ML20127J201
| ML20127J201 | |
| Person / Time | |
|---|---|
| Site: | Waterford, 05000000 |
| Issue date: | 12/31/1984 |
| From: | Cain J LOUISIANA POWER & LIGHT CO. |
| To: | |
| Shared Package | |
| ML20127J165 | List: |
| References | |
| NUDOCS 8505210405 | |
| Download: ML20127J201 (39) | |
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k *: p ,,.d ,,' ' '3 N ., ' . k ', gY' Je ANNUAL REPORT 1984 e i A0-OqQSLOM> AOS 0hoO pur gSOS2hoCy em 1 ._ ..
l l l l l a This 1984 Annual Report is prepared for the in-formation of stockholders, employees, and other interested persons. . The Company's 1984 Annual Report to the Secunties ! and Exchange Commission on Form 10-K (including financial statement schedules) is available to any stock-l holder without charge. Stockholders can obtain a copy by writing to: M. H. McLetchie Senior Vice President - j Accounting & Finance, and Treasurer
- Louisiana Power & Light Company 3
, R O. Box 6008 5 i j New Orleans, Louisiana 70174 j Telephone: {504) 366-2345 BanFst i 't l l I o 1
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) b l l i l ! l l 4 i i HIG HtfG HTS- l As of As of Dec. 31.1984 Dec. 31.1983 Plant lovestment 54.116.786.000 53.688.148.000 i Revenue 51.245.659.000 S1.144.743.000 Net income 5 201.011.000 5 131.546.000 f Peak Load (occurred 6/22/84 and 8/29/83) 4.200.000 KW 4.207.000 KW Generating Capability 4.605.000 KW 4.618.000 KW Customers , 562.273 552.025 Average annual kilowatt- , hours per residential customer 13.479 12.996 Average annual revenue per residential kilowatt-hour 6.104 5.724 Population in area served 1 654.000 1.629.000 Employees 2.9 73 2.756 l---.---._.---
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"--*-~~""~ PRES I D E NTS T ETTER ~~"~~~
I < Gradual improvement in Louisiana's economy to LP&Ls generating capability of 4,605 megawatts continued in 1984, and Louisiana Power & Light at the end of 1984. 1 Company shared in that improvement. LP&L's net income in 1984 was S201.0 million, a i For the first time since 1980, the average annual 52.ED6 increase over 1983. However, Allowance for l electric consumption increased among our residen- Funds Used During Construction accounted for l tral customers. This was due to the improved eco- 63.9% of this net income figure.
; nomic climate and relatively stable fuel costs during The Louisiana Public Service Commission granted
! 1984. Average residential use in 1984 was 13,479 LP&L an increase of 569 million in additional reve-kilowatt-hours - an increase of 483 kilowatt-hours nue on February 20,1984. This increase went into over average residential use in 1983. effect March 2,1984. This LP&L industrial sales accounted for was less than the $309 l 53% of our retail sales in 1984. The -
. million that had been re-average fuel cost for 1984 was 2.848 quested in the Company's cents per kilowatt-hour compared to .
. January 24,1983 rate filing.
2.762 cents in 1983. The Company's requested Major industnal expansions in the s increase had included the area LP&L serves occurred at the net additional revenues , Texaco and Tenneco refinenes. In ig required when Waterford addition. Air Products completed 3 and Grand Gulf I were a new plant. t M anticipated to be placed LP&L's Power Team, our highly kA', - into commercial opera-tion. However, the LPSC expenenced professionals who make up top management, was responsible directed the Company to for a number of important achieve- refile its requested in-ments which are highlighted in this creases for the two ! letter. nuclear units. Chief among Company accomplishments to 1984 On Apnl 12,1984, the Company filed with the was the obtaining of a low-power operating license LPSC for additional annual revenues of S316 million. for Waterford 3 our now complete nuclear generat- This amount was the Company's estimate of the ing unit in St. Charles Parish. The faality, located net revenues required to cover Waterford 3 and a about 25 miles uprrver from New Orleans on the 14% allocation of Grand Gulf I to LP&L The amount Mississippi, is currently undergoing testing. We antici- requested was net of the estimated fuel savings from ( the operation of these two nuclear units as well as [ pate receiving a full power license soon and the unit is scheduled to be in commercial operation in a phase-in of the increased costs due to Waterford 3 June,1985. Waterford 3 will add 1,101 megawatts being in commercial operation. Grand Gulf I is a l l { . m ,w , , a.
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} El d Nb OClh Company operating revenues in 1961 totalled S1.2 billion, a 9% increase over 1983 revenues. The Company's customers at year-end totalled 562.273.
l.250-megawatt faality. 90% of which is owned by an increase of 1.9% over the 552.025 at the close of l Middle South Energy. Inc. It is expected to be in 1983. The Company's 1984 peak demand was 4.200 ! commercial operation by mid-year 1985. megawatts; this occurred at 4 p.m. June 22. This l On March 4.1985. the LPSC denied the Apnl compares to the 4.207 megawatts of peak demand
- 1984 rate request on the basis that the commercial on the Company system in 1983.
j operation dates of the two units were still uncer- Functional consolidation with New Oneans Pub- ! tain. The Company plans to refile its rate case and lic Service Inc., one of LP&L's assoaate companies l to take all necessary legal and other action in order in the Middle South System, continued to progress I to obtain the rate relief necessary to in 1984. The companies l enable it to meet its obligations re- first announced their in-j sulting from the antiapated second tention to consolidate in quarter 1985 in-service status of July,1981. Applications for Waterford 3 and Grand Gulf I. authority to consolidate F"= ' 4 On August 24. LP&L was awarded - have been filed with the ajudgment of 540.309.142 plus LPSC and the Securities interest against United Gas Pipe Line .. and Exchange Commis-1 Company in a long-standing suit for, a sion. l among other things, breach of natural . In November, Malcolm l gas suppfy contracts. The award. , H. McLetchie succeeded made by Civil District Court Judge John H. Erwin, Jr., as George C. Connolly. Jr., is being Senior Vice President - appealed by United. Any net amounts received by Accounting & Finance, and Treasurer of the Com-LP&L in thisjudgment will be returned to LP&L's pany. However, Mr. Erwin has remained as a Senior customers. Vice President, ar.d is availible to the Company During 1984, LP&L sold 5190 million of first as a consultant. Also, Richard L Murlowskijoined mortgage bonds and 550 million of preferred stock the Company as Senior Vice President - Assistant in public offerings, and sold 565 million in common to the President at the same time. stock to its parent Middle South Utilities. Inc. LP&L Despite some economic and regulatory problems. also issued $220 million in pollution control bonds, your Company is encouraged by its opportunities of which S105 million will not be available to LP&L and expects to meet its challenges in the year ahead. until after Waterford 3 is in commercial operation. With the ccdication of our employees, we believe Also during the year. LP&L expended $442.1 million 1985 will be another successful year for the Company in construction costs, which induded 5366.9 million For the Board of Directors for Watenord 3 construction. March 4.1985 , Y Jarnes M. Cain President
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I l MANAGEMENT ~~~~""~~~
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!98'i !t Wds d year of d(Ilif vemf'nts for L P&l h.6 A ' . - . iA... r .. w - V ; ,, -- . - 3 i. s.- <s :'ry
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p . .- - . rilarlagf'rTlerlt, all suJ) porting the tW()-fold q0a' Of 3,3.
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kl L P&L Task Forc e was f(;rmed of miferienc ed i. .i '! 1." - .c - ' l "
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- ef flclency Wlll Irl( re,e,f' ds Well as a( C Ural y The /
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*q f,-, f N.. '. 9 .Y3 and W!!I produce savings estim.ited at 5250 000 per
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duct"d 3 651 Energy information and Educational f' . ,, ~','.., ' x ghf) .cs' h1 -,'.. ' ~J; ]. - < ' -( TJ .- 'T Programs for 9/ 786 ( onsumers and teachers The - parIl(Iparlts Werf' GIVf'f' I<i(ts Orl erler(Jy utill/,Ml()fl a W
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) Witrle >se()[he corlverslora of LP&L's Pontchar- i e ,.. <
g ~; A E. . l train sutntanon f rorn 115-KV to / 30-KV The c om- ?i- Q ,. [.4 ' ? .S, flcitly Oas <f so aI)lP to reclu('e its riistflI)utf()r) -
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transformer inventory to a very low 6% Compared j t -
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Each of these measures and more a d t)e (ontinued - v* ,. 'f/ . ' - D .:.' , ', ,, T. - ' Y .'
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l c 1985. as Wili new goals to he set in our endeavor :' -
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3 C, '"* to rnalntain the highest levels of efficer (y at i P&L ,. i s .v. .
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n;m , c:aa W "-~;;-"~~~~~~~~~ EXTERNAL" AFFAIRS _d ,g t j y 8U2g93 M ( p l,; y! k Q L Q JyrdG U 7 yni r; -~ g;7 ;5$ :u
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As the years proceed. LP&L recognizes a growing .
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- the consumers, civic leaders and elected officials i' - . e; P
- locally, statewide and nationally.1984 was no .. .j .
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exception. We met the need, we fulfilled the O ,.; y']. ,'; v.' obligation. Management has maintained a close working
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relationship with LouisiWs Congressional delegation. . f J -l. - . . j r enabling LP&L to protect favorable long term natu- .
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ral gas contracts from the detrimental effects of w ;- ~.i,", 0.y )' proposed legislation. As a result, adequate supplies s A i E-of low cost natural gas for the generation of power .
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will continue to hold down consumer electric bills. F. CIM- - l1^ ' . and aid areawide industrial development. . . . .
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_ >6 in the State Legislative arena efforts to preserve - E ., . yj. < E ' 2 - LP&L's tax exemptions on materials and energy " q. y . ' % . . ;
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sources used to generate electacity were highly .
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successful. Retaining these exemptions therefore , . ' Nj e ' % J'J ..,., J,} g minimizing tax increases, is a direct benefit to our ' ; % *. , i - n % Y- ' ' 1 [ $'!Y customers who would otherwise be exposed to higher costs. ? J , ./l ~ .
'. 'N A strong political action committee enables LP&L's ~L%' ' . &.'
?k' employees to meaningfully support national, state b ' **eme %
iany i ~~ and local candidates for public office. Membership .
< L ," fl of Louisiana Emplo>tes Committee of Political Action of Louisiana Power & Light Company (LECOPA - 8 O b" \ -[fJ ~ ' ' ~
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. . jl LP&L) increased by 29% so that for the first time over , 47 ,
half of the Company's eligible employees are now . . u.g ' ;
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members. This indicates an employee awareness of the importance of being involved in the political g Y W WN : .l. .. . .i- J' process. The Waterford 3 Safety information Book. part of our emergency information plan, received the high-hQ ' h est marks possible from the Federal Emergency N Management Agency. A new Energy Education
; I cordaro Center for visitors to Waterford 3 is under con-5""' ' V'ce Pres @nt - External Affairs struction and will open in 1985 as an information resource center for the entire region.
We will continue to meet our obligation to communicate with our customers civic leaders and elected officials in working toward a secure energy future for the state o.f Louisiana. s h w._ . .. . .. ann . _,w,:4 rrt_gww.g 3 _ ~ ,a. ._g- _ ..p,
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LP&L's leadership in the luclear energy and ter h- ; ,p , l nology fields was o >nfirmed in 1984 First. On April .., -p -% ~ ' " ' ./ . , 19 Waterford 3 construc tion was offiaally completed . . . - ;- ' fA Secnnd un December 18 the nuclear plant was - L -. s ' ' .' 3.: given a low power hcense by the Nuclear Regula-
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,}C uegin initial testirig Finally in the last two days of 1984 all 21/ fuel assemhhes were successfully g
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f loaded into Waterford s reactor ' c.. s+; ' . .De - ' .%T> ' . <.e., When the NRC awarded L P&L the license to :
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It also represented years of dedication and thou- j .y - ny' :g. ,g sands of hours af work by our staff It was in 19/0 . _}. .c;,,e e'" J. j g^
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- 14 years ago - that LP&L t amrnitted to the long l pa t - ,.3 .
;e range pian of nuilding touisiana first nuclear plant ,. e- ,~ v. w .4. .
Offiaals of the NRC have comrnended the depth arld breadth of nuclear expenenCe present on the ..T.j'{ghb.
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Next step? Full power We anticipate getting the
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1985 That means L l()4 megawatts will be added to k . - 2, our current elecInc generating capaaty. creating a b I f, , k [/.h ~.~, ' . .g . . .
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bdse lod (} gerlerd[lrl] fd(llity for TTlore [harl 561 000 _- '.' - LP&L t ustomers T?* -
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Planning for a secure energy future is one of r,J. M ...' .j"f.,e# ~ -,w ( ".'s'4.' e'.ijp, ' , : ' . '. B'* w *3.-
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,i f yf. g -.gj.p #. . e iP&L,s most cntical roles We are proud that the
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Waterford 3 project is helping f ulfill that ver) impor- .
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e>(eptionaHy ef f a lent an<1 effective to the tienefit t :, - j},/ j. of stoc kholders and ( ustomers ahke ?. 3 l} (. - j _ LPKl raised over 5420 mdhon from extern.H i$P& t: . . $ :$ & .- .y-sourm, dunny 1984 the rnajor portion t > err a ; used ;+.- - t .
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ford 3 nuc icar unit induued 1n the funds raised ;+' ; .g. r. . ,.- s., externauy was 5190 mdhon from the sale of three ,j' -""'- j ,.
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issues of Fast Mortgage Bond , and 5115 from the
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Cenmr has completed its hrst year of operation. and _ !. 4 t : . the results are ou ehent W.e are riow prorewng
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ger rng same day deposit of funds and ao vieranny }. . . f . our < ast, f;ow hy two day s - ah measun's whn h ( L.. .: . . ',..' >:
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ITT1J)r()Vt' tt le C_r)rT1[],tr }}'s firl.ir :(l<d [X hltl()rl j,i *f .- ,' , ,' I 1984 was a year of important ac u mphshrnents '!cy ,,
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which w N c (jntinue to [noduc e poutive results in g }' .l,* - , j,- ,7 ,
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ENERGY ~ SUPPLY ~ ~~~~ b' ' [ e o
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n is tne weignty responsibihtv of L PKL manage- v'-
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ment to have a constant. adequate supply of energy [ ,- "[' .h.
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for nur customers - indusinal. commeraal and ,- .0- M' 8
- e. 1-residential That means we rnust he prudent planners. j (.3 s
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1 *' looking into the years far ahead of us and predrcung what energy sourc es will be plent ful and practK al - v p. . . - ' ' ((%.s7-Q'-k t.
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In 1984 LPKL accomphshed a great deal in our Z ; ,'. ]. ., # -f..?-
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efforts to maximve existing energy supphes This .f,,c. Qg . - -
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year saw the development of the Power Plant ',' f :_" ~9 ; g l -
*i Productivity improvernent Program which wW be .' , .c.. '. - - T , f .. f:Jt ,
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- implemented in 198s This new plan wm improve -
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unit effroenoes and avallatyhties save on fuel costs. ' ' -', . . '
$j? *4 .
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redut e replacement energy costs and maintenance l7,
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(osts. and save considerably on espenses AhK h ; '(. .. } . m , ,*f - V. 9 J. ultimately benefits our customers
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Another accomphshment was the continuation of s ; 7 . . ,. g .> . a - - '.~'a f ,.' the Compromise Settlement Agreement with Texaco .-? ; '- J"$ V
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d. Texaco's commitment to save LP&L's customers on ' ,,' f ~. ( , ' ' f * ' ' e - fori nas resuaed in Teuo iower no tne,r gas onces g A.~.c. e : ..- S3 "
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on rnany occasions and that has caused other s;, 4. - , .
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3-6 ..a. .. .. e ' sup[Wiers to do the sariu Iti 1984 the savings to ' . ,e -
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LP&L from the use of Tex.ac o gas alone were ' ' : . [ ., 7 ,'d ' ' , f j - l l ' j :. J '. ~ approiomately 565 mdhon This c an be added to '
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..# ' I several milhon saved from ( ompeting supphers w
{ as tne iargest energy orov, der ,n tne sute or ., .
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y+. ... : c. . . , Louisiana LP&L must rely on knowledge expen- t <
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enc e and sound business deosions in predwting gf . ar. - . . m ., w e W , . ..' : w nat hes,n our ene w uture in i9s4 w e w ere ..en % p c k, . nght on course . . ..- f ,
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ADMINISTRATIVE
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..' .4 1-The pnme ,v hrevement of L P&L1 Adrmrnstratrve
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Department in 1984 was the purc hase of MM:S ".J - t ' 7 Y~<;# p$/ .. ' .d I . ' (' These initials represent a state-of-the-art online com-Ix ' %
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puter system for MatenaK Management informa- -
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tion System. strongly re< ummended by vanous audit p, y .[ .. .
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groups that have vNted LP&L X E, t :. y : -
' %, '. ( i i. s MM!s will support the full range of l P&l ar t#vities . .i;[I .
in the typical matenal (vc le For instance. purc has-
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,ng outlays for 1984 exceeded 5160 mrllion The ; , ,,
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new systern is estimated to save L P&L at least r'
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5500.000 annually by provKling improved :nform+ ' -
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(. tinn on vendor performance and physical invertory .f .Y
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10 rerMr"ments other opportunmes for savings will :: ^ - - f.. - L
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result from ac c urate matenal des ( nptions expedr- j% . ' " -k. - ' trous matenal kxanon, automated ordenny mid -*/e: '. - (E
- receiving. and matenal status tratk;ng e . . ;~ ... . .,.-f . . _ --.- . j,~'
Aho in 1984 an MMIS implementation team was c C. .. . : .*., -:
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formed with representatives from a!! t P&L depart- . .
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3 IIIen[s These l b team rnembers dlon] Wf th 40 * :'. 7/ '. :- .i - ~
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.kkhilonal rnatenaj relatty j ernployees were thoroughly y# . r -
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( trained on all far ets of the system With the installa - ^ v 3 . ... , . .,
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tion or equipment and actual tesong n progress.
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W <- . -. LP&L c an expect total company-wide use of MMIS - i r- / , ; , 'e. . ' ., * ; '. , ..' , '4.s
- n late 1985 e >r early 1986 We're using high tec hnol- L, ,..- . [ -
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ogy in administranon for a more effic tent energy A 3.r., ':.
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- 4. Xeron Centre Offke Complex 4 's k, *
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.- ~ <mmmum m m m mx.wauwa m mam m aw m m am m _ m aam CUSTOMERS OPERATING REVENUES (Thousands) From Retail Customers (Millions of Dollars) 1984 = 562.3 1984 = $1,245.7 1973 74 75 76 77 78 79 80 81 82 83 EH 1973 74 75 76 77 78 79 50 81 82 83 84
$1.200 ==
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- 858 M 1.000 E en E 400 m F4 I2 b bOE S 800 EEEE al E B 3 B 300 muNNHHE Q W 2 (E E 600 200 f ? I4 d N Il N Ib 5 5 3 b I 400 EEEEE im u M H H N ij n 5 B B 5 2 200 -_ um a E E E E E E O NEdUUdUU O O $ 5 E O MEEEEEEEEEEE n' ,12 ENERGY SALES AVERAGE MWH USE To Retail Customers Per Residential Customer 1984 = 13,479 (Billions of Kilowatt-Hours) 1984 = 22.76 1973 74 7S 76 77 78 79 80 81 82 83 84 1973 74 75 76 77 78 79 80 81 82 83 84 15.000 25 12.500 20 M W - - 10.000 _
15 P M Is O E $ E$ 7.500 10 c' "*' N Dh N $2 b E E EI l 5.000 - 5 IE II U d b Nb b b E E$ 1 2.500 0 E NNdb U NS b I5l O Ob 0 CONSTRUCTION EXPENDITURES GROSS UTILITY PLANT (MlHions of Dollars) (MI:llons of Dollars) 1984 = $442.1 1984 = $4,116.8 1973 74 75 76 77 78 79 80 81 82 83 84 1973 74 75 76 77 78 79 80 81 82 83 84 3.
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I MANAGEMENTS DISCUSSION"----~~~"~~~ AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION which has not yet ruled on the matter Because of the Net income increased $69.5 milhon and 514.I million in quest on of how much of Grand Gulf I's output will be 1984 and 1983. respectruely, and decreased $7.0 million in assigned to the Compa ly remains unsettled. the rate applica-1982. The large increase in 1984 was pomanly due to tion proposed a formul6 type rate adjustmmt clause. The increasing amounts of Allowance for Funds Used Dunng proposed clause would permit the Conipany to recover Construction (AFDC) attnbutable to the finanong of Water- non-fuel related expenses associated with buying power ford 3. the Company's nuclear generating unit. increased from Grand Gulf I no matter what portion of the unit's energy sales to retail customers, a $69 milhon annual retail output is allocated to the Company. Accordingly, if the rate increase implemented in March 1984, a change in Company vere a!!ocated 38 37% of MSE's share of Grand acounting method to include the cumulatrVe effect of Gulf I (as initia!!y proposed to the FERC). Its requested net accruing unbilled revenues, and continuing cost control increase in revenues would be $496 milhon On March 4 raeasuresWien Waterford 3 is placed in commeraal operation. 1985. the LPSC denied the Apal 1984 rate request on the the Company's construction program will be reduced basis that the commeraal operation dates of the two units substantiallyy However, upon commercial ooeration. AFDC, a were still uncertain. The Company plans to refile its rate major component of earnings in recent years, will cease case and to take all necessary legal and other action in order accruing and earnings will be affected by the initiation of to obtain the rate relief necessary to enable it to meet its depreciation expense. Additional rate rehef is cntical, therefore, obhgation resulting from the antiopated second quarter 1985 13 - - upon the commencement of commercial operation of the in-service status of Waterford 3 and Grand Gulf I. unit because the Company must begin to recover those costs UQUIDITY AND CAPITAL RESOURCFS assocated with Waterford 3 that have not previously been Construction expenditures (induding AFDC) totalled 51.5 allowed in rates and to earn a return on its investment. billion dunng the three-year penod 19824984. These ex-Dunng theyear 1984, the Company sold 565 melkon of penditures were funded by net finanong transactions of common stock. 550 million of prefered stock. $ 190 milhon of 58536 milhon, funds from operations and a portion of the first mortgage bonds. and 5220 million of pollution control proceeds from the settlement agreement with a gas suppher revenue bonds (of which $105 milhon is being retained in a in 1982 (see Note 11). Cash collateral secunty account until four months after The Company contemplates construction exnenditures. Waterford 3 is placed in operation) pnmarily for the payment including AFDC of $719 milkon for 1985 through 1987 of outstanding short-term borrowings, for the finanong in including 5160 million required to achiew commeraal opera-part C its construction prograrn and for other corporate tion of Waterford 3. Further. dunng 1985, the Company is purposes. At December 31.1984, after such mcunties sales. obhgated under a Power Purchase Advance Payment Agree-the earnings coverage for the Company's first mortgage ment to make advance power purchase payments to MSE of tands was 1.98 times the annual first mortgage bond interest $4.8 milhon per month until the earher of commeraal requirements, and its earnings coverage for preferred stock operation of Grand Gulf I or Decemoer 31.1985. The was 1.51 times the annual interest charges and preferred Company intends to meet these and its other corporate dividend requirements. Based on these coverages, which requirements dunng the penod through commercial opera-include the cumulatr.e effect of the accounting change tion in 1985 of these nuclear units with funds denved from mentioned above. the Company could have issued no operations. with funds received from the sale of common additional first mortgage bonds (except such bonds issued stock to its parent. Middle South Utihties. Inc., and with the solely for refunding outstanding 'irst mortgage bonds) and proceeds of short-term borrowings. In this latter connection, only a nomirial amount of preferred stock. the Company is currently authonzed by the SEC to make Wsth regard to rate matters, h Apnl 1994 the Company short-term borrowings of up to the lesser of $200 milhon or filed with the LPSC a request for a 5316 milhon net increase 10% of capitak7ation. 5125 milhon of which was outstanding in annmi revenues from retail customers. The increase will at February 28.1985. be needed to provide cash earnings tf.ot reflect the in-service With respect to the full 1985-1987 penod. and in addition status of Waterford 3 and Grand Gulf 1, both of which are to the foregoing capital requirements. approximately $255 presently scheduled for commercial operation dunng the first milhon will be needed for finanong the above-mentioned half of 1985. In connection with that portion of the request proposed plan to phase into rates the costs associated with related to Waterford 3. the Company proposed a plan to Waterrord 3 and S 125 milhon will be required in order to phase into rates the costs assocated with that fachty. The meet long-term debt matunties and preferred stock sinkir g Grand Gulf I portion of this fihng was based on the Company fund requirements. Assuming adequate retail rate rehef, the receiving a 14% allocation of MSE's share of the unit. as Company estimates that its requirements for capital funds provided in the initial deosion by an Administrat've Lwv from external sources dunng this penod will be approxi-Judge (AU) of the Federal Energy Regulatory Commission mately 5447 milhon, and expects tn obtain such funds from lFERC) The ALJs deosion is ncw pending before the FERC. the safe of common stock to its parent, the above-mentioned i
t4 tq o: , renwne _ - - - _ . _
/
-t
$105 milhon held.in'a cash collateral security account. .
requirements. These expenses increased in 1982 due to : short-term borrowings and the issuance and sale of such - higher average unit pnces and to large valumes of purchased
- other securities as may be determined to be appropnate. power used to displace even higher gas and/or oil-fueled
. If the March 4.1985 IPSC decision las discussed under generatiort The vanances in other operating expenses in
~ Financial Condition") has the effect of allowing. for a sub- 1984-1982 were attnbutable to deferred fuel costs, which at stanaal period of time. less than adequate rate relief needed -Dmes reflected wide fluctuacons in the cost of energy, and to .
for the Company to meet its obligations resulting from the ' the effeds of increased costs of labor, matenals and supplies.~ n - antiopated second quarter 1985 in-service status of Water- and services. ~ ford 3 and Grand Gulf 1. the Company's earnings, liquidity. Total income taxes included in operating expenses and in . Tand financial condicon would be materially and adversely other income in the years 1984-1982 vaned pnmarily because l affected. . of changes in income before income taxes and the increased RESULTS OF OPERATIONS levelof AFDC.
) As mentioned above, net income increased $69.5 milhon For each of the years 1984.1983, and 1982, increased
~ and $14.1 million in 1984 and 1983. respecovely, following a interest charges were pnmarily attributable to the Company's issuance of addioonal debt and to the accrual by the -
l 57.0 milhon decrease in 1982. However net income exclusive ( of AFDCand thecumulative effect of the change in account- Company of interest on the porton of the proceeds used by the Company of the settlemern entered into by the Company
- g y~ ' ing method in 1984, two non-cash items, reflects an increase with a gas suppher in 1982.
of $22.4 milhon in 1984 and decreases of $30.8 milhon and 112.6 milhon in 1983 and 1982. respectruefy. EFFECTS OF INFLATION - .. .. Operaung revenues !acreased $100.9 milhon in 1984 pnma - Despite the reduced level of inflation in 1984 and 1983, its
- nly as a result of the above-mentioned rate increase and an impact on the Company's operacons in recent years has _.
1 1 increase of 6% in energy sales to retail customers. For the _ . been significant (see Note 14 to Finanaal Statements. Effect -
- year 1983. revenue decreased $50.8 milhon and energy sales of inflation on_ Operations (Unaudited)").
to retail customer 5 declined by 7% due to mild weather .
SUMMARY
conditions and reduced industrial activity Revenue increased . The abehty of the Company to secure adequate and omely 6
$77.8 milhon in 1982 primanly as a result of a 1981 retail rate rate relief to cover the costs associated with Grand Gulf I and Waterford 3 and other increased costs will have a significant -
l increase. The change in sales of energy was relauvely small in
* . 1 impact on the financial condition of the Company, and its
,,. 19824 _
- abikty to provide the generaung capacityand other resources -
7 The combined fuel and purchased posver egenses increased during the year 1984 due to increased energy requicements .necessary to serve the present and future energy require-shghtly offset by the lower average unit prices and decreased ments of its customers.-
' in .1%3 pnmanly as a result of a net reduct on in energy M
y -
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-5 M
a IT i REPORT OF" MANAGEMENT-
-^ ~~~-~~ -~~~~'~-
i s
, s_
a.+ L The management of LD JisianM'ower & Light Company financial information through its audit committee, composed has prepared and is responsib!e for the finar'cial statements of outside directors. The audit committee meets periodically and related finanaal information irxluded in this annual with management, the internal auditors, and tne indepen-L report. The financial statements are based on generally dent public accountants to discuss auditing, internal control, accepted accounting prinoples consistentiv apphed, except and financial reporting matters. The independent public for the change in 1984 in the method of Atcounting for accountants and the internal auditors have free & cess to the revenues as descnbed in Note 18 to the finanaal statements. audit committee at any time. To meet ns <espons:bilities with respect to financial The independent public accountants provide an objective [ information, management maintains and enforces a system assessment of the degree to wtlich management meets its [a of internal accounting controls that is designed to provide reasonable assurarxe, on a cost effectrve basis, as to the responsibikty for fairness of finanaal repotng. They regularly evaluate the system of internal accounting controls and i integrity, objectrvity, and reliability of the financial records and perform such tests and other procedures as they deem
- as to the protection of assets. This system includes communi- necessary to reach and express an opinion on the fairness of
[ cation throuch written polices and procedures, as well as the financial statements. Management beheves that these polices and procedures E organization structure that provides for appropnate drvision l; of responsdihty and the training of personnel. This system is provide reasonable assurance that its operations are camed
- also tested by a comprehensive internal eudit program. out with a high standard of business conduct. 1 5 = c_ =
j The hoard of directors pursues its respornibihty for reported i E- - e
- AUDITORS' OPINION =
Louisiana Power & Light Company - We have examined the balance sheets of Louisiana Power R & Light Company as of D"cember 31.1984 and 1983 and
! the related statements of income, retained earnings. and changes in financial position for each of the three years ,
in the period ended December 31. i984 Our examinations were made in accordance with generally accepted auditing y standards and. accordingly. included such tests of the ac-y counting records and such other auditing procedures as we e considered necessary in the (ircumstances , in our opinion, the above-mentioned finanaal statements 7 present fairly the finanaal position of the Company at a December 31.1984 and 1983 and the results of its operations ; and the changes in its finanaal position for each of the ] F three years in the period ended December 31.1984 in ! conformity with generally accepted accounting principles ; E consistently apphed dunng the penod except for the change. E with which we concur. in 1984 in the method of accounting g for revenues as descnbed in Note 18 to the finanaal 3 5 i statements m
$t f, f
= New Orfeans. Loumaru PE Manh' 1985 e T . f"
- p. _.
~ ~'
' BALANCE S HEETS "--""""--""""~~""~~"~~""
December 31,1984 and 1983 Assets 1984 1983 lin Thousands) UTILITY PLANT (Notes 8 and 9): Electnc 51.514 442 51.463.856 Constructon work in progress 2.602 344 2.224.292 Nuclear fuel I l 040__ 4.764 Total 4 127.326 3.692.912 Less accumulated depreciaton 556.406 522.508 Utility plant - net 3 571 420 3.170.404 OTHER PROFERTY AND INVESTMENTS:
. Investment in subsidiary - at equity (Note 8) 51017 46.073 , ,j7 Other 550 515 Total 51 567 46.588 CURRENTASSETS:
Special deposits 10.825 10.8 % Temporary investments - at cost whic.h approximates market: Asscciated companies 600 - Other 9.54 3 7.069 Notes recesable 729 841 Accounts receivable: Customer and other (less allowance for doubtful customer accounts (in thousand3) 51.035 in 1984 and 5135 in 1983) 61 339 55.738 Associated companies 262 197 Accrued unbilled revenues (Note 18) 36 977 - Receivable from gas supplier (Note 11) - 250.000 Deferred fuel costs - 4.577 Matenals and supplies - at average cost 13.372 11,355 Power purchase advance payments (Note 8) 11.475 - Other 9.779 4.105 Total 156 901 344.738 DEFERRED DE81TS: Power purchase advance payments (Note 8} 49.902 - Other _ 19 348 3.586 Total 69 250 3.586 f TOTAL 53 849.138 $3.565.316 see Notes to FnarxW suremern (~ -
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- Capitalization and Liabilities 1984 1983 lin Thousands)
CAPITALIZATION: Comrnon stock, no par value, authorized 150.000.000 shares; issued and outstanding 121,958.900 shares in 1984 and 112.111.100 shares in 1983 (Note 5) S 803.900 $ 738.900 Paid-in capital 758 - Retained earnings (Note 7) 51.199 39.898 Total common shareholder's equity 855 857 778.798 Preferred stock, without sinking fund (Note 5) 145.882 145.882 Preferred stock, with sinking fund (Note 5) 284.501 240.951 Long-term debt (Note 6) 1.471.855 1.173.453 Total 2.758.095 2.339.084 17 - OTHER NONCURRENT UA8fuTIES: Accumulated provision for property insurance 6 852 4.540 Accumulated provision for injunes and damages 1.610 957 Total 8.462 5.497 CURRENT UABlUTIES: Notes payable (Note 4): Associated companies - 100.100 Banks - 77,900 Currently matunng long-term debt 2.54 9 20.462 Accounts payable: Associr vj companies 32.990 48.782 Other 63.096 63.119 Customer deposits 26.451 24.220
- Taxes accrued 8.74 5 4.088 Accumulated deferred income taxes (Note 3) 2.618 (5.086)
Interest accrued 43.191 33.916 Dividends declared 48.777 32.418 Gas contract settlement - liability to customers (Note 11) 62.652 58.884 Deferred fuel costs 16.855 - Other ' ( l.856 2.010
} Total I 309.780 460.813 DEFERRED CREDITS-Accumulated defarred income taxes (Note 3) 126.675 123.147 Accumulated deferred investment tax credits (Note 3) 1/l.482 136.506 Gas contract settlement - liability to customers (Note 11) 451.214 475.000 Other 23430 25.269 Total 772.801 759.922
) l COMMITMENTS AND CONTINGENCIES 'twtes 7. 6. 8. and 9) TOTAL 53.849.138 53.565.316 I i see Notes to Fruncial 5uternerts
y STATEMENTS OF INCOME For the years ended December 31,1984,1983 and 1%2 1984 1983 1982 (in Thousands) OPERATING REVENUES S1.245.659 51.144.743 51,195.583 OPERATING EXPENSES: Operation: Fuel 379 924 349.596 387.710 Purchased power 367.287 385.144 375.924 Other 127.596 100,737 75.244 Maintenance 51.805 46.625 45.556 Depreciation 47.951 45.815 45.286 Taxes other than income taxes 28.397 24.756 22.685 income taxes (Note 3) 35.975 19.616 55.842 Total 1.038.935 972.289 1.008.247 OPERATING INCOME 206.724 172.454 187.336 OTHER INCOME: Allowance for equity funds used duing construction (Note IF) 91.517 71.266 38.967 Miscellaneous income and deductions - net 13.230 6.505 7.353 locome taxes (Note 3) f6.085) [3.020l (1.298) Total 98.662 74.751 45.022 INTEREST CHARGES: Interest on long-term debt i38 824 121.609 100.!74 Other interest - net (Note II) 20.105 21.765 29.880
- Allowance for borrowed funds used dunng construction (Note IF) (36.928) (27.715) (15.154)
L u 18 Total 122.001 115.659 114.900 INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING METHOD 183.385 131.546 117.458 CUMULATIVE EFFECT TO JANUARY I,1984 OF ACCRUING UNBILLED REVENUES (NET OF INCOME TAXES OF $ 16 548 THOUSAND) (Note iB) I7.626 - - NET INCOME S 201.01I S 131.546 5 I i7.458 STATEMENTS OF RETAINED EARNINGS For the years ended December 31,1984,1983 and :982 1984 1983 1982 (In Thousands) . RETAINED EARNINGS. January i s 39 898 5 60.981 5 76.995 i ADD - Net income 20I.011 131.546 117.458 Total 240.909 192.52/ 194.453 DEDUCT: Drvrdends - cash: Preferred stock at prescobed rates (Note 5) 49.207 44.600 33.518 Common stock i10.182 107.786 99.789
- Capital stock expenses. etc. 321 243 165 Total 189 710 152.629 13? 4,//
RETAINED E.\RNINGS. December 31 (Note 7) s 51 199 5 39.898 $ 60 % 5ee Notes to Anarmt statements L
( STATEMENTS OF CHANGES IN FINANCIAL POSITION For the years ended December 31,1984.1983 and 1982 1984 1983 ;982 FUNDS PROVIDED BY: (In Thousands) Operations: Net income (1981 includes 517.6 million speaal item) (Note 18) 5201.011 5131.546 S 117.458 Depreaation 47.951 45.815 45.286 Deferred income taxes and investment tax credit adjustments - net 46 208 16.901 48.703 Allowance for equity funds used dunng construction (Note 1F) (91.517) (71.266) (38.967) Total funds provided by operations 20'653 122,996 172.480 Other Allowance for equity funds used dunng construction (Note IF) 91 517 71.266 38.967 Gas contract settlement (Note 11) (20.018) - f.132.535 Funds on hand or due from gas supplier (Note 11) 247.526 - (782.197) lovestment in subsidiary - 2.627 - Decrease (incrcase) in working capital (13.207) 29.020 6.942 Total funds provided. excluding finanang transactions 509.471 225.909 568.727 Finanang transactions: Common stock 65 000 150.000 50.000 Preferred stock 50.000 75.000 47,720 First mortgage bonds 190.000 250.000 - Other long-term debt i13 543 - 25 Short-term secunties - net - 134.000 - Total funds provided by finanong transactions 418 543 609.000 97.745 Total funds provided 5928 014 5834.909 S 666.472 FUNDS APPLIED TO: Utility plant additions: Construction expenditures for utility plant 5442.051 5548.495 5 506.722 Nuclear fuei 6.276 385 546 Total gross additions (includes allowance for funds used dunng construction) 448.327 548.880 507.268 Other: Drvidends declared on preferred stock 49.207 44.600 33.518 Dnndends declared on common stock 140.182 107.786 99.789 investmer,t in subsidiary 4.944 - 6.543 Gas contract settlement (Note 11) 598.651 - Funds on hand or due from gas supplier (Note 11) - (525.128) - Power purchase advance payments (Note 8) 62.377 - - Miscellaneous - net 18.915 7.770 4.028 Total funds applied to other 275.625 233.679 143.878 Finanang transactions: Redeniption of preferred stock 5.000 - - Retirement of first mortgage bonds 18.000 50.000 - Retirement of other long term debt 2.462 2.350 2.267 Short-term secunties - net i78.600 - 13.059 Total funds applied to finanang transactions 204 062 52.350 15.326 Totai funds appired 5918.014 5834.909 $ 666.472 Decrease (increase) in working capital *: Notes and accounts receivable - net 5(43.531) S (4.019) 5 (15.993J Deferred fuel costs 21432 5,500 (11.020) Accounts payable I15.815) (8(M) 33.166 Taxes and interest accrued 13.932 11.215 (9.804) Other 10.775 17.128 10.593 Total 5!l3207) S 29.020 5 6.942
- Excludes short-term secunties - net currently matunng long-term debt. deferred income taxes, gas contract settlement -
liability to customers included in current liabilities and power purchase idvance payments included in current assets. see Notes n Fnw1oal stawlern i,.
y- 1 NOTES TO FINANCIAL" STATEMENTS ~~~~~- For the years ended December 31,1984,1983 and 1982
- 1.
SUMMARY
OFSIGNIFICANT E. INCOME TAXES ACCOUNTING POLICIE5 The Companyjoins its parent in fihng a consohdated Federal income tax retum. locome taxes are allocated to the A. SYSTEM OF ACCOUNTS Company in proportion to its contnbunon to the consoh-The accounts of the Company are maintained in accordance dated taxable income. with the system of accounts prescribed by the Louisiana Pub- Deferred income taxes are provided for differences between hc Service Comm!ssion (LPSC) which substanually conforms book and taxable income to the extent fermitted by the to that of the Federal Energy Regulatory Commission (FERC)' regulatory bodies for ratemaking purposes. Investment tax
- 8. REVENUES credits allocated to the Company are deferred and amortized Prior to December 31.1983 the Company recognized based on the average useful hfe of the related property revenue when billed. To provide a better matching of beginning with the year allowed in the conschdated tax revenues and expenses, effective January 1,1984, the Com-return.
pany adopted, in March 1984, a change in accounting F ALLOWANCE FOR FUNDS USED method to provide for accrual of the non-fuel portion of DURING CONSTRUCTION esimated unbilled rewoues. Unbilled revenues result from To the extent that the Company is not permitted by its energy dehvered since the penod covered by the latest regulatory bodies to recoves in current rates the carrying costs bilkngs to customers. The cumulatre effect of this account- of funds used for construction, it capitahzes, as an appropri-g ing change as of January 1,1984 was recorded in March ate cost of utihty plant AFDC which is calculated and 1984 and increased 1984 net income approximately $17.6 recorded as provided by the regulatory system of accounts. milhon (net of related income taxes of S 16.5 milhon). Had this Under this uuhty industry practice, construccon work in new accounung method been in effect dunng 1983 and progrest (CWIP) on the balance sheet is charged and the 1982, the Company's net income before the cumulative income statement is credited for the approximate net com-effect would not haw been materially different from that posite interest cost of borrowed funds and for a reasonable shown in the accompanying Financial Statements. return on the equity funds used for construction. This The rate schedules of the Company include fuel adjust- procedure is intended to remove from the income statement ment clauses under which fuel costs are tilled to customers' the effect of the cost of financing the construction program The Company defers under/over recoveries of fuel costs and results in treating the AFDC charges D W= same manler which occur through operauon of the fuel adjustment as construction labor and material costs As norxash items, Clauses until these amounts are reflected in billings to these credits to the income statement have no effect on mstomas. current cash earnings. After the property is placed in service, C. UTIUTY PLANT AND DEPRECIATION the AFDC charged to construction costs is recoverable from Uuhty plant is stated at onginal cost. The cost of additions customers through depreciation provisions included in rates to unhty plant includes contracted work, direct labor and charged for utility service. In accordance with a rate order materials, allocable overheads, and an allowance for the recerwd in February 1984, the Company, beginning March 2, composite cost of funds used dunng construction (AFDC). 1984. used an accrual rate of 3.507; on its investment in The costs of units of property reared are removed from utihty Waterford 3. a nuclear generating unit schedu!ed for opera-plant and such costs plus removal costs, less salvage, are tion in 1985, up to an investment of " i .1000.000, and an charged to accumulated deprecanon. Maintenance and M of 9M on W enq WP W Rs M repairs of property and the replacement of items determined ment in Waterford 3 in excess of $1,695.000.000. For the to be less than units of property are charged to operating enod January 1,1982 through March I,1984, the Comoany expenses. Substantially all of the unhty plant is subject to the used an accrual rate of 3% on its investment in Waterford 3 hen of the Company's Mortgage, up to an investment of $1,260.000.000, and an accrual rate Depreciation is to nputed on the straight-kne basis at rates d 96 m emy NP W on mm M bawu cc the estmated service hves of the various classes of Waterford 3 in excess of 51,260.000.000. property Depreaanon provided on average depreciable prop-TMyy@WmempaWh a ted to approximately 3.3% in 1984 and 1983 and rojects dunng penods of interrupted construccon when in e puon n tenporary aM monunuauon can & D. POSTRETIREMENT BENEFITS 3 # *'"9 # "# " "" #** The Company has postreurement plans covenng sub-stantially aff employees. The Company's pokcy is to fund pension costs accrued. Cnsts of other postretirement plans are accrued as incurred. Q- -
ws a n.wemm.marmwew.m mm nmmmmmm =amcww waa n G. OTHER NONCURRENT LIABILITIES requirements in respect of the deferred amount through The Company provides for uninsured property nsks and for external finanong arrangements and would bill the related claims for injunes and damages through charges to operat- carrying costs to customers on a current basis until the ir*g expenses on an accrual basis. Such expenses have been deferred amount was fully recowred. allowed for ratemaking purposes. The application also requested that, in addition to the rate H. RECLASSIFICATIONS relief related to Waterford 3, the LPSC issue an order poor to Certain reclassificatons of previously reported amounts the in-service date of Grand Gulf 1, to be put into effect have been made to cunform with current classifications. when that unit commences commercial operation, accepting and approving " formula rates" proposed in the application in
- 2. RATE MATTERS order to provide the Company with the additional electnc revenues it will need to meet its purchased power expenses On Apol 12.1984, the Company filed with the LPSC a associated with power and energy from Grand Gulf I. These general rate increase application with respect to customers formula rates if apphed on the basis of the allocation to the under itsjurisdiction. The Company requested authonzation Company of a 14% share of MSE's share of the power from to put into effect, upon commencement of commercial Grand Gulf I as determined in the initial decision of the All operation oi Waterford 3, new retail rate schedules designed of the FERC in proceedinos pending before the FERC, would to prov de additional annual net revenues, based on the test require a net increase in test year revenues of 581 milhon, or.
y?ar ended June 30.1983, of $234.5 million. The amount so if apphed on the basis of a 38.57% share of MSE's share of 21 - requested was based on the additional revenue require- power from Grand Gulf I being allocated to the Company in ments of the Company after giving effect to the projected such FERC proceedings. as onginally proposed in such reduction in fuel costs assocated with nuclear generation in proceedings, would requrre a S261.1 million net increase in the amount of approximately S I19.8 milhon and a rate test year rewnues. These amounts give effect to the projected rrxxferation proposal. This rate moderation proposal contem- reduction in fuel costs associated with the nuclear fuel com-plated that the Company would defer the collection from ponent of such purchased power expenses in the amounts customers of an aggregate of 5270 milhon of the amount of approximately 512.4 milhon and 529 milhon, respectively. Otherwise recoverable by it on its investment in Waterford 3 On March 4,1985. the LPSC denied the April 1984 rate dunng the first three years of commercial operation of that request on the basis that the commercial operation dates of unit, would neither defer further amounts nor recover any the two units were still uncertain. The Company plans to deferred amounts in the fourth year, and would collect such refile its rate case and to take all necessary legal and other aggregate deferred amount from customers over the follow- action in order to obtain the rate rehef necessary to enable ing five years. The proposal further contemplated that the it to meet its obhgations resulting from the antiopated Company would fund a substantial portion of its cash second quarter 1985 in-service status of Waterford 3 and Grand Gulf 1. d
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- 3. INCOME TAXES Income tax expense is composed of the following:
1984 1983 1982 Current: lin Thousands) Federal 5 5.019 5 2,725 5 1,463 State /.381 3.010 6.9 74 Total 12.400 5.735 8.437 Deferred - net-Liberalized depreciation 826 4.550 5.967 Deferred fuel cost (10 3181 (2.663) 5.336 Unbilled revenue 18.081 (34 8) (689) Other 2 /02 2.069 5.345 Total i1.231 3.608 15.959
- " 22 investment tax credit ad 3 ustments - net 34 9 /6 13.293 32.744 Recorded income tax expense 558 608 522.636 557.140 Charged to operations S35.9/5 S19.616 555.842 Charged to other income 6 085 3.020 1.298 Charged to cumulative effect of change in accounting method t 6.548 - -
Recorded income tax expense 58 608 22.636 57,140 income taxes applied against the debt component of AFDC 34.24 9 26.019 14.227 Total income taxes 591.85/ S48.655 571.367 Total income taxes differ from the amount computed by applying the statutory Federal income tax rate to income before taxes. The reasons for the differences are as follows: 1984 1983 1982
% of % of % of 1 Pre 4 w Pre-Tax Pre-Tax Amount locnme Amount income Amount income Computed at statutory rate 5119.415 4600 570.924 46.0% 580.315 46 0%
increases (reductions) in tax resulting from: Allowance for funds used during construction (58.6/9) (11/) (45.500} (29.5) (24.896) (14.3) State income taxes net of % Federalincome tax eff&t 1 801 11 1.895 1.2 4.652 2.7 Other - net (4/39) II 8) (4.683) (3 0) (2.931) (1.7) Recorded income tax expense 58.608 21 6 22.636 14.7 57.140 32.7 income taxes applied against debt component of AFDC 34 149 90 26.019 12.3 14.227 5. I Total income taxes s 97.85/ 316y 548.655 27.0% 571.367 37 8 % Unused investment tax credits at December 31,1984 Curr. me tax t, ming differences for which deferred amounted to 570. I milliun. These credits may be applied income t< rt been provided are 5680 million. 559.0 acainst federal income tax Isab!! ties in future years. If not million. and . ..., million in 1984.1983, and 1982. respectivety. used. they will expire in 1992 through 1999. W ,
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- 4. LINES OF CREDIT AND The Company may borrow from these sources subject onty RELATED BORROWINGS to its maximum authonzed level of short-term borrowings.
The Company has received authonzation from the Secunties At December 31.1984 the Company had $28.1 mi" on in and Exchange Commission under the Public Utility Holding lines of credit with Louisiana banks and participated with the Company Act of 1935 to have outstanding at any one time other Middle South System operating companies in $180 short-term borrowings aggregating not more than the lesser milhon of consolidated lines of credit with banks outside the of $200 million or 10L of the Company's capitalization. At Middle South System area of service. In February 1985, these the end of the years 1984 and 1983 the aggregate amount of non-terntonal bank lines of credit were reduced to $140 unused lines of credit with Louisiana banks were 528.1 million. Compensating balances (approximately 5% of the million and $29.2 million, respectively. The operating compa-coinmitment amounts) or equivalent fees are required by nies had available at the end of 1984 and 1983 5180 million certain of the lending banks. Additionally, the Company and 5122.1 mdlion, respectively. under the consolidated lines partiapates with certain other companies of the Middle of credit. South System in a money pool arrangement whereby those The short-term borrowings and the applicable interest companies with available funds make short-term loans to rates (determined by dividing applicable interest expense, other companies in the System having short-term borrowing excluding that accrued on settlement agreement funds used U-requirements. The Company also has arrangements with a by the Company (see Note 11). by the average amount commeraal paper dealer for the sale of commeraal paper. borrowed l for the Company were as follows: 1984 1983 1982 Un Thousands) Maximum borrowing 5159 201 S185.118 5145.793 Year-end borrowing
$178.000 5 44.000 Average borrowing-Bankloans 5 32 861 5 59.699 5 31.728 Commeraal paper S 592 5 25.180 Assoaated companies 5 16 066 S 25.892 -
Average :nterest rate dunng the penod. Bank loans iI 7+ 9.9% 15.4 % 9.5% 15.7% Commercial paper Assoaated companies
- 0 n, 94% -
Average interest rate at end of penod. 11.0 % 9 Erb Bank loans Co'mmercial paper Assoaated companies 9.9h - i
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- 5. PREFERRED AND COMMON STOCK Preferred stock at December 31,1984 and 1983 consisted of the following:
Shares Authcxized at Shares Outstanding Current December 31 at December 31 Call Pnce Cumulative. 5100 Par Value 1984 1984 1983 Per Share Without sinking fund: 4.96% Senes 60 000 60.000 60.000 5104.25 4.16% Senes 70 000 70.000 70.000 104.21 4.41% Series 70.000 70.000 70.000 104.06 5.16% Senes 75 000 75.000 75.000 104.18 5.40% Senes 80.000 80.000 80.000 103.00 6.44% Senes 80.000 80.000 80.000 102.92 g y 9.52% Senes /0.000 70.000 70.000 106.58 7.84% Senes 100.000 100.000 100.000 105.74 7.36% Series 100 000 100.000 100.000 105.20 8.56% Senes 100 000 100.000 100.000 105.28 9.44% Senes 3n0.000 300.000 300.000 109.08 11.48% Senes 350.000 350.000 350.000 I i 1. I I Total I 455.000 1.455.000 1.455.000 Unissued 3.045.000 - - Total 4 500 000 1.455.000 1.455.000 Cumulatrve. 525 Par Value With sinking fund: 10.72% Senes 2.280 000 2.280.000 2.400.000 5 27.01 13.12% Senes I 5/0 000 1.520.000 1.600.000 27.46 15.20% Senes I /00 000 1.200.000 1.200.000 28 80 14.72% Senes 2.000 000 2.000.000 2.000.000 28.68 12.64% Senes 3.00dOOO 3.000.000 3.000.000 28.16 19 20% Series 2 000.000 2.000.000 - 29.80 Total 12 000.000 12.000.000 10.200.000 Unissued 9.800 000 - - Total /I 800.000 12.000.000 10.200.000 1984 1983 (in Thousands) Without sinking fund: Stated at 5100 a share 5 145.500 $ 145.500 Premium 382 382 Total preferred stock and premium. without sinking fund S 145882 S 145.882 With sinking fund: Stated at $25 a share S 3]O.000 5 255.000 Issuance expense a 15.499) (14.019) Total preferred stock and issuance expense, with sinking fund S 284.501 5 240.951 L
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The 10 72%.1312% 15.20b.14.72%.12.64% and 19.20% Number of Shares preferred stock issues are each subjen to a sinking fund 1984 1983 1982 pursuant to which tne Company is obligated to redeem. Common Stock shares commencing on July 1,1984. October I,1984, November I. sold 9.847.800 22,728.000 7,576.000 1985. May 1,1987. February 1.1988 and August 1,1990. 525 Preferred Stock respectively. and ending in the year in which all of the shares shares sold 2.000.000 3.000.000 2.000,000 of said issues have been redeemed. 120.000,80.000,60.000. 525 Preferred Stock 100.000.150,000 and 400.000 shares. respectiveV. at a pnce shares redeemed 200.00 - - of $25 per share plus accumulated and unpaid dividends. In September 1983 the Company sold 3,W4.000 shares of The changesin the number of shares of Common and its common stock, no par value, to its pareilt company Preferred Stock outstanding during the three years ended concurrently with, and for an amount equal to. the payment December 31.1984 were as follows: of a 526.359.000 cash dividend on its common stock.
- 6. LONG-TERM DEBT 25 -
Long-term debt at December 31,1984 and 1983 consisted of the following: 1984 1983 First Mortgage Bonds: (In Thousands) 3 A% 5enes due 1994 5 - 5 18.000 9 % Senes due 1986 15 000 75.000 4 %% Senes due 1987 20 (v 20.000 15%% Senes due 1988 50 DJO 50.000 10%% Senes due 1989 45.000 45,000 5 % Senes due 1990 20.000 20.000 16 % Senes due 199I 75.000 75.000 I6%% Senes due December I,1991 100.000 100.000 I2 % Senes due 1993 100 000 100.000 4%% Senes due 1994 25,000 25.000 16 % Seres due 19% 100.000 - 5%% Senes due 1996 35 000 35.000 5%% Senes due 1997 16.000 16.000 6b% Senes due September 1.1997 18.n00 18.000 74% Senes due 1998 35.000 35.000 9%% Senes due 1999 15.000 25.000 9%% Senes due 2000 10 000 20.000 74% Senes due 2001 25 000 25.000 7b% Senes due 2002 25.000 25.000 7b% Senes due Nowmber 1. 2002 25 000 25.000 8 % Senes due 2003 45 000 45.000 8%% Senes due 2004 45 000 45.000 8h% 5enes due 2006 40.000 40.000 10 % Senes due 2008 60 000 60.000 13b% Senes due 2009 55 000 55.000 13%% Senes due 2013 100 000 100.000 13 % Senes due September I,2013 50 000 50.000 14 %% Seres due 2014 55 000 - 15%% Senes due December I. 20!4 h 000 - Total First Vortgage Bonds I. U 9 000 I.147.000 A. .j
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- 991 1983 Other:
St. Charles Pansh Pollution Control Revenue Bonds. Senes 1984 (less S 1,457 on deposit with trustee) i I 3 913 - St. Charles Pansh Pollution Control Revenue Bonds. Second Senes 1984 (less S 105.000 held in cash collateral secunty account) - - Other pollution control and industnal revenue bond obligations. 6.4(7k-BL due 1988-2009 16 300 16.300 Pnnapal amount of muniapal revenue bond Jblfgallons. I %%-8% due senally 1985-2004, and other future obligations under operating agreements M 341 36.804 Total Other __ 164 185 53. lM Unamortized premium and discount on long-term debt - net (8. /8 I J (6,189) Total Long-Term Debt i.474.401 1.193.915 Less - Amount due within one year 1.549 20.462 Long-Term Debt excluding Amount Due Within One Year 51 471.855 51.173.453
- N in June and December 19M the Company entered into 7. RETAINED EARNINGS agreements with St. Charles Parish (Pansh) whereby the Pansh issued SIIS million (Senes 1984) and 5105 milhon The Mortgage, which is presently more restrKt Ve than the (Second Series 1984). respectively. In adjustable / fixed rate Articles of locorporation, contains provisions restnct:ng the Pollution Control Revenue Bonds due 20!4. The bonds bear payment of dividerxjs or other distnbutions to common
. interest at 835% per annum for three years and thereafter stockholders. At December 31.1984. all retained earnings convert to an annually adjusted interest rate, not to exceed were free from such restnctions.
15% per annum. The bonds are secured by letters of credit and are subject to redemption in June and December 1986. 8. COMP.ilTMENTS AND CON 7"lGENCIES respectively. at the option of the issuers of the letters of credit, if Waterford 3 is not in commeraal operation by Jan- Capital Requirements vary 15. I186. The Company's construction program contemplates the At December 31,1984. the Second Senes 1984 bond following estimated expenditures (including AFDC). proceeds are held by the issuer of the letter of credit (issuer) in a cash collateral secunty account. The Company and issuer 1985 1986 1987 have 120 days following the commeraal operation date of (in Millions) Waterford 3 to obtain partrapation from other banks in the Construction expenditures $321.1 5217.9 $ 180.2 letter of credit. at which time the proceeds will be released to AFDC (included above) 91.5 8.1 13.5 the Company If such partiopation is not obtained, the bonds are subject to redemption. at the option of the bondholders- In addition to the capital requirements necessary to fund Sinking fund requirements on First Mortgage Bonds and the construction program, substantial additional capital would matuntjes under long-term debt instruments in effect at be required in the penod 1985-1987 if certain costs assoa-December 31,1984 for the years 1985 through 1989 are as ated with Waterford 3 are defer =d in accordance with a follows' rate moderation proposal to be included in a retail rate Year Sinkinq Fund
- Matunties" increase application with the LPSC.
(in Thousands) 1985 511.290 5 2.549 System Fuels, Inc. 1986 12.440 77.675 The Company has a 33%nterest in System Fuels. Inc. (SFI). 1987 12.240 22.774 a jointly-owned subsidiary of the four pnrx spal operating 1988 12240 52.832 subsidianes of Midd'e South Utikties. Inc. (MSU). SFl operates 1989 l 1.740 48.016 on a nordprofit basis for the purpose of planning and imple-
*Sirt. q urd recurrements may be sansried by certihcanon of menting programs for the procurement of fuel supplies for preperty acdoons at a rate of !6/% of such requirements "It is anuopmf rhat First Mortgage Bond rrutunties will te all of the oIrrating companies; its costs are pnmanly re-refinanced a; matunty covered through charges for fuel dekvered.
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i E 4 r The parent companies of SFI have made loans to SFl to for use at the proposed Wilton Station with an option to finance its fuel supply business under a loan agreement purchase an additional 50 million tons. By separate agree-
- dated January 1.1984, as amended January 1.1985. which ment, the Company guaranteed SFI's performance under the provides for SFl to borrow up to S I20.000.000 from its parent Contract and agreed to purchase the coal from SFl. SFl has companies throup December 31,1985. As of December 31 advised the coal supplier that because of forces bgend its - - - - -
1984, the Company had loaned 56.204.000 to SFl pursuant to control including in particular the regulatory situatica this loan agreement and the Company's share of the unused the earliest possible dates that the two units of the station loan commitment was $45.537.000. Notes under this agree- could be put into operation are 1993 and 1995, respectively, ment ma:ure December 31. 2010. In addition, the Company and further that the station may be delayed to a time that had loaned SFI S44.806.000 under previous loan agreements. would make the existing contract non-viable. The supplier Notes mature in 2002 and 2008 under the provisions of the has refused to agree that regulatory constraints or any other previous loan agreements. difficulties constitute events of force majeure under the Coal in connection with certain of SFl's borrowing arrangements. Supply Agreement. but has indicated a willingness to con-SFI's parent companies, including the Company, have tinue an exchange of views with the hope that they will lead covenanted and agreed severally in accordance with their to a mutually satisfactory resolution of the matter. Resolution respective shares of ownership of SFl's common stock, that of this matter could adversely impact the cost of fuel for the 27 they will take any and all action necessary to keep SFi in a Wilton Station, or could possibly expose either SFl on the
; sound finanaal condition and to place SFl in a position to Company to claims for significant damages in the event SFl discharge, and to cause SFI to discharge its obligations under does not ultimatery prevail in asserting that ewnts of ferce
[ these arrangements. At December 31.1984. the total loan majeure have excused performance or in the event efforts to F ( commitment under these arrangements amounted to tratigate any possible damages are unsuccessful. r 5225.000.000 of which 5203.625.000 was outstanding at that Availability Agreement and b date. Also. SFI's parent companies, including the Company. Power Purchase Advance Payment Agreement have made similar covenants and agreements in connection The Company, together with the other System operating w;th forxyterm leases by SFl of oil storage and handling companies, is obligated under the Availability Agreement to [ faalities and coat hoppar cars. At December 31.1984. the Middle South Energy. Inc. (MSE) in accordance with stated i aggregate discounted value of these lease arrangements was percentages (the Company 26.9% AP&L 17.1% MP&L 31.3% e 580.769.000. New Orleans Public Service Inc.(NOPSI) 24.7%) to make pay-SFl has contracted with ajoint venture for a sur "c' coal ments or subordinated advances adequate to cover all of
, from a mine in Wyoming, which, based on ests' ad re- the operating expenses and certain of the capital costs of g serves, is presently expected to provide for at lea . *urty MSE. In addition, under the Power Purchase AcNance Pay-years of the projected requirements of the Independence ment Agreement the Company. together with the other i Station SFI's parent companies, including the Company, each System operating companies, agreed, if Grand Gulf I were acting in accordance with their share of the ownership of not placed in commercial operation by December 31.1983.
SFI's common stock. Joined in, ratified, confirmed and to make advance payments to MSE for pont purchases r! adopted the contract and obligations of SFI thereunder. Under which in the aggregate total $12.5 million per nonth. Such ,! the contract. envestment in the mine for leases, plant and payments, adjusted to exclude AP&L as contemplated by the equrpment is the responsibility of thejoint venture. In order Reallocation Agreement discussed in the next paragraph. [ to limit thejoint venture's investment nghts and. hence, the commenced January 2.1984 and will continue until com-amount to be paid to it as a component of the price of coal, mercial operation of Grand Gulf I or December 31.1985, the contract provided that 5FI invest any funds for plant and whichever occurs earlier. The Company's share of these r equipment in excess of a speofied amount. Arkansas Power monthfy payments is 54.8 million. Through 1984. 53.9 billion
& Light Company (AP&L). Mississioni Power & Light Com- had been expended by MSE on the Grand Gulf plants' two pany (MP&L) and Arkansas Electric Cooperative Corporation, units the first unit of which is scheduled for commeraal as growners in part of the Independence Station, have operanon in the second qwrter of 1985.
t agreed to make the inwstments rather than SFl and, accordingly. Reafiocation Agreement have reimbursed SFI for investments previously made by it. Effectrve November 1981, the System operating companies I SFl executed a coal supply agreement for the purchase of entered into a Reallocation Agreement allocating the capaaty
? approximately 100 mdleon tons of coal over an 18 year penod and energy available to MSE from Grand Gulf I and 2 as
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r g - n ,y , w w ' ? ; L Na +,a . ~ ~. - ~ . . . ~ . -, .~ -. . ~. . ~. .~ ~ . , . . .,~,,,~.,,.,.,...<,...,-.,,..-.,.--....;.,-..w.~..-..- w. b t [follows: the Company. 38.57% and 26.23%. MP&L 31.63% . Company, the other three System operating companies also
' and 43.97% and NOPSI,29.8(M and 29.80%. respectrvely. have intervened in the proceeding.
; This allocation was consistent with a prior allocation of . On Apnl 30.1982. Middle South Services. Inc. (MSS) on g y icapaaty and energy for the units arnong the Company, behalf of the System operating companies. hied with the MP&L and NOPSI. pursuant to a memorandum of under- FERC for approval of the New System Agreement that pro- ,
- standing executed by the System operating companes on l vides for the coordinated planning. construction, and operar r
+
JJuly 21.1980. Under the Reallocation Agreement, the Company tion of their generation and transmission fachties. Rates S MP&L and NOPSI. in proportion to such allocat.ons, have , under the New System Agreement became effective on i assumed all of the responsibihties and obhgations of AP&L . January I,1983, subject to refund. Vanous parties have inter- [ with respect to these units under the Availabihty Agreement vened in this proceeding. Some parties are contesting the
. and the Power Purchase Advance Payment Agreement and, method by which the agreement equalizes capaoty and
~
in consideration thereof, AP&L has rehnquished its nghts in . energy among the System operating companies and certain R ' the Grand Gulf Statiort However, each of the System operat. proposals, if adopted. could cause significant changes in , 3 ing companes, including AP&L. remains pnmarily hable to ' the allocation of costs among the companies. Hearings 1 MSE and its assignees for payment or advances under the concluded in December.1983. On February 4,1985. the AU
' "E; ~ Availability Agreement and the Power Purchase Advance canng the New System Agreement proceeding issued his - _ ' Payment Agreement in accordance with the respective origi- initial deosion recommending that the New System Agree-6 nal percentages set forth in the immediately preceding . ment be adopted, as filed with the FERC. with certain modF
{ paragraph. AP&L would be obligated to make its share of the fications. Principally, the deosion recommended that a payments or advances only if the other System operating . 15.75% return on common equity be granted; that no penodic
,_ companes were unable to meet their contractual obligations. -review conditions be attached to approval of the New The percentage allocations to the System operating com - - System Agreement; that production cost equalization of all S panies of capaaty and energy available to MSE from Grand System generating units, as proposed by vanous intervening
- Gulf I and 2, as set forth in the agreements referred to above, parties, not be granted; and that the reserve equalization
- are subject to the approval of the FERC, which hasjurisdic- provisions in the New System Agreement, as hied, be '
'" ~ adopted. However, the AU went on to recommend that the tion in the mattet _ Unit Power Sales Agreement and . - Grand Gulf Station be integrated into the New System New System Agreement Agreement by having each of the System operating com-
. The System operaung companies, including the Company. - panies pay for the capacty and energy costs of Grand Gulf ;
have requested, or will request, from their respective state based on the ratio that each System operating company's - pubhc utihty commissions rate adjustments adequate to annual demand bears to tf'c annual demand of the entire t permit them to meet their obhgacons to MSE to purchase System and that each System operating company's share of l ' ~ s : power under the Unit Power Sales Agreement (See Note 2). Grand Gulf be included in calculating such Company's cap-.
~' Under the Unit Power Sales Agreement, as filed with the abihty, and. consequently, its reserve equalization payments.
FERC, the capaaty and energy available to MSE from Grand This decision is subject to review of the FERC. l Gulf Station vmuld be sold to the Company. MP&L and in an effort to resolve the difficult and complex issues
* ' NOPSI in accordance with the percentages set forth in the involved in the Unit Power Sales Agreerrent and the New
' Reallocation Agreement discussed above. An Administrative System Agreement proceedings, the System operating L Law Judge (AU) of the FERC has rendered his initia! deosion . companies, MSE, and MSS, as agent for the System operating =
regarding such Agreement The AU has deferred any decia companies, submitted an Offer of Settlement to the FERC on sion on Grand Gulf 2 and has recommended that capaary January 4.1985. Under the terms of the Settlement Offer, the K " and energy from Grand Gulf I be allocated to AP&L as well New System Agreement as currentry in effect would remain
^
ias the other System operating companies. The AU's deosion in effect unchanged. The Unit Power Sales Agreement, as j allocates MSE's share of the capacity and ererge f am Grand . proposed to be amended.anocates M5E's share of the g Gulf I. as follows: 14% to the Company. 36% to AP&L 33% to capacty and energy from Grand Gulf 1, from the date
; MP&L'and 17% to NOPSI. compared to MSE's request that of commercial operation through December 31,1990, as
~
s
- such costs be allocated 38.57% to the Company,3163% to follows: I4% to the Company,'l7.1% to AP&L 19% to MP&L
.MP&L and 29.80% to NOPSI. This deosion, which AP&L is - 17% to NOPSI and 32.9% as inventoned capacty Effective :
opposing is subject to review of the FERC. In addiuon to the - January 1,1991, the allocation changes as follows: 27.48%
....s 2 fL'
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+mu ==.mme .wemem.m-.wammu,.anummm-mm.u.2m----w to the Company. 27.87% to AP&L. 24.42% to MP&L and nuclear fuel expense and provisions to recover such costs 20.23% to NOPSI. Accordingly. taginning January 1,1991. have been made in an application to the LPSC. The Company the Company would commence paying its respective share has executed a contract with the Department of Energy of the full cost of service of Grand Gulf 1, including amorti- (DOE) whereby the DOE will fumish disposal service for the zation of the deferred carrying charges on inventoried Company'} spent nuclear fuel at a cost of one mail per capaaty over the remaining hfe of Grand Gulf 1. plus a kilowatt-hour of gross generation.
return on the deferred canying charges. This proposed FederalIncome Tax issues - IRS Offer of Settlement is subject to review of the FERC. The Federal income tax returns for the years 1971 through On February 22.1985, the FERC issued an order convening 1978 have been examined by the IRS. For the years 1971 a settlement conference for the purpose of addressing the through 1976. all issues. Other than an issue involving the proposed Settlement Offer and of resolving the issues in the taxabikty of customer deposits, have been settled and a tax Unit Power Sales Agreement and New System Agreement assessment of 51.6 milhon, pfus interest of $18 milhon. has proceedings. The initia! settlement conference is scheduled been paid. Payment of the tax assessment and interest did to conwne on March 12,1985. not have a material effect on net income. For the years 1977 It is not possible to predict what decision or deosions the and 1978, the IRS has proposed certain adjustments that. FERC will ultimately render in the New System Ag eement g except for the customer deposits issue, are not matenal. A and Unit Power Sales Agreement proceedings cr with re- wntten protest has been filed with the IRS. Any additional tax spect to the Offer of Settlement. If timely recovery of any habshty that may result from resolution of the customer cost allocated to the Company as a result of any FERC deposits issue would not have a material effect on net decision in these cases is not permitted by the LPSC, the income because income taxes on customer deposits would Company's finanaal posrtion could be adversely impacted. be normalized. Nuclear Uabihty insurance Consolidation with NOPSI As of December 31,1984, tt e Pnce-Anderson Act hmited in the interest of increased economic efhciency, the Com-the public habikty nf a hcensee of a nuclear power plant to pany and NOPSI have developed a plan to consolidate the 5620 milhon for a singte nuclear incident. This hmit will two companies and their operations into a new company irurease by 55 million for each add;aonal operating hcense to be called Louisiana Power & Ught Company. MSU, wtich issued by the Nuclear Regulatory Commission (NRC) Insur- currentry owns all of the outstanding common stock of the ance for this exposure is provided by private insurance and Company and NOPSI. would own all of the common stock an indemnity agreement with the NRC. Every bcensee of a of the new company. nuclear power plant is obhgated, in the event of a nuclear inodent irnolving any commeraal nuclear fachty in the 9. LEASES United States that results in damages in excess of the pnvate insurance, to pay retrospective assessments of up to 55 mil- In 1980. the Company entered into a sale and leaseback hon per incident for each hcensed reactor it operates or of certain office buildings and related real propemes. A gain up to a maximum per reactor owned of 5'O milhon in any of 513.438.000 has been deferred and is now being amor-calendar year. At December 31.1984 the Cnmpany had one tized over tre kfe of the lease. The lease is for a pnmary licensed reactor. term of 20 years and requires minimum annual rentals of The Company is a member-insured under a pnmary approximately 52.996.000 through 1985 and $3,307.000 property damage insurance program provided by Nuclear thereafter. Mutual Limited. a mutual insurer. As a member-insured with Rental expense amounted to approximately 55.736.000, this mutual. the Company is subject to assessments if losses 55.586.000 and 55.748.000 in 1984.1983, and 1982. respectively exceed the accumulated funds ava:lable to the insurer. The The Company has SEC authorization to lease nuclear fuel present maximum assessment for inodents occurnng dunng up to $130.000.000. Lease payments. based on nuclear fuel a pohcy year is approximately $21 milhon. use, will be treated as cost of fuel. The lease, unless sooner Spent Nuclear Fuel terminated by one of the parties. will continue through June Under the terms of its nuclear fuel lease. the Company is I. 2028. The unrecovered cost base of the lease at Decem-responsible for the disposal of spent nuclear fuef. The ber 31,1984.1983. and 1982 was 5129.230.000. $120.332.000 Company considers all costs incurred or to be incurred in the and $108.479.000, respectively use ard disposal of nuclear fuel to be proper components of Other lease commitments are not significant.
m mtessummmarzerr:cwc.mysn;mnennemmur.mmac-mnest=cmex=1auxx:ssa
- 10. POSTRETIREMENT BENEFIT 5 provided through vanous means including payments of premiums to insurance companies and/or accruals for self The companies of the Middle South System have vanous insurance pohcies managed by insurance companies. The postrebrement benefit plans covenng substanaally all of their Company recognizes the cost of providing these benefits by employees. expensing the payments made to the insurance companies.
Pension plans are administered by a trustee who is responsi- The cost of providing these benefits for rearees is not ble for pension payr ents to recrees, Vanous investment mana- separable from the cost of providing benefits for active gets base responsibahty for management of the plans' assets. employees. The total cost of providing these benefits and the in addinon. an independent actuary performs the necessary number of active employees and reurees for the last three actuanal valuauons for the individual company plans. fiscal years were as follows: Effective January 1,1982, the Company modified the method of amortizing prior service costs by changing from 1984 1983 1982 a fixed amortizanon period of thirtyyears to varying amortiza- Total cost of hea.th care Don penods not to exceed thirty years. The effect of this and hfe insurance change on 1982 pension expense was not significant. Total 56.598 55.426 $5.181 (in thousands) 30 pension expense of the Company for 1984.1983 and 1982 Numberof actrve was $7.471,000, $6.841,000 and 55.007.000 respertisely- employees 2.915 2,700 2.6 74 The companson of the actuanal present values of accumu- Number of retirees S/2 491 4 73 lated pension plan benefits and plan net assets for the Company's defined beneht plan is presented below. This companson was determined in accordance with the provi. 11. SETTLEMENT AGREEMENT sions of Statement of Financial Accounung Standards No. 36 WITH GAS SUPPLIER which requires the use of certain assumptions which are A dispute between a gas suppher and the Company different from those used by the Ccmpany's actuary in ansing from the gas suppher's claimed inabihty to deirver full determining an appropnate lesel of funding for the Company. quantties of fuel gas due the Company under several natural gas contracts was settled by the execution of a settlement
#* 7 'I agreement on June 4.1982. The settlement agreement provides for the payment of 51.087 bi' hon in cash (of which pn Thousands) 5587 milhon 5250 milhon and $250 milhon were rece sed by Actuarial present value of the Company in Jur.e 1982. January 1%3 and January 1984, accumulated pension plan respectively) plus a guaranty of savings of at least 5585 benefits: milhon in certain gas acquisioon costs between 1982 and Vested 5 54 348 549.759 [996. In March 1983. the LPSC ordered in general that the Norv*sted 3 584 3.876 refunds be made as follows: the $587 m.!' ion received on Total 5 57931 $53.635 June 4.1982, plus interest, or a total of $637 milhon. shall be "I " * "* " *#7 Net assets available for in ten qualinMm Wnning in N pension benefits s i 10138 592.935 and the 5250 milhon received in Jwuary 1984 shall be refunded in nine equal annual installments beginning in The assumed rate of retum used in determining the 1985. In addition, in February 1984 the LPSC ordered the actuanal present value of accumulated pension plan benefits Company to refund 532.6 milhon, represenung interest not was 9k. already covered in its March 1983 refund order, to customers The Company also provides certain health care and Ofe in equal installments over a nine year penod beginning with insurance benefits for retired employees. Substantially all the 1985 refund. As a result of the LPSC Ordets, the Company ;
employees may become chgible for these benefits if they accrued in 1984,1983, and 1982 net interest expense in the i reach retirement age whife still working for the Company. amounts of 59.2 milhon. $ 11.1 milhon, and $19.2 milhon. These benefits and similar benefits for active employees are respectrvely. W
r_ ._
> X utR Cr 103.4.W+t:M @WWELWMS&%ts;410IS$5t*WEXT%YJ$i42XJAftW4EW4*CTATELW#hYM.$M3R.MP./4"* - "N
- 12. TRANSACTIONS WITH AFFILIATES and $30.832.000 in 1982. Operating expenses include char-ges from affiliates for fuel cost, purchased power. and techni-The Company buys electncity from and sells electnoty to cal and advisory services totalling $338.686,000 in 19C4 the other operating subsidianes of MSU its parent. under $339.314.000 in 1983. and 5407.903.000 in 1982.
rate schedules filed with the FERC. In addition. the Com-pany purchases fuel from SFl and receNes technical and adv'- sory services from Middle South Services. Inc.
- 13. QUARTERLY RESULTS (Unaudited)
Operating revenues include revenues from sales to affili- Unaudited operating results for the four quarters of 1984 ates amountrng to $12236.000 in 1984 $25.310.000 in 1983. and 1983 follow: Operating income Guarter Operating As Previously As Ended Revenues Reported Restated (2) Net income 31 - (in Thousands) 1984 M,nch f l) 516/.901 531 665 540 0/6 557.100 June 195h16 61.616 54155 45.431 Septemter 37//// 66.510 66 510 55.167 Dry ernt wr Di.835 46.933 46.933 43.213 1983. March 267.205 33.016 38.424 23.623 June 252.322 30.929 37.017 28.254 September 349.138 49.177 56.166 47.373 Decernber 276.078 33.313 40.847 32.296 (1) For the quarter ervh1 March 31.1984 net income was increased by 5 I 76 miflion as a result of a change in accounting method to prowk> for the initial accrual of the non-fuet portion of estimated unbilled revenues (See Note 1B) (2) in order to conform finarrial statement presentaton to rate-making treatment. the Company has reclassified certain income tax credits from inclus#on en other income to erxiusion in operating income. Accordingly operating income for the quarters ended March 3!,1984 Jtse 30.1984 ark 1 for each of the quarters in 1983 has tx=en restated. l The business of the Company is subject to seasonal intenm penod should not be considered as a basis for fluctuations with the peak penod occurnng dunng the estimating the results of operations for a full year. l summer months. Accordincfy earnings information for any
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w - l l 7 i c e_ & . iM.L EFFECTOF NWLARON ^ Accounting StandardsNo.33,"FinancialReportingandChang - ON N l W ing Prices", as amended by Statement of Financial Account-1The following supplementary information about the effect -' 'ing Standards No. 82. It should be viewed as an estimate of
' the effects of changing pnces, rather than as a prease i "of changing pnces on the Company is provided in accor .
^
idance with the requirements of Statement of Financial measure. s- , c ' Statement of income from Operations and Other Finanaal Data Adjusted for Effects of Changing Prices -
- for the Year Ended December 31,1984 lin Thousands) ;w::p32 As Reported in Adjusted for the . Changes in Finanaa! Speafic Pnces ,
Statements (Current Costs)
- Rewnues*
51.245.659 ~ $ l.245.659 Operating expenses (excluding depreciation)*
~
990.984 .990.984-Ii
~ '
Depreciacon ' 47.951 122.824-
. - Total operating expenses 1.038.935' l. I 13.808
; Operating income 206.724 ' 131,851 c Other income * . '. 98.662 - 98.662
- Interest & other charges * ~ 122.001 122.001 7
income from operations (excluding adjustment to net recoverable cost) 5 '183.385 5 108.512 _ .q nlncrease in specific prices (current costs) of property, plant, and equipment
, . - held during the year **f 5 107.421
% ,' . Adustment to net recoverable cost _ 47,646 Effect of increase in general price level - ' (209.3?2l - ,
l, Excess (deficiency) of increase in speafic prices, after adjustment
, s
' to net recoverable cost. over increase in general price level - (54.325)-
+
,s - Gain from decline in purchasing power of net amounts owed 97.771
-5 43.446
. Net "
~
-m 9 Assumed to be in " average for the year" dollars and thus are not restated. .
' **At December 3 f,'1%4 current cnst of property, plant. and equipment, net of accumulated deprecation, was s5.649.255.000 w :ile histoncal
' cost or net cost recowrable through deprecation was s3.57i.420.000.
i "4 I e
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m m naiMaiNN&Wecem ZenwyaTv;t%hMr#FEgrgt;r.syginciergsse;: Emits;iggrwmsressm1mtrgryg;6g;g,4spe-Nw=Nggr Frve-Year Companson of Selected Supplementary Financ.al Data Adjusted for Effects of Changing Pnces (in Thousands of Average 1984 Dollars) Year Ended December 31 1984 1983 1982 1981 1980 OPERATING REVENUES Si /45 659 51.193.464 $ 1.286.565 51.276.562 51.075.895 CURRENT COST INFORMATION: Income from operations (excluding adjustment to net recoverable cost) 5 108.512 5 61.410 5 49.624 5 68.159 5 58.252 Excess (deficiency) of increase in speofic pnces, after adjustment to net recoverable cost owr increase in general pace level 5 54 325) 5 (24,929) 5 15.245) 5 (120.558) 5 (195.DI) Net assets at year-end at net recoverable cost 5 843.I74 5 798.300 5 691.444 5 680.657 5 679.157 3 3 , ,, ,,, GENERAL INFORMATION. Gain from decline in purchasing power of net amounts owed 5 9 U /1 5 85.067 5 70.592 5 142.830 S 190,819 Average consumer pnce index 311.I 298.4 289.I 2 72.4 246.8 Current cost 3 mounts reflect tne changes in specific prices in revenues as depreciation. Therefore, the excess cost of of property. plant and equipment from the year of acquiss- plant stated in terms of current cost over the histoncal cost of tron to the present. The current costs of property plant and plant is not preserrJy recowrable in rates. This excess (deficency) equipment which represent the estimated costs of replaong is reflected as an adjustment to net recoverable cost. While existing plant assets, are determined by applying the Handy- the ratemaking process gives no recognition to the current Whitman index of Public Utility Construction Costs (HWI) to cost of replaong property plant. and equipment, the Com-the cost of the surviving plant by year of acquisitiort Land pany believes, based on past expenences, that it will be and certain other plant assets that are not included in the allowed to earn the increased cost of its net investment HWI were converted using the Consumer Pnce Index for all when replacement of faolities actually occurs. Urban Consumers (CPI-UI. To property reflect the economics of rate regulation in the The current year's depreciation expense on the current cost Statement of income from Operations presented above, the amounts of property, plant, and equipment was determined adjustment of net property, plant and equipment to net by applying the Company's depreciation rates tc the indexed recoverable cost is adjusted by the gain from the decline in 1 amounts. purchasing power of net amounts owed. Dunng a pened of Fuel inventones and the cost of fuel used in generation inflation holders of monetary assets suffer a loss of general have not been restated from their histoncal cost in nominal purchasing power while holders of monetary liabilities expen-dollars. Regulation limits the recovery of fue' msts to actual ence a garri The gain from the decline in purchasing power costs incurred through the operation of adjustment clauses or of net amounts owed ss pnmanly attnbutable to the substan-adjustments in basic rate schedules. For this reason, fuel tial amount of debt which has been used to finance property inventones are effectively monetary assets. plant and equipment. Since the depreciation on this plant is As prescnbed in Statement of Financial Accounting Stand- limited to the recovery of histoncal costs, the Company does ards No. 33. incorne taxes were not adjusted. not have the opportunity to realize a holdng gain on debt The regulatory commissions to which the Company is and is limited to recovery only of the embedded cost of debt subject allow only the histoncal cost of plant to be recovered capitat \ b
e s s , Record of' progress'197421984"-~~~~~~~"""-~~~ I984 I983 1982 198I Estimated population served i6 % 000 1.629.000 1.600.000 1.585.000 Electnc customers-year end Residential 495.416 487.148 478.360 469.998 Commercial 55 838 53.812 52.001 50.574 Industnal / 34/ 7.503 6.618 6.655 Other 3 6// 3.562 3.408 3.352 Total electric cutomers 56/ / /1 552.025 540.387 530.579 Electnc operating revenues (5000) Residential 5 4m 75/ 5 358.840 5 364.005 5 341.555 Commercial /15 444 186.822 182.981 164.653 Industnal 56/.088 529.649 574.060 525.349 Other 63.375 69.432 74.537 86.204 Tctal electnc operating re/enues s I ./45 659 51.144.743 51.195.583 51.117.76i KWH sales (milhons) Residential 6630 6.2 74 6.429 6.405 Commeraal 3410 3.168 3.I30 3.016 p 34 Industrial I/ 168 11.491 12.997 13.067 Cther 108/ 1.305 1.385 1.664 Total Sak's / U90 22.238 23.941 24.152 Res;dential customer data Awrage annual use - KWH I34/9 12.996 13.545 13.791 Awrage annual revenue per KWH 6 loc 5 72( 5 664 5.334 Commeroal customer data Average annual use - KWH 61 039 59.886 60.900 60.669 Average annual revenue per KWH 63/4 5.90c 5.854 5.464 Peak System demand (A N) 4 /00 4.207 4.259 4.256 System input (KWH in milhons) Generation 14 100 12.922 I4.54 0 15.471 Purchased power 10419 10.662 10 567 9.74 5 Total system input /4519 23.584 25.107 25.216 Fuel cost for generation (5000) 5 419 9/4 5 349.5 % 5 387.710 5 356.786 Generating capabihty (MW) 4 605 4.618 4.625 4.625 Heat rate - BTU Per KWH c,enerated 10 649 10.793 10.800 10.681 Operating income (5000) 5 /06.7/4 5 172.454 5 187.336 5 167.224 Net income (5000) 5 /0101I* 5 131.546 5 I I 7.458 5 124.469 Gross electric plant (5000) 54 I16 /86 53.688.148 53.131.461 52.634.000 Total assets (5000) 51849 I 3a 53.565.316 53.602.112 52.330.20i Capitahzation (5000) long-term debt 51 4/I 8 % $ 1.173.453 5 947.596 51.001.209 Preferred stock, with sinking fund /84 501 240.951 169.101 121.381 Preferred stock, without sinking fund 145 8H/ 145.882 145.882 145.882 Common equity 8%85/ 778.798 649.881 615.895 Totai carstahzat:on 5/ /58 095 52.339.084 51.912.460 51.884.367 E tWoyees - year end / 9/ 3 2.756 2.721 2.499
' Net income for 1984 includes the cumulatrve effect to January I.1984 of accruing unbilled revenues in amount of 517.6/6 thousand after income taxes.
g-
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4 u w. mnmaw:xm_ = _- - - - - - - 1980~ il979 ' -1978 1977 1976- 1975 1974 1.553.000 - 11.509.000 I.455.000: 1.345.000 1.304.000 1.250.000 .l.225.000 457.191: .443.527 .'427.938 . .'395.479 384.213 366.242 ' 356.479 48.617 : -l46.848 44.884 - 40.096 38.632 36.166 35.014
' 6.846 - 7,162- 7,518 - 7.651 6.586 ~ 5.824 5.424 i 3.250 3.173 ' 3.044 2.770 2.634 2.4% 2.425 515.904 -500.710- 483.384 445.996 432.065 410.728 399.342
$ : 265.080 ' ' $ 180.364
$ 146.326 - $ I24.500 $ 93.712 $ 87.819 5 85.791 123.656 85.983f 68.328 55.398 42.505 39.789 38.092 358.177- ~ 212,853 : 141.803 114.874 77.278 64,386 65.264 -
'106.610 - ' 78.276 99.918 - 84.179 117.782 72.850 - 53.605
- $ 853.523 $ ' 557.476 - - $ ' 456.375 $ 378.951 5 331.277 5 264.844 5 242.752 -
6.398 < 5.996 - 5.862 5.334 4.597 4.346 ' 4,956 J2.876- < 2.721 ' 2,624 2.268 f.%5 - 1.852 1.671
- 11. % 3 II.388 9.685 9.028 8.068 6.600 - 6.133 35 - - .
- 2.708 - 3.14 7 ; 4.541 : 4.322 6.921 6.359 6.788 ~
- 23.945 23.252 -22.712 20.952 - ' 21.551 19.157 ' 18.548
< 14.177_ .13.758 - 14.063- < 13.680 12.328 - 12.028 11.249 4.144 . ; 3.0lt 2.504 ' 2.33( 2.04( 2.02( 2.17e 60,129; ' :59.363 60.498 57.502 53.I15 . 51.940 48.447 4.304 3.164 2.60( 2.444 - 2.164 - 2.154 2.28( :
' L 4.078 ' ~4.091 3.852 3.515 3.180 ~ 2.883 2.692
-16.440 - 18.429 21.251 ~ 20.204 21.541 18.931 17.904-8.670 5.860 ' 2.799 1.901 1.077 1.154 1.594 -
25.110 24.289 24.050 ' 22.105 22.618 20.085 19.498
$ 190.226 $ 168.117 $ 141.236 $ 135.211 $ 85.134 $ 76.846-
' $ . 296.820 =
4.625 _4.612 - 4.603 4,447 4.392 - 4.346 3.569
~
1 10.753 i10.625 ' 10.185 . 10.202: 10.036 10.198 10.345 a, .' $ 133.018
.$ 89.067' $ ' 79.659 $ 69.040 $ 63.617 5 64.663 $ 59.I46 i $ .100.676 $.65.129; $ 53.744- $ 44.406 $ 39.227 $ 43.695 5 40.886
$7.319.246 i
$2.069,106 - $1.792.952 $1.509.785 $ I.309.439 $ l.172.911 $1.077.798
$2.078.445 L L$1.842.365 $l,557.157 $1.298.75l $1.158.262 11.051.242 $ 946.933 '
$ 828,989 - $ 827.430 $ 728.748 5 566.315 $ . 575.809 $ 519.088 $ 468,987 121.381 92.990 - -
~ 145.882 ~ 145.882 110.809 ~ l10.809 80,776 ~ 80.776 80.776
^ 564.109 ' 487.441' 417.192 363.763 332.725 307.361 247.174
' $ l.660.361 > $1.553.743 $1.256.749 - $ 1.040.887 $ 989,310 $ 907.225 5 796.937 '
t 2.342 - : 2.329 ' 2.216 2.129 2.118 2.104 - 2.089
. _ . - _ _ _ _ _ _ _ _ _ _ _ _ m_ _ _ _ - _m._s
DIRECTORS OFFICERS H Se,N e CHAVANNE Corporate Control and JAMES M. CAIN JAMES M. CAIN Assistant Secretary President and Chief Execurrve Othcer President S. G. CUNNINGHAM, JR. of tne Company G. D. McLENDON Voce President - ExecutrVe Mce President Rates and Regulatory Affairs f O feans Public Service Inc. MALCOLM L HURSTELL G. F. DELERY TEX R. KILPATRICK Senior Mce President - Vice President - Consumer Sennces President Central Amencan E""9Y M'Y L V MAURIN Lite insurance Company D. L ASWELL Vice President - Fossil Operations
"~
JOSEPH J. KREBS, JR. Chairman of the Board N'O a W H. TALBOT Mce President - J.1 Krebs & Sons. loc. J. J. CORDARO Assistant to President, and Secretary Pr sident - T. W. BOATRIGHT FLOYD W. LEWIS h"','a 'Nfa , Chaaman and President Assistant Treasurer J. H. ERWIN. JR. R. N. GARRETT, JR' a, s 36- Middle South Unhtles. Inc. he r Vice President and Consuftant H. DUKE SHACKELFORD Assistant Treasurer AgoculturalInterests R. S. LEDDICK N. J. BRILEY
" $'d nt - Assistant Secretary W. CUFFORD SMITH [u"'ea Operation President E. A LUPBERGER I Baker Smith & S,n MALCOLM H. McLETCHIE Assis' tant Secretary and Seni r Mce Pradent - Assistant Treasurer JACK M. WYATT ""*l ^ ~" "
Former Owrman of the Board and R. J. ESTRADA Chief Executrw OffKer of the Company RICHARD L MURLOWSKl Assistant secretary and (Retned August 1.1983) Senior Vice President ' Assistant Treasurer
- Assistant to the President WILUAM C. e JELSON fss t t r t ry and Senior Mce President - Assistant Treasurer **
Administration and Services D. E. KNOWLES, JR. ABADlE Group Vice President - R. CantJ' roner Division Operations
- Resigned effecive February 25.1985.
** Elected elfective February 25. I995 L
1 6- m .. .,...,,.,c-~...,..,.,
!' Louisiana Power & Light Company operates in 46 of the 64 panshes of Louisiana - a 19,500-square-mile area which, as of December 31,1984, had an esti-mated population of 1,654.000. At War-end 1984 7 LP&L was serving approximately 42% of Louisiana's population. %.' The area served by LP&L includes most of North Louisiana, a small portion of East Central Louisiana, 4 -.
and rnost of Southeastem Louisiana, including the metropolitan area around the City of New Orleans and b, . - the 15th Ward in the City of New Orleans. LP&L's system is part of, and is inter-pg < connected with, the other operating
-l -. companies of the Middle South
/. -;; Utilities System. This arrangement
[. r .: 1- s
- provides more dependable elec-tric service for customers. and also results in the greatest g economy in the generation of
-.y .Qg electric power, with resultant
[ - savings to customers.
.a:
'^*
j%x . , . - jYj L, ty GENERAL OFFICE TRANSFER AGENT FOR I42 Delaronde Street PREFERRED STOCK R O. Box 6008 Bradford Trust Company N w Orleans, Louisiana 70174 67 Broad Street (501) 366-2345 New York, New York 10004 REGISTRAR FOR TRUSTEE FOR PREFERRED STOCK FIRST MORTGAGE BONDS Harns lust Company of New York The Chase Manhattan Bank. NA Ninth Floor Corporate Trust Administrative Division i 10 William 5treet i New York Plaza.14th Floor New Yoix, New York 10038 New York, New York 10081}}