ML20137K369
| ML20137K369 | |
| Person / Time | |
|---|---|
| Site: | Pilgrim |
| Issue date: | 11/27/1985 |
| From: | Skowronski W BOSTON EDISON CO. |
| To: | Saltzman J NRC |
| References | |
| NUDOCS 8512030170 | |
| Download: ML20137K369 (14) | |
Text
-,
i BOSTON EDISON COMPANY EXECUTIVE OFFICES 800 BOYLSTON STREET P. O. B ox 36 8 BOSTON, MASSACHUSETTS O2199 WALTER E. SMOWRONSKI assestaart tasanwesa November 27, 1985 Mr. Jerome Saltzman, Chief Antitrust Indemnity Group Nuclear Regulatory Commission U.S. Nuclear Regulatory Agency Washington,.D.C. 20555 RE: Docket No. 50-293
Dear Mr. Saltzman:
Enclosed please find the data necessary for compliance with the 1975 amendments to the Price Anderson Act (Public Law 94-197):
1.
Boston Edison Company Annual Report for 1984.
2.
Boston Edison Company Form 10-Q for the quarter ended Septenber 30, 1985 as filed with the Securities and Exchange Commission.
3.
Cash Flow Forecast for the year 1986.
4.
Narrative Statement of curtailment of capital expenditures.
Very truly yours, l
ht'6ACW G En' closures d
t 8512030170 851127,3
{)
ADOCK0500g PDR I
u SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.
20549 F0RM 10
-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) 0F THE SECURITIES EXCHANGE ACT of 1934 For Quarter Ended June 30, 1985 Commission file number 1-2301-2 BOSTON EDISON COMPANY (Exact name of registrant as specified in its charter)
Massachusetts 04-1278810 (State or other jurisdiction of (I.R.S. Employer incorporation or organization)
Identification No.)
800 Boylston Street, Boston, Massachusetts 02199 (Address of principal executive offices)
(Zip Code)
Registrant's telechone number, including area code 617-424-2000 NONE Former name, former address and former fiscal year, if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X
No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class outstanding at July 31, 1985 Common Stock, 510 par value 15,959,286 shares 4
u
- BOSTON EDISON COMPANY QUARTERLY REPORT ON FORM 10-0
.i JUNE 30, 1985 PART I - FINANCIAL INFORMATION Page Item 1.
Financial Statements Balance Sheets - fune 30, 1985 (Unaudited) and December 31, 1984 3
Statements of Income (Unaudited) - Quarters and Six Months Ended June 30, 1985 and 1984 4
Statements of Sources of Construction Funds (Unaudited) - Six Months Ended June 30, 1985 and 1984 5
Notes to Unaudited Financial Statements 6
Item 2.
Management's Discussion and Analysis of Results of Operations and Financial Condition 8
Exhibit to Part I PART II - OTHER INFORMATION Item 1.
Legal Proceedings 10 1
Item 2.
Changes in Securities 10 Item 3.
Defaults Upon Senior Securities 10 Item 4.
Submission of Matters to a Vote of Security Holders 10 I
Item 5.
Other Information 10
[
Item 6.
Exhibits and Reports on Form 8-K 10 l
l Signature Page 11 l
2 l
I-
I l
PART I - FINANCIAL INFORMATION-BOSTON EDISON COMPANY BALANCE SHEETS Juna 30, 4
1985 December 31, Item 1 - Financial Statements (Unaudited) 1984
.l (In Thousands)
ASSETS Property, Plant and Equipment:
i Utility Plant in Service
$2,238,631
$2,177,266 Nonutility Property 1,108 1,108 Construction Work in Progress 70,324 61,559 2,310,063 2,239,933 Less: Accumulated Depreciation 655,759 626,109 1,654,304 1,613,824 Nuclear Fuel - Net 99,065 68,384 Total Property, Plant and Equipment 1.753,369 1,682.208 Investments in Nuclear Electric Companies, at equity 10,872 10,809 Nuclear Decommissioning Fund 4,005 2,831 Current Assets:
Cash 2,393 3,832 Accounts Receivable - Net 157,776 186,678 Materials and supplies, at average cost, and other 76,285 71,988 Total Current Assets 236,454 262,498 Deferred Debits:
Deferred Cost of Cancelled Nuclear Unit 204,906 217,098 Other (Note 4) 26.087 71,020 Total Deferred Debits 230,993 288,118
_S2,235,693 S2,246,464 CAPITALIZATION AND LIABILITIES Common Stock, par value S10 per share (Note 2)
S 159,593 S 157,477 Premium on Common Stock 189,177 183,850 Retained Earnings 197,345 189,275 546,115 530,602 Cumulative Preference Stock Non-Mandatory Redeemable Series 38,287 38,287 Redeemable Series 35,194 35,264 Cumulative Preferred Stock 83,000 83,000 First Mortgage Bonds 749,125 674,125 Nuclear Fuel and Related Financing Obligations 50,000 50,000 Current Liabilities:
Long-Term Debt Due Within One Year 15,770 15,770 Notes Payable 122,000 181,000 Accounts Payable 45,715 84,202 Property Taxes Accrued 2,878 1,468 Income and Other Taxes Accrued 4,127 1,338 Interest Accrued 13,146 10,568 Dividends Payable 14,303 14,132 Other 7,888 13.153 Total Current Liabilities 225,827 321,631 Deferred Credits:
Accumulated Deferred Income Taxes 387,981 387,118 Accumulated Deferred Investment Tax Credits 93,221 90,984 Nuclear Decommissioning Reserve 7,686 5,663 Other 19,257 29,790 S2,235,693 92,246,464 See accompanying notes to unaudited financial statements.
u 3
BOSTON EDISON COMPANY STATEMENTS OF INCOME (Unaudited)
(In Thousands, except Per Share Amounts) l Quarter Ended Six Months Ended 6-30-85 6-30-84 6-30-85 6-30-84 OPERATING REVENUES:
Electric
$180,548 S150,002
$372,288
$310,397 Steam 3,168 3,401 11,166 11.533 Fuel and Purchas s.d Power Adj. (Note 3) 91,345 140,491 214,710 299,744 Other 4,849 6,542 9,798 11,687 Total 279,910 300,436 607,962 633,361 OPERATING EXPENSES:
Operation - Fuel 94,207 97,182 203.111 208,578
- Net Purchased Power 22,750 52,354 62.952 112,092
- Other 54,122 48,504 101,895 94,751 171,079 198,040 36,7,958 415,421 Maintenance 16,912 14,875 34,949 31,770 Depreciation 20,764 17,949 41,528 35,898 Amortization of deferred cost of cancelled nuclear unit 6,095 6.095 12.190 12.190 Taxes - Property and Other 17,573 18,871 37,566 38,529 Taxes - Income 13,481 12,862 36,178 31,334 Total 245,904 268,692 530,369 565,142 OPERATING INCOME 34,006 31,744 77,593 68,219 OTHER INCOME AND DEDUCTIONS:
Allowance for other funds used during construction 1,379 1,714 2,686 3,077 Other - Net 346 31 608 505 INCOME BEFORE INTEREST CHARGES 35,731 33,489 80,887 71,801 INTEREST CHARGES:
Long-term debt 17,987 15,920 33,800 31,690 Nuclear fuel and related financing obligations 1,044 1,576 2,115 2,805 Other 2,030 1,619 6,138 3,021 Allowance for borrowed funds used during construction - credit (998)
(1,241)
(1,945)
(2,228)
Total 20,063 17,874 40,108 35,288 NET INCOME 15,668 15,615 40,779 36,513 PREFERRED DIVIDENDS PROVIDED 1,377 1,377 2,755 2,755 PREFERENCE DIVIDENDS PROVIDED 2,093 2,149 4,186 4,292 BALANCE AVAILABLE FOR COMMON STOCK S 12,198 S 12.089 S 33,838
$ 29,466 EARNINGS PER SHARE OF COMMON STOCK S 0.77
$ 0.79
$ 2.13
$ 1.93 DIVIDENDS DECLARED PER COMMON SHARE S 0.81 S 0.75 S
1.62 S
1.50 COMMON SHARES OUTSTANDING (weighted average) 15,921 15.348 15,867 15,274 See accompanying notes to unaudited financial statements.
4
BOSTON EDISON COMPANY STATEMENTS OF SOURCES OF CONSTRUCTION FLTDS (Unaudited)
Six Months Ended June 30, 1985 June 30, 1984 (In Thousands)
Funds from Operations S 107,245
$ 94,611 Funds Provided from (Applied to) Outside Financings:
Sale of Common Stock (Note 2) 7,443 6,461 Redemption of $1.175 Series Preference Stock (70)
(1,035)
Retirement of Pollution Control Bonds (13,340)
Issuance of Series U Bonds 15,000 Issuance of Series V Bonds 75,000 Increase (Decrease) in Notes Payable (59,000) 50,000 S 23,373 S 57,086 Other. Funds Provided (Used):
'a'orking Capital and other changes S 23,518
$ (18,101)
Dividends Declared (32,703)
(30,051)
(9,185)
(48,152)
Total Funds Provided S 121,433 S 103,545 Construction Expenditures:
Plant S 77.532
$ 98,132 Nuclear Fuel 43,901*
5,413 Total Construction Cxpenditures S 121,433 S 103,545 Includes payment of $40,583 for spent nuclear fuel disposal costs incurred through April 7, 1983.
See accompanying notes to unaudited financial statements.
5
l BOSTON EDISON COMPANY a-NOTES TO UNAUDITED FINANCIAL STATEMENTS 1
- 1) Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted a~ccounting principles, have been condensed or omitted in this Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. However, in the opinion of the Company, the disclosures contained in this Form 10-Q are adequate to make the information presented not misleading. These statements should be read in conjunction with the financial statements and the notes thereto included in the Company's annual report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1984 and the Company's quarterly report to the Securities and Exchange Commission on Form 10-Q for the quarter ended March 31, 1985.
