ML20125A640

Annual Financial Rept,1978

ML20125A640
Person / Time
Site:	Cooper
Issue date:	02/16/1979
From:	IOWA POWER & LIGHT CO.
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ML19242B103	List: ML20125A640
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NUDOCS 7908070513
Download: ML20125A640 (52)

Text

. . .

10W8 POW 8R 1978 ANNUAL REPORT tis -

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NOTICE -

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4 t THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE " ' ~ '

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' DIVISION OF DOCUMENT CONTROL. THEY HAVE BEEN in.w-CHARGED TO YOU FOR A LIMITED TIME PERIOD AND 3 MUST BE RETURNED TO THE RECORDS FACILITY  ;

BRANCH 016. PLEASE DO NOT SEND DOCUMENTS '

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$ CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY il .

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• Contents '

Page 1978 Financial Highlights . , , 1

- President's Letter . 2 The Year in Review. ,, 4 FinancialStatements . . . . .14 Notes to Financial Statements . . .18 W Management's Discussion and Analysis

.25

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of Statements of Income. ..

0 . Service Area Map . , , .27 Electric and Gas Statistics . . .28

- Financial Summary . .30 Management Committee.' . . . 32

' CompanyOfficers : . Inside Back Cover Annual Meeting The 1979 Annual Meeting of Shareowners will be held at 10:00 a.m. on April 25,1979.

Lt the offices of the Company,823 Walnut,

. Des Moines, Iowa. Record date for share-owners participating either by attendance it the meeting or by proxy is March 9, 1979. All shareowners are invited to attend.

Pr:xy material will be delivered by mail about mid-March.

Annual Report to the Securities and Exchange Commission - Form 10 K

~ A copy of the Company's 1978 annual report to the Securities and Exchange Commission on Form 10-K, containing essentially the same financial information as contained herein, will be available by April 1. Any shareowner may obtain a copy .

by submitting a written request to Phillip D.

Ehm. Vice President and Treasurer.

This report and financial statements con-

• V . t jned herein are submme d for the per-sonai information of the security holders of Iowa Poner and Light Company, and are not transmitted in connection with any pro-posed sais or offor to sell or buy securities nf the Company, now or hereafter issued.

or with any preliminary negotiation for such

' sale or purchase.

New York and Midwest Stock Exchange Symbol-LOP Executive Off:ces 666 Grand Avenue

' Des Mcines, Iowa 50303 515/281-2900 Financial Contact Phillip D. Ehm. Vice President snd Treasurer About the Cover:

strars While the quality of service of an energy Common Stock supplier is hea'<ily dependent upon a Manu actur s Hanover Trust Co., variety of inanimate materials and p.*W J . , 28 machines, the vast mechanical complex is Bankers Trust Company, N'ref5 -

only as good as the team of dedicated Des Moines. Iowa l's i i TOcj[io employees which ties everything together.

. Pr ferred Stock rNr' ' N.ME of e-Dv,,,.,j }

7}'E' N i d, c2 Bankers Trust Company, lowa Power employees, about 1500 Des Moines, Iowa strong, are a valuable asset in insuring Transfer Agents their communities a dependable suppiy of Common Stock a energy. But the majority of our employees Manufacturers Hanover Trust Co., contribute far more to the quality of life in New York, N.Y. their communities by participating in a

?- Central National Bank & Trust Co., wide variety of public service activities.

' Des Mo'nes, Iowa We're proud to highlight five such Preferred Stock individuals in the following pages. Working towa Power and Light Company, together they help insure an energy future Des Moines, Iowa we can all live with.

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The adc:tronal generat ng capacity of Council Biutts Unit

1. 3 he'ps assure our customers of adequate energy in "

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1978 Financial Highlights Percent increase j, 1978 1977 (Decrease) -

Eam;ngs per average share of common stock $ 3.62 $ 3 14 15 3 Dividends per share of common stock- -

Paid S 2.30 $ 2 13 80 Annual rate at year-end S 2.40 1 2 24 71 Shares of common stock-(In thousands) e Average 6.814 5 99? 13 7 i Year-end 6,946 6.712 35 (In thousands)

=' Tota! operating revenues $227,155 $ 199.486 13 9

', . Total operating expenses $193,855 $170h00 13 6

-: Operating income S 33,300 $ 28.886 15 3 Interest preferred dividends and other 5 S,615 $ 10.0G1 (? 4 4)

Balance available for common stock 5 24.685 $ 18 825 31 1 Total utihty plant investment $693,088 $615.067 12 7 Electric Operations Operattng revenues (in thousandu $150,488 $139 687 77 Sa:es - milhons of kwh 4,307 4 015 73 Peak load - kitowatts 1,063,717 1.063 611 -

Coohng degree days 1,217 1.341 (9 2)

Average annual residential use -k wh 8,610 8 061 68 Gas Operations Operating revenues (In thousands) $ 76,667 $ 59.799 28 2 Sa!es - milhons of ccf 372 357 40 Maumum dai'y sendout - thousands of ccf 2,460 2 474 (0 6)

Heating degree days 7,217 6067 19 0 Average annual resident;al use - ccf 1,543 1 432 78 Pla nned (in thousando 1979 Constructton espend.tures S 84,023 $ St MS $85 003 Sa!e of secun: es-Lona-term debt S 10,900 $ 40 000 530 000 Preferred stock -

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l Common stock $ 5,895 $ 26158 517 000

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\ WHERE THE 1978 CONSTRUCTION DOLLAR C AME FROM N _ ,,g 7*

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Opro'ximately 21 million kilowatt-hours of delay construction of the Council Bluffs-to- Services. was assigned new responsibilities

!ectricity to the East. By increasing pro- Booneville line necessary to serve Unit #3. as Vice President-Electric Operations. Also, action during the strike, nuclear plants A realistic ccmpletion date for the trans- Guy G. Gilchrist. Assistant Vice President, cross the country were able to reduce the mission facdity remained indefinite at the retired f rom the Company in 1978 and is ation's demand for coal by 20%. end of the year. now active in real estate and farm manage-One of the major successes of 1978 was We anticipate through 1983 an average ment.

ie start up of Council Bluffs Unit #3. This annual kilowatt-hour sales growth of about In January, your Board of Directors ap-50.000 kw unit, the largest coal-fired 4.7%, together with an electric peak load proved in pnnciple a plan whereby the scihty in towa, is now in a position to con- growth of about 4.8%. Assuming normal Company would become a subsidiary of a

'ibute significantly to the growing energy summer weather and traditional industrial new holding company called lowa femands of our customers. The disappoint- demand, we expect our peak demand to Resources Inc., which would be formed by pent swallowed with this accomplishment grow from 1.064 megawatts in 1978 to the Company if shareowners approve the

$ that the continuous full operation of Unit 1.348 megawatts by 1983. New generating plan at the April 25,1979 Annual Meeting.

'3 will be jeopardized until the associated units, as described in the section titled The intent of the proposed plan. discussed ransmission facilities are completed. A " Future Energy Needs." are under con- in detail in the proxy material you will mall opposition group has continued to struction to meet the projected demand. shortly receive, is to permit greater finan-lowa Power filed a request with the Iowa cial and organizational flexibility and pro-State Commerce Commission for a 19% vide the means for more Clearly defined IN M LL oNs o electric rate increase to cover the in- separation of utility and non-utility creased costs which arise because of the operations.

r* completion of Council Bluffs Unit #3 and Looking ahead.1979 will bring to close a g' .%,_., .. . .

decade in which the utility industry has b - ' ' *v1 for increased depreciation expenses, capital costs and other expenses. The been changing drastically. The changes are to k g s _. % % k. ~~] Company also filed a request for a 5% gas not over. There are hints of further govern-rate increase to cover increased depreci- mental regulation, more visible opposition 4 ation expenses, capital costs and other ex- to utihty projects and continued intiationary penses. The Commission suspended the effects on both lowa Power and its custom-rates, but will allow increases to be col- ers. However, we firmly expect to maintain

'68 69 70 71 72 73 74 75 76 77 78 lected during 1979, subject to refund. In a strong financial position and an adequate TcTac s ALES 9(WH IN MILLloNs price guideline program for controlling foreseeable future. We at lowa Power are e inflation, the Company will initially collect continuing to work for an " energy future 80% of its requested electric increase and we can all live with.'

. s j 40% of its requested gas increase.

e d A number of organizational changes Sincerely.

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,.. 8ERIENIN 1 .- -- were made during the year. Ralph F. Dught H. Swanson mo

(( Art W

[ " ' " " " Schlenker. Senior Vice President, was assigned responsibilities as head of the Chairman and President p

• Develocment Group. This new group was ~J) ff gjh __

formed to implement corporate policy in

" strengthening, increasing, and diversifying February 16,1979

'68 '69 70 71 72 73 74 75 76 77 78 the services provided for the benefit of our NEL usso TO PRoviou stacTaiceTy customers and the Company and its in-

• g vestors. Initiatives are to be internai as agass' .

.f well as external in establishing long-range w . 80% est : een ? programs that will improve our ef fec-a A mm " j tiveness and pro'itability.

in addition, J. Paul Glahn, Vice President and Treasurer, assumed the position of y,,

Vice President-Gas Operations; Phillip D.

