ML20126D025
ML20126D025 | |
Person / Time | |
---|---|
Site: | Maine Yankee |
Issue date: | 04/10/1980 |
From: | Howe R Maine Yankee |
To: | NRC COMMISSION (OCM) |
References | |
NUDOCS 8004150290 | |
Download: ML20126D025 (37) | |
Text
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April 10, 1980 United States Nuclear Regulatory Commission Washington, DC 20555 Gentlemen:
Pursuant to Section 50 71 (b) of Rules and Regula-tions, we are enclosing ten certified copies of our 1979 annual financial report.
Very truly yours, Robert S. Howe Chief Accounting Officer Encs.
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SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K Annual Report under Section 13 or 15(d) of The Securities Exchange Act of 1934 Tor the fiscal year ended Commission file number December 31. 1979 1-6554 MAINE YANKEE ATOMIC POWER COMPANY !
(Exact name of reststrant as spectfted an its enarter)
Maine 01-0278125 (State or other juttsdictton of (1.R.S. Employer incorporation er organization) Identification No.)
F.dison Drive. Augusta. Maine 04336 (Address of prtacapal executive (Zap Code) offices)
Registrant's telephone number including area code 207-623-3521 Securities reststered pursuant to Section 12(b) of the Act:
Name of each exchange Title of each class on which registered First Mortaase Bonds, Series A (Stantna Fund) 9.10% Oue 2002 New York Stock Exchanne First Mortname Bonds, Series B (Sanktna Fund) 8 t/21 Due 2002 New York Stock Exchanne First Mortaste Bonds, Series C (Sinkina Fund) ? 5/8% Due 2002 New York Stock Exchante Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Conesission Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the close of the period covered by this report.
Shares Outstanding Class as of December 31, 1979 Common Stock 500,000
Maine Yankee Atomic Power Company Form 10-K-1979 PART I ITEM 1 - BUSINESS (a) General. The Company, incorporsted under the laws of Maine on January 3, 1966, owns and operates a pressurized water nuclear-powered electric generating plant at Wiseasset, Maine, with a current net capa-bility of approximately 830 megawatts electric (the " Plant"). The Com-pany sells its capacity and output to its eleven sponsoring utilities.
The Company's principal office is located on Edison Drive, Augusta, Maine 04336, and its telephone number is (207) 623-3521.
The Company is sponsored by eleven investor-owned New England utilities (the " Sponsors"), each of which coussitted itself under a Power Contract with the Company to purchase a specified percentage of the capacity and output cf the Plant and pay therefor, beginning on January 1, 1973, a like percentage of amounts sufficient to pay its fuel costs, operating expenses (including a depreciation accrual at a rate sufficient to fully amortize the investment in the Plant over a period ending May 1, 2002),
interest on its debt and a composite return of 9.87, on its capital stock equity. However, due to ltat tations imposed by the Federal Power Com-mission (now the Federal Energy Regulatory Cometssion ["FERC"l) on the return on the Company's common equity, the actual composite return is somewhat less. Each sponsor has also agreed ur.do r a capital Funds Agreement with the Company to provide a like percentage of the Com-pany's capital requirements not obtained f rom other sources, subject to obtaining necessary authorizstions of regulatory bodies in each instance. All such obligations are subject to the continuing jurisdic-tion of various Federal and state regulatory bodies.
(b) Problems Af fecting the Industry and the Company. Events at the Three Mile Island Nuclear Unit No. 2 in Pennsylvania (*TMI") caused increased concern about the safety of nuclear generating plants. The Company cannot predict what effect the events at TMI, which have pre-capitated renewed opposttion to nuclear power, may ultimately have upon the continued operation of the Company's nuclear generating f acility.
The T?t! incident has prompted a rigorous reexamination of safety related equipment and operating procedures in all nuclear facilities. On Octo.
ber 30, 1979, President Carter's Commission on NI issued its final report which, among other things, contained extensive reconsnendations on aspects of nuclear power; on December 7, 1979, the President, while reaf firming his support for continued inclusion of nuclear power in his national energy policy, announced his agreement with the spirit and in-tent of those recesssendations and his inttiation of steps toward their implementation. On January 13, 1980, the Nuclear Regulatory Commis-ston's ("NRC") Special Inquiry Group publicly released its Report on TMI which contained recommendationa similar to those of the Presidential Commission. The NRC and its staf f are currently reviewing this latter report. Meanwhile, the NRC has promulgated numerous requirements in re-sponse to TMI, including both near term modifications to upgrade certain safety systems and instrumentations and longer-tera design changes which affect about 25 items, ranging f rom equipment changes to operational support. The Company's nuclest facility and all other nuclear f acili-ties are being reexamined by the NRC to determine the scope of modifica-tions necessary to comply with these new requirements. The Company has made the near-term modifications required by the NRC during the period from January 11, 1980 to March 15, 1980 when its nuclear plant was shut down for a scheduled reloading of its nuclear fuel. The Company is j still in the process of evaluating the impact of the long-term improve-
, ments suggested by the NRC staf f. However, until the scope of those I
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O Maine Yankee Atomic Power Company (1 Form 10-K-1979 latter improvements, as they apply to particular reactors, has been de-fined by the NRC, the cost of any modifications and their effect, if any, on the operations of the Company cannot be quantified. While the ultimate effect of these reexaminations, studies and proposals cannot be specif1cally predicted, they could result in costly modifications of the Company's nuclear plant. I A petition calling for termination of the production of electricity by nuclear fission due to alleged safety and economic reasons, and the con-sequent shutdown of the Company's nuclear plant, was circulated by cer-tain groups in Maine. The petition was signed by more than the required j number of voters and was presented to the Maine Legislature in February, i 1980. Under Maine law, the Legislature must enact the proposed legisla-tion at its 1980 session or refer it to a vote of the electorate. The Company is presently unable to predict the ultimate resolution of the petitioc d rive , including the result or validity of any legislative action or referendus vote, which would be held in the late summer or l f all of 1920 pursuant to a subernatorial proclamation af ter adjournment of the i t.gisla tu re . The Company believes that the Maine Tankee plant is both a safe and the most economical source of base load electric powce, and intends to take all reasonable steps necessary to provide for the continued operation of the plant.
(c) Retulation and Environmental Matters. The nuclear generating facil-ity ot Maine Yanzee ta suoject to extensive regulation by the NRC. The i NRC is empowered to authorize the siting, construction and operation of j nuclear reactors af ter consideration of public health, ufety, environ-mental and antitrust matters.
The United States Environmental Protection Agency (" EPA") administers programs established under the Federal Water Pollution Control Act and the Clean Air Act which affect the Plant. The former Act establishes a national objective of complete elimination of discharges of pollutants into the nation's water and creates a rigorous perett program 1esigned to achieve this objective. The latter Act empowers EPA to estsblish clean air standards which are implemented and enforced by state . gen-ctes. The EPA has broad authority in administering these programs, including the ability to require installation of pollution control and mitigatton devices. The Company is also subject to regulation with regard to environmental matters and land use by various state authori-ties.
Under their continuing jurisdiction, the NRC and one or more of the EPA and the state authorities having jurisdiction over the Company's f acili-ties may modify permits or licenses which have already been issued, or impose new conditions on such permits or licenses, and may require additional capital expenditures or require that the level of the opera-tson of a unit be temporarily or permanently reduced or ceased. See
" Problems Af fecting the Industry and the Company". However, since the eleven Sponsors of the Company have agreed to provide the required rapital not otherwise available, to take the total output of the Plant, and to pay all costs including capital costs, statutory requirements with respect to environmental quality, although they could necessitate significant cash outlays, will not materially affect the earning power of the Company or cause material changes in the registrant's business or intended business.
(d) Nuclear ruel. The Company has contracted for the purchase of all of its urantum concentrate requirements through 1983. In addition, the Company has contracted with a supplier for the purchase of up to O '
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Maine Yankee Atomic Power Company
) Form 10-K-1979 1,300,000 pounds of uranium concentrates, deliveries of which, although contingent upon the commercial operation of a processing facility cur-rently under construction, are scheduled for 1981 to 1992 and would fulfill nuclear fuel requirements through 1986. The Company has a con-version contract through 1983 and has a contract with DOE for enrichment services through 2002; its f abrication requirements are covered through 1983, with a contract option for two additional years. As is the case throughout the nuclear industry, the Company has no contractual arrange-ments for the final disposition of spent fuel.
In September 1979, the Company filed with the NRC a proposed change to its operating license relating to increasing its existing spent fuel storage capacity by providing more compact fuel storage. On October 24, 1979, the NRC published notice of the proposed issuance of a license amendment implementing the change and providtog an opportunity for interested persons to petition for leave to intervene and request a hearing. A timely petition and request was filed by Sensible Maine Power, a non-profit co rpo ra tion , and the Attorney General of Maine filed a notice of his intent to participate in any hearing. The NRC has established an Atoutc Safety and Licensing Board to preside over the proceeding. The Company anticipates that a prehearing conference to designate tasues wtll be scheduled in May 1980 and that the adjudi-catory hearing will follow within about 90 days thereaf ter. The Company cannot predict the scope of the proceeding, its duration or its outcome.
The present capacity of the spent fuel pool at the Company's plant will be filled in 1987 and af ter 1983 would not accommodate a full core re-moval. The modification of this capacity proposed by the Company differs from designs heretofore implemented at other nuclear facilities O but is essentially the same basic concept of more compact storage in the extsting spent fuel pool. If the proposed modification is not approved, the Company will have to develop alternative plans which would involve further approval by the NRC.
Maine Yankee does not currently utilize a net salvage value for spent fuel in its nuclear fuel cost calculations. Maine Yankee's nuclear fuel in the reactor is amortized on the basis of original cost plus the estimated cost of disposition of that fuel.
(e) Employees. At December 31, 1979, the Company had 130 employees.
ITEM 2 - St.tMARY OF OPERATIONS In accordance with the Power Contracts with the Sponsors, the Company bills out an amount, each month, equal to the total costs for that month, including a return on invested capital, regardless of the level of operation of the plant. The Plant was placed in commercial operation for billing purposes on January 1,1973.
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Maine Yankee Atomic Power Company Fors 10-K-1979 Maine Yankee Atomic Power Company STATEMENT OF INCOME (Dollars in Thousands Except Per Share Amounts) i 1979 1978 1977 1976 1975 Electric Operating Revenues $68,867 $70,373 $65,659 $58,860 $61,731 Operating Expenses Fuel 15,319 17.411 14,863 11,686 14.538 Operation 14,193 10,684 8,394 6,884 7,230 Maintenance 2,544 4,496 3,556 1,433 1,917 Depreciation and Amortization 8,279 8,173 8,087 8,029 7,736 Taxes Federal and State Income 7,864 8,703 9,058 8,578 8,192 Local Property 3,750 4,094 4,222 3,800 2,839 Total operating Expenses 51,949 53,561 48,180 40,410 42,452 1
Operating income 16,918 16,812 17,479 18,450 19,279 Other Income (Expenses)
Allowance for Other Funds Used:
During Construction 76 50 50 31 114 For Nuclear Fuel 1,547 1,341 1.047 1,136 844 Other (168) (63) (31) (15) (33)
Income Before Interest Charges 18,373 18.140 18,545 19,602 20,204 O Interest Charges Long-ters Debt Other 13,307 150 11,534 (8) 11,502 23 11,616 781 12.527 441 Allowance for Borrowed Funds Usedt During Construction (133) (90) (90) (59) (193)
For Nuclear Fuel (2,602) (1,023) (674) (561) (378)
Total Interest Charges 10,722 10,413 10,761 11,777 12,397 Net Income 7,651 7,727 7,784 7,825 7,807 Dividends on Preferred Stock 1,001 1,025 1,083 1.122 1,122 Earntngs Applicable to Cosason Stock $ 6,650 $ 6,702 $1M $ 6,703 $ 6,685 Shares of Common Stock Outstanding 500,000 500,000 500,000 500,000 500,000 Earnings per Share of Conunon Stock $13.30_0 $13.404 $13.402 $13.406 $13.370 Dtvidends Declared per Share of Commcn Stock $13.250 $13.400 $13.404 $13.405 $13.380 i
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l Maine Yankee Atomic Power Company Form 10-K-1979 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
SUMMARY
OF OPERATIONS For a period of thirty years, commenctag on January 1, 1973 in accord-ance with the Power Contracts, each participant receives its entitlement percentage of plant output and is obligated to pay its entitlement per-centage of the Company's total costs, including a return on invested capital, regardless of the level of operation of the plant.
The following is management's discussion and analysis of certain sig- i i
nificant factors which have affected the Company's costs during the comparative periods 1979 versus 1978, and 1978 versus 1977.
A summary of the significant period to period changes in the principal cost items is shown below:
Comparison of 1979 1978 Versus 1978 _Versus 1977 5 I S_ 1
[ Thousands of Dollarsl(Increase or (Decrease)]
Fuel Expense (2,092) (12.0) 2,548 17.1 Operation Expense 3,509 32.8 2,290 27.3 Maintenance Expense (1,952) (43.4) 940 26.4 Long-Ters Debt Interest Expense 1,773 15.4 -
Allowance for Funds Used for O the Purchase of Nuclear Fuel Fuct Expense 1,785 75.5 643 37.4 The decrease in fuel expense was primarily the result of (1) the plant being ordered to shut down by the ERC from March 13 through May 24, 1979 and (2) an outage during the month of September 1979. The plant operata ed during most of the 1978 period except for a major maintenance and refueling outage shich occurred f rom July 14 through August 24, 1978.
Fuel expense increased in 1978 due to (1) a higher amortization rate, which was caused by (A) 72 new assemblies being inserted in August 1978 at a higher cost in comparison to the assemblies inserted in June 1977 (B) a full year's ef fect of the change in the assumptions regarding the cost of spent fuel disposal made in July 1977 and (2) an increase in generation of 209 million KWH.
Operation and Maintenance Expense Stsntitcant tocreases to Operation Expenses in 1979 were primarily the result of expenses associated with the shut down ordered by the NRC and to a lesser degree due to costs of renting a transformer, outside ser-vices employed and increases in insurance preatums.
The increase in Operations Expenses in 1978 reflect the increased cost of outside services, rental of a transformer and general labor increases.
The Company did not have a refueling shutdown in 1979. The level of maintenance activity performed in 1979 when the plant was not operating were below those experienced in 1978 during the refueling.
The increase in Maintenance Erpenses in 1978 reflects expenditures whtch included work on the Reactor Coolant System. Turbo-generator unit and the Condenser Systems.
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Maine Yankee Atomic Fower Company Form 10-K-1979 Lont* Tere Debt Interest Expense and Allowance for Funds Used to Purchase Nuclear Fuel (AFN)
The increase in Interest Expense and AFN in 1979 and the increase of ATN in 1978 were the result of higher levela of investment in nuclear fuel to meet current and future refueltas requirements and to higher interest rates incurred on corporate borrowings.
ITEM 3 - PROPERTIES The Plan". is located on tidewater on Bailey Point in Wiseasset, Maine, on a 740-acre site which is owned in fee by the Company and is adequate for the Plant sad for the associated switchyard facilities (which are owned in part and operated by Central Maine Power Company). It is a nuclear powered electric generating plant, utilizing a pressurized water reactor, fueled with slightly enriched uranium dioxide. The nuclear steam supply system and certain other equipment were designed and f abricated by Combustion Engineering, Inc. The turbine generator was supplied by Vestinghouse Electric Co rpo ra tion. Stone in Vebster Engineering Co rpo ra tion , as engineer a r.d constructor, designed and constructed the Plant. The nuclear design and construction of the Plant *.as supervised by the Nuclear Services Division of Yankee Atomic Electric Company, which supervised and is supervising the design and construction of several nuclear generating plants in New England. Con-struction of the Plant, which began in 1967, was completed in 1972 except for certain discharge temperature control facilities designed to meet the requirements of the Maine Board of Environmental Protection, which were completed in 1975.
ITEM 4 - PARENTS AND SUBSIDIARIES O The names of the Sponsors and the percentage of voting securities owned by each are as follows:
Name of Sponsor Percentane Central Maine Power Company 38%
New England Power Company 20 The Connecticut Light in Power Company 8 l
Banger Hydro-Electric Company 7 l
Maine Public Service Company 5 Public Service Company of New Hampshire 5 Cambridge Electric Light Company 4 Montaup Electric Company 4 The Hartford Electric Light Company 4 Vestern Massachusetts Electric Company 3 Central Vermont Public Service Corporation j
_19EI The Company has no subsidiaries.
ITEM 5 UGAL PROCEEDINGS l The operation of existing nuclear units and the construction of nuclear units presently planned in the United States continue to be a subject of public controversy. Various groups have filed law suits and participat-ed in administrative proceedings claiming that the present state of l nuclear technology presents risks to public health and safety and to the environment. In addition, certain of these groups have proposed restrictive legislation relating to nuclear power. Some of the claims made by such groups, if they should prevail, or the exiatence of the O
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O Maine Yankee Atomic Power Company Form 10-K-1979 controversy itself, could cause substantial ordifications to or extended
- hutdowns s of plants presently in operation. See Item 1. " Problems Affecting the Industry and the Company".
The Price-Anderson Act is a Federal statute providing, among other things, that the maximum liability for damages resulting f rom a nuclear ,
I incident would be $560 million, to be provided by private insurance and governmental resources. As required by the NRC regulations, prior to operation of a nuclear reactor, the licensee of the reactor is required to insure against this exposure by purchasing the maximum avs11able private insurance (presently $160 million), the remainder to be covered by the recently implemented retrospective premium insurance and by an indemnity agreement with the NRC. Under amendmenta to that Act, owners of operating nuclear facilities may be assessed a retrospective premium of up to $5 stilion for each reactor owned in the event of any one nuclear incident occurring at any reactor in the United States, with a mantmum assessment of $10 million per year per reactor owned. It is not yet possible to evaluate the claims being asserted as a result of the TML incident or whether any assessments may be levied under these provisions as a result of the incident. See Item 1. " Problems Affecting the Industry and the Company".
The Maine Yankee Plant was declared commercial December 28,1972, with regular operation at approximately 570 megawatts electric (net) starting on January 1, 1973, in accordance with the Power Contract. Hearings on the Company's application for a forty-year license at full operation were completed in 1972 and the license for full operation at approxi-mately 790 megawatts electric (net) was granted by the Atomic Energy ,
Commission ("AEC"). the predecessor of the NRC, on June 29, 1973. Dur- l ing 1978 the NRC authorized an increase in the output rating of the !
plant to approximately 850 megawatts electric (net), j The Company's nuclear generating plant, which had been temporarily shut down along with four other nuclear units pursuant to a March 13, 1979 order of the NRC staff, was restored to power production on June 5, 1979 af ter the order was lif ted on May 24. The order was based on the dis-covery by the NRC of an allegedly improper analysts technique in a com-puter code used by the architett-engineering firm which designed the plant in predicting the stress loads which would be placed on some safety-related piping systems of the plant in the event of a major earthquake. During the shutdown the Company performed reanalyses of the piping systems in accordance with the order, and the plant was returned to commeretal operation without modification of the systems.
The Company's plant was shut down on January 11, 1980 for a scheduled reloading of its nuclear fuel and was restored to power production on March 15, 1980. During the shutdown the Company also made certain modia fications required by the NRC as a result of the TMI incident. See Ites 1. "Probless Affecting the Industry and the Company".
The Power Contracts between Maine Yankee and its sponsors require the sponsors to continue to make monthly payments thereunder through 2002 whether or not the plant is in operation except under circumstances not now applicable which would entitle the sponsors to cancel the Power Contracts. The Sponsors are also obligated under the Capital Funds Agreements with Maine Yankee to pay their respective shares of the capi-tal requirements of Maine Yankee, not otherwise obtainable, which would include the cost of any modifications to the Plant that may be required pursuant to an NRC Order.
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Maine Yankee Atomic Power Company Form 10-K-1979 ITEM 6 - INCREASES AND DECREASES IN OtfrSTANDING SECURITIES AND INDEBTEDNESS None ITEM 7 - CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES Not Applicable ITEM 8 DEFAULTS UPON SENIOR SECURITIES Not Applicable.
ITEM 9 - APPROXIMATE NLHBER OF EQUITY SECURITY HOLDERS (1) (2) l Title of Class Number of Record Holders '
Consson Stock 11 (Sponsors)
Cumulative Preferred Stock, 7.48% Series (Sinking Fund) 77 ITEM 10 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Previously reported in Form 10-Q for quarter ended June 30, 1979.
ITEM 11 INDEMNIFICATION OF DIRECTOR $ AND OFFICERS Section 9 of the Company's By laws provides as follows:
Section 9. Indemnification of Officers, Directors, Employees and Agents (a) Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the Company, by reason of the fact that he is or was a Director, of ficer, employee or agent of the Company, or is or was serving at the request of the Company as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Company against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a man-ner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termi-nation of any action, suit or proceeding by judgment, order, settlement, conviction or upon a pies of nolo contendere or its equivalent shall i not of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any j
criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the f act that he is or was a Director, officer, employee or agent of the Company or is or was serving at the request of the Company as a O '
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ffaine Yankee Atomic Power Company O Form 10-K-1979 Director, of ficer, employee or agent of another corporation, partner-
- ship, joint venture, trust or other enterprise shall be indemnified by the Company against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the ;sfense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company except that no indemnification shall be made in respect of any claim, issue or matter as *o which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Company unless and only to the extent that the Superior Court or the court in which such action or suit was brought shall determine upon application that, despite the adjudisation of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Superior Court or such other court shall dees proper.
(c) To the extent that a Director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subparagraphs (a) and (b) above, or in defense of any claim, issue or matter therein, he shall be in eenified against expenses including attorneys' fees actually and reasonably incurred by him in connection therewith. Any such person may enforce the right of indemnification granted by this subparagraph (c) by a separate action against the Company, if an order for indemni-fication is not entered by a court in the action, suit or proceeding in which he was successful on the merits.
(d) Any indemnification under subparagraphs (a) and (b) unless ordered by a court shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the Director, 1 officer, employee or agent is proper in the circumstances because he l has met the applicable standard of conduct set forth in subparagraphs (a) and (b). Such determination shall be made by the Board of Direc-tors who were not parties to such action, suit or proceeding, or if such quorum is not obtainable, or even if obtainable, or even if obtatuable af a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Company -in advaoce of the final disposi-tion of such action, suit or proceeding as authorized by the Board of Directors in the manner provided in subparagraph (d) upon receipt of an undertaking by or on behalf of the Director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnifiej by the Company as authorized in this Sec-tion 9.
(f) The indemnification provided by this Section 9 for any person shall not be deemed exclusive of any other rights to which such person may be entitled under any By* Law, agreement, vote of stockholders or disinter-ested Directors or otherwise, both as to action in his official capacity and as to action in another capacity, while holding any office, and shall continue as to any such person who has cessed to be a Director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person.
(g) The Company shall have power to purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a Director, of ficer, employee or agent of another corporation, part-nership, joint venture, trust or other enterprise against any liability O "
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- Maine Yankee Atomic Power Company Form 10-K-1979 asserted against him incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions of this Section 9.
The Company's Board of Directors has taken action to implement the pro-visions of the By-laws.
Insof ar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, of ficer or controlling person of the regiatrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrent will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indematfication by it is against public policy as expressed in the Act and wtl1 be governed by tse final adjudication of such issue.
ITE*t 12 - FINANCIAL STATEMENTS AND EXHIBITS FII.ED, AND REPORTS ON FORM m
(A) Financial statements and exhibits filed as a part of this report:
- 1. Financial Statements:
Report of Independent Public Accountants.
Statement of Income for the five years ended December 31, 1979.
Balance Sheet at December 31, 1979 and 1978.
Statement of Capitalization at December 31, 1979 and 1978. !
I Statement of Changes in Common Stock Investment for the five years ended December 31, 1979. j Statement of Sources of Funda for Acquisition of Nuclear Fuet and Construction of Electric Property for the five years ended December 31, 1979.
Schedules:
V Electric Property and Nuclear Fuel.
VI Accumulated Provision for Depreciation and Amortization of Electric Plant and Nuclear Fuel.
All other schedules are omitted as the required information is inapplicable or the information is presented in the Financial Statements or related notes.
- 2. Exhibits - None (B) No reports on Forms 8-K were filed during the last quarter of 1979.
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O Maine Yankee Atomic Power Company Tors 10 K-1979 ,
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Maine Yankee Atomic Power Company:
We have examined the balance sheet and statement of capitalization of Maine Yankee Atomic Power Company (a Maine corporation) as of Deces-ber 31, 1979, and 1978, and the related statements of income, changes in cosuson stock investment and sources of funds for acquisition of nuclear l fuel and construction of electric property for the years then ended, and the supporting schedules as listed on the accompanying index. Our exas-inations were made in accordance with generally accepted auditing stan-dards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present f airly the financial position of Maine Yankee Atomic Power Company as of December 31, 1979, and 1978, and the results of its operations and O its sources of funds for acquisition of nuclear fuel and construction of electric property for the years then ended, and the supporting schedules present fatriy the information required to be set forth therein. all in conformity with generally accepted accounting principles applied on a consistent basis.
ARTHUR ANDERSEN & CO.
Boston, Massachusetts, l'ebruary 6, 1980.
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O Maine Yankes Atomic Power Company Form 10-K-1979 Maine Yankee Atomic Power company l l
STATEMENT OF INCOME for the Five Years Ended December 31, 1979 (Dollars in Thousands except Per Share Amounts)
Year Ended December 31, 1g11 1978 1917 1976 1975 Electric Operating l Revenues $68,867 $70,373 $65,659 $58,860 $61,731 ;
Operating Expenses Fuel (Notes 1 and 11) 15,319 17,411 14,863 11,686 14,538 operation 14,193 10,684 8,394 6,884 7,230 ,
Maintenance (Note 1) 2,544 4,496 3,556 1,433 1,917 l Depreciation and Amortization (Notes 1 and 11) 8,279 8,173 8,087 8,029 7,736 Taxes Federal and State ,
Income (Note 2) 7,864 8,/03 9,058 8,578 8,192 j Local Property 3,750 4,094 4,222 3,800 2,839 ,
Total Operating Expenses 51,949 53,561 48,180 40,410 42,452 l Operatang Income 16,918 16,812 17,479 18,450 19,279 Other Income (Expenses)
Allowance for Other Funds Used-For Nuclear Fuel O (Note 1)
During Construction (Note 1) 1,547 76 1,341 50 1,047 50 1,136 31 844 114 l
Other (168) (63) (31) (15) (33) I Income Before Interest i Charges 18,373 18,140 18,545 19,602 20,204 Interest Charges ,
Long-Tern Debt '
(Notes 4 and 5) 13,307 11,534 11,502 11,616 12,527 Other 150 (8) 23 781 441 J Allowance for Borrowed Funds Used -
For Nuclear fuel (Note 1) (2,602) (1,023) (674) (561) (378)
During Constr.ction ;
(Note 1) (133) (90) (90) (59) (193) i 10,122 10,=13 10,761 11,777 12,397 l Net Income 7,651 7,727 7,784 7,825 7,807 i Divideods on Preferred l Stock 1,001 1,025 1,083 1,122 1,122 i Earnings Applicable to .
l Common Stock $ 6,650 $ 6,702 $ 6,701 $ 6,703 $ 6,685 )
Shares of Common Stock I Outstanding 500,000 500,000 500,000 500,000 500,000 Earnings per Share of Common Stock $13.300 $13.404 $13.402 $13.406 $13.370 Dividends Declared per Share of Common Stock $13.250 $13.400 $13.404 $13.405 $13.380 The accompanying notes are an integral part of these financial statements O >>
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Maine Yankee Atomic Power Company
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Fons 10-K-1979 l Maine Yankee Atomic Power Company BAIANCE SHEET December 31, 1979 and 1978 (Dollars in Thousands)
ASSETS I
December 31, 1979 1978 Electric Property, at Original Cost (Notes 4 & 11)
(Sch. V) $240,061 $237,884 Less: Accumulated Depreciation (Notes 1 & 11) s (Sch. VI) _54,105 46,448 l 185,956 191.436 I Construction Work in Progress 8,951 3,275 Net Electric Property 196,907 196,711 )
Nuclear Fuel, at Original Cost (Notes 1 & 11)
(Sch. V)
Nuclear Fuel in Reactor 52,564 52,564 Nuclear Fuel-Spent 42,557 42,557 Nuclear fuel-Stock 35,679 4,924 130,800 100,045 Less: Accumulated Amortisation (Note 1) (Sch. VI) 91,844 76,525 38,956 23.520 Nuclear Fuel in Process 40,394 35,905 Net Nuclear Fuel 79,350 59,425 Net Electric Property and Nuclear Fuel 274,257 254,136 Current Assets Cash (Note 3) 139 250 Accounts Receivable 6,474 6.788 Materials and Supplies, at Average Cost 3,503 2,859 Prepayments 949 1,127 Total Current Assets 11,065 11.024 Deferred Charges and Other Assets 1,783 795
$287,105 $265,955 The accompanying notes are an integral part of these financial statements.
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O Maine Yankee Atomic Power Company Fore 10-K 1979 Maine Yankee Atomie Power company BALANCE SHEET December 31, 1979 and 1978 (Dollars in Thousands)
STOCKH0LDERS' INVESTMENT AND LIABILITIES December 31, 1979 1978 Capitalization (See Separate Statement)
Common Stock Investment $ 66,857 $ 66,784 Redeemable Preferred Stock 13,070 13,696 Long-Tern Debt 105,923 111,168 Notes Payable to MYA Fuel Company 33,450 17,650 Total Capitalization 219,300 209,298 Current Liabilities Notes Payable to Banka (Note 3) 3,925 -
Current Sinking Fund Requirements (Note 4) 1,822 1,414 Accounts Payable 3,412 3,758 Dividends Payable 1,919 1,956 Accrued Interest and Taxes 2,739 2,893 Other Current Liabilities 47 43 Total Current Liabilities 13,864 10,064 Deferred Credits Accumulated Deferred Income Taxes and Unamortized Investment Tax Credits Net (Note 2) 52,570 45,652 Unamortized Gains on Reacquired Debt (Note 1) 1,371 941 Total Deferred Credits 53,941 46,593 Commitments and Contingencies (Note 8)
$287,105 $265,955 The accompanying notes are an integral part of these financial statements, a
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/~' Maine Yankee Atomic Power Company Form 10-K 1979 Maine Yankee Atomic Power Company STATEMDrT OF CAPITALIZATION December 31, 1979 and 1978 (Dollars in Thousands) l December 31, 1979 1978 Cosmon Stock Investment Common Stock, $100 Par Value, Authorized and Outstanding 500,000 Shares $ 50,000 $ 50,000 Other Paid in Capital 16,805 16,805 Capital Stock Expense (281) (303)
Gain on Cancellation of Preferred Stock 110 75 Premiums on Preferred Stock 196 205 Retained Earnings 27 2 66,857 66,784 Redeemable Preferred Stock - 7.48% Series,
$100 Par Value. Authorized 170,000 Shares, Outstanding 130,700 at December 31, 1979 and 136,960 at December 31, 1978 (Note 6) 13,070 13,696 Long-Term Debt (Note 4)
First and General Mortgage Bonds O Series A - 9.10 % due May 1, 2002 Series B - 8 1/2% due May 1, 2002 Series C - 7 5/8% due May 1, 2002 58,161 38,911 10,842 60,575 40,075 12,114 Less: Current Sinking Fund Requirements (1,822) (1,414)
Unamortized Debt Discount, Net of Premium (169) (182) 105,923 111,168 Notes Payable to KYA Fuel Company (Note 5) 33,450 17,650 Total Capitalization $219,300 $209,298 The accompanying notes are an integral part of these financial statements, f
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O Maine Yankee Atomic Power Company Form 10-K-1979 Maine Yankee Atomic Power Company STATEMENT OF CllANGES IN COMMON STOCK INVES* MENT For the Five Years Ended December 31, 1979 (Dollars in Thousands)
Amount at Other Paid Retained Shares Par Value in Capital Earninas Total Balance December 31, 1974 500,000 $50,000 $16,653 $ 5 $66,658 Add (Deduct)
Net Income - - -
7,808 7,808 Cash Dividenda Declared on -
Common Stock - - - (6,690) (6.690)
Preferred Stock - - - (1,122) (1,122)
Capital Stock Expense - -
14 -
14 Balance December 31, 1975 500,000 50,000 16,oo7 1 66,o68 Add (Deduct)
Net Income - - - 7,825 7,825 Cash Dividends Declared on -
Common Stock - - -
(6,703) (6,703)
Preferred Stock - - - (1,122) (1,122)
Capital Stock Expense - -
14 -
14 Balance December 31, 1976 500,000 50,000 16,o81 1 66,o82 Add (Deduct)
O Net Income Cash Dividends Declared on -
- - - 7,784 7,784 Common Stock - - - (6,702) (6,702)
Preferred Stock - - -
(1,083) (1,083)
Redemption of Preferred Stock - -
75 -
75 Capital Stock Expense - -
13 -
13 Balance December 31, 1977 500,000 50,000 10,769 -
66,769 Add (Deduct)
Net Income - - -
7,727 7,727 Cash Dividends Declared on -
Common Stock - - -
(6,700)
Preferred Stock (6.700)
(1,025) (1,025)
Capital Stock Expense - -
13 -
13 Balance December 31, 1978 500,000 50,000 10,782 2 66,784 Add (Deduct)
Net Income - - - 7,651 7,651 Cash Dividends Declared on -
Common Stock - - - (6,625) (6,625)
Preferred Stock - - - (1,001) '(1,001)
Redemption of Preferred Stock - -
35 - 35 Capital Stock Expense - -
13 -
13 Balance December 31, 1979 $00,000 $50,000 $1o,830 $ 27 466,857 The accompanying notes are an integral part of these financial statements.
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O Maine Yankee Atomic Power Company Form 10 K-1979 Maine Yankee Atomic Power Company STATEMENT OF SOURCES OF FUNDS FOR ACQUISITION OF NUCLEAR FUEL AND CONSTRUCTION OF ELECTRIC PROPERTY (Dollars in Thousands) 1979 1978 1977 1976 1975 Funds Provided Internal Sources Froe Operations Net Income $ 7,651 5 7,727 $ 7,784 $ 7,825 $ 7,807 Anortization of Nuclear Fuel 15,319 17,411 14,863 13,240 15,029 Fuel Settlement Credit * - - (1,554) (491)
Depreciation and Amortization 8,279 8,173 3,087 8,029 7,736 Deferred Income Tax and Investment Tax Credits, Net 6,918 7,583 8,868 8,413 8,192 Allowance for Other Funds Used for Nuclear Fuel and During Cons t ruction (1,623) (1,391) (1,097) (1,167) (958) 36,544 39.503 38,505 34.)S6 37,315 Less:
Sinking Fund Requirements:
Long-Ters Debt 4,850 5,555 5,626 4,483 4,172 Preferred Stock 626 - 1,304 - -
Dividends on Preferred Stock 1,001 1,025 1,083 1,122 1,122 Dividends on Common Stock 6,625 6,700 6,702 6,703 6,690 Other, Net 505 46 (139) (1,208) (463)
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% (Increase) Decrease in Worktng Capital, Exclusive of Notes Payable to Banks and Sinking Fund Require-ments Cash and Receivables 425 (616) (1,054) 1,519 994 l Other Current Assets (466) (66) (587) (598) (618)
Other Current Liabilities (533) (7,776) 12,075 (4,354) (6,178) l (574) (8,458) 10,434 (3,433) (5,802) l Net Available from Interetal Sources 22,363 17,719 34,363 20,253 19.992 External Sources l Increase (Decrease) in Notes Payable to MYA Fuel Company .
15,800 8.750 (11,950) 20,850 -
Increase (Decrease) in Notes Payable to Banks 3,925 - (200) (5,700) (3,100)
Series A Debentures - - - (15,000) -
Net Available from External Sources 19,725 8.750 (12,150) 150 [3,100)
$42,088 $26,469 $ 22,213 $20,403 $16,892 4
i Funds Used for Acquisition of j Nuclear Fuel and Construction 1 of Electric Property I Acquisition of Nuclear ,
Fuel $35,244 $25,732 $20,968 $19,543 $12,786 !
Allowance for Other Funds .
Used for Nuclear Fuel (1,547) (1,341) (1,047) (1,136) (844) !
Construction of Electric I
Property 8,467 2,128 2,342 2,027 5,064 Allowance for Other Funds Used During Construction (76) (50) (50) (31) (114)
$42,088 $26,469 $22,213 $20,403 $16,892 The accompanying notes are an integral part of these financial statements.
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Maine Yankee Atomic Power Company O Form 10-K-1979 Mai.ne Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 1. SL?tMARY OF SIGNIFICANT ACCOWTING POLICIES The Company: The Company owns and operates a pressurized-water nuclear-powered electric generating plant with a current net capac-ity of approximately 830 megawatts electric. The plant cosmsenced commercial operation on January 1, 1973. The following New England electric utilities own all of the Company's common stock:
Ownership Sponso r / Pa rticipant_ Interest Central Maine Power Company 38%
New England Power Company 20 The Connecticut Light and Power Company 8 Bangor Hydro-Electric Company 7 Maine Public Service Company 5 Public Service Company of New Hampshire 5 Cambridge Electric Light Company 4 Montaup Electric Company 4 The Hartford Electric Light Company 4 Western Massachusetts Electric Company 3 Central Vermont Public Service Corpora tion j Total 100%
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1973, in For a period of thirty years, cessencing on January 1, accordance with the Power Contracts, each participant shall receive its entitlement percentage of plant output and is obligated to pay its entitlement percentage of the Company's total costs, including a return on invested capital regardless of the level of operation of the plant.
Reeulation: The Company is subject to the regulatory authority of the Federal Energy Regulatory Commission (TERC), the Nuclear Regu-latory Cossetssion (NRC) and the Public Utilities Commission of the State of Maine (PUC) as to accounting, operations and other matters.
Depreciation and Maintenance: Depreciation is provided using a re-manning itfe method designed to fully depreciate electric plant on a straight line basis over the period ending May 1, 2002.
Because of economic and regulatory uncertainties, the Company does not presently provide for nuclear plant decommissioning costs. The Company ts currently studying the many alternative methods of decom-missioning and the various funding options but cannot now predict what method of decommissioning will be adopted or its cost, which could be significant using present technology.
Minor renewals and betterments are charged to maintenance expense l unless the item constitt3tes a retirement unit, in which case the new unit is charged to electric plant. At the time depreciable proper-ties are retired, the original cost, plus cost of removal, less sal-vage, of such property is charged to the accumulated provision for depreciation.
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Maine Yankee Atomic Power Company Form 10-K-1979 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Amortization of Nuclear Tuel The cost of nuclear fuel in the reactor, plus the estimated cost of disposition of that nuclear fuel, is amortized to fuel expense based on the ratio of energy produced during the period to the estimated total core capability with a corresponding credit to Accumulated Amortization.
Prior to June 10, 1977, the Company's estimated cost of disposition of nuclear fuel was based on estimates of the cost of reprocessing, less selvsse. Through May 1976, nuclear fuel salvage values and reprocessing costs were based on the estimated market values and costs of reprocessing at the time that the fuel was expected to be removed from the reactor. Froe .fune 1, 1976 through June 9,1977, nuclear fuel salvage values and reprocessing costs were based on the estimated market values and reprocessing costs at the time of reprocessing. This modification for estinating the cost of re-processing, net of salvage, had no saterial ef fect on the cost of power because the increases in each component were approximstely of equal magnitude. ,
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As a result of federal energy proposals and other indications of a developing national policy with respect to the disposition of O nuclear fuel, the Company changed its estimate of the cost of dis-position of nuclear fuel. Consencing June 10, 1977, the Company began providing f or permanent storage rather than reprocessing of l
spect fuel. The Company's estimate of the cost of permanent stor-age is based on a study by the NRC. This estimate of cost is sub.
ject to a number of uncertainties including the timing of available i storage capacity, the extent of future inflation, regulatory require- l ments and the cost of f uture services, all of which may require periodic revisions in future nuclear fuel amortization rates.
The original cost of Nuclear Fuel-Spent has been fully amortized.
Amounts for the final disposttion of fuel have been collected total-Itog $15,!01,000 at December 31, 1979 and $11.365,000 at December 31, 1978. These amounts are reported under the caption " Accumulated Amortization" in the attached financial statements. Spent fuel discharged prior to June 10, 1977 has not been revalued to reflect permanent storage. Management will revalue its spent fuel inven-r tories beginning in 1980 to reflect an estimate of the cost of permanent disposal. Costs of revaluation will not affect net income of the Company as such costs are recoverable under the terms of the power contracts. I Allowance for Funds Used Durina Construction and Allowance for Funds l Used for Nuclear Fuel (Af C): The Company records the net cost of l
borrowed funds and a reasonable return on other funds used to fin-ance construction and nuclear fuel acquisition programs. The amount of the allowance recorded is determined by multiplying the average monthly dollar balance of Construction Work In Progress (CVIP) and Nuclear Fuel In Process and Stock (NFIPS) by rates related to the cost of the capital used to finance the respective additions. The following table contains the weighted average rates used during the most recent five annual periods:
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Maine Yankee Atomic Power Company Form 10-K-1979 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
AFC AFC on CVIP on NFIPS 7.68% 7.40%
1979 7,60 7.00 1978 6.98 7.87 1977 7.21 8.07 1976 7.35 8.46 1975 Unamortized Gain or Loss on Reacquired Debt: Gains and losses on bonds reacquired to satisfy stating fund requirements of First Mortgage Bonds have been deferred and are being amortized to income over the remaining original terms of the applicable series as pre-scribed by the Uniform Systes of Accounts of the FERC.
- 2. INCOME TAX EXPENSE The components of Federal and state income taxes reflected in the statements of income are as follows:
Year Ended December 31, 1978 1977 1976 1975 1979 (Dollars in Thousands)
Federal: -
Current S 602 $ 625 $ 134 $ - $
Deferred and Investment 7,594 7,410 7,042 6,076 68}1 Tax Credits. Net 6,678 t
7,456 7,728 7,410 7,042 l 1
Statet 165 -
344 495 56 I Current 752 1,274 1,003 1,150 '
842 Deferred 1,247 1,330 1,168 1,1t }
1,186 Total Federal and State $7,864 $8,703 $9,058 $8,578 $8,192 Income Taxes The Company provides deferred taxes for the tax effects of timing differences between pre-tax accounting income and taxable income.
Prior to 1975 the Company did not provide fully for the tax ef fect of timing differences and beginning in 1976 is providing additional deferred taxes to recognize the tax effect of these dif ferences.
These additioLal deferred taxes are recoverable under the terms of the power contracts described in Note 1.
The table below reconciles a provision calculated by multiplying income before Federal income taxes by the statutory Federal income tax rate to the above provision for Federal income taxes:
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i Maine Yankee Atomic Power Company Form 10 K-1979 Maioe Yankee Atomic Power Company NOTI.S TO FINANCIAL STATEMENTS
- 2. INCOME TAX EXPENSE (continued)
(Dollars in Thousands) 1975 1978 , 1977 1976 1979 Amount 1 Amount 1 Amount 1 Amount 1 Amount i Federal income tax provision at statutory rate $6,591 46.0% $7,288 48.0% $7,446 48.0% $7,313 48.0% $7,128 48.0%
(Increase)
Reductions in taxes resulting from:
Deferred taxes not provided on certain timing dif-2.9 429 2.8 429 2.7 143 .9 - -
ferences 411 Amortization of invest-O sent tax credit (678) (4.7) (573) (3.8) (456) (2.9) (331) (2.2) (293) (2.0) 2.1 309 2.0 285 1.9 207 1.4 Other 354 2.4 312 federst income tax 4 49.8% $7.410 48.6% $7,042 47.4%
provisions $6,678 4M_
% $7,456 _B % $7,728 Investment tax credits are deferred and amortized over the life of the assets giving rise to the credits. At December 31, 1979, the Company had avatlable approximately $5,800,000 of investment tax credits which may be used to reduce Federal income taxes which would otherwise be payable. Available net operating loss and investment tax credit carryforwards have been utilized to the extent possible to eliminate current taxes payable in each period.
The Company has provided for, and deducted for tax purposes, certain costs associated with nuclest fuel reprocessing and storage. In the examination of the Company's Federal income tax returns for years 1973 through 1977, the Internal Revenue Service (" IRS") has disallow-ed the current deduction of these costs. If the IRS prevails, the Company will be required to fully utilize the $5,800,000 of invest-ment tax credit available as of December 31, 1979 and to pay Federal and state income taxes of approximately $1,375,000 to meet the cumu-Lative income tax assessments through 1979. However, these assess-ments will have no effect on income tax expense because the Company provides income taxes for the ef fects of all timing differences.
- 3. NOTES PAYABI.E TO BAHTS The Company had lines of credit at the periods ended December 31, 1979 and 1978 totaling $14,000,000. With respect to $13,000,000 of i
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1 Maine Yankee Atomic Power Company J Iare 10-K-1979 Maine Yankee Atoo.- Powy Ce .spany NOTES TO FINANCIAL STATEMENTS
- 3. NOTES PAYABLE TO BANKS (continued) the line, the compensating balance requirement is 15% of average outstanding borrowings. The compensating balance requirement for the remaining $1,000,000 is 10% of the line or 20% of outstanding borrowings, whichever is greater. Certain information related to these lines is as follows for the years ended December 31:
1979 1978 (DoII U s in ThE sands)
$14,000 $14,000 Total lines of credit 3,925 - -
Borrowings outstanding Average daily outstanding borrowings 1,148 97 Highest level of borrowings 9.300 3,900 Annual interest rate at year end 15.25%
Average annual interest rate 15.40% 7.79%
4 FIRST MORTGAGE BONDS The annual sinking fund requirements of the First Mortgage Bonds currently outstanding amount to $4,775,000 for each of the years 1980 througn 1984. Bonds repurchased amounted to $3,436,000 at December 31, 1979 and $3,361,000 at December 31, 1978.
Under the terms of the Indenture securing the First Mortgage Bonds, O substantially all electric plant of the Company is subject to a first wortgage lien.
5 MYA fTEL COMPAVY On August 26, 1976, the company entered into a Loan Agreement cov-ering the issuance of up to $35,000,000 principal amount of promis-sory notes to MYA Fuel Company, a subsidiary of BSC Holdings, Inc.
BSC is owned by a partnership composed of partners of Goldoen.
Sachs & Co. Certain information related to this loan arrangement is as follows for the years ended December 31,:
1979 1978 (Dollars in Th E nds)
Promissory notes outstanding $33.450 $17,650 Average datly outstanding borrowings 28,252 16,002 Highest level of borrowings 34,250 25,100 Annual interest rate at year end 14.18% 10.61% l Effective average annual interest rate 13.33% 10.11%
The Loan Agreceent provides that, in the absence of an Event of Default (as defined) or occurrence of a Terminating Event (as defined) the arrangement will extend to May 1, 2002, unless terminated by either party upon proper notice. The Company must provide 90 days written notice while MYA Fuel company must give at least three years written notice. In order for the arrangement to extend beyond August 26, 1981, the PUC i must extend its present approval of the arrangement.
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l Maine Yankee Atomic Power Company Torm 10-K-1979 l
Maine Yankee Atomic Power Company l NOTES TO TINANCIAL STATEENTS i
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- 6. REDEEMABLE PREFERRED STOCK 1
The Company may redeem, in whole or in part, any of the 7.48% Series l Preferred Stock upon not less than thirty nor more than fif ty days' notice at $107.11 per share on or before December 31, 1982, and at amounts decreasing to $100.00 thereaf ter; in each case plus accrued dividends. l Beginning in 1978, 6,000 shares must be redeemed and cancelled annually, at par, and at the election of the Company an additional 6,000 shares may be redeemed and cancelled, at par, on each redeep-tion date. The optional provision is not cumulative.
Preferred Stock repurchased and not cancelled amounted to 7,300 shares at December 31,1979 and 7,040 shares at December 31, 1978.
- 7. RETIREMENT INCOME P!.AN The Company has a noncontributory retirement income r't* which covers substantially all full-time employees. The Coor W i licy is to fund pension costs accrued, including atounts s'tffiter to amortize unfunded prior service costs of $155,198 as # Meep:- 1, 1978 over 30 years.
The Plan expense approximated $182,000 for the year 1979, r;30,000 O- for the year 1978, $121,000 for the year 1977, $86,000 for the year 1976 and $72,000 for the year 1975. As of December 1, 1978, the date of the last actuarial review, the market value of the assets exceeded the actuartelly computed value of vested benefits by
$532,092.
- 8. COMMITMENTS AMD CONTINGENCIES Nuclear Fuel The Company anticipates nuclear fuel expenditures of $26,749,000 for 1980 (exclusive of ATC) and $85,144,000 for the period 1981 through 1984 (exclustve of ATC).
The Company has contracted for the purchase of all of its uranium concentrate requirements through 1983. In addition the Company has a contract wnth a uranium supplier for the purchase of up to 1.3 million pounds of uranium concentrates. Deliveries of these concentrates are scheduled to begin in 1981 and end in 1992, but delivery is contingent upon the commercial operation of a processing f acility which is currently under construction. The Company, has not included fuel expenditures or deliveries for this contract in the information presented above. The impact on expenditures for the 1981 througn 1984 period could amount to $25,422,000 and the uranius concentrate requirements would be fulfilled through 1986 if contracted deliveries are fulfilled.
The Company has conversion contracts through 1983 and has a contract with the Department of Energy for enrichment services through 2002.
Its f abrication requirements are covered through 1983, with a cur-rent contract option for two additiunal years. It has no contrac- l tual arrangements for reprocessing or permanent storage of spent l I
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1 Maine Yankee Atomic Power Company Form 10-K-1979 Maine Yankee Atomie Power Company NOTES TO TINANCIAL STATEMENTS
- 8. COMMITMENTS AND CONTINCENCIES (continued) fuel. The Company is expanding its on-site spent fuel storage facility to provide capacity to store such fuel through 1983 while maintaining a full core discharge capability. In addition, in September 1979 the Company filed with the NRC a proposed change in its operating license relating to increasing its existing spent fuel storage capacity by providing more compact fuel storage. An inter-venor has requested a hearing, which the Company expects will be hold af ter the first quarter of 1980. The Company cannot predict the scope of that proceeding, its duration or its outcome, if the proposed change is not approved, the Company will have to develop alternative plans which would involve further approval by the NRC.
Construction The Company anticipates construction expenditures to amount to
$13.000,000 for 1980 including $3,000,000 towards a $6,300,000 con-tract commitment for the purchase of a spare turbine rotor.
Price-Anderson The 1975 noendments to the Price-Anderson Act changed the public liability insurance requirements for the nuclear industry. Since August 1,1977, each reactor licensee is required to carry $160 mil-O lion of primary public liability insurance, supplemented by a mandatory industry-wide program of self insurance. Under the pro-gram, in the event of a nuclear incident at any operating reactor in the United States, each licensee could be assessed up to 55 mil-lion with a limit of two assessments per reactor owned per calendar year in the event of more than one incident, ,
l Three Mile Island The events during the spring of 1979 at the Three Mile Island Nuclear l'ait No. 2 in Pennsylvania ("TMI") resulted to damage to the TMI plant and release of radioactivity into the environ-ment and caused widespread concern about the safety of nuclear generating plants. The incident also prompted a rigorous reexamination of safety-related equipment and operating procedures in all nuclear facilities by their owners and the NRC. The commission formed by President Carter to investigate and report on the causes of the TM! incident issued its report on October 30, 1979, recommending a number of changes in WRC organization and practices, licensing of nuclear plants, plant operating practices, operator training and other safety-related matters and on January 13, 1980, an NRC-commissioned report containing stellar reconsendations was released. As a re-sult, the NRC has promulgated numerous requirements, including both near-tere modifications and longer-tere design changes. The Company has made the modifications required to date by the NRC, but cannot i predict what further modifications will be required, their cost, or I
their effect on the operation of the Maine Yankee plant. l
- 9. ANTI-NUCLEAR PETITION DRIVE A petition calling for termination of the production of electricity by nuclear fission due to alleged safety and econceic reasons, and 25
Maine Yankee Atomic Power Company Form 10-K-1979 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 9. ANTI-NUCLEAR PETITION DRIVE (continued) the consequent shutdown of the Company's nuclear plarxt, was circu.
Lated by certain groups in Maine. The petition was signed by more than the required number of voters and was presented to the Maine Legislature in February, 1980. Under Maine law, the Legislature must enact the proposed legislation at its 1980 session or refer it to a vote of the electorste. The Company is presently unable to predict the ultimate resolution of the petition drive, including the result or validity of any legislative action or referendus vote, which would be held in the late summer or fall of 1980 pursuant to e gubernatorial proclamation after adjournment of the Legislature.
The Company believes that the Maine Yankee plant is both a safe and the most economical source of base load electric power, and intends to take all reasonable steps necessary to provide for its continued operation of the plant.
- 10. UNAUDITED QUARTERLY FINANCIAL DATA Unaudited quarterly finsacial data pertaining to the results of operations is shown below:
1979 Quarter Ended Mar. 31 June 30 Sept. 30 Dec. 31 (Dollars in Thousands Except Per Share Amounts)
Electric Operating Revenues $16,592 $15,324 $17,686 $19,265 Operating Income 4.334 4,234 4,145 4,204 Net Income 1,933 1,929 1,876 1,912 Earnings Per Share of Common Stock 3.35 3.35 3.26 3.34 1978 Quarter Ended Mar. 31 June 30 Sept. 30 Dec. 31 (Doitars in Thousands Except Per Share Amounts)
Electric Operating Revenues $17,082 317,179 $17,160 $18,952 Operating Income 4,219 4,052 4,148 4,393 Net income 1,932 1,930 1,931 1,934 Earnings Per Share of Common Stock 3.35 3.35 3.35 3.35
- 11. SUPPLEMENTARY IKFORMATION TO DISCLOSE THE EFTECTS OF CHANCING PRICES (UNAUDITED)
The following supplementa ry information is supplied in accordance with the requirements of the Statement of Financial Accounting Stan-dards No. 33 for the purpose of providing certain information about the ef fect of changing prices. It should be viewed as an estimate of the approximate effect of inflation, rather than as a precise measure.
Constant dollar-amounts represent historical costs stated in terms of dollars of equal purchasing power, as measured by the Consumer 26
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Maine Yankee Atomic Power Company i l
Form 10 K-1979 l
l Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS j l
- 11. SUPPLEMENTARY IlfFORMATION TO DISCLOSE THE EFFECTS OF CHANGING PRICES (UNAUDITED) (continued) j Price Index for All Urban Consumers (CPI-U). Current cost amounts reflect the changes in specific prices of plant from the date the plant was acquired to the present, and dif fer f rom constant dollar amounts to the extent that specific prices have increased more or less rapidly than the general rate of inflation. The current cost of nuclear generating plant is estimated based on an engineering ;
study of the current cost (per megawatt) of replacing the present generating plant. l Nuclear fuel used in generation has been restated from historical '
cost using current market prices of uranium, conversion, enrich-ment and fabrication. Nuclest fuel expense was developed by divid-ing the estimated current cost of the in-reactor fuel by the expected generation of the core times the actual generation produced during the year 1979.
Depreciation expense for the current cost of productive capacity was developed by applying the depreciable rate to the current cost i
value adjusted by the ratio of average historical cost to year-end historical cost.
Since only historical costs are deductible for income tax purposes, the income tax expense in the historical cost financial statements is not adjusted.
Under the rate-making practices prescribed by the regulatory com-missions to which the Company is subject, only the depreciation of historical cost of utility property is included in the cost of ser-vice used to establish the Company's rates. Therefore, the cost of J plant and nuclear fuel stated in terms of constant dollars or cur-rent cost that exceeds the historical cost of plant is not presently ,
recoverable in rates, and is reflected as a reduction to net recov- ;
erable costs. While the rate-making process gives no recognition to the current cost of replacing property, plant and equipment, based on past practices the Company believes it will be allowed to earn on and recover the increased cost of its net investment when replace-ment of facilities actually occurs. ,
To properly reflect the economics of rate regulation in the State-ment of Income froe Operations Adjusted for Changing Prices, the :
reduction of utility plant and nuclear fuel to net recoversble cost j should be offset by the gain from the decline in purchasing power !
of net amounts owed as shown below. During a period of inflation, 1 I
holders of monetary assets suffer a loss of general purchasing pcwer whtle holders of monetary liabilities experience a gain. The gain from the decline in purchasics power of net amounts owed is priserily attributable to the substantist amount of debt which has been used to finance property, plant, equipment and nuclear fuel.
Since the depreciation on utility plant and amortization of nuclear fuel is limited to amounts based on historical costs, the Company 27
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Maine Yankee Atomic Power Company Form 10-K 1979 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 11. SUPPI.EMENTARY INFORMATION TO DISCLOSE THE EITECTS OF Cl(ANGING PRICES (UNAUDITED) (continued) does not have the opportunity to realize a holding gain on debt and is limited to recovery only of the embedded cost of debt capital.
Statement of Income and Operations Adjusted for Changing Prices for the Year Ended December 31, 1979 (Dollars in Thousands)
Constant Current Dollar Dollar l Conventional Average Average Historical 1979 1979 Cost Dollars Dollars Operating Revenues $68,867 $68,867 $ 68.867 operation & Maintenance 16,737 16,737 16,737 fuel Expense 15,319 18,147 28,518 ,
Depreciation & Amortization 8,279 13,692 26,299 I Taxes 11,614 11,614 11,614 l' O interest Charges Otter, Net 10,722 (1,455) 10,722 (1,455) 10,722 (1,455)
Income (I.oss) from )
Operations (excluding reduction to net recoverable amount) $ 7,651 $ (500) $(23,568)
Increase in specific prices (current cost) of plant and Nuclear Fuel held dur-ing the year * $ $ 92,831 Reduction to net recov-etable amount (24,833) (11,875)
Effeet of increase in general price level (82,811)
Net (1,855)
Gain from decline in pur-chasing power of net i amounts owed 24,666 24,666 l
$ (167) $ 22,811
- At December 31, 1979 current cost of Plant and Nuclear Fuel, net of accumulated depreciation and amortization was $704.512, while histort-cal costs or net cost recoverable through rates was $274,257.
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f) Maine Yankee Atomic Power Company Form 10-K 1979 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATLENTS
- 11. SL'PPLEMENTARY INFORMATION TO DISCLOSE THE EFFECTS OF CHANGING PRICES (UNAl'DITED) (continued)
Five Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices (Dollars in Thousands, Average 1979 ,
Dollars) i Years Ended December 31.
1979 1978 1977 1976 1975 Operating Revenues $68.867 $78,296 $78,646 $75,051 $$57253 Historical Cost Information Adjusted for General Inflation Loss from operations excluding reduction to net recoverable amount $ (590)
Loss froa nperations per common share (after preferred divsdend requirement) $ (3.18)
Current Cost Information Loss from operations O excluding reduction to net recoverable amount $(23,568)
Loss from operations per common share (after preferred dividend requirement) $(49.14)
Excess of increase in general price level over increase in specific prices after reduction to net re-coverable amount $(1,855)
General Information Net assets at year end at recoverable amount S 63,222 Cain from decline in purchasing power of net amounts owed $24,666 Cash dividends per common share $13.250 $14.909 $16.055 $17.092 $18.045 Average Consumer Price Indes 217.4 195.4 181.5 170.5 161.2 f
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Maine Yankee Atomic Power Company Form 10-K-1979 Schedule V ,
Maine Yankee Atomic Power Company ELECTRIC PROPERTY AND NUCLEAR FLIL For The Year Ended December 31, 1979 (Dollers in Thousands)
Balance at Balance Beginning Additions Retirements Transfers and at End of Period at Cost or Sales Other Charaes of Period Electric Property Organization $ 7 $ -
3- - 7
$ 3 Miscellaneous Intangible Plant -
601 - -
601 Land and land rights 522 - - -
522 Structures and improvements 56,025 1,505 3 - 57,527 Reactor plant equtpoent 101,189 280 1 -
101,468 Turbogenerator units 57,605 -
608 - $6,997 Accesscry electric equipment 14,498 - - -
14,498 Miscellaneous power plant equip. 4.725 405 2 -
5,128 Substation equip. 3,239 - - -
3,239 Miscellaneous electric property 74 - - -
74 Unfinished construction 3,275 5,676 - - 8,951 Total Electric Property $241,159 $ 8,467 $249,012
$6J Wclear Fuel Nuclear fuel in reactor S 52,564 $ -
3 52,564 Nuclear fuel in process 35,905 35,167 -
(30,678) 40,394 Nuclear fuel -
spant 42,557 - - - 42,557 Nuclear fuel
- stock 4,924 77 30,678 35,679 1
$135,950 $35,244 $1
$ - $171,194 1
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Maine Yankee Atonic Power Company Form 10-K-1979 Schedule V (continued)
Maine Yankee AJ.oeie Power Company ELECTRIC PROPERTY AND NUCLEAR FL'EL for The Year Ended December 31, 1978 (Dollars in Thousands)
Balance at Balance Beginning Additions Retirements Transfers and at End of Period at Cost or Sales Other Charges of Period Electric Property Organtzation 7 $ - $- $ - $ 7 Land and land rights 522 - - - $22 Structures and improvements 55,861 166 2 - 56,025 Reactor plant equipment 101.084 126 21 - 101,189 Turbogenerator units 56,658 947 - - 57,605 Accessory electric equipment 14,477 21 - - 14,498 Miscellaneous power plant equip, 4,607 130 12 - 4,725 Substation equip. 3,239 - - - 3,239 Miscellaneous electric property 74 - - - 74 Unfinished O construction 2,537 738 - - 3,275 l Total Electric
$239,066 $241,159 Property $ 2,128 $J Nuclear Fuel Nuclear tuel in reactor $ 39,812 $ -
$- $ 12,752 $ 52,564 Nuclear fuel in process 33,140 25,665 - (22,900) 35,905 Nuclear fuel -
spent 33,202 - -
9.355 42,557 Nuclear fuel -
stock 4,065 66 - 793 4,924
$110,219 $25,731 $- $ - $135,950 O
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O- Maine Yankee Atomic Power Company Form 10-K-1979 Schedule VI Maine Yankee Atomic Power Company ACCUMllIATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF ELECTRIC P! ANT AND NUCLEAR FLT.L For The Years Ended December 31, (Dollars in Thousands)
Additions Balance at' Charged Balance Beginning to Costs Other at End.
,t_9]7 8 of Period and Expenses Re t i rt.t.en t s Channes of Period y Electric Property $38,313 $ 8,173 $ $ (4) $46,448 Nuclear Fuel $59,114 $17,411 $- $ - $76,525 1919 Electric Property $46,448 $ 8,279
$6J $ (8,) $54,105 1 Nuclear Fuel $76,525 $15,319 $- $ - $91,844 O
See Note 1 of " Notes to Financial Statements" for the Company's depreciation and amortization policies, I
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O Maine Yankee Atomic Power Company Form 10-K 1979 PART II l
I Item 13 - SECURITY OWERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT l
The following table shows the ownership of the Company's 500,000 shares of $100 par value Common Stock, all of which is issued and outstanding and all of which is held of record and beneficially. None is held by management.
Amount Percentage Name and Class owned of Class Central Maine Power Company 190,000 shares 38*
Edison Drive Augusta, Maine 04336 New England Power Company 100,000 20 20 Turnpike Road (Route 9)
- Westboro, Massachusetts 05181 The Connecticut Light and Power Company 40,000 8 PO Box 2010 Hartford, Connecticut 06101 t
Bangor Hydro Electric Company 35,000 7 33 State Street Bangor, Maine 04401 O Maine Public Servtce Company 209 State Street Presque Isle, Maine 04769 25,000 5 Public Service Company of New Hampshire 25,000 $
PO Box 330 Manchester, New Hampshire 03105 Cambridge Electric Light Company 20,000 4 675 Massachusetts Avenue Cambridge, Massachusetts 02139 Montaup Electric Company 20,000 4 Po Rox 2333 Boston, Massachusetts 02107 The Hartford Electric Light Company 20,000 4 PO Box 2370 Hartford, Connecticut 06101 kestern Massachusetts Electric Company 15,000 3 174 Brush Hill Avenue West Springfield, Massachusetts 01089 Central Vermont Public Service Corporation 10,000 2 77 Crove Street Rutland, Vermont 05701 500,000 shares 1007.
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l O Maine Yankee Atomic Power Company Form 10-K-1979 ITEM 14 - DIRECTORS AND EXECtft'IVE OFFICERS OF THE REGISTRANT A. Directors The directors of the Company and their principal occupations and all positions and offices with the Company are as follows:
Name, Age and Year Principei occupation First Elected Director Elwin W. Thurlow, 56, 1973 President and Chief Executive President and Director Officer, Central Maine Power Company Thomas C. Webb, 45, 1977 Senior Vice President, Finance Vice President and Director Central Maine Power Company Charles E. Monty, 53, 1971 Senior Vice President, Engineering Vice President and Director and Production Central Maine Power Company Vice President, Central Maine j John B. Randazza, 51, 1975 Power Company J Vice President and Director Joan T. Bok, 50, 1977 Vice Chairman, New England Electric Director System I
William F. Burt, 54, 1978 Assistant to the President New England Gas and Electric Association )
Director Ralph A. Brown, 62, 1968 President and Chief Executive Officer.
Director Maine Public Service Company John F. G. Eichorn, Jr. , 56, President, Eastern Utilities 1971 Director Associates William B. Ellis, 39, 1976 President, Northeast Utilities Director Thomas A. Greenquist, 51, 1973 President, Bangor Hydro Electric Director Company James E. Griffin, 52, 1973 President and Chief Executive Director Officer, Central Vermont Public Service Corporation Carrol R. Lee, 30, 1979 Assistant to the President, Director Bangor Hydro-Electric Company Guy W. Nichols, 54, 1978 Chairman, President and Chief Director Executive Officer, New England Electric System Robert F. Scott. 50, 1976 Senior Vice President, Customer Director Services and Rates, Central Maine Power Company Donald C. Switzer, 63, 1971 Vice Chairman, Northeast Utilities Director l
William C. Tallman, 59, 1966 President (Chief Executive), Public Director Service Company of New Hampshire O 34
_ _ _ _ _ _ _ _ . _ _ _ _ _ .- . - - . ~ - , ,. , .
I Maine Yankee Atomic Power Company Fo rm 10-K-1979 Each of the Directors, other than Mr. Webb, has for the past five ]
years been and is now an officer or employee of one of the Sponsors or an associate company thereof. Mr. Webb joined Central Maine l Power Company as Vice President, Financial and Treasurer in 1977 I af ter having served as Treasurer (free 1974) and Assistant Treasurer I (1972-1974) of Wisconsin Power and Light Company. Each of the Sponsors is represented on the Company's Board of Directors, but there is no formal understanding with respect to such representa-tion. The Directors are elected at the annual meeting of stock-holders and hold office until their successors are elected and qualified.
B. Executive Officers The following are the executive officers of the Company with all positions and offices heldt Name Age Office and Year First Elected Elwin W. Thurlow 56 President and Director - 1975 Charles E. Monty 53 Vice President and Director - 1971 John B. Randazza 51 Vice Prestdent and Director - 1975 Thomas C. Webb 65 Vice President and Director - 1977 Donald C. Vandenburgh 56 Vice President - 1974 Wendell P. Johnson 57 Vice President - 1972 Richard A. Crabtree 33 Treasurer - 1977
'Seward B. Brewster 52 Secretary and Clerk - 1968 Each of the executive of ficers other than Mr. Webb, whose business experience is given under paragraph A above, has for the past five years been and is now an officer or employee of one of the sponsors or an associated company thereof. The executtve officers are elect-ed annually by the Board of Directors and hold office until their successors are elected and qualified.
There are no family relationships between any director or executive of ficer nor any arrangements pursuant to which any were selected as officers or directors.
ITEM 15 - MANAGEMENT RENLMERATION AND TRANSACTIONS The Company has paid no remuneration to its of ficers or directors, but, complytng with regula to ry requirements, has reimbursed Central Magne Power Company for services rendered by its employees.
During the construction period, no return was paid to Sponsors on the money paid by them for Common Stock, but a return (at the rate of 7% per annum through November 30, 1970 and at the rate of 10% per annus there-after) was charged to plant in a manner stallar to that followed by utility companies in recording plant construction costs. The amounts so charged were recorded as paid-in espital. This practice terminated as of December 31, 1972, the last day of the last month of the con-struction period. These amounts are to be paid to the Sponsors on the redemption of Common Stock. The Company's First Mortgage Indenture and ,
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Maine Yankee Atomic Power Company Form 10-K-1979 the provisions of its Articles of Incorporation relating to its capital stock contain various liettations on redemption.
During 1979 and 1978, the company paid $3.123,255 and $2,462,917, respectively, to Yankee Atomic Electric Company, an associate of sev-etal of the Sponsors, for services at cost of its engineering and nuclear se rvices department. Prior to the execution of the Capital '
i Funda Agreements and Power Contracts. Central Maine Power Company, one of the Sponsors, advanced necessary construction funds to the Company at cost. Subsequent to that time, Central Maine has furnished the Company certain engineering, administrative and legsl services, and furnished certain facilities, at cost and electric service at its filed rates. During 1979 and 1978, Central Maine was reimbursed in the amount of $3,090,256 and $1,689,901, respectively, for such services.
It is expected that Yankee and Central Maine will continue to perform such se rvices for the Company in the future, for which they will be reimbursed by the Company.
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SIGNAttfRES I l
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MAINE YANKEE ATOMIC PO%T.R COPJANY 4
March 2$, 1980 By /S/ R. A. Crabtree Treasurer By /S/ R. S. Howe Chief Accounting Of ficer l
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