In the opinion of the Company, the accompanying unaudited financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 1985 and the results of operations for the three and six month periods ended June 30, 1985 and 1984, and the sources of construction funds for the six month periods ended June 30, 1985 and 1984.
The results of operations for the six month period ended June 30, 1985 are not indicative of the results which may be expected for the full year. During 1984 and 1983, the Company experienced major fluctuations in quarterly net income.
See Item 1(c)(1)(V) " Seasonal Nature of Business", in the Company's annual report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1984.
- 2) On May 1, 1985 and June 3, 1985, the Company issued 85,711 and 14,979 shares, respectively, of its Common Stock in accordance with the Dividend Reinvestment and Common Stock Purchase Plan.
At June 30, 1985, the Company had 21,534,500 shares of Common Stock authorized; 15,959,286 shares were issued and outstanding.
(See Note 4 of Notes to Schedules of Capital Stock and Indebtedness included in the Company's annual report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1984 and Notes 2, 3 and 4 of Notes to Unaudited Financial Statements included in the Company's quarterly report to the Securities and Exchange Commission on Form 10-Q for the quarter ended March 31, 1985).
- 3) On July 22, 1985, the Massachusetts Department of Public Utilities ("MDPU")
~
issued its order regarding the Company's fuel adjustment factor application which included replacement fuel and purchased power costs incurred as a result of the 1983-84 outage at Pilgrim Nuclear Power Station. The unit was shut down for 387-days for refueling, maintenance, modifications, and replacement of recirculation piping. The MDPU's order allowed the Company to recover all but approximately ten days of such fuel and purchased power costs. The disallowed costs have been collec:2a by the Cospany subject to refund pursuant to prior orders of the MDPU, and will be refunded to the Company's retail customers during the period August through October, 1985. On August 12, 1985, the Company filed an appeal of certain aspects of the MDPU's order with the Massachusetts Supreme Judicial Court. The Company believes that the revenue refund required by the July order will not have a material effect on the accompanying financial statements.
6
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- 4) The MDPU, in an order dated July 25, 1985, has denied the Company's request for approval of an oil conservation adjustment charge which would have assured recovery of all costs connected with the proposed coal conversion of New Boston Statior4; the Company has thereby suspended plans for the conversion.
The Ccmpany has deferred the S12,200,000 costs of the feasibility studies associated with the proposed coal conversion, in accordance with the instructions of the MDPU; the Company expects to recover these costs in its next race filing.
7
BOSTON EDISON COMPANY Management's Discussion and Analysis of Results of Operations and Financial Condition for the Three and Six Months Ended June 30, 1985 Versus the Comoarable 1984 Periods Results of Operations - Six Months Ended June 30. 1985 Earnings per share of common stock for the six month period ended June 30, 1985 were S2.13 compared to $1.93 for the same period last year.
Total operating revenues amounted to $607,962,000 for the six months, a decrease of $25,399,000 or 4%.
Base electric revenues increased $61,891,000 as follows:
Retail rate increase S15,267,000 Increase in retail kilowatthour sales of 1.7%
2,853,000 Subtotal
$18,120,000 Transfer of certain fuel related costs previously recorded as fuel revenues 44,202,000 Subtotal 62,322,000 Sales for resale (431,000)
$61,891,000 Fen 1 and purchased power adjustment revenuec decreased S85,034,000 and fuel and net purchased power expense decreased $54,607,000. The primary reason for these decreases is that Pilgrim Nuclear Power Station operated at approximately 77%
during the first six months of 1985, whereas it was on outage status for virtually all of 1984 for refueling, maintenance, modifications and replacement of recirculation piping. The availability of Pilgrim Nuclear Power Station in 1985 has allowed the Company to replace higher cost fossil generation with nuclear generation, thereby significantly reducing expenditures for purchased power. Fuel and purchased power adjustment revenues were further decreased due to the tranr"er of I
certain fuel related costs to base rates; prior to July, 1984, such costs were l
recovered via the fuel and purchased power adjustment clause.
l The increase in base revenues was primarily offset by increases in labor, maintenance, depreciation and other operating expenses. The Company's effective income tax rate for the first six months of 1985 and 1984 was 47% and 46%,
l respectively. Interest on long-term debt increased $2,110,000 due to the issuance l
of Series U Bonds during the second quarter of 1984 and the issuance of Series V Bonds during the second quarter of 1985. Other interest charges increased l
$3,117,000, primarily due to an increase in the average outstanding loan balance slightly offset by a decrease in the average borrowing rate.
l 8
Results of Operations - Three Months Ended June 30, 1985 Earnings per share of common stock for the three month period ended June 30, 1985 were 50.77 compared to S0.79 for the same period last year.
Total operating revenues amounted to S279,910,000, a decrease of S20,526,000 or 6. S *.. Base electric revenues increased $30,546,000 as follows:
Retail rate increase S 7,702,000 Increase in retail kilowatthour sales of.4%
1,527,000 Subcotal 9,229,000 Transfer of certain fuel related costs previously recorded in fuel revenues 20,968,000 Subtotal 30,197,000 Sales for resale 349,000 S30,546,000 Fuel and purchased power adjustment revenues decreased S49,146,000 and fuel and net purchased power expense decreased $32.579,000. The prinary reason for these decreases is that Pilgrim Nuclear Power Station operated at approximately 90%
capacity during the second quarter of 1985, whereas it was on outage status for virtually all of 1984 for refueling, maintenance, modifications and replacement of recirculation piping. The availability of Pilgrim Nuclear Power Station in 1985 has allowed the Company to replace higher cost fossil generation with nuclear generation, thereby significantly reducing expenditures for purchased power.
Such decreases are also partially due to lower fossil fuel prices, which are down slightly from comparative 1984 levels. Fuel and purchased power adjustment revenues were further decreased due to the transfer of certain fuel related costs to base races; prior to July, 1984, such costs were recovered via the fuel and purchased power adjustment clause.
The increase in base revenues was off set by increases in labor, maintenance, depreciation and other operating expenses.
Interest on long-term debt increased S2,067,000 primarily due to the issuance of $75,000,000 Series V Bonds, 12 5/8%,
during the second quarter of 1985.
r Financial Condition See Part II, Item 7
" Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's annual report to the Securities and Exchange Commission for Form 10-K for the year ended December 31, 1984.
See l
also Note 2 of Notes to Unaudited Financial Statements included in Part I of this Form 10-Q.
In June, 1985, the company made a payment of approxi=ately $40,583,000 to the U. S. Department of Energy; such payment satisfied the Company's obligation for pre-April 7, 1983 spent nuclear fuel disposal costs.
The Company is continuing to seek alternative energy sources to diversify its fuel mix further and fill a part of its future capacity needs. The Company has recently signed contracts with two small power producers to purchase 90 megawatts of capacity generated by wind, coal and other fuels beginning in 1986. Both contracts are subject to approval by the MDPU and will require the procurement by the developers of various environmental approvals. See also Note 4 of Notes i
to Unaudited Financial State =ents included in Part I of this Form 10-Q.
9
BOSTON EDISON COMPANY PART II - OTHER INFORMATION Item 1.
Legal Proceedings:
j See Items 1(c)(1)(11): " Regulation", 1(c) (1)(xii): " Environmental l
Matters", and 3: " Legal Proceedings" in the Company's annual report to the 3
Securities and Exchange Commission on Form 10-K for the year ended December 31, 1984 for further information regarding the Company's legal proceedings.
By orders issued June 10, 1985 and August 1, 1985, MDPU directed the Company to file no later than May 15, 1986, new retail rates to continue implementation of rate structure principles set forth in DPU 1720, the Company's 1984 race decision.
Item 2.
Changes in Securities Reference is made to Note 2 of Notes to Unaudited Financial Statements included in Part I of this Form 10-Q.
Item 3.
Defaults Upon Senior Securities - None Item 4.
Submission of Matters to a Vote of Security Holders - Not applicable Item 5.
Other Information - None Item 6.
Exhibits and Reports on Form 8-K (a) Exhibits Filed Herewith:
Applicable to Part I:
x Exhibit 15 - Letter re: unaudited interim financial statements 15.1 Report of Independent Certified Public Accountants Applicable to Part II:
Exhibit 28 - Additional Exhibits 28.1 Letter of Independent Certified Public Accountants re: Form S-3 filed by the. Company on March 14, 1984 (File No. 2-89946).
28.2 Letter of Independent Certified Public Accountants re:
Form S-14 filed by Boston Industries on March 14, 1984 (File No. 2-89945).
(b) There were no reports on Form 8-K filed in the second quarter of 1985.
10
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SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
e BOSTON EDISON COMPANY (Registrant)
Date: August 13, 1985
/s/
Thomas J. May Thomas J. May Vice President and Treasurer (Chief Accounting Officer) 11 i
r BOSTON EDIS0N COMPANY 1986 Internal Cash Flow Projection for Pilgrim Unit #1 Nuclear Power Station (Dollars in Thousands) 12 Mos. Ended Projected Year 9/30/85 1986 Net Income After Taxes
$ 92,147
$ 95,224 Less Dividends Paid 66,268 72,387 Retained Earnings 25,879 22,837 Adjustments :
. Depreciation and Amortization 131,868 138,670 Deferred Income Taxes and Investment Tax Credits 45,828 29,883 Allowance for Funds Used During Construction (12,474)
(12,658)
Total Adjustments 165,222 155,895 Inte:nal Cash Flow S191.101 5178,732 Average Quarterly Cash Flow
$ 47,775
$ 44,683 Percentage Ownership in All Operating Nuclear Units -
Pilgrim Unit #174.27%
Maximum Total Contingent Liability
,$ 10,000 Noyrmber 27, 1985 o
ITEM (4) NARRATIVE STATEMENTS OF CURTAILMENT OF CAPITAL EXPENDITURES:
The Boston Edison Company would be able to curtail $10 million of capital expenditures within any three month period of the next twelve months if it becomes necessary to pay retrospective premiums.