Ehm. Vice President-Division Operations, was named Vice President and Treasurer; and Jack Luhring. Vice President-Planning we ma i9tr ma tm unwee HERs THE 4973 REVENUE DOLLAR C AME FROM WHERE THE 1978 REVENUE DOLLAR W AS USED

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ecember. The Company plans to continue Current Power Supply from a fuel mix of both coal and nuclear sing corrimercial paper to finance the generation. Customers' energy use totaled 979 construction program in part with an For the first time in 22 years, the Com- 4.307 million kilowatt-hours for the year.

nticipated outstanding balance of $49 pany's electric peak demand occurred in Cooper Nuclear Station near Brownville, illion by the end of 1979. September rather than earlier in the sum- Nebraska. has contributed significantly to Operating expenses continue to increase mer. A high of 1.064 megawatts was lowa Power's system s:nce it was placed ach year and 1978 was no exception. recorded during a period of unusually warm into service in mid-1974. Owned by st of electricity purchased and electric weather early in the month. That matched Nebraska Pt blic Power District, the Cooper roduction fuel was $56 8 million, up 2.9% a record high peak demand recorded in Station provided more than 50% of cur ver 1977, and the cost of gas purchased July 1977 which was 12.7% higher than 1978 electric energy requirements. This for resale increased 31.0% to $53.9 the 1976 peak. The peak demand is the energy is purchased under a long-term fillion. An energy cost adjustment clause one hour during a year when our contract with Nebraska Public Power pnd a purchased gas cost adjustment customers require more electricity than District which permits lowa Power to take plause allow the Company to recover these during any other hour. one-half of the output of this unit. A increased costs automatically in our elec- During 1978, the Company's electric companson of costs of electnc capacity Jric and gas rates. supply continued to originate principally and energy continues to point out the I favorable economics of nuclear generation.

n m m'e n ,- n m n - ~ -m Construction Activities

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?' throughout the service area, a major facil-j ity was completed in 1978 and construction

,y activities are underway on two other additions.

Dedication ceremonies for the new facil-ity on the east side of Des Moines, Two M s -

s Rivers Service Center, were held in

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< conjunction with the 1978 Annual Meeting 3 x . of Shareowners. This four-building complex 1

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p serves as headquarters for approximately 300 gas and electric field operations

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.I employees. Activities formerly located in y w' P , . . . . . Older buildings at several locations are now g '

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consolidated in this new facility. The new x ,p g .

service center is a large part of a major

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f; renovation project of East Des Moines g, j ~,

. being planned by business and civic g- N

,I leaders from that area Plans for a new office arid service g center facility to be located at Oskaloosa, lowa, were completed and construction activities are undarway. This new building will be located on a five acre parcel of 90 acres of land one mile north of the down.

9 town Oskaloosa business district. The entire 90 acres will be platted as a

" Planned Unit Development" and include a mix of light industnal, single-family homes

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Energy uture...

A genuine concern and ability to work with S people is felt by the young men and women Chuck Safris influences as coach of a local soccer team. Promoting 7airplay and cooperation is an important contribution to the continuing dewlopment of the young citizens in Chuck's community. Good human Telations skills are also essentialin all facets of business today.

However, for Chuck. Employee Relations Manager, those skills are vital 10 successful operation. His is the job of maintaining productive rela- l lions and practices among the 1500 employees of the' Company.

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5;y e gecome increasingly active in exploration lowest operating cost of any existing unit in e 15%, or 100 megawatts, of the Ottumwa ind development not only in the Gulf Coast towa. As part-owner and operator of this 3 Generating Station scheduled for com-egion, but also in the western United unit, Iowa Power will invest about $154 9 pletion in 1981' 3tates and in the Arctic. million of the approximate $330 million cost -g of the plant and will receive 46.7% of the e 33 3%, or 217 megawatts, of the Louisa uture Energy Needs output. Ownership of Unit #3 is shared by Generating Station scheduled for com- M -

To ensure adequate future capacity to six other power suppliers in the state. This pletion in 1983.

eet the electric peak demand loads on unit is four and one-half times larger (but 9 ur system. Iowa Power is participating in nearly 10 times more costly to construct) Role of Nuclear Power ,4 i number of joint plant construction than the two existing units at Council Bluffs Regulatory uncertainties and the failure y rojects. and is expected to burn over two million of the new energy policy to address the _9 One of the most significant generation tons of low-sulphur Wyoming coal per year. nuclear power questions continue to pre- #

vent lowa Power from proceeding with 4

construction of the Vandalia Nuclear Gen-erating Station. Proposed construction g plans for this unit, which would be located _z about 20 miles east of Des Moines were 1!!!

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suspended in 1977. Although construction 3 plans remained suspended during 1978, a total of $3.1 million in unrecoverable accumulated costs, including fuel enrich- j ment payments to the Department of i i .

Energy, are being amortized to expense -

M' over a five year period. '=

M On the brighter side of the nuclear pic.

ture, not only did lowa Power shareowners S continue to support nuclear power genera- q

_- tion in 1978, a group of U.S. govemors also .si:

adopted a pro-nuclear stand. By a nearly i unanimous vote, governors attending the Y Na'ional Governors Canference last August . .

urged the federal government to streamline c F-m the licensing procedure for nuclear pcwer --i l facil i ties, proceed with development of the 9 j[' ,. breeder reactor and nuclear fuel repro- --4 y cessing technolcgy, and to move forward j l EM spos I ob er Transmission Lines j Construction of necessary transmission g

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lines, a process once fairly routine. has in a recent years become the target of protest 5 and legal controversy. Iowa Power is not l/7 unique in the problems associated with Cortinued

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Energy uture... _

3

A gift of blood is a gift of life. Those words _3

_. ho!d special meaning for Earl Hiedik. After a 2 i Jall from the local Blood Bank, Earl can be found adding to the five ]

2nd one-half gallons of blood he has already contributed. The life sus- 1

^a ining needs of a community are critically dependent on individuals j

'ike Earl, who respond without hesitation. As a Gas Foreman, Earl's 4 1ays are spent providing the facilities necessary to extend natural gas )

service to customer's homes. That is another function Earl undertakes ig Nith enthusiasm and a sense of pride. y 7 R d=

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Rate Activities increase necessary to meet increased 80% of the electric increase and 40% of wages, costs of materials and supplies. the gas increase January 1,1979. While Settlement is still pending on a 3 6% and cost of capital associated witn gas ser- the Company's costs justify collection of natural gas rate increase request filed by vice. Although both requests were initially the full amount of both increase requests.

the Company in August 1977. A total of suspended by the towa State Commerce management believes it is important that

$2.5 million in revenues based on those Commission, the higher rates were inflation be brought under control.

l rates was collected under bond subject to scheduled to become effective January 1 Three circumstances permitted lowa

, refund during 1978 1979. subject to refund. Power to initially collect less than planned.

In June Iowa Power filed a request for a Then. in October President Carter called First. the reduction in the 1979 Federa!

$27 million increase in electric rates nec- for a voluntary program of limiting price corporate income tax rate to 46% from 4essary, in large part, to begin recovering and wage increases as a means of con- 48% provides some reduction in the Com-the costs associated with the construction trolling inflation. Since the Company pany's cost. Second, a substantial cost of Council Bluffs Unit #3. The Company's desires to support the spirit of the Presi- deferral arises by not charging the investment in this unit will be about $154 dent's program as much as possible increased depreciation rates which are pro-million. Also, during the summer, a request without jeopardizing its financial stability, a posed in these rate dockets until they are was filed for a $3.2 million natural gas rate decision was made to begin collecting only approved by the Commission. Further the Company is willing to accept for this initial I

, period a slightly lower return on equity than it requested in the filings, although a full

[ recovery of capital costs will be sought prospectively.

~ ^

Employee Relations In March of 1978, a group of lowa Power office and clerical employees voted 114 to 109 to form a bargaining unit of the International Brotherhood of Electrical Workers (IBEW). Company and union repre-sentatives have been meeting since late May to negotiate a contract for this new bargaining unit.

At the same time, negotiat ions were pro-cecong on a renewal of the existing Wage

,_ g" and Working Contract between Iowa Power

( f; f

• g( and the IBEW Local 499 representing the physical work force employees. The three-j 3 , s \ ,

D.A .

l \ year union contract covering this group of M #

• g 790 empioyees expired in August 1978.

E, . /s * ,, 1 The new three-year rerewal agreement M -f

' [i was rat:fied by a majority of these union employees and includes a 7 5% genera!

j l wage increase in 1978. a 7.41% increase f in 1979, and either a 7.5% increase in 1980 or, if greater, ti e per cent change in i

9 the Consumer Price Index during a prior 12 month period Demonstrable improvements in work rules or practices are provided in the contract. Company management j

believes the terms of the new agreement i

Energ uture... -

g"

• 6 Weekends provide an extra

)L[MB avalulGMMuu speciai kind of reward for Erma Milosevich. She has devoted over 500 Saturday mornings during the past 15 years teaching religious education. Erma's parish church serves as her school room and groups of handicapped children are her pubils. Patience and caring are not only reflected in Erma's contribu-l tion to the children in her parish church - they are also evident to

'em'ployees throughout the Company. As a Payroll Accountant, her hard

! work and conscientiousness are a benefit towa Power employees

'didn't need to bargain for.

9 i.

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have expressed a desire to be informed ters important to our industry. Such pro- began in 1976, made significant strides and active in legislative matters concerning grams included more efficient use of pres- dunng 1978 toward completion of the basic the utility industry. It is gratifying to know ent generation techniques and develop- engineering of a coal gasification demon-that a large group of our shareowners are ment of future alternatives to conventional stration plant, wilkng to contact their representatives and energy methods. Expenditures for research lowa Power is a partner with 10 other legislators to voice their concern for our and development in 1978 totaled $905.000 utilities and A!!is-Chalmers in the project, energy future. A group such as this can be and we expect to spend over $1 million in and has already committed more than $1.1 a powerful force in influencing major 1979 million in an effort to find an economical, governmental decisions affecting the Com- Significant among these projects is our environmentally acceptable method of us-pany's well-being and the energy future of involvement in the Allis-Chalmers ing the vast available high-sulphur coal the nation. "KILnGAS" research. "KILnGAS" is the supplies to produce gas.

name given to a process using coal to pro- lowa Power conducts some research Research and Development duce an environmentally acceptable, low- projects on its own, including the monitor-During 1978. Iowa Power continued to Btu synthetic gas for use as a boiler fuel ing of individual solar energy and wind support research and development pro- for electric generation and industrial pro- power installations. However, compre-grams concentrating on a variety of mat- cesses. The "KILnGAS" project, which hensive research requires large sums of money. To provide a forum for this compre-

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other pubhc. private and cooperative util-A

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q ities across the nation, channels its resources through the Electric Power (y )

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Research Institute (EPRI) EPRI, a national 2 .

/ J-gA ' ., 3 ' s research foundatica, is able to initiate K

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J larger projects and eliminate duplication by

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the utihties.

'igr[ f{.y c' -

3 y EPRI researchers continue to investigate g "a 3 ,.y 4 j/p - such energy alternatives as fuel cells, solar 7 y. "

,7/ Q y . .. # 4 4 power and geothermal energy. A number of

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Y. [. studies are directed at improving systems

[ that r, . transport, distribute and store energy.

s K , ((h D,y -U EPRI is also actively involved in major b [f .' ~ %' "  ; ($ .,'$

'9 7@ f g jL9I.' ' @ 70- t- research on nuclear energy and the if 4 h '. /4. /- [f$ Vff' '^

... breeder reactor; electrical transmission

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x I .-;. , .; ' O . - systems; and environmental effects of

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In 1976, the Gas Research Ir.stitute (GRI) 3 A- r

{mg n ?% ' _ .' . A 1  :

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g '. was formed by the gas industry to meet the

{q'1 qf  !. '] urgent need for expanded research and

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conservation measures. Qualified con-2

-4 tractors are engaged by the GRI to perform l soecific gas-re'ated research designed to

, increase the supply, improve the trans-9 portation and enhance the efficient utiliza-

, tion of gaseous fuels in 1977 the Federal Energy Regulatory Commission issued an order approving a funding formula which i a!!ows the GRI to collect a small surcharge on all gas sold in interstate commerce in Energy uture... -

When the fire alarm sounds, every second wasted can mean additional devastation. Very few realize that as much as Charlie Ellison. As Chief of the Malvern, Iowa Volunteer Fire Department, Charlie has given a p

large share of his time protecting the individuals and property in that area. His quick response and leadership have helped prevent untold tragedies. Charlie, Serviceman Combination, is also on call a great deal of 'the time in his job with lowa Power. Whether he's fighting a fire, lighting a furnace or checking a gas leak report, Charlie's courteous land prompt service is an asset to his community.

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-m med"allim mounted for permanent display through the roof due to inadequate insu- will continue to be that towa Power is I on an antique bronze-finish doorknocker. lation More than 20,000 lowa Power " working for an energy future we can all y Some 100 lowa Power customers have customers flocked to see their thermo- hve with

• 3 apphed for the N E W. award to date. and grams. and the Company views the pro- j the Company expects response to increase gram as an unquahtied success " Opera- Consumer Affairs g next year as the program receives more tion Sky Scan" will Continue to be pro- More than at any time in the history of "j pubhcity. mcted during 1979. especially in the 35 the f ree enterpnse system, companies [

" Operation Sky Scan," an aerial heat- communities which were not photographed today. . particularly those involved in _-

loss study of residences in Iowa Power's last year. providing cntical services . . must be q service terntory, was begun in 1978. Our corporate communications program aware of and sensitive to the concems, i Thermograms - infrared photographs for the year ahead is currently in the problems and very real demands of the 5 taken on a clear winter night by a low-flying formative stage. New developments which consuming pubhc. Therefore, beginning in ,g airplane - were made of thousands of occur dunng 1979 may influence what we 1978 and continuing in 1979. the Company T homes. Homeowners were then given the say and the manner in which we say it. But will place increased emphasis on the s opportunity to view the thermogram of their regardless of the subject to be discussed, development of consumer affairs g home to determine if heat was escaping the overriding theme of all communications programs. (

Specifically, a new procedure has been t implemented in which disconnect notices  %

j (kI \ f(m; $ y I' can or may be mailed to an interested third

- t aDA party who can assist the customer faced

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1. . .- With such disconnection action; a hst of y customers who have indicated they use hfe =

- }( ?, y sustaining equipment in their homes has Q

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quickly as possible in an emergency; customers on a fixed or hmited income

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bill, thereby avoiding late payment charges; g 3 ^), e anu an excellent liaison has been devel-

' S; ', oped with pubhc agencies working on p

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, k ,1 assistance programs. )

, j A " Consumer Action Program" directed y at achieving greater community awareness a g .y' ,

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of such activities and at the same time establishing a two-way dialogue with

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customers was in its initial stages at year-ea

' ' /- .

M ,0 end. The program includes a senes of i

,, s.j V ', - " Town Meetings" to be held throughout _

our service terntory. The format has been tailored to encourage consumer expression

]

( g of concerns and questions. In-depth con- _

sumer group meetings with a panel of __

customers representing specific interest _

groups are also being considered at the m

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same time. g i

orkhg  ?

or n i Energ uture... !E Culturai boundaries and communication y barriers pose no obstacles in the life of Mel 2 Beaver. Through his active participation on the Board of Iowans for f International Adoption, his days are filled with new horizons. On the job 3 as a Tree Trimmer Foreman, Mel and his crew can be found high in a $

bucket truck removing tree branches that present potential hazards to 5 the power lines and customers throughout Iowa Power's system. l 13 3 w

a

Statements of Income and Undistributed Eamings Year Ended December 31 1978 1977 1976 1975 1974 (In Thousands)

Operating Revenues (Note 1)

Electric $150,488 $139.687 $131,947 $110,908 S 88,738 Gas 76,667 59,799 49,757 45.898 38,570 Total operating revenues. 227,155 199.486 181,704 156.806 127.308 Operating Expenses Operation-Electricity purchased and interchanged-Cooper Nuclear Station (Note 2) . 27,472 29,817 28,522 21,522 9,060 All other, net. 5,137 3,786 984 3,436 6,935 Electric production fuel . 24,197 21,619 22,626 17,842 14,423 Gas purchased for resale 53,884 41,149 31,526 29.039 23.905 Other operation , 28,377 24,240 22,147 19,538 17,020 Maintenance . 12,837 10,696 10,231 9,105 7,149 Depreciation (Note 3). 16,875 15.454 14,855 12,875 10,819 income taxes (Note 3) . 12,150 12,017 12,975 9.268 6,861 Property and other taxes . 12,926 11,822 11,375 11.360 10.401 Total operating expenses 193,855 170,600 155,241 J3,985 106,573 Operating income . 33,300 28,886 26.463 22,821 20.735 Otherincome(Deductions)

Allowance for equity funds used dunng construction (Note 3) . 6,277 4,110 2,132 1.887 1,590 Other income (deductions), net . (15) (788) (501) (175) (377{

Total other income. 6,262 3,322 1,631 1,712 1.213 Income before interest charges 39,562 32,208 28,094 24,533 21.948 Interest Charges interest on long-term debt . 14,470 12,601 10.535 8,174 6,698 Interest on short-term debt , 1,473 823 645 1,400 2,306 Allowance for borrowed funds used during construction (Note 3) . (4,988) (3.644) (1,304) (1,126) (895 Totalinterest charges . 10,955 9,780 9.876 8,448 8,108 Net income 28,607 22,428 18,218 16,085 13,840 Preferred stock dividends . 3,922 3,603 2,647 2,392 1,627 Net income available to common stock (Note 1) , 24,685 18,825 15,571 13,693 12,213 Undistributed Earnings Balance at beginning of year. 42,637 37,611 33,544 29,025 24,250 Deduct:

Cash dividends declared on com-mon stock of $2.34, $2.16%,

$2.02%, $1.88, and $1,76%

per share, respectively . 16,032 13.496 11,449 8,839 7,419 Capital stock expense . 15 132 55 185 19 Discount on preferred stock sold. -

171 -

150 -

Balance at end of year. S 51,275 $ 42,637 $ 37,611 $ 33,544 $ 29,025 Average shares of common stock outstanding (000). 6,814 5.992 5,523 4,692 4,201 Net income per average common share outstanding (Note l) $ 3.62 $ 3.14 $ 2.82 $ 2.92 $ 2.91 The accompanymg notes to financal statements are an integral paq of these statements 14 l

Binc] Sheets December 31 1978 1977 (In Thousands)

Property and Other Assets Utility plant, at original cost (Note 3):

Electric . $564,712 $391.511 Gas. 74,727 70,034 Common . , 11,876 12.035 651,315 473,580 Less-Accumulated provisions for depreciation. 153,078 138.291 498,237 335,289 Construction work in progress 41,773 141,487 540,010 476,776 Productive capacity under power purchase contract (Note 2) . 218,848 223.015 l

Current assets:

Cash 1,183 1,326 Short term investments. -

15.276 Notes receivable. 3 2.711 Federalincome tax refunds receivable (Note 3). 5,239 903 Accounts receivable,less reserves of $339 and $256, respectively . 25,216 12,809 Materials and supplies, at average cost . 7,658 7,150 Electric production fuel, at average cost 10,899 8,172

. Prepayments and other. 2,560 1,690 52,758 50.037 Deferred charges and other assets:

Construction and other funds held by pollution control revenue bond trustee . 5,978 3,397 investments in subsidiary companies at equity (Note 3). 6,835 3,894 Other. 10,384 6.030 23,197 13.321

$834,813 $763.149 Capitalization and Liabilities Capitalization (See accompanying statements) $448,643 $430,222 Obligation under power purchase contract (Note 2), 214,483 218,848 Current liabilities:

Short-term debt to be refinanced-Commercial paper outstanding, interest at 9.925%

to 10.475% in 1978 (Note 6) . 34,475 -

Maturing long-term debt due February 1,1978. - 5,130 Maturing long-term debt due December 1,1979. 6,389 -

Other current liabilities-Rate refunds, including interest (Note 1). 766 1,113 Accounts payab!e . 30,862 24,721 Dividends declared . 5,146 4.738 Accrued taxes . 16,687 16,343 Accrued interest and other . 5,627 5,517 Current portion of obligation under power purchase contract (Note 2). 4,365 4,167 104,317 61,729 Reserves and deferred credits:

Accumulated deferred income taxes (Note 3). 37,770 32,609 investment tax credit being amortized (Note 3) . 25,865 17,612 Other . 3,735 2,129 67,370 52,350

$834,813 $763.149 The ACC0mpanying D0tes to finanCtal Statements are an integral part Of these Statements 15 L ..

Statements of Capitalization (excluding ob!igat.cn urder power purchase contract)

December 31 1978 1977 (In Thousands)

Common Shareowners' Equity (Notes 4 and 6)

Common stock, authorized 8.000,000 shares, par value

$10 (671,346 shares reserved), outstanding 6,946,073 shares and 6,711,916 shares, respectively . $ 69,461 $ 67,119 Additional capitalinvested. 59,744 56,176 Undistributed earnings. 51,275 42,637 180,480 40 % 165.932 38 %

Cumulative Preferred Stock Authorized 800,000 shares, par value $100, outstanding:

50,000 shares 3.30%. 5,000 5,000 50,000 shares 4.40%. 5,000 5,000 50,000 shares 4.35%. 5,000 5,000 50,000 shares 4.80% 5,000 5,000 100,000 shares 7.84%. 10,000 10,000 100,000 shares 10.20% subject to a five percent annual sinking fund requirement beginning in 1980. 10,000 10,000 150,000 shares 8.50%. 15,000 15,000 55,000 12 % 55,000 13 %

Long Term Debt exclusive of (a) Current sinking fund requirements of

$1,210,000 met substantially by reacquired long-term debt and (b) reacquired long-term debt in excess of the current sinking f und requirements:

First mortgage bonds:

2-3/4% Series due 1979. - 6,365

~

3-1/4% Series due 1982. 8,475 8,481 3-3/8% Series due 1983. 7,251 7,266 3-5/8% Series due 1986. 6,569 6,607 3-5/8% Series due 1988. 8,908 8,908 4-5/8% Series due 1991. 9,050 9,077 6-5/8% Series due 1998. 14,100 14,171 9% Series due 2000. 13,950 14,025 7-5/8% Series due 2001. 14,400 14,475 6-1/2% Series due 2003 (Note 6). 9,900 -

10-3/4% Series due 2004. 19,200 19,400 8-3/4% Series due 2006. 29,998 29,998 5.9 % Series due 2007. 18,000 18,000 8-1/4% Series due 2007. 30,000 30,000 Debentures,4-5/8% Series due 1989 . 7,702 7,857 Note,6.7% due 2003 (Note 6) . 1,000 -

i Note,6.1% due 2007. 1,000 1,000 Pollution control revenue bonds, guaranteed:

5.1 % due serially 1983 to 1997 . 8,600 8,600 5.6% due serially 1984 to 2003. 5,060 5,060 Total long-term debt. 213,163 48 % 209,290 49 %

$448,643 100% $430,222 100%

6 The accompanv irig notes to f;nancial statements are an integral part of these statements.

16

Statements of Sources of Funds for Construction Year Ended December 31 1978 1977 1976 1975 1974 (in Thousands)

Funds Obtained From Operations:

Net income (Note 1). $28,607 $22,428 $18,218 $16.085 $13,840 Cash dividends declared . (19,954) (17.099) (14,096) (11,231) (9.046)

Long-term debt sinking fund retirements - (907) (1,399) (924) (724) (724)

Depreciation . 18,218 16.478 15,741 13,617 11,505 Deferred income taxes. net . 5,161 3,686 3,540 2,571 1,850 Investment tax credit, net . 8,253 5,551 4,158 2,766 1,025 Allowance for funds used during construction . (11,265) (7,754) (3,436) (3.013) (2,486)

Net funds obtained f rom operations . 28,113 21,891 23,201 20.071 15.964 Funds Obtained From Working Capital and Other Changes:

Short-term debt . 34,475 (22,680) (7,910) (1,010) 11.150 Cash, notes and accounts receivable . (13,892) 2.675 (3,535) (2,254) (3,322)

SNrt-term investments , 15,276 (15,276) - - -

Materials and supplies, including electric production fuel . (3,235) 1,714 (563) (2,300) (5,748)

Rate refunds . (347) (10,119) 4,041 1,658 1,039 Accounts payablo , . 6,141 2,746 9,560 (481) (197)

Accrued taxes . 344 3,516 (2,984) 6,494 (2,660)

Investments in subsidiary companies . (2,941) (982) (2,587) (291) (34)

Other changes, net (134) 3,353 359 626 1,378 Net funds obtained fromworking capital and other changes. 35,687 (35,053) (3.619) 2.442 1,606 Funds Obtained From Extornal Sources:

Sale of common stock, net proceeds 5,895 26,095 18,320 12.653 294 Sale of preferred stock, net proceeds . - 14,759 - 9,775 -

Sale of long-term debt, net proceeds (16) 29,605 29,932 - 19,721 Long-term debt maturity . (5,130) - - - -

Pollution control revenue bond proceeds received from trustees 8,209 16,797 1,183 2,057 3.643 Net funds obtained from external sources , 8,958 87,256 49.435 24,485 23,658 Funds Used For Construction:

From above sources , 72,758 74,094 69,017 46,998 41,228 Allowance for funds used during construction , 11,265 7,754 3.436 3.013 2,486 Total Funds Used For Construction. $84,023 $81,848 $72.453 $50,011 $43,714 the accompanona notes to tmana statemer.ts are an =tegrai part of inese statements l 17 l

Notes to Financial Statements The Iowa statutes permit the Company to place new rates into effect (1) Rate Matters:

On January 1,1978, the Company placed into effect, subject to re- 120 days after filing, or such earlier time not sooner than 30 days after fund. new gas rates designed to produce annual revenues about $2.4 filing as the Commission may allow, subject to refund pending final milhon higher than previously approved rates would have produced. action by the Commission.

Revenues for 1978, include $2.5 million attnbutable to such rates sub- The current liability for rate refunds at December 31,1978, primarity lect to refund as to any amount not allowed by the Iowa State Com- represents refunds received from the Company's pipeline suppliers in merce Commission (Commission) After allowing for income taxes at the process of being refunded to customers.

full statutory rates, net income and net income per average common share for 1978, include $1.2 million and 17C, respectivety, attnbutable (2) Long Term Power Purchase Contract:

to revenues subject to refund. Under a contract with the Nebraska Public Power District (NPPD),

The Company filed new electric rates in June 1978, and new the Company is purchasing one-half of the output of the 778 megawatt gas rates in August 1978, intended to be placed into effect on Cooper Nuclear Station at Brownville, Nebraska, which was placed in January 1,1979, and designed to increase annual electric and gas commercial service on July 1,1974 As of December 31,1978, NPPD revenues over revenues which v ould have resulted from rates had issued $467.6 million of Nuclear Facility Revenue Bonds (average theretofore in effect by about $27 million and $3.2 million, respec- interest rate of 5.8%) to finance the construction of this station, to pro-tively, subject to refund of any amounts not allowed by the Com- vide necessary working capital and to satisfy debt service requirements mission In response to the new voluntary price standards of the through June 30,1974. A total of $438 million and $446 million of such Council on Wage and Price Stability, the Company elected to bonds was outstanding at December 31,1978 and 1977, respectivejy.

place into effect on January 1,1979, only such portions of the The Company has agreed to pay, during the period expiring in 2004, new rates as are expected to increase annual electric and gas one-half of the monthly fixed and operating costs of the plant (excluding revenues by about $21 million and $1.2 million, respectively, sub- depreciation) and its proportionate share of the nuclear fuel costs ject to refund The new retes are intended, among other things, to based upon energy actually delivered. NPPD's contract with General produce sufficient revenues to offset the increased depreciation Electric Company (GE) for nuclear fuel and fuel services provides for and interest expenses and decreased income f rom the reduced the disposition of spent nuclear fuel through 1980, but currently there allowances for borrowed and equity funds used during construc- are no arrangements or expenditures for the disposition of spent tion which result from Council Blutfs Unit 3 being placed into ser- nuclear fuel beyond such time except for the construction of facilities vice in December 1978. In addition, as described in Note 5 of to store fuel spent through 1990 which are being financed from funds Notes to Financial Statements, the Company and others have obtained from the sale of Nuclear Facility Revenue Bonds issued by suspended plans to construct a nuclear generating facility in cen- NPPD referred to above.

tral lowa and in 1978 the Company began a five year amortization The total payments to NPPD are reflected as " Electricity Purchased of $3.1 million of the associated costs. The new electric rates pro- and Interchanged" in the Statements of Income and in the current rate-vide, subject to refund, for the recovery dJring the four years end- making process. The monthly fixed costs include the debt service ing 1982 of the $2.5 million balance of tho $3.1 million for the payments necessary to retire the principal of and to pay the interest on nuclear project costs which are not estimated to be of value to one-half of the bonds issued by NPPD. The amount of debt service any future resumption of the project. payments on a monthly basis approximates $1.4 million and is not All of the Company's electric sales are currently subject to an contingent upon the plant being in operation. The net interest com-Energy Cost Adi ustment Clause The clause is designed to reflect ponents of the Company's payments to NPPD were $4,834,000, changes in the costs of fuel used by the Company to generate elec. $11.489,000, $11,640,000, $12,134,000 and $11.556,000 for the tricity and changes in the costs of electricity purchased by the Com- years 1974,1975,1976,1977 and 1978, respectively.

pany, to minimize the time required to reflect such changes in its elec- The Company reflects on the Balance Sheet as a liability the portion inc rates and to adjust amounts billed to actual costs incurred. (50%) of NPPD's Nuclear Facility Revenue Bonds outstanding for All of the Company's gas sates are subject to an automatic Pur- which the Company is obligated to pay over the term of the contract, chased Gas Adjustment Clause which reflects changes in prices with a like amount representing its right to purchase power under the charged by its pipeline suppliers. Changes in monthly contract demand contract as an asset. Inclusion of such amounts on the Balance Sheet and commodity cost per unit of gas purchased by the Company are has had no effect on net income nor on any amounts in the accom-reflected in the regular monthly bills sent to its gas customers beg n- panying Statements of income inasmuch as no changes have been ning 15 days af ter the date such unit costs change. made to date in the manner in which the payments made to NPPD are recovered in the ratemaking process.

18 l

e .

l(3) Summ:ry of Significant Accounting Policies: (e) Allowance for Funds Used During Construction (AFUDC)

(I) GinIral The allowance for funds used during construction represents The accounting records of the Company are maintained in the cost of borrowed funds and a reasonable retum on other funds Iccordance with the uniform system of accounts prescribed by used for construction purposes in accordance with rules pre-313 Federal Energy Regulatory Commission (FERC) wftch were scribed by the FERC. Recognition of this item as a cost of utility 3so Edopted by the Commission. plant is appropriate since it constitutes a cost of construction, and under established regulatory rate practices, the Company is per-

[ . El:ctric (b) Utility Plant and gas plant is stated at the original cost when first mitted to eam a fair return on such cost and to recover it in the l devoted to public service. Such costs include labor-related rates charged for utility services after the related plant is placed dxpenditurts, such as payroll taxes, pensions, insurance and other in service. AFUDC is a noncash item which is classified in other Oring3 benefits, administrative and general costs and the cost of income, except that the portion of the allowance related to bor-Ounds used during construction. rowed funds is classified as a reduction of interest charges in (c) Joint Plant Ownership accordance with an order of the FERC effective in 1977. The rate used to compute AFUDC was 8.9% in 1978 (composed of 3.9%

Utider joint ownership agreements with other towa utilities, the for borrowed funds plus 5.0% for other funds), and was 8.5% in Company had undivided interests at December 31,1978, in four 1977(3.7 % for borrowed funds plus 4.8% for other funds). Com-

t

ctric generating units, either in service or under construction, posite rates of 8.5%,8.0% and 8.5% were utilized to compute

s shown below

AFUDC for the three years ended December 31,1976, respec-tively. The Company has allocated AFUDC for the three years Council Neal Blutts Ottumwa ended December 31,1976, between borrowed funds and equity Louisa funds based on the assumption that funds used to finance Umt No. 3 Unit No. 3 Unit No.1 Umt No. I construction during the years 1974 through 1976 were supplied in Utility plant in service (millions) . $33 5 5144.2 $- $ -

' Utility plant under construction the same proportion as average capitalization ratios during each (millions) . -

of those years and that the costs of debt and preferred stock 18.6 2.8 funds were equMient to the then-embedded ccstt exclusive of Estimated for completion (millions) . , -

9.8 35 4 158.4 ncome tax effe6.The amounts capitalized during the years in the f ve year period ended December 31,1978, have varied in relation Total (millions) . $33.5 $154 0 $54.0 $161.2 to the level of construction expenditures and the cost of capital.

Accumutated depreciation (f) Employees' Pension Plan millions) fUni(tcapacity-MW ......

. $ 3.1 $ 0.3 - -

The costs of the pension plan, which covers substantially all 520 650 675 650 Company's share - percent. 23 % 46.7 % 15 %

employees, were $915,769, $1,295.621, $1,134,069, $1,396,659 33.3 %

and $1,807,101 for the years 1974,1975,1976,1977 and 1978, respectively, including amortization over a 30-year period of the Tha dollar amounts shown above represent the Company's cost of the benefits comr",Aed by reference to years of previous shara in each jointly-owned unit and each participant must provide service. The unfunded ;,ast service cost at December 31,1978, its own financing for its share of the unit. The Company's shares of direct expenses of the jointly-owned units are included in the was estimated to be $4,167,215. The actuarially computed value of vested benefits as of December 31,1978, was less than the c;rrisponding operating expenses on the Statements of income. total pension fund.

(d) R:v:nue R venue is recorded on the basis of meters read during the cilIndar year.

9 19

(g) Federal and State income Taxes The total income tax expense as set forth above produces the The items comprising income tax expense are as follows: effective income tax rates as shown in the following schedule.

These percentages are computed by dividing such total income year Ended December 31 tax expense by the sum of such tax expense and net income. The 1975 1974 table below reconciles such effective income tax rates to the 1978 1977 1976 statutory Federal income tax rate applicable to each period.

F; derat incorne taxes- (in Thousands)

Taxes currently payable: Year Ended December 31 Current provision . $ 2,036 5 1.508 $ 2.881 $2.654 $3,070 1978 1977 1976 1975 1974 Investment credits carned back . (5,239) (903)

Effectrve income tax rate as reported. 30 % 35 % 42 % 37 % 33 %

Provision for deferred taxes 4,650 3.426 3.264 2.495 1.675 State income taxes. net of Federal Deferred taxes provided in income tax benefits. (3) (3) (4) (3) (3) prior years-credit (298) (334) (290) (353) (119) Cost of dismantkng property removed Investment tax cred:ts. net. 8,458 6.151 4.845 2.766 1.025 from service, treated as current-year 9,607 10.700 7,562 5.651 tax expense but charged to Total utihty operations 9.848 159 65 28 50 accumulated provisions for Non utihty operabons . III depreciation per books. 1 2 2 2 2 Total $ 9,718 $10.007 $10. 765 $7.590 $5.701 Straight-hne tax depreciation over State income taxes- (under) related book depreciation . -

(1) (1) -

3 Taxes cunently payable . $ 1,733 $ 1.575 $ 1.709 $1.277 $ 916 Taxes and pension costs treated as Provision for defeued taxes 818 603 574 439 295 current-year tax expense but Deferred taxes provided in capitahzed per books. 4 4 3 3 4 pnor years credit (9) (10) (1) Allowance for funds used dunng (8) (8]

1,210 c ns chon . 13 M 5 6 6 iotal utthty operations 2,543 2,169 2,275 1,706 er dems, net . 3 -

1 3 3 Non-utshty operations . 20 28 12 5 9 auog eral c me ax ra .  % 48Y. 48 % 48Y. 48 %

Total . $ 2,563 $ 2.197 $ 2.287 $1.711 $1.219 Total Federal and state (h) Depreciation income taxes-Utihty operations . $12,150 $12.017 $12.975 $9.268 $6.861 The provisions for depreciation as an annual percentage of the Non utikty operabons . 131 187 77 33 59 average depreciable plant in service, determined generally by the pplication of straight-line rates, were as follows:

Total . $12,281 312.204 $13.052 $9.301 $6.920 Year Ended December 31 The 1978 current Federal income tax provision has been 1978 1977 1976 1975 1974 reduced by $5.239.000 of investment tax credits which will be car

• Electnc . 3.6% 3.5% 3.5% 3.3% 3.0%

ried back to prior years. Investment tax credits available to reduce Gas . 3.8 3. 7 3.6 3.5 3.1 income taxes which may be payable in future years totaled Common . 7.6 6.9 7.8 7.7 86 approximately $2,582,700 at December 31,1978.

The Company provides deferred income taxes for the effect of Renewals and betterments of units of property and replace-using accelerated amortization for pollution control facilities, ments constituting units of property are charged to utility plant liberalized tax depreciation and shorter Asset Depreciation Range accounts. The repairs of property and renewals and replacements tax lives. As deferred taxes become currently payable, the related of items determined to be less than units of property are charged accumulated deferrals are credited to operating income. to maintenance. Property units retired or otherwise disposed of in The accumulated investment tax credits are being amortized the normal course of business, together with the cost of removal over the life of the property giving rise to such credits. The amor- less salvage, are charged to the accumulated provisions for ,

tizations for the years 1974,1975,1976,1977 and 1978 were depreciation.

$202.031, $293.122, $404,539. $459,848 and $956,012, respec-tive!v (i) Investments in Subsidiaries The Company does not consolidate its subsidiaries which are reflected in the financial statements using the equity method of accounting These subsidiaries are engaged in natural gas explo-ration, energy, land, and development activities. The Company's interest in the earnings, which are insignificant, of its unconsoli-20 f

dated subsidiaries is included in "Other income (deductions), net" The towa Power and Light Company Tax Reduction Act Employee Stock Ownership Plan (TRAESOP) was initially approved (4) Common Stock and Premium on Common Stock: by the Board of Directors of the Company on July 28,1976, to From January 1,1974, to December 31,1978, common stock become effective retroactively to January 1,1975, for purposes of outstanding increased by a total of 2,750,720 shares. This Section 301 of the Tax Reduction Act of 1975, and January 1, incr:as) in common stock outstanding arose from the sale of 1976, for purposes of Section 401 of the Intemal Revenue Code.

54,356 shares of common stock to employees under an Employee The TRAESOP was amended on March 31,1978 and April 26, Stock Purchase Plan, from the sale of 481,863 shares to share- 1978. Funds contributed to the TRAESOP, in the form of the Com-holders through the Automatic Dividend Reinvestment and Stock pany's common stock, are used to reduce Federal income taxes Purch:s3 Plan, from the issuance of 64,501 shares to the Tax payable. The Company's participation in the TRAESOP is voluntary Reduction Act Employee Stock Ownership Trust, and from the and will terminate automatically if Congress withoraws this tax sal:s of common stock to the public in 1975 (600,000 shares), in benefit. While dividends are paid to the participating employees, 1976 (700,000 shares) and in 1977 (850,000 shares). the common stock itself is unavailable to active employees for 84 months af ter issue. The Company has authorized 330,000 shares AdditionIl capital invested chariged during the periods as of its common stock to be issued under the TRAESOP, of which follows: 11,719 shares were issued in 1976,15,798 shares were issued in Year Ended December 31 1977 and 36,984 shares were issued in 1978, leaving a total of

=

1918 1977 1976 1975 1974 265.499 shares reserved for issuance at December 31,1978.

(in Thousands)

Balance begmning of period. 156,176 $40.082 $29.964 $23.850 $23.733 (5) Construction Expenditures and Commitments: l Additions arising from sales Construction expenditures for 1978 were $84.0 million and are f of common stock budgeted at $84.7 million in 1979. The Company has made con-to employees . . 195 150 99 72 51 struction commitments of approximately $200 million for the Com-Additions arising from sales pany's portions of jointly-owned generating additions. In addition, ep b c 2,747 "

15.675 9.858 6.042 66 Additon3 arising from for its share cf the uranium costs needed for three refuelings at issuance of common stock Cooper Nuclear Station.

to the Tax Reduction On February 18,1977, plans for the construction of a proposed Act Employee Stock 1.270.000 kw jointly-owned nuclear facility in central lowa (Van-Ownership Trust. 626 269 161 - -

dalia Project) were suspended indefinitely by the participants due Balance end of rvriod , $59,744 556,176 $40.082 $29.964 $23 850 to substantial delays anticipated in obtaining regulatory approvals of the proposed site and facility under new lowa plant siting legis-lation and uncertainties being experienced by other utilities in fed-erally regulated licensing and construction activities.

Th3 Company has an Automatic Dividend Reinvestment and The Company has expended $11 million through December 31, Stock Purchase Plan which gives the holders of its common stock 1978, on tne Vandalia Project consisting of $6.0 million for land k opportunity to purchase new shares of its common stock at a acquisitions, site analysis and engineering, $1.5 million for fuel 5% discount from the market price at the dividend payment date enrichment payments to the Department of Energy and $1.6 by h:ving their cash dividends automatically reinvested. In addi- million for other expenditures. Although the project remains under tion, if th;y wish, shareholders may make optional cash payments indefinite suspencion, the Company has now concluded that cer-tl purch s2 shares at market price on the last business day of tain expenditures related to the project, as it was originally con-each month. No brokerage coremissions or service charges are templated, would have no value to a future resumption of the pro-ass;ssed for purchases made Jnder the Plan, however, the Com- ject. The Company expects to be able to utilize all of the $6.0

'pany r:s:rvis the right to refuse any payment in excess of $5,000 million in expenditures mentioned above in future generation pro-r, month. A total of 218,137 shares of common stock was jects The Company does not expect to be able to utilize either the

' reserved for sale under the ha1 at December 31,1978. $1.6 million for other expenditures or the $1.5 million expended for Under an Employee Stock Purchase Plan, eligible employees fuel enrichment in future generation projects. See Note 1 for a m y purchase, through payrcll deduction only, common stock of discussion of rate proceedings in which the Company seeks to lth3 Company at 85% of market price, on designated dates. recover the balance of such expend.tures which it cannot other.

Monthly purchases cannot exceed the lesser of 10% of an wise recover.

,employds regular monthly base pay or $2,083. A total of 187,710 Wr:s of common stock was reserved for sale under the Plan at Dec:mber 31,1978.

21

(6) Financings: (7) Segments of Business:

i (a) Short Term Debt The Company is a public utility operating company engaged in The Company is currently authorized by the FERC to incur up to distnbuting electrical energy and natural gas. The reportable items

$100 million in short-term debt as interim financing of the con- for electric and gas departments for the years 1978 and 1977 are struction program. Of this total, commercial paper may be issued as follows:

in an amount not to exceed 25% of the gross operating revenues 1978 for the preceding twelve months. At December 31,1978, the Com-pany had established lifies of credit with various banks totaling Total

$44 65 million for which the banks are compensated with either a Electnc h Company fee or compensating balance. Short-term loans are generally (in Thousands) arranged on a demand basis for periods of varying length not to Operating information-Operating revenues. $150.488 $76.667 $227,155 exceed 270 days at a rate based on the prime rate or commercial paper rate then in effect. The maximum amount of such short-term Operating expenses, excludmg provisiontorincometaxes . 113.431 68.274 181,705 borrowings outstanding at any time was $37.84 million during 1978. The daily average amount of short-term borrowings Pre-tax operating income . 37,057 8.393 45.450 amounted to $17.3 million and the weighted average interest rate Allowance for funds used dunng construction (AFUDC) . 11,265 -

11.265 was 8.4% for the year 1978.

(b) Sale of Pollution Control Revenue Bonds P",**9*'*'*9'*****-

, , 99 _ g ,y g y',

Pollution control revenue bonds were sold on December 27, Other (income)and deductions . 15 1978, by the Cities of Chillicothe, Council Bluffs and Pleasant Hills, Int re c arges lowa, for the purpose of financing the Company's portion of the p, , ,'

costs of installing pollution control equipment for Ottumwa Gen-Net income per statement ofincome. $ 28.607 erating Station Unit 1 Council Bluffs Power Station Unit 3 and the Company's Des Moines Power Station. A total of $10.9 million of Other information-such bonds was issued, including $9.9 million at a 6%% interest Depreciation and amortization expense. $ 14.193 $ 2,682 $ 16,875 rate (secured by the Company's First Mortgage Bonds) and $1 Capital expenditures . $ 79.004 $ 5.019 $ 84.023 million at a 6.70% interest rate (secured by the Company's note). ,

I""**'***U"'*""*"**~

(c) Sale of First Mortgage Bonds ' '

The Company sold $30 million First Mortgage Bonds,9%%

Non-utihty plant and other investments 8.284 Series due 2009, on January 17,1979. The net proceeds of $29.5 Asset or v' "

million were applied toward the payment of short-term debt. 9 ,, ns 7 279 (d) Sale of Additional Common Stock Totat assets ~ $834.813 The Company sold 375,000 shares of additional common stock on January 17,1979. The net proceeds of $9.4 million were ap-

' plied toward the payment of short term debt.

e

e .

1977 (9) Quarterly Financial Data (Unaudited):

Total For the quarters shown, operating revenues, operating income, Efectoc Gas Companl net income, and net income per average share of common stock (in Thousands) were as follows:

Oper ting information-Operating revenues . $139.687 $59.799 $199.486 Quarter Ended Operating expenses excluding 1978 Mar 31 June 30 Sept 30 Dec.31 provision for income taxes 103.896 54.687 158.583 Pre tax operating income ' 35.791 5.112 40.903 Operating Revenues (000) . $70.112 $49.181 $53.651 $54.211 Operating income (000). 11.735 5.355 9.105 7.105 o r g const t on AFUDC) . 7.750 4 7.754 Net income (000) . R6M G8 7J79 W8 Net income per Average Share Pre tax operatmg income. of Common Stock . $$ 43 $ 48 $100 $ 72 including AFUDC . 5 43.541 $ 5.116 $ 48.657 g Ot'r r (income) and deductions . 788 Operating Revenues (000) . 158.570 $43.988 $47.229 $49.698 Interest charges . 13.424 Operating income (000) . 8.901 5.156 7.265 7.564 Provision for income taxes . 12.017 Net income t000) . 7.247 3.725 5.730 5.725 Net income per statement of mcome. $ 22.428 Net Income per Average Share of Common Stock . $1.15 5.48 $ 82 5 71 Othir information-Depreciation and amortization expense $ 12.879 $ 2.575 $ 15.454 Since the average number of shares of common stock out-Capitaltxpenditures . $ 78.295 $ 3.553 $ 81.848 standing increased each quarter, the sum of the quarterly net income per average share will not necessarily equal the net investm:nt information- ncome per average share for a twelve month period.

Identifiable assets (a) . $678.213 $60.565 $738.778 The foregoing amounts are unaudited but reflect, in the opinion Non-utility plant and other investments 4.980 of management, all normal recurring adjustments necessary for a Assets utiliz;d for overall fair statement of the results of operations for such quarters.

Company operations 19.391 Total assets. $763.149 (10) Certain Replacement Cost Information (Unaudited):

Due primanly to inflation and the costs associated with equip-(a) Utility plant less reserves for depreciation and amortization, efectnc production ment required to meet regulations governing environmental stan-fuel, d.f;rred gas purchase costs and natural gas storage, other matenal and sup- dards, the cost of replacing the Company's plant in service today pts, net accounts receivabfe, productive capacity under power purchase contract- would exceed the amounts actually spent for such facilities and Gd po'lution control revenue bond proceeds held by trustee' reported in the Company's financial statements. The Company has computed the replacement cost and the related depreciation Capit1 Leases: expense data in accordance with Securities and Exchange Com-Certain leases presently accounted for as non-capitalized finan- mission requirements and such data are reported in its Form 10-K.

Ging leas:s in accordance with their treatment in the ra'emaking The Company cautions that such replacement cost is not the

@oc:ss meet the criteria for classification as capitalleases in current value of existing productive capacity; it is only an estimate repoiting requipments of the Securi;ies and Exchange Com- of the cost that would be incurred if such plant were replaced in mission. If such leases had been accounted for as capital leases, addition, it must be recognized that an estimate is, by nature, Oss;ts would have .ncreased by $0.9 million and $5.5 million and imprecise and predicated upon certain assumptions and subjective liabilities would have increased by $0.4 million and $4.8 million as judgments. Furthermore, while disclosure of replacement cost is a sf D;c:mber 31,1977 and December 31,1978, respectively. If requirement of the Securities and Exchange Commission, the Ouch leas:s had been accounted for as capital leases, expenses Company is required by the Uniform Systems of Accounts would not have increased materially. prescribed by the Iowa State Commerce Commission and by the Federal Energy Regulatory Commission to report its utility plant at original cost.

Replacement cost is currently not considered in the ratemaking process, since only the historical cost of utility property is now included in the rate base upon which the Company is allowed to earn a f air rate of return. However, the cost of replacement prop-erty, when existing productive capacity is actually replaced, would be expected to be included in the rate base. j 23 L )

Auditors' Report w~ ' ~ , '-&

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,q To the Shareowners and Board of Directors of Iowa Power and Light Company:

-i We have examined the balance sheets and statements of capitalization of IOV3 POWER AND LIGHT

[y COMPANY (aq lowa corporation) as of December 31,19/8 and 1977, and the related statements of income fj j 8

and undistributed earnings and sources of funds for construction for each of the years in the five-year '

period ended December 31. 1978. Our examinations were made in accordance with generally accepted aud: ting standards, and accordingly included such tests of the accounting records and such other auditing g i

. _ ,9 procedures as we considered necessary in the circumstances. ,

As discussed in Note 1 of Notes to Financial Statements, the financial statements for 1978 include gas l 7

revenues collected subject to refund under a rate increase which is pending the regulatory decision of the Iowa '

i State Commerce Commission. ,

in our opinion, subject to the ef fect. if any, on the 1978 financial statements of the regutatory decision on the 9" .

jas rate increase referred to in the preceding paragraph, the financial statements referred to above present r

] fairly the financial position of Iowa Power and Light Company as of December 31,1978 and 1977, and the p l e

results of its operations and the sources of its funds for construction for each of the years in the five-year A l period ended December 31,1978, in conformity with generally accepted accounting principles applied on a T l s consistent basis. M 3

l Chicago, Illinois January 24,1979 ARTHUR ANDERSEN & CO. i M. j

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Sincs Cooper his been in operation, th3 Company's need to Common Stock Dividends and Prices purchass electricity from other sourcrs has been reduced. The Company and predecessor companits haya paid dividends However, the Company has purchased electricity when such pur- on Common Stock each year since 1909. The price range of the chases could be made at a lower cost than the Company would Ccmmon Stock in the New York Stock Exchange - Composite have incurred if it produced its own energy. During 1978, elec- Transactions and dividends declared during the periods indicated tricity purchased and interchanged costs decreased 3.0% even were as follows:

though electric energy purchased increased 15.3%. This was due Price Range primarily to the availability of lower cost energy received from Dtvidends Cooper during the year. The Company's Energy Cost Adjustment Decla d High Low Clause reflects the cost of the nuclear fuel and the cost of other 1978 energy purchases. First Quarter. 5.56 26 7/8 25 eco" 4 Electric Production Fuel costs decreased in 1977 due to the ,d 0 /8 12.5% reduction in Company generated electricity. The reduced Fourth 0uarter' . [60 27 23-7/8 generation requirements were due to the available energy from Cooper Nuclear Station at lower costs. In 1978, electric pro- M77 duction fuel costs increased 11.9% while Company generated 0 a'j' 0

electricity increased less than 1%. Changes in costs of fuel used Third 0uarter . .54 28 26-1/8 in the Company's electric generating facilities are reflected in the Fourth 0uarter . .56 26-7/8 24 1/8 Energy Cost Adjustment Clause in the Company's electric rates.

Cas Purchased for Rosale costs have increased in both 1977 Lines of Business and 1978. The increased costs reflect the higher unit prices The approximate percentages of the Company's operating charged by the Company's pipeline suppliers. Increases in unit revenues and income before taxes derived from the sale of elec-costs of gas are recoverable through the Purchased Gas Adjust- tricity and gas during the years 1974 through 1978 were as ment Clause in the Company's gas rates. A 0.5% decrease in unit follows:

gas sales limited the increase in gas purchase costs in 1977; however, gas sales increased 4.0% in 1978. Year Ended Decernber 31 Other Operation expenses reflect increases in wages and 1978 1977 1976 1975 1974 benefits to the Company's employees and increased costs of Operating Revenues materials and supplies. E ectric . 66 % 70 % 73 % 71 % 70 %

Gas. 34 30 27 29 30 Maintenance expenses reflect increases in employees' wages operating Income Before and benefits and increases in the costs of materials and supplies- Income Taxes Scheduled outages for the installation of a new water coolin9 Electric . 82 88 86 83 83 system permitted more extensive maintenance at Des Moines Gas 18 12 14 17 17 Power Station in 1978. Approximately 64% of the Compi.y's 1978 operating revenues Depreciation expense increased in 1977 due to increases in was derived from electric and gas service furnished in Des Moines depreciation rates and in the depreciable plant in service, and and environs.

• increased in 1978 due to increases in depreciable plant in service.

Income Taxes decreased in 1977 and increased in 1978 reflecting changes in taxable income.

Property and Other Taxes increased in both years due pri-marily to an increase in the property taxes resulting from new construction.

Allowance for Funds Used During Construction (AFUDC) increased in 1977 and 1978. This is primarily the result of con-struction expenditures on Unit 3 at the Compan/s Council Bluffs Power Station, placed in service in December 1978 The AFUDC rats increased to 8.9% in 1978 from 8.5% in 197' (See Note 3e of Notes to Financial Statements.)

Other income (Deductions), Not increased in 1978 due to a r duction in other interest expense, which is comprised primarily of interest on rate refunds and income tax deficiencles.

literest on Long Term Debt is up substantially in both 1977 and 1978. These increases reflect the sale of $30 million First Mortgage Bonds in September 1977 and the sale of $19 million of Pollution Control Revenue Bonds in March 1977. In addition, approximately $11 million of Pollution Control Revenue Bonds were sold in December 1978.

Interest on Short Term Debt increased in 1977 and 1978. The variation reflects the size of the construction program, the timing of permanent financing and the interest rates for short-term debt.

Preferred Stock Dividends increased significantly in 1977 and moderately in 1978 because of the sale of 150,000 shares of 8 50% Cumulative Preferred Stock in April 1977. ,

26

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,7W. .*q

,$t. x lowa Power's service area covers more than gsouth, 7

wtscONsIN 5.600 square miles. It encompasses Des IOWA Moines, the state's largest metropolitan area, where the Com- N4W $iMen pany headquarters is located, and also in-cludes Council Bluffs, one of the major com- ,,

munities in western Iowa. More than 550,000 people receive

• aM *

"'*""*" E electric service and gas mervice in 26 counties served by the h

• twN is Company. Included is d ** *'"*"

electric service to 119

• incorporated commun-ities, while gas is co., si 8 ussoum distributed in 78 in.

corporated commun-Itles. The region is characterized by diver. coalFired Nuclear g Divisen/AreaOthces sitied industries, his- pereng steen g oenereug staten au sence ceters e Area service Centers toric and recreation E6ectric Gas incorporated sites, prosperous Customers Customers Population commuruties farms and attractive _Cetrai Diwsu and southeast Region 162.000 11P.000 390,000 67 residential areas. Westem Drvision 62.000 14 000 160 000 63 l

'l

Electric and Gas Statistics i,

1

,= 0 , ~- 1 -

N< .

y Electric Revenues (000)

^ ,

t'@

y Residential Small general service .

[ ,

' . "- Large general service.

J- s-Other .

h

• Totai revenues Sales (000's kwh)

Residential Small general service .

Large general service .

. Other.

Total sales.

A. Customers (year end) -

~ -

Resider.tial .

Small general service .

Large general service . ,

' Othe r .

~~'

\ '

Total customers Peak demand - MW (summer winter).

• N '

3 System load factor .

! I q ,, i

• Average annuai residential use-kwh m _

Average residential revenue per kwh .

Utility plant investment per customer.

1. Gas Revenues (000) l

- Residential Commercial & Industrial-Firm .

Commercial & Industrial-Interruptible .

Other .

i (tv -

/~ l Total revenues i Sales (000's ccf)

Residential h' Commercial & Industrial-Firm .

' g4 Commercial & Industrial-Interruptible .

s

(_ ,

Total sales.

Customers (year end) l Residential

, Commercial & Industrial-Firm .

Commercial & Industrial-Interruptible .

.p3 y ;. _,- Total customers Maximum daily sendout (000's ccf)

Average annual residential use-ccf .

• Average residential revenue per ccf.

Utility plant investment per customer.

WNe many lowan s caq be heard complaining about our long snowy winters most would also admit to enjoying the recreaisonalactmties such winters make possible 28

O 6 1978 1977 1976 1975 1974 1973 1968

$ 68,278 $ 62,359 $ 58,816 $ 51,412 $ 41,050 $ 34,701 $ 21,891 39,800 37,417 35,343 29,679 23,044 19,791 12,911 36,952 34,432 32,212 25,155 20,587 17,546 10,397 5,458 5,479 5,576 4,662 4,057 3.545 2.160

_5150,{88 _S L39J87__ $131,947 $110,908 $ 88,738 $ 75,583 $ 47,359 1,678,914 1,533,168 1,439,133 1,445,464 1,298,381 1,278,688 880,829 1,012,729 959,331 912,978 871.108 762,267 738,864 529,698 1,508,055 1,419,220 1,292,046 1,228,524 1,203,101 1,199.292 832,741 107,413 103.125 109,997 113,781 114.395 107,492 81,420 4,307,111_ 4.014.844 3,754,154 3.658,877 3,378,144 3.324,336 2,324,688 197,351 193,034 187,735 183,497 180,331 176.609 157,617

,25,447 25,166 24,914 24,756 24,546 24,280 23.643 352 348 330 313 303 301 283 935 936 904 880 867 849 780 224,085 219,484 213.883 209.446 206.047 202,039 182.323 1,064 777 1,064-736 944-693 955448 940-597 853-564 593-442 51.1 % 47.1 % 50,1 % 48.1 % 45.2 % 48.4 % 48.7 %

8,610 8,061 7,770 7,960 7,276 7,336 5,673 4.07c 4.07C 4.09C 3.72C 3.16C 2.71 C 2.49C

$ 2,734 $ 2,454 $ 2,169 $ 1,899 $ 1,746 $ 1,610 $ 1,251

$ 40,847 $ 30,781 $ 27,122 $ 25,102 5 20,763 $ 19,726 $ 14,729 21,279 16,089 13,982 12,288 10,146 9,822 5,947 13,670 11,764 8,115 8,210 7,399 6.227 4,329 871 1,165 539 298 262 276 184

$ 76,66_7_ _ $ 59,799 $ 49,758 $ 45,898 $ 38,570 $ 36,051 5 25,189 178,962 164,986 170,628 172,264 167,747 168,766 165,986 104,534 98.589 101.430 101,407 100,818 103.582 85.258 8801 1

93,571 86,732 113,871 127,542 123,940 133,976 371,537_ 357,146 358.790 387,542 396,107 396.288 385.220 116,771 116.055 115,193 114,098 113,198 112.023 101,791 13.385 13,259 13,137 13.066 13.074 13,104 11,906 294_ 301 302 306 364 356 322 130,4_50_ 1_29.615 128,632 127,470 126.636 125.483 114,019

• 2,460 2,474 2,460 2,398 2.370 2.369 2,253 1,543 1,432 1,493 1,519 1,494 1,520 1,661 22.82 C 18 66C 15.99C 14.57C 12.38C 11.69C 8 87C

$ 616 $ 590 $ 573 $ 552 5 530 $ 494 $ 398 29

l . .

i Financial Summary J l

, l 1

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,N . ' /7 Summary of Operations (000): i Operating revenues N

' ~

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'g .

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[ f, y. .

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Depreciarson .

,T: . Federaland stateincome taxes- '

f ' ' Jr OI* '

Current I

• • ' ' Met with investment credit, net.

Deferred until f uture years, net. I n Property and other taxes.

31, ,

• Interest on debt.

[lIW Allowance for f unds used during construction .

,{

• Other deductions

- Total Netincome .

Dividends on preferred stock .

Net income apohcable to common stock .

I Dividends on common stock,

• e Undistributed earnings .

f, i Earnings per share of common stock .

i d $)

,' '{f j Dividends paid per share of common stock .

Average book value per share

;p Retum on average common equity.

l r -

. Ut1111y Plant (000):

w Electric .

Gas.

Total utility plant .

Accumulated provisions for depreciation .

l i Accrued deptetiabonfutibly plant.

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f Total capitalization (000)-

c . Common stock equity .

• *, Preferred stock .

l l Long-term debt .

< Number ol Employees-Year end

~~ *

• Denores credtt j m .

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I WJter feCreatlOn is an important leisure activity for 10wan's People living in the areas served by towa Power have a vartefy of water reCreJflonJI areas available to them i

o a 1978 1977 1976 1975 1974 1973 1968

$227,155 $199,486 $181,704 $156,806 $127,309 $111,634 $ 72,548 139,067 120,611 105,805 91,377 71,343 59,633 32,282 12,837 10,696 10,231 9.105 7,149 7,004 4,302 16,875 15,454 14,855 12,875 10,819 10,093 7,147 (1,470) 2,180 4.590 3,931 3,986 5,804 7,049 8,458 6,151 4,845 2,766 1,025 589 303 5,162 3,686 3,540 2,571 1,850 1,281 1,052 12,926 11,822 11.375 11,360 10,401 10,213 8,492 15.943 13,424 11,180 9,574 9,004 6,323 4,300 11,265* 7,754* 3,436* 3.013* 2,486* 660* 505*

15 788 501 175 377 26 361*

198,548 177,058 163,486 140,721 113,468 100,306 64,061 28,607 22,428 18,218 16,085 13,840 11.328 8,487 3,922_ 3,603 2,647 2,392 1,627 1,226 843 24,685 18,825 15,571 13.693 12,213 10.102 7,644 16,032 13,496 11,449 8,839 7,419 6,687 5,159

$ 8,653 $ 5,329 $ 4,122 $ 4,854 5 4,794 $ 3,415 $ 2,485 5 3.62 $ 3.14 $ 2.82 $ 2.92 $ 2.91 $ 2.56 $ 2.37

$ 2.30 $ 2.13 $ 2.00 $ 1.84 $ 1.74 $ 1.68 $ 1.60

$ 25.D $ 24.50 $ 23.11 $ 22.81 $ 22.18 $ 21.03 $ 17.36 14.2 % 12.8 % 12.2 % 12.8 % 13.1 % 12.2 % 13.7 %

$612,672 $538,552 $463,820 $397,838 $359,701 $323,896 $228,005 80,416 76,515 73,665 70,426 67,102 61,807 45,364

$693/8_8 $615.067 $537,485 $468,264 $426,803 $385,703 $273,369

$153,078 $138,291 $125,574 $113,441 $108,288 $ 99,700 $ 67,162 22.1 % 22.5 % 23.4 % 24.2 % 25.4 % 25.8 % 24.6 %

3.7% 3.6% 36% 3.4 % 3.2 % 3.2 % 3.1 %

$448,643 $430,222 $341,604 $287,054 $258,583 $230,354 $170.217 40.2 % 38.6 % 39.4 % 39.1 % 36.8 % 39.0 % 33.4 %

12.3 % 12.8 % 11.7 % 13.9 % 11.6 % 13.0 % 11.8 %

47.5 % 48.6 % 48.9 % 47,0 % 51.6% 48.0 % 54.8%

l 1,518 1,473 1,448 1,415 1,402 1,394 1,278 i

9 i 31 I

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-2 32

l r Company Officers Comp:ny Directors Dwight H. Swanson Chairman and President; Age 59. Albert L. Andersont 10 years of Company service West Des Moines. Iowa

' President of Mid-Amenca Body & Equipment Execusy V e President, Age 51 Co . Inc (Manufactunng)(Elected 1973) 25 years of Company service Waldo O. Bargmann

-ar r, Des Moines. Iowa nbr" V c esident and General Counsel. Gener i Manager of John Deere Age 50.10 years of Company service D "s orks Wanufactunny R:fph F. Schlenker E 19 Senior Vice President. Age 50. Charles Duchen't 29 years of Company service Des Moines. Iowa Edward L Birdsall Chairman of the Board of Younker Brothers.

Vice President. Age 57; inc < Retail Merchandising)(Elected 1974) 32 years of Company service Jack R. Eakint Phillip D. Ehm Council Bluffs. Iowa Vice President and Treasurer; Age 46. Chairman of the Board of State Bank and

?A years of Company service Trust of Council Bluffs (Banking)

(Etected 1973)

J.P:ulF1.hn Paul V. Farver*

Vice President. Age 48.

24 years of Company service Chicago lihnois Pevy L. Creenwood Business Consultant (Elected 1973)

Vice President. Age 58- James R. Lyon 19 years of Company service Des Moines lowa John E. Lt.hring Executive Vice President of Iowa Power Vice President; Age 50. (Elected 1972) 25 years of Company service Mark W. Putney Des Moines. Iowa Willl: m O. Merrill Vice President and Controller, Age 55. Senior Vice President and General Counsel 29 years of Company service of Iowa Power (Elected 1974)

John Ruan*

Eugene E. Young Des Mo.nes. towa Vice President; Age 53. President of Ruan Transport Corporation 9 years of Company service (Motor Carner)(Elected 1958)

Lynn K. Vorbrich Ralph F. Schlenker Secretary and Associate General Counset; Des Moines. Iowa Age 40. 6 years of Company service Senior Vice President of Iowa Power L.yd R. Hornback (Elected 1975)

Assistant Vice President, Age 48. Dwight H. Swanson*

23 years J Company service Des Moines. towa Rex E. Jorgensen Chatrman of the Board and President of Assistant Vice President; Age 56. Iowa Power (Elected 1969) 28 years of Company service Charles W Wilson

• Leon rd L. Mowen Red Oak lowa Assistant Vice President. Age 64 President of Wilson Concrete Company 41 years of Company service Wanufacturing)(Elected 1969)

Eargaret L. Blecher Daniel J. Zaf f arano, Ph.D.

Assistant Secretary. Age SS. Ames lowl 21 years of Company service Vice President for Research and Dean of Martyn D. Kleen Wduate Col!ege. Iowa State University Assis' ant Treasurer. Age 53. (Efected 1973) 26 years of Company service

• Mernter E xecutive Comm,ttee t M.-ber Aud't Commitfee i

Bulx Rat) -

~

! U.S. Postaga l- PAID

_. ._j.

Des Moines, lowa

- ' 60B Grand Avenue Permit No. 2202

' Des Moenes, Iowa 50303

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