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Financial Highlights Years ended December 31, 1984 1983
% Change Operating Revenues (000)
$1,316,668
$ 1,069,285
+ 23.1 %
Balance for Common Stock (000)
$74,811
$53,575
+ 39.6%
Common Shares Outstanding -
Weighted Average (000) 15,436 14,902
+ 3.6%
Common Stock Data:
Earnings Per Share
$4.85
$3.60
+ 34.7%
Dividends Declared Per Share
$3.12
$2.91
+7.2%
Payout Ratio 63 %
80 %
- 21.2%
Book Value Per Share
$33.61
$32.21
+ 4.3%
Return on Average Common Equity 14.69 %
11.24 %
+ 3 0.7%
Fixed Charge Coverage (SEC) 3.02X 2.67X
+ 13.1%
9 ston Edison is an operating public utility engaged principally in thegeneration.
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W purchase, transtnission distribution and sale ofelectric energy. It svas incorporated in 1836. The company supplies electricity at retail to an area of approxnnately 590 square miles svithin 30 miles of Boston, encornpassing the City of Boston and surrounding cities and tosens. The population of the territory served at retail is approxirnately 1.500.000.
Boston Edison also supplies electricity to other utilities and rnunicipal electric departments at scholesalefor resale, and providcs stearn to approximately 310 cus-tomers in the City of Boston.
About 85 percent of the company's revenues are derivedfrom retail elecsric sales.
10 percentfrom svholesal* electric sales. 3 percentfrom steam sales and 2 percentfrom other sources.
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In writing to you for the first time as chief e 4 85 4
am fortunate to be able to present a portrait of a strong company operating 3.o 3.,
3 s, in a dynamic, growing service territory. Throughout the following report
.'a 3
the factors contributing to last year's 35 percent gain in earnings per share of common stock are detailed. As a shareholder, you no doubt appreciate 2
the importance of our resurgent financial strength. In September the divi-1 dend was increased eight percent, three months earlier than had been tradi-tional.The price of common stock went from 24% to 34% at year end and m
79 80 81 82 83 84 for the first time in more than a decade it exceeded book value.
Earnings Per Share Earnings increased 35 percent As part of our continuing emphasis on long-term quality of service, we oo,,,,,,,,,,,,ong,,,,,,,,,
undertook a substantial investment at the Pilgrim Nuclear Power Station that resulted in a successful program to recondition and replace many plant components. Also, plans to burn coal at an existing oil-fired plant, to import additional power from Canada and to add additional supplies of natural gas to the fuel mix advanced.
As the text summarizes 1984 performance in detail, I want to share with you here some of my thoughts on the far-reaching changes affecting the electric utility industry and your company. Those changes are impor-tant. They present us with new challenges. But more importantly they offer opportunities to further our commitment to reliable, safe and cost-effective service while adopting innovative approaches to future business development.
The regulatory and customer environment in which electric utilities operated in the 1970s and early 1980s was often marked by rapidly rising prices and public hostility. Under the leadership of Thomas J. Galligan, Jr.,
your company responded well, and when he retired as chief executive offi-cer last May, the company had recovered from the difficulties of previous years.
From left to right, Scnier rice Proidcnt william D. liarrington lxccunre rice Praidcnt Josph P.
Tyrrell, PraiJcnt and Chic [hecutive Olliccr stephen J. sweeney and Dccuticc Vice Praident James M. Lydon.
3
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t3 35
,or "" E of 3 We were able to maintain our commitment to provide high quality ser-Mk vice. We are strengthening that traditional commitment through an open planning process, the consumer advisory panel, discussions between corpo-rate officers and leaders of special interest groups and a variety of other s-
-m-m-m m-ways, some of which are described in the following pages. As a result, the adversarial relations of the past have been replaced by open discussion and a high degree of cooperation between various interests in achieving com-g
,. 81 82 83 84 79 80 b
b R3 turn Cn Equity naturn on equity grew 31 From the shareholder perspective, the role of public involvement bears percent over 1983's level and note because of the important relationship between customer satisfaction the gap hatween actual and and regulatory decision-making. Recent regulatory decisions in Massachu-
- "***d"'"5"'"***d'
.56 percentage points.
setts have underscored the fact that a utility that is responsive to its cus-tomers under a host of different circumstances is also responding to regulators. Knowing the needs and concerns of customers and regulators, and being responsive simply makes good business sense.
The rules under which we operate are changing. Fortunately, we are well-prepared for them. The Department of Public Utilities (DPU) last year i2s m =J E ordered a major change in rate structure by substantially increasing peak prices and requiring time-of-use rates for large commercial customers. The
=
750 DPU made it clear that it wants price strategies that send a signal to con-sumers on the true future cost of service. We concur in the importance of f
using price signals as part of a strategy to defer the need for new capacity.
E what is uncertain is the full effect of those signals on usage patterns.
e 79 80 81 82 83 84 operztine new.nu..
In a separate decision the DPU stressed that a utility must look at all Opersting revenues increased available options before deciding to build new capacity. It said that invest-by 23 percent because ot.u..
ment in neW Capacity can only be recovered i[it iS determined to be "used t ined kHowatthour sales growth and a $34.1 rni!!!cn and useful" regardless of whether decisions to build were prudent in the r.tsu rai: increase, first place.That decision clearly imposes new investment risks, but also the opportunity for greater rewards. There are uncertainties surrounding this recent decision, but our financial and organizational strengths put us in an unusually good position to identify and address those uncertainties.
4
l 56 An important step in that direction was taken in the establishmein of an energy supply and demand planning department. We have consolidated 4
forecasting and planning groups to assure that all supply and demand options are thoroughly considered. In addition, we are developing a new E =,,
=
2 business plan, one that will define the company for the coming years and give us the capabil.ty and flexibility to take advantage of the environment that is moving us into a more competitive future.
In the years ahead, we will be aggressive in exploring and developing
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s 84 Aa '*prov*d economy contrib-options for meeting future energy needs. We will look for opportunities to participate in new projects where the potential for return is commensurate ory..i,..
with the risk. We will continue to involve various publics in the planning process. We will meet with regulators and other interested parties on the meaning and implication of uncertain forecasts of future energy demand growth and new energy pricing strategies.
The traditional values that helped shape Boston Edison over the past 100 years will continue. This company is indeed fortunate to have Greater Boston with its dynamic service territory growth. I am personally fortunate to have an outstanding group of managers and employees and am confident that together we will be able to make and implement effective and timely decisions in this changing environment. Your management is proud of the accomplishments of 1984 and of the more than 4,000 employ-ees who displayed their dedication and hard work throughout the year. We look forward to tomorrow.
Sincerely.
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Stephen J. Sweeney Praident and Chief Executive 0))icer February 15,1985 5
Fintnairl Psrfsrmtnc@
ineteen-eighty-four was a The common equity component of very successful year for Boston Edison long-term capitalization reached the Company. Net income rose dramatically, company's objective of 38 to 40 percent.
due to sustained growth in kilowatt-Equity accounted for 39 percent of capi-hour sales and a 534.1 million retail rate tal at the end of 1984 as compared to 37 increase.
percent in 1983. Return on equity rose Earnings per common share markedly from 11.24 percent in 1983 to
(
increased from $3.60 in 1983 to 54.85.
14.69 in 1984. In addition, return on The quality of the company's earnings equity, excluding AFUDC, is well abos.
remains high; AFUDC (Allowance for industry averages, indicating a solid Funds Used During Construction) as a current return. This increase narrowed percent of net earnings available for the gap between the actual return on i
A newly-enhanced budget and comnion shareholders was only 15 per-equity and the company's 15.25 percent goavsetting prc.cesa neios Tk dividend' earnings payout allowed return to only 0.56 percentage managers at aH levels to inte-Ta o, a MonMN d dided Werage, pdG. MW ng thh imprmment, grate snort and iong-terrn plan-ning with the overall derection improved and dropped below the the stock price was the highest in 11 of the company industry average in 1984.
years, up 22 percent from 1983 to l.**4 4
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the company's strong internal cash gen-m The company's internal cash gener-eration will continue to strengthen ation, which was 107 percent of capital interest coverage, capital structure and 4 -- "
m expenditures in 1983, declined to 69 earnings quality over the already percent in 1984 because of increased improved present levels.
3-capital expenditures for improvements Fitch Investors Service, Inc. also made at Pilgrim Station. m upgraded its rating on first mortgage 2 -- - -
bonds from A - to A + saying that the Dividend Increased higher rating reflects the company's In September, the board of direc-financial position and prost,ects for g
tors increased the dividend on the com-significant improvement in the years pany's common stock by 8 percent from ahead.
79 80 81 82 83 84
$3.00 per share to 53.24 annually. The The company has filed a shelf reg-Common Dtvidend C ""*"
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lier than has been traditional, reflects million in First Mortgage Bonds, Series rematns strong at a mvei the company's continuing commitment V. The proceeds will be used to finance eueeug - re mausi,y to its shareholders. Improvements in the capital additions. E a,e,3ge company's earnings performance enabled the board to undertake the 4i i ;& ;..
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- a aa 1985. The portion being billed is subject to refund, pending hearings and a final decision by the FERC.
The company's fuel clause contin-ues to be determined on a forecasted basis, adjusted for actual experience.
This forward-looking ratemaking con-cept permits recovery of fuel and the fuel portion of all purchased power on a current basis. m i
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t.1981. Boston Edison input on the proposed conversion. Also, launched a flexible process for meeting the Final Environmental Impact Report m
the future "nergy needs of its customers. on the proposed coal conversion at New jE Called IMPACT 2000, the plan looks at Boston was approved by the Common-la u
,2 12 i2 u supply and demand choices and out-wealth of Massachusetts Executive j
lines the options for the future. These Office of Environmental Affairs and all E
elements are: fuel diversity, conserva-major environmental permits had been
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- involvement. a lation was recently enacted in Massa-
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a8 si 82 83 84 Fuel Diversity subject to approval of the Department of Tiie oil embargoes of the 1970s Public Utilities, to recover in retail rates capitasiration made it c lear that electric utilities over a period of up to 12 years the cost Th* cornP*av connu.s io
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should r.ot depend on one source of of conversion, including financing fuel Since luct time, Boston Edison has costs. The company plans to file its actively followed a policy of diversify-application for approval with the DPU.
ing its fuel mix.
If satisfactory project financing arrange-As a short-term measure, gas will ments can be obtained and if the DPU be burned in several units on an inten approves recovery of all costs of conver-ruptible (i.e., as available) basis. Mystic sion, the company intends to proceed Unit 7, the company's largest fossil unit, with this project.
has burned gas for at least 7 months a The company also decided in 1984 year since 1982. Contracts have been to put coal conversion plans for Mystic signed to permit the 2 New Boston units Units 4,5 and 6 on hold because pro-to burn gas 7 months a year from 1985 jected savings were less certain.
through 1987. Net savings from burning The conversion is estimated to cost gas during the next few years are esti-5620 million. Based on current fuel mated to be $8-510 million a year at price forecasts, projected customer sav-both Mystic and New Boston. All 3 ings are approximately $4 billion to the units will retain the flexibility of burn-year 2010 over the cost of burning oil.
ing more than one fuel in order to take The New England Power Pool advantage of future differences in price (NEPOOL) reached agreements with and availability.
Hydro. Quebec to purchase up to 33 mil-Significant progress was made in lion megawatthours of hydroelectric the company's plans for coal conversion. energy over an Il-year period from the in the first such decision involving a Canadian province of Quebec.This coal conversion project of this magni-Phase I power will be transmitted start-tude, the company in 1984 voluntarily ing in mid-1986 over a new 690 mega-decided to add flue gas desulfurization watt direct current interconnection now systems, or scrubbers, to the conversion under construction. This arrangement is plans for New Boston Units I and 2 to estimated to save the burning of 5 mil-reduce sulfur dioxide emissions. The lion barrels of oil a year for New decision followed extensive public England customers. Also, an agreement V
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m prmciple was reached between million expansion program, to be com-1 NEPOOL and Hydro-Quebec for Phase pleted over the next several years.
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- 11 of the project. Under Phase II, Hydro-The company is actively exploring Quebec will provide New England uti!i-other alternative fuels. During Novem-ties 7 million megawatthours of energy ber, a coal-water mixture liquid fuel g
_ each year for a ten-year period that is was burned for test purposes in Mystic
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anticipated to begin in 1990. Phase 11 is Unit 4. Additional industry research E,m_ _ _ lion additional barrels of o pursued in 1985.
m expected to save the burning of 12 mil-and development of this fuel will be ioo _
New England customers. Boston Edi-The company is also committed to son's share of the New England savings increasing its energy supply through
- created by the Phase I and Phase 11 pur-cogenerators and small power produc-
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chases is expected to be approximately ers, such as refuse-to-energy plants, y,
j 12 percent.
and small hydroelectric plants. Boston Under a contract signed in 1981 Edison filed a 20-year contract with the 79 so si 82 83 84 with the New Brunswick Electric Power DPU for a 10-megawatt purchase of Csnstruction Expenditures Although the Company is not Commission, Boston Edison continues power from a peat-fueled cogeneration involved in a major construc-Jo neceive 100 megawatts of power facility located near Camden, Maine.
tion program, capital spending ar.nually from Point Lepreau Nuclear Initial output from the facility is IorNte c[ea Lovver Plant. The agreement runs until expected during spring 1986. The con-g I
8, w th options to extend to 1991.
tract reflects the company's interest in Power Station.
Point Lepreau Unit I achieved a capac-buying power from small power pro-ity factor of 89.6 percent during 1984. To ducers and cogenerators to supplement complement the Point Lepreau pur-its energy supply. a chase, the wmpany is purchasing 100 megawatts from Bear Swamp Units 1 Conservation and Load Management and 2, a pumped storage facility owned Through its conservation and load by New England Power Company.The management programs, the company company, as well as NEPOOL, has been encourages customers to save electricity discussing with the New Brunswick and to shift use to off-peak times. Dur-Electric Power Commission the pur-ing 1985, wrap-It Cap-It and other con-chase of power from a second Point servation programs that had helped Lepreau unit that is being considered conserve oil and gas in addition to elec-for construction in the early 1990s.
tricity will be phased out in response to The company is planning major the DPU order of June 29,1984. The transmission line construction because company is directing new conservation of increasing power purchases from programs at saving electricity as the Canada and growth in the downtown principal source of energy. The com-Boston area. In 1985, construction will pany has filed a new conservation pro-begin en an underground 345,000-volt gram in which a contractor will transmission line from Woburn to North estimate how much electricity a cus-Cambridge. The project is the first tomer can save with various conserva-major transmission addition in the $130 tion measures. The contractor will then 12
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exploring other conservation and load management possibilities such as forg-ment area of the city is being restored.
me 4 +- e ing energy partnerships that are unique Edison's part in the building's rehabili-m n a within the utility industry. To involse tation will include an innovatise of1-potential users in designing programs, peak heating and woling system, a spe-Boston Edison invited representatises cial heat recovery system and a solar-of 7 consumer organizations to help assisted domestic water heating system.
desclop a combined aedit and conserva-In conjunction with the Audubon Soci-tion program for residential c ustomers.
ety, the wmpany will also sponsor an The residential wnservation focus educational program for arc hitetts and group made rewmmendations includ-builders and enwurage similar inner-ing the formation of an independent city proietts. m organi/ation called the Conununity Energy Partnership inc. to implement Public Involvement them. The concept calls for a local pro-Planning for the f uture is being gram that will wmbine an energy audit undertaken with input f rom t ustomers, with weatheri/ation servites in a one-of ficials and other, w ho u ould be step program. This plan will be 'ubmit-af f et ted.
ted to the DPU and the Massachusetts The Consumer Ads isory Panel is Executive Oliice of Energy Resources made up of 16 representatives of Boston for review in 1985. A similar group was Edison residential and tommertial t us-also formed with representative mm-tomers, as well as spetial interest mercial and industrial (ustomers.
groups sut h as low -inwme, the elderly Boston Mayor Ray Flynn broke and minorities. In existente for two ground on a development projett that years, the group has been meeting regu-Boston Edison is participating in and larl. In 1984, the group presented to 3
which is being sponsored by Ss mphony wmpany management rewnunenda-l Area Renaissante, Int. A 16-unit resi-tions waterning wllection protedures dential building located in a redeselop-and (ustomer bill-paying problems. The zwren m*"W";"stWWManma xwnw t mum t
n:canus 13
recommendations fell into three cate-conclusions were reached, but the con-gories: financial assistance, service sensus was that the dialogue had been improvement and a pilot program to an important link in building stronger implement service-improvement communications between the company strategies.
and the consumer and that similar types in September, the company of communication should continue.
brought together representatives of 7 The company encouraged public consumer and public interest groups involvement of another type with its with government and company officials construction of the IMPACT 2000 House to participate in a day-long consumer /
with its state-of-the-art energy-ellicient utility dialogue. The purpose of the dia-features such as photovoltaic cells. Con-logue was to discuss the cost of electric-strection of the house was followed ity and ielated issues in an informal, weekly on public television's Tlic All non-adversarial setting. No concrete New T/lis Old Har 3c. Dedicated by Gover-With its array of 24 photovoi-2% '
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taic root panels the IMPACT a
a 4
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erating more than 4 kdowatts h, ;,
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nor Michael S. Dukakis in June, the may also present greater shareholder house was then opened for a year of opport unity.
public tours. After winning a Massa-During the fourth quarter, a new chusetts Award for Energy Innovation, Supply and Demand Planning Depart-the company received special recogni-ment was formed to facilitate long-term tion (the highest award category) in the decision-making. Divisions of the com-Department of Energy's National pany which dealt with forecasting, gen-Awards for Energy Innovation. m eration and demand side planning were combined into a single, integrated plan-Long-range Planning ning unit. The new department will Uncertainties surrounding future assess the costs, risks involved and the demand for power and the utility indus-availability of various supply and try's ability to license and build large demand options.
generating units in a reasonable time The company is pursuing a broad frame place special demands on utility range of conservation and load manage-i planners. In such a period of uncer-ment programs as a means of control-tainty, Boston Edison places a high ling demand. E priority on the integration of supply and demand planning.
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That need was underscored as
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company and the New England Power
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A recent DPU directive has impor-
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o electric utilities considering construc-tion or purchase of new capacity. By v.s f.-
directing electric utilities to prove new plants or power contracts to be 'used
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economy. Unemployment in the Greater R
Boston area was 4.1 percent for the year, continuing a trend of being consider-ably lower than other industrial metro-politan areas. Retail sales growth was 6.6 percent in 1984, up f rom 5.8 percent
~
a year earlier. Territory sales totaled 11.1 million megawatthours. Sales in the conunercial sector accounted for 52 per-cent, industrial sales 17 percent, resi-dential sales 26 percent and other sales 5 percent. Both the service and manu-facturing sectors are expected by man) to maintain their competitive position with other cities in the years ahead. The building boom of the last several years (onlinued in 1984 with the downtown construction of new of fice space, hotels and other commercial property, as well in 1984 new residential con g
struction dacing page top photo, and buddings hk e Commercial oevelopment Erchange Piace con rtbuted to
- +
The Boston economy respomled the company s sales base The new 13 mdhon square foot yjgg79gsl). to the national economic
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recovery. Robust growth continues in of the old Boston Stock Exchange Bunding L schange Place has an innovative energy IU INy*
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systerri that uses 600 000 gai jj{
l984, approxilliately 18.2 niillion square ions of water storage capacit y
{eet o[ UCW industrial and commercial for ef ficient heating and
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""9 Seventy-one percent, or approximately 13 million square feet, will be elettri-cally heated. Of that amount,50 percent will incorporate energy-ef ficient heat pumps in their heating and cooling sys-tems. Among the new buildings that opened in 1984 were the 1,000-room Boston Marriott Hotel Copley Plate, the 1.2 million square-foot One Finantial Center, located in Dewey Square and 16
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existing housing was converted to elec-accounted for about 50 percent of sales the 765,000 square-foot Lafayette Place, in the residential electric heating mar-all of which are electrically heated.
ket for both new construction and con-The first of three phases of the versions. m Massachusetts Technology Center at Bird Island Flats, next to Logan Airport, i
' [, n g,, gy is scheduled for opening in 1985. This if 1.2 million square-foot complex will
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anncy, n,n anmjc,of provide space for high technology Mp" C
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prises. Opening is also planned for the tal n n n w o! as a 500,000 square-foot Four Seasons Hotel f
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in 1985.
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has lh ncl:t,.! f r:n1 il:s s
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300,000 to 800,000 square feet by late bcaa. ln Hm,:n.m a, wn 1987, and on BOSCOM, a computer
,,,n u rdi ns <n a r,ia markettenter on Commonwealth Pier, t
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scheduled for completion in 1985. There oni nal.nnt "m /nal fnum ul u n1i,s a!..lo g
were also several smaller Boston oflice buildings constructed or renovated, as well as suburban industrial and com-in
' k nnrunn m Isnni Brow ne mertial expansions. The company has 5
t ' e l't. ' ! " am continued to encourage architects, I " * "" ' I
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builders and developers to incorporate
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== CcmmitmNnt t@ Snrvics This substation steps down
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ag steps were taken at increasing einphasis on improving the voltage before electricity trav-Boston Edison during 1984 to assure efficiency of day-to-day operations and ell 10 Customers vid dis?Nbu-the continuation of reliable service for customer service with high technology tion networks The bucket CUSIUIUCIS-app! CalionS. E truck disp;ays the company s newty approved fteet color The conipany continues to place
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4' Information Systems chasing transactions by centrali/in va r-
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operational. The svstem enables dis-A customer meter-reading device
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patchers to monitor and control the elet-known as an elettronic data tollector is trit system elettronically f rom the also in development for 1985 introduc-
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System Control Center. The 515 million tion. Estimated to cost 51.2 million, the With tre company s newly-SCADA system alerts dispatchers to any hand-held computer is expected to save epaaico computer a,eee araf t.
thanges in the status of the elettric sys-the tonipaiiy that amotint in one year of
,ng (C AD> system (photo tein and provide alarms of tr()uble. Dur-use. The collector will allow employees teio-; iecnnicia > can eniarge ing I984, renH)tc terniinal units were to record the tiine and date of their d'a9 tam detas as sma" -
installed at over 50 percent of the 71 readings for more acc urate billing of
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substations lo be tonnetted to SC ADA.
tustomers. The computer will also be Drawings can be updated fou At Pilgrim Station in the first programmed with special notes to aid
,,m s,,s,,, us ag ine c A o quarter of 1985, a 51.5 million computer the employee in f uture readings. m system inan by nana system. designed to minimi/c worker radiation exposure and enhante worker c,"f -
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RIMS will track worker radiation expo-
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,S to assist operators in monitoring the k.7.
, [q. m N New tomputers were added to the
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turbine and of her plant operations.
2 Company engineers have also been
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studying the ellettiseness of a portable
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pw %[: @3 % :E%;.,Nd"C.T Employee Achievements p
Reliable service for Boston Edison municipal of ficials and answering customers would be impossible without media (luestions. One hundred twenty-a dedicated workforce. Nineteen eighty-one Edison line crews, joined by 150 4
four was a year of many accomplish-crews f rom neighboring utilities.
ments l'or Boston Edison employees.
brought power back to all but a lew
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A spring storm, the worst in at customers by April 3. An earlier storm t
4 ;f ' y
'W least 15 years for damage to wires and resulted in the worst flooding of the J'
poles, hit the company ~s territory on company's underground system in
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March 29, leaving 150,000 tostomers seven years. Service was restored to
. *Oh*h without power. The company declared most of the 20,000 af fected customers a major emergency and employees u ithin 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />.
worked around-the-clock restoring Employees' commitment to safe
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service, taking 66,000 calls f rom work habits paid oil with impressive customers, addressing the concerns of safety records. Through a variety of safety programs introduced over the past several years, Ihe number of lost
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is not:n I anon at u n
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The Quality Cirtle Program, in its t h a n si n,/ s
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fourth year of operation, now imolses letImm m!nithct.nt 4
th.n ! n M m an m.! min 150 employees in 17 tircles. In Ihe pro-gram, employees meet weekly on a s ol-m ! tai a a m r.nn 'h.n y
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pra n/a.ut< m HInti
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- untary basis to discuss u ork-related issues. Alter investigation and analysis, vn n.
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they recommend solutions to manage-t ou Ann Ashburo ment. Also during 1984, an advisory sos te" ' 'r< t" t
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agement and union representation lo guide the Quality Circle Program. m
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System Performance
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Company plants, both lossil and nuclear, were the site of major mainte-I nante programs during 1984 that will produce savings by enhanting operat-l ing elt it ient y.
g An estended outage took plate at
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Pilgrim Nuticar Power Station during h
most of 1984 imolving replacement ol the plant s retirtulation piping system, s
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routine refueling and other related signed for the purchase of enriched ura-work. Over 2,700 tasks were performed, nium from Urenco, a European consor-many that had been scheduled for later tium. Also, a 12,000 square foot waste outages. The company's program for compacting facility, designed by com-scheduling safety modifications was pany engineers, went into use in 1984.
commended by the Institute of Nuclear The compactor will dramatically reduce Power Operations as a model of good the volume of low-level nuclear waste to practice for the industry. Work per-be shipped from Pilgrim.
formed during the outage cost over Electric Light and Power magazine
$165 million.The plant was, to a large recently ranked New Boston Station degree, restored to its original condition among the top 20 fossil generating and during the next twelve months its plants in the country based on its heat operation could save customers $200 rate which is measured in British ther-million in fuel costs.
mal units per kilowatthour. The plant is In other significant events at Pil-expected to repeat that distinction with grim Station, a 10-year contract was a heat rate of 9,522 British thermal units per kilowatthour for 1984. Fuel savings of more than 562 million have resulted
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from improvements in the plant's heat y
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rate since 1976.
. Panic peeric calleil the The Electric Power Research Insti-Afarch starnt the went in hJf i
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~J 150,000 of Edison's cus-
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y
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l-tute (EPRI) granted the company a l '.
$480,000 contract to study the feasibil-tenten 10st rewcr. Afy nef M f
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ity oflife extension at Mystic Unit 6.
fnnily's was outfor is
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overhaul of the un.t, the study w.ll i
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assess the economic benefit of prepar-rics. werked around the s
clak to gct rewcr back On.
ing the 23-year-old plant for use until It enakes you arrreciate the target year 2010. Results of the study will also be applied to Mystic Units 4 i
... x the valuc 0/c/cctricity and l
AIll can say is 'thanksfar and 5 and the company will supply the the rceric who Freduce it.
industry a set of generic guidelines for the scrrice. "'
- . 'srfO life extension evaluation. The program,
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11olly Jordan 1
M the first ofits kind in the United States, hE custamcr is seen as an important element in the 803 tan Edison company
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planning efforts.
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c Major improvements began on the
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.s front area of the city. The network is y
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ity. Also, new communication devices
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fg.
_d
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} Q { },",,,
l Qf g
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l 23
f
..mfp
- __3=:
i M;1 O-are being installed in many parts of the Environmental Responsibility network that will help monitor and pre-In 1984, the company continued its k (#
dict network equipment deficiencies to efforts to ensure clean air, water and I.
reduce failures. The $2.5 million project land in its operations.
is scheduled to be finished by summer Boston Edison has taken a leader-
~
1985.
ship role ir :he industry by going eyond be Envimnmental Ntdon an oM y
n n T his water level control panel at ine cniitonviiie Training cen.
the direct current distribution system Agency's requirements concerning
)
ter simulates operating condi-has beeri filed with the DPU with a removal of PCBs (polychlorinated tions at Pilgrim Station. in requested Juue ],1935 approval date.
biphenyls). PCBs had been used in a
.ooition lo an instrument and Retirement of the system, which at its fluid to cool and insulate electrical r.In centeIno$ e. ac56-peak supplied 75,000 customers and equipment. In a $40 million project that riow only suppl es partial serv ce to will last five more years, the company ties for health physics, chemistry and electrical and about 1,000 customers, would take will replace several thousand pieces of approximately 40 months. a electrical equipment. Priority compo-meenanicai maintenance.
nents of the program were completed in 1984.
r Intensive training programs were c
,,Bes,0,, Esien i,as conduaed ror puniic sareiy omciais on sliamr cenccrn fer the the company's policies and programs for cemnnmity of ripnenth in handling PCBs and electrical fires.
in crcratien ef Pilgrint d
Training was also held for employees Nn(Icar Power station.
i who work around hazardous wastes.
Ernpleyccs at the statien and Edien manajicmcnt t
'N The programs presented proper tech-niques for handling, disposal and harc been scusitive te our I
clean-up according to hazardous waste
)1 g%
~Q, - 4 regulations and company poh..cies.
uccJs and have ntade important centributions A new oil / water separator system te thc cennnunity. '
was completed to protect outdoor stor-William Nolan chairman age areas where oil-filled transformers Tcwn cf Pipnenth neard and other equipment are stored at the ef sc/cctmen Watertown Materials Management Cen-ter. The separator will ensure that acci-dental oil spills are prevented from entering nearby waterways through the drainage system.
As part of its ongoing commitment to environmental responsibility, the company upgraded Mystic Station's waste treatment facilities with wte of-the-art equipment. E 4
(?
24
mammmmm@rg1J:nizrtinn There were substantial changes became responsible for the Energy Sup-in company organi/ation during 1984 at ply and Corporate Relations Organi/a-the executive level.
tion in October.
In May, Thomas J. Galligan, Jr.,
Organizations throughout the com-retired as chief executive of ficer of the pany used a newly-enhanted budget wmpany. Mr. Galligan became presi-and goal-setting process during 1984 to dent in 1967 and thief executive ofliter integrate short and long-term planning in 1970. Mr. Galligan's meritorious with the overall direction of the wm-achievements have been chronided on pany. The Budget and Controls Group the inside f ront cover of this report. Ile will help identify areas of the company continues as chairman of the board, a for improvement. The group considers position he has held since 1979. Upon how the company can best utili/c its Mr. Galligan's retirement, the Board of resources and encourages managers to Dire (tors named President Stephen J.
incorporate goals of improved elliciency Sweeney chief executive oliiter.
into their own planning. m Former U. S. Senator Paul E.
Tsongas was elected to the Board of
~
Directors in December, ellective upon 3
,>.w.
~d
[,e s a s termination of his service as a United m,-,
e \\e States senator. Senator Tsongas brings
.2
- ~
. J. r., m n,
s to the board expertise gained during a
- y48 -
o mi n ir s ira o<r distinguished career as an elected pub-
- 1, N.,
4' b
n o aw !"
' di s -
+4 lic of ficial and a long-standing interest
- 1.. '
"- J"J
.s..
J "' O I " " '
1"
! R and deep understanding of energy e
_jv
~
an, w:nu anw ' un, i
- v N
.r
+
'#"' I*'
Joseph P. Ilealey, a director since au r, i, m! m u sv.
1960 and a former general counsel of the
.s
~
~
company, died on January 12,198 5. In
^ 4(( >
7;
+
addition to his suucssf ul business j
p'#-
,,,j, m,,,,
career, he had been widely respected for i,
^ M mmag g.
3,,,c,7 7 j, a s g,y n,,r,, s o
his many oustanding contriFutions to s,o an w,y.n,J on s s public service.
ocn
,, Av a s "o Ending distinguished servite com!. m, rm bn w orc careers with ooston E 'ison were Vic,.
Willis l'r out s Presidents Robert T. Parry, Ralph M.
slur <ie e
C"/I'"'
elmon and Benjamin 11. Weiner.
Warren F. Roche was elected s ite president of Fluman Resourtes ellettive July 1, and gained responsibility for Labor Relations in October. \\lso ellet-tisc July 1 A. Lee Oxsen was named vite president of Nuclear ()perations.
Vice Pr(sident John R. Stesens j
25 L
Management'a Discurion and Analy:i2 Results of Operations The Company received annualized retail rate increases power related costs were transferred from the fuel (which include allowances for inflation) of clause to base rates. Other operating revenues
$34,100,000 and $31,100,000 in June,1984 and May, increased $10,511,000 primarily because ofinterest 1983, respectively.
revenues associated with certain municipal accounts.
For a detailed discussion of the effects ofinflation Other operating expenses increased $65,641,000 and changing prices see supplementary information primarily due to increases in labor costs, maintenance provided on pages 39 and 40.
and depreciation expenses.The Allowance for Funds Used During Construction ("AFUDC") was up 1984 Versus 1983
$6,317,000 over 1983, primarily due to an increase in Earnings per share of c >mmon stock for the year the level of construction work in progress.
ended December 31,1984, were $4.85, an increase of Other interest increased $6,162,000 due to an
$1.25 over 1983.
increase in the average outstanding loan balance and The major event affecting 1984 operations was the an increase in the Company's average borrowing rate.
shutdown of the Company's Pilgrim Nuclear Power See Notes 6 and 7 of Notes to Schedules of Capital Station for refueling, maintenance, modifications and Stock and Indebtedness on page 34. The ef fective replacement of recirculation piping. The station was income tax rate for both 1984 and 1983 was 46.4%.
on outage status for virtually all of 1984 whereas in 1983 Versus 1982 1983 it operated at 80% of capacity. The decreased Earnings per share m. 1983 and 1982 were $3.60 and availability of Pilgrim Nuclear Power Station caused an increase in system fuel and purchased power costs
$3.18, respectively, an increase of $0.42. Total operat-ing revenues increased $13,018,000. Base electric reve-with like increases in fuel and purchased power nues increased $64,197,000 due to the following:
adjustment revenues. Similarly, the decrease in sales for resale is primarily attributable to a sharp decline in Rate increases
$28,756,000 sales of power from Pilgrim Nuclear Power Station.
5.8 5 growth in retail kWh sales 26.315.000 increases in maintenance and depreciation expense, Retail revenue increase 55,071,000 and allowances for funds used during construction Sales for resale 9,126.000 are, to a large extent, attributable to refueling, mainte-Total increase
$64.197.000 nance, modifications, and replacement of recirculation piping at Pilgrira Nuclear Power Station in 1984.
Fuel and purchased power adjustment revenues Total operating revenues increased $247,383,000.
and fuel and purchased power expense decreased Base electric revemies increased $82,571,000 due to
$46,640,000 and $51,383,000, respectively, from the following:
1982. In 1983, the Company's Pilgnm Nuclear Power Rate increases
$ 36,715.000 Station operated at 80% of capacity, compared to 56%
6.6% growth in retail kWh sales 22,797.000 n 1982. The increased availability of the station m subtotal 59.512.000 1983, combined with a slight decline in fossil fuel Transfer of certain costs previously prices permitted the Company to lower its system fuel recovered as fuel revenues to base costs and short-term purchases of power.
rates 40,187,000 Oh opW gm immd WE L000 Retail revenue increase 99,699,000 from 1982 levels primarily due to increases in labor sales for resale (17,128.000) costs, employee benefits, and uncollectibles, coupled Total increase
$82.571.000 with a full year's amortization of the cost of the can-celled nuclear unit uhich began in May,1982. See The Company recovers the majority of its fuel and Note B of Notes to Financial Statements on page 35.
purchased power costs through fuel and purchased Total interest on nuclear fuel and related financing power adjustment clauses; the balance of fuel and pur-obligations and other interest declined sharply from chased power costs are recovered through base rates.
the 1982 level primarily due to reductions in both the Fuel and purchased power adjustment revenues and average amount outstanding and average borrowing fuel and purchased power expenses increased rates. See Notes 6 and 7 of Notes to Schedules of Capi-
$153,519,000 and $160,045,000, respectively from tal Stock and Indebtedness on page 34. The ef fective 1983. Pursuant to a retail rate order received in June, income tax rate for 1982 was 45.5%.
1984, $78,627,00n of annualized fuel and purchased 26
(
Results of Operations Construction Program and Financing mately $939,000,000 (including nuclear fuel, but The Company is continually studying various energy excluding allowance for funds used during construc-supply alternatives in order to reduce oil consump-tion and potential coal conversion program costs).
tion, including potential coal conversion of existing Funds generated internally are a major source of con-Company facilities and the long-range availability to struction funding and represented 69%,107%, and the Company of purchased energy options from Cana-84% of construction expenditures in 1984,1983 and dian facilities.
1982, respectively. Construction expenditures in 1984 The Company has developed coal conversion plans amounted to approximately $264,000,000 of which for its New Boston Station at an estimated construc-62% or $165,000,000 were incurred at Pilgrim tion cost of about $575,000,000, excluding allowance Nuclear Power Station. It is expected that a significant for funds used during construction. The units would percentage of future construction requirements will be also have the capability of burning either oil or natu-funded internally, provided that the Company's rate ral gas. The conversion of both units would be com-structure is adequate to cover increasing costs. It is pleted in approximately three years. Legislation has anticipated that the balance of the Company's con-recently been enacted in Massachusetts that would struction program and its long-term debt maturities allow the Company, subject to approval of the Massa-and sinking fund requirements (the latter two items chusetts Department of Public Utilities ("MDPU"), to aggregating $57,770,000 in the next five years) will recover in retail rates over a period of up to twelve be financed by the issuance of debt and equity securi-years the reasonable and necessary costs for such con-ties. The Company anticipates financing its nuclear version to coal, including financing costs. The Com-fuel requirements under its existing nuclear fuel pany intends to proceed with this coal conversion financing agreements or similar arrangements.
program if satisfactory project financing arrangements In 1984, the Company's First Mortgage Bonds rat-can be obtained and if the MDPU approves recovery of ings were upgraded to A 1 by Moody's Investors Ser-all costs of conversion, vices, to A + by Standard & Poor's, and to A + by The Company is currently installing $8,000,000 of Fitch Investors Service. The Company's preferred stock natural gas conversion equipment at its New Boston and preference stock ratings were both upgraded to Station as part of its strategy to provide for both cost BBB-by Fitch Investors Service. The Company's obli-savings and fuel diversity; New Boston Station will gations pursuant to its nuclear fuel financing arrange-then have the capability to burn either oil or natural ments were also upgraded to A 1 by Standard & Poor's.
gas. Additionally, the New England Power Pool The Company's capitalization ratios improved to 50%
(of which the Company is a participant) and debt,11% preferred stock and 39% common equity, as llydro-Quebec are currently negotiating an agreement compared to 1983 ratios of 51% 12% and 37%
(Phase II) under which participants will receive respectively. The Company continues to meet 7,000,000 megawatthours of electricity annually for increases in working capital requirements, as well as ten years; completion of the construction of the neces-the interim financing necessary for its current con-sary transmission facilities is now scheduled for 1990.
struction program, primarily through bank borrow-The Company will receive approximately 12% of the ings. In early 1985, the Company filed a shelf power provided under this agreement. It is currently registration statement for $75,000,000 of First Mort-estimated that pursuant to this agreement, Hydro-gage Bonds, the purpose of which will be to refinance Quebec would supply approximately 10% of New existing short-term indebtedness which was incurred England's projected electrical energy in 1990.
primarily for expenditures at Pilgrim Nuclear Power The Company's construction program for the period Station in 1984. See Notes 6 and 7 of Notes to Sched-1985 to 1989 which is subject to continuing review ules of Capital Stock and Indebtedness on page 34.
and adjustment, is currently estimated to be approxi-nevenuds Expenses Fueland 48.2%
Purchased Power 42.7% Fuel and Purchased Power Taxes 11.7 %
23 2 % Commercial Other Expenses 87%
14 2% Residential Payroll and Benefits 7.9%
9.3%
Other Utihties Maintenance 6.3%
62% Industrial Depreciation S.7%
1.9%
Miscellaneous te est aM 4.8%
1.3%
Stearn Dividends Declared 4.7%
1.1%
Street Lighting
\\
[ Retained in Business 20%
.1%
Railroads N
100 0 %
N
/
100.0 %
21
m Statements of income (in llwusands, except Earnings per Share)
Years ended December 31, 1984 1983 1982 Operating RevenJes:
Electric
$ 712,328 5 629,757
$ 565,560 Steam 17,740 16,953 17,008 Fuel and purchased power adjustment 561,562 408,043 454,683 Other 25,038 14,527 19.016 Total Operating Revenues 1,316,668 1,069,285 1,056,267 Operating Expenses:
Operation:
Fuel 381,075 397,322 440,340 Net Purchased Power 253,529 77,237 86,057 634,604 474,559 526,397 Other 194,561 183,674 151,461 Total Operation Expenses 829,165 658,233 677,858 Maintenance 82,622 62,085 54,878 Depreciation (Notes A and G) 74,821 63,592 53,866 Amortization of deferred cost of cancelled nuclear unit (Note B) 24,381 23,142 13,380 Taxes - property and other 76,981 73,053 74,173 Provisions for income taxes (Notes A and E):
Current 10,816 10,133 14.060 Deferred 44,785 26,938 9,104 Investment tax credit - Net 21,289 21,996 26,923 Total Provision for Income Taxes 76,890 59,069 50,087 Total Operating Expenses 1,164,860 939,174 924,242 Operating income 151,808 130,111 132,025 Other Income:
Allowance for other funds used during construction (Note C) 8,403 4,756 4,781 Other - Nel 1,544 3,233 1,140 Operating and Other Income 161,755 138,100 117,946 Interest Charges:
long-term debt 63,594 62,851 65,518 Nuclear fuel and related financing obligations 5,729 7,307 10,453 Other 9,668 3,506 8,081 Allowance for borrowed funds used during construction -
credit (Note C)
(6,085)
(3,415)
(6.486)
Total 72,906 70,249 77,566 Net income 88,849 67,851 60,380 Preferred dividends provided 5,512 5,512 5.512 Preference dividends provided 8,526 8,764 8,986 Balance Avallable for Common Stock 5 74,811 53,575 5
45.882 Common Shares Outstanding (weighted average) 15,436 14,902 14,434 Earnings per Share of Common Stock
$4.85
$ 3.60
$ 3.18 The notes and whedules on pages 31 through 40 are an integral part of the finantial statemenh.
Management's Diwuuion ar.d Analysis of Operations and Finan(tal Constition b on pages 26 and 27, 28
- Statements of Sources of Construction Funds and Retained Earnings (in thousands)
Years ended December 31, 1984 1983 1982 Statements of Sources of Construction Funds Funds Generated Internally:
Net income
$ 88,849
$ 67,851 5 60,380 Add - Amounts charged (credited) not ret)uiring funds currently:
Depreciation and other amortization (Notes A and G) 73,532 63,852 55,958 Amortization of deferred cost of cancelled nuclear unit (Note B) 24,381 23,142 13,380 Deferred income taxes (Note E) 44,785 26,938 9,104 Amortization of nuclear fuel (Note A) 5/i60 23,503 15,935 Investment tax credit, net (Note E) 21,289 21,996 26,923 Allowance for funds used during construction (Note C)
(14,488)
(8,171)
(l1,267)
Total f rom operations 244,108 219,11I 170,413 Less - Preferred dividends declared 5,512 5,512 5,512 Less - Preference dividends declared 8,526 8,804 9,005 Less - Conunon dividends declared 48,413 43,547 40,883 Funds Generated Internally 181,657 161,248 115,013 Funds Obtained from ( Applied to) Outside Sources:
Sales (Redemptions) of Securities:
I Sale of Common Stock 16,405 12,695 9,535 Redemption of Preference Stock (1,898)
(2,100)
(I,759) l increase in limg-term Debt Outstanding 15,000 80,622 3,310 Debt Retirements (35,590)
(77,375)
(12,625)
Redemption of Secured Notes (I,640)
(1,640)
(l 640)
Increase (decrease) in Notes Payable 144,000 (14,000)
(18,000)
IncreJse (decrease) in Nuclear Fuel & Related Financing Obligations, net (33,000) 35,000 Funds Obtained from ( Applied to) Outside Sources 136,277
( 36,7%')
13.821 c Other Funds Provided (used):
[)eferred fuel costs (10,946)
(1,789) 42,627 Working Capital and other changes (42,740) 10,623 (34,998)
(53,686) 26,834 7,629 Total Funds Provided
$264,248
$ 151,284
$ 136,463 Construction Expenditures:
Plant
$247,662
$ 12 3,34 3
$ 130,075 Nuclear Fuel 16,586 27,941 6,388 Total Construction Expenditures
$264,248
$ 151,284
$ 136.463 Statements of Retained Earnings Balance at beginning of year
$162,472
$ 152,484
$ 147,504 Net income 88,849 67,851 60,380 251,321 220.135 207,884 Cash Dividends Declared:
Preferred 5,512 5,512 5,512 Preference 8,526 8.804 9,005 Conunon 48,413 43,547 40,883 62,451 57,863 55,400 Balance at end of year
$ 188,870
$ 162,472
$ 152,484 The notes anil whcilutewn pages il through 40 are an inirgral part of the finans tal statements Management's Dmunion anil Anatpis of Operations anil hnantial Con htion is on pages 26 anit 27 29
Balanc3 Sheets (hnhwad)
December 31, 1984 1983 Assets Property, Plant and Equipment, at original cost (Notes A, C, G and I)
Utility plant in service:
Electric plant
$2,137,877
$ 1,877,485 Steam IIcating service plant 39,389 39,700 2,177,266 1,917,I85 Less: Accumulated depreciation 626,109
$1,551,157 581,951
$ 1,3 35,234 Nuclear fuel 196,514 178,196 Less: Accumulated amortization 128,130 68,384 122,373 55,823 Nonutility property 1,108 1,132 Construction work in progress 61,559 88,909 1,682,208 1,481,098 Investments in Nuclear Electric Companies, at equity 10,809 10,416 Nuclear Decommissioning Fund (Note G) 2,831 1,030 Current Assets:
Cash 3,832 2,294 Accounts receivable, net:
Customers 169,148 159,535 Other 17,530 2,220 Materials & supplies, at average cost 66,938 57,26i Prepaid expenses & other current assets 5,050 262,498 3,4 34 224,744 Deferred Debits:
Deferred cost of cancelled nuc! car unit (Note B) 217,098 241,478 Other (Notes A and G) 71,020 288,118 36.659 278,137
$2,246,464
$ I,995.425 Capitalization and Liabilities (see accompanying schedules of capital stock and indebtedness)
Common Stock Equity 5 530,602
$ 487,799 Cumulative Preferred Stock 83,000 83,000 Cumulative Preference Stock Non-Mandatory Redeemab!c Series 38,287 38,287 Redeemable Series 35,264 37,162 Long-Term Debt 674,125 674,895 Nuclear Fuel and Related Financing Obligations 50,000 50,000 Current Liabilities: (Note D)
Long-term debt due within one year 15,770 37,230 Notes payable 181,000 17,000 Accounts payable 84,202 59,282 Property and other taxes accrued (Note E) 2,806 4,120 Interest accrued 10,568 9,902 Dividends payable 14,132 12,736 Other current liabilities 13,153 321,631 14,644 174,914 Deferred Credits:
Accumulated deferred income taxes (Note E) 387,I I8 338,213 Accumulated deferred investment tax credits (Note E) 90,984 74,703 Nuclear Decommissioning Reserve (Note G) 5,663 1,906 Other (Note G) 29,790 513,555 34,546 449,368
$2,246,464
$ 1,995.42 5 The notes and whedules on pages 31 through 40 are an integral part of the finandal statements.
Management's Diwuwion and Analysis of Operations anti Financial Condition is on pages 26 and 27.
30
Schedule of Capital Stock coottars in sticusands, except per share mucu m)
December 31, 1984 1983 Common Stock Equity, Common Stock Par value $10 per share (Note 1):
Authorized 21,534,500 shares; Issued and Outstanding 15,747,689 and 15.146,284 shares
$157,477
$151.463 Premium on Common Stock 183,850 173,459 Retained Earnings 188,870 162,472 Surplus Invested in Plant 405 405 Total Common Stock Equity
$530,602
$487,799 Cumulative Preferred Stock, Par value $100 per share, authorized, issued and outstanding (Note 2):
December 31, 1984 Series Per Share Shares Redemption Price 4.25 %
$103.625 180,000
$ 18,000
$ 18,000 4.78 %
$ 102.80 250,000 25,000 25,000 8.88 %
$ 104.00 400,000 40,000 40,000 Total Cumulative Preferred Stock
$ 83,000
$ 83,000 Cumulative Preference Stock, Par value $1 per share,8,000,000 authorized; issued and outstanding:
Non-Mandatory Redeemable Scries (Note 3):
$ l.46 Series - 2.675,000 shares 5 2,675
$ 2,675 Premium on 51,46 Series 35,612 35,612 Total Non-Mandatory Redeemable Preference Stock
$ 38,287
$ 38,287 Redeemable Series (Note 4):
$1.175 Series 3,807,500 and 4,000,000 shares 3,808
$ 4,000 Premium on $1.175 Series 31,456 33,162 Total Redeemable Preference Stock
$ 35,264
$ 37,162 The notes on pages 11 through 14 are an integral part of this shedule.
31
Schedaalm of Indebtmalness pu etw,nm39 Long-Term Debt (Note 5): First Mortgage Bonds:
Duember 31, Interest Series Rate (%)
Maturity 1984 1983 E
3 Aug. I,1984
$ $ 18,000 F
4%
June 1,1987 25,000 25,000 11 4%
June 1,1992 15,000 15,000 1
4%
Nov.1,1995 25,000 25,000 J
6%
June I,1997 40,000 40,000 6%
Nov.1,1998 50,000 50,000 L
9 Dec. I,1999 50,000 50,000 M
9%
July 1,2000 60,000 60,000 N
8%
May 15,2001 75,000 75,000 S
Variable Jan.15,2002 25,000 25,000 Q
9%
Dec.15,2003 90,250 92,625 R
10.95 Oct. 31,2004 73,125 75,000 P
9%
Apr.15, 2007 60,000 60,000 T
12 %
Apr.15, 2013 75,000 75,000 U
10 %
Apr.1, 2014 15,000 Total First Mortgage Bonds
$678,375
$685,625 Other Long-Term Debt:
Secured Notes, due November 15,1985, with interest at 11 %%
$ 11,520
$ 13,160 Collateralized Pollution Control Revenue Bonds (net),8% percent, due May 1,1984 13,340 Total Long-term Debt 689,895 712,125 Less: Long-term Debt Due Within One Year 15,770 37,230 Long-Term Debt - Net
$674,125
$674.895 l
Other Debt:
Nuclear Fuel and Related Financing Obligations (Note 6)
$ 50,000
$ 50,000 Notes Payable:
Bank Loans (Note 7)
$146,000
$ 37,000 Commercial Paper (Note 6) 35,000 Total
$181,000
$ 37,000 The noin on pagn 13 through 3 4 are an integral pari of this w hedule.
32
Notes to Schedules of Capital Stock and indebtedness
- 1. Common Stock Since December 31,1981, the Company has hsued shares of Common Stock, $10 par value, as follows:
Number Total Premium of Shares Par on Common (b)
Value Stock Balance December 31, 1981 14.218,986 $142,189,860 $ 160,636,224 Dividend Reinvestment Plan 446,227 4.462,270 5,072,496 Balance December 31,1982 14,665,213 146,652,130 165,708,720 Dividend Reinvestment Plan 439,620 4.396,200 7,036,199 Employee Stock Ownership Plan 41,451 414.510 713,476 Balance December 31,1983 15,146,284 151,462,840 173,458,395 Dividend Reinvestment Plan (a)
S I I,989 5,119,890 8,714,133 Employee Stock Ownership Plan (a) 89.416 894,160 1,677,668 Balance December 31,1984 15.747,689 $ 157,476,890 $ 18 3,850,196
- a. The remaming authorised comnmn shares reserved for future issuante are: Disidend Reinsestment plan 696.816 shares: E mployee stosk ow nership Plan 89,995 sharct
- b. At the Annual Mecimg hehl Aprd 19,198 3. sharehohters voteil to amend the Arnsics of orgamration to in(rcase the authonsed (apital stod. of the Company by4.000 000 addinonal shares of S10 par value common uo(k.
- 2. Cumulative Preferred Stock There were no changes during 1982,198 3, or 1984 in cumulative preferred stock. Upon involuntary liquidalion of the Com-pany, holders will be entitled to $100 per share.
- 3. Cumulative Non-Mandatory Redeemable Preference Stock There were no changes during 1982,1983, or 1984 in the $1.46 Series of preference stock. The redemption price at Decem-ber 31,1984 is $16.022 per share. (See Note 4-bl
- 4. Cumulative Redeemable Preference Stock Total Premium on Series Number Par Preference
$1.175 (issued March 19,1975) (a) (b) (c) of Shares value Stock Balance De(ember 31, 1981 4,400,000 $4,400,000 $ 36,652,000 Redemptions 193,200 193,200 1.565,723 Balance December 31,1982 4,206,800 4,206,800 35,086,277 Redemptions 206.800 206,800 1,924,471 Balance December 31,1983 4,000,000 4,000,000 33,161,806 Redemptions 192,500 192,500 1,705,896 Balance December 31,1984 3,807,500 $ 3,807,500 $ 31,455,910
- a. The Company may under iettain market iondinons be reqmred to invise tenders of and purthac200.000 shares annually at a prise not to cuced 510 per share plus dnidends aarued; abernausrly, the Company may purihaw such shares m the o,m market.
- b. sub est to the prior preferenital rights of the Cumularise preferred sto(kholJers, ugun mmluntary hquidanon of the company. holders of the $1.175 i
and $1.46 series are entated to rescive 510 and $15 per share. respc(tnely.
c.1he redemption prite at De(cmber ll,198 4 is $11.t 75 per sharc.
33
F Notes to Schedules of Capital Stock and indebtedness
- 5. Long-Term Debt
- 6. Nuclear Fuel and Related Financing Substantially all property, plant and equipment and Obligations materials and supplies owned by the Company are The Company has credit agreements with two major subject to lien under the terms of the Indenture of banks pursuant to which a wholly-owned financing Trust and First Mortgage dated December 1,1940, and subsidiary of the Company may issue not in excess of supplements thereto.
$85,000,000 principal amount of commercial paper The aggregate principal amounts of long-term debt supported by irrevocable letters of credit issued by the including sinking fund requirements due in the five banks. The proceeds of such issues are loaned to the years 1985 through 1989 are $15,770,000, $4,250,000, Company or applied to repay maturing conunercial
$29,250,000, $4,250,000, and $4,250,000, paper. The agreements also permit the Company to respectively.
make revolving credit borrowings from the banks The Company's Series S 13onds bore interest at provided that the amount of such borrowings and 15.0% per annum for the period January 15,1984 to the commercial paper outstanding do not exceed January 15,1985 and the rate will be adjusted each
$85,000,000 in the aggregate. The agreements, which year thereafter subject to certain limits to 127% of the are subject to automatic one year extensions unless the monthly average yields to maturity for actively traded applicable bank gives three years notice of termina-marketable U.S. Treasury fixed interest securities, tion, are currently scheduled to expire on June 30, adjusted to constant maturities of ten years. The inter-1988 ($35,000,000), and November 30,1988 est rate for the period January 15,1985 to January 15,
( $ 50,000,000). In December,1984, the Company bor-1986 will be 14.60%
rowed $35,000,000, under such arrangements, which in April,1984, the Massachusetts Industrial Finance will be refinanced with the proceeds from the planned Agency issued $15,000,000,10%% Collateralized pol-issuance of $75,000,000 of First Mortgage Bonds in
'ution Cm. trol Revenue Refunding Bonds (Boston Edi-early 1985. The effective rate of interest on the com-son Comp 1ny Project) due April 1,2014. The proceeds mercial paper outstanding at December 31,1984 was of the above issue were used to refund a like amount 9.51% including commitment and support fees. The of bonds that matured on May 1,1984. In order to evi-Company's obligations under these financing agree-dence the Company's obligation to repay the loan ments are collaterallized by a security interest m made to it by the Agency, the Company delivered to certain nuclear fuel. These security interests are subor-the Trustee, as assignee of the Agency, its $15,000,000 dinate to the lien of the indenture securing the Com-First Mortgage Bonds, Series U,10%% due April I, pany's First Mortgage Bonds.
2014'
- 7. Bank Loans To provide financing flexibility, at December 31, 1984 the Company had credit arrangements aggregating approximately $150,000,000. These arrangements provide for borrowings at or below the prime interest rate and require commitment fees to be paid on the unused lines of credit. Commitment fees for the years ended December 31,1984,1983, and 1982 totalled
$195,000, $463,000 and $495,000, respectively.
Information regarding short-term bank loan bor-rowings is as follows:
(thousands of dollar 4 1984 1981 1982 Maximum Short-Term 11ank Loan Horrowings
$146,000 $75,000
$ 174,000 Daily Weighted Average Amount Outstanding 73,884 12.696 44.145 Weighted Average Interest Rates.
Exduding Commit-ment Fees:
On HalJnte Out-standmg at Year End 9.52 %
10.6 5 %
lo.68"u During the Year (Daily) 10.91 %
9.71";.
11.87 %
34
Matme in Ein.macini Statoniente A. Summary of Significant Accounting Policies Pilgrim 2 nuclear unit over approximately eleven and The Company is subject to regulation by various agen-one-half years pursuant to retail rate orders of the cies. Because of the effect in regulated businesses of MDPU. Such costs include certain financial carrying the rate making process, dif ferences may arise in the costs that will be reviewed and may be increased or application of generally accepted accounting principles decreased from time to time by the MDPU. The between regulated and nonregulated businesses. Such remaining recovery period is approximately nine dilferences are related principally to the time at which years.
various items enter into the determination of net C. Allowance for Funds Used During j
income in accordance with the prmciple of matclu.ng Construction costs and revenues. ( Accounting policies are also descubed m Notes C, E and F.)
in accordance with regulatory accounting, the Com-pany capitalizes as part of comtrutu.on costs certain
- 1. Principles of Consolidation general and administrative costs and an allmvance for The financial statements include the accounts of the funds used during construction (AFUDC). AFUDC Company and its wholly-mvned financing subsidiary, represents the estimated cost of borrmved and equity BECO Fuel Company, Inc.. In the process of consoli-funds used to finance the Company's construction dation, all intercompany balances and transactions program. This cost is not an item of current cash have been eliminated.
income, but is recovered over the service life of plant in the form ofincreased revenue collected as a result
- 2. Depreciation and Amortization of higher depreciation expense. AFUDC rates for the Physical property is depreciated on a straight-line years 1984,1983, and 1982 were 11.3% 11.3% and basis at approximately 3.54% annually. At the time of 12.6% respectively.
reurement of property units, their cost and the cost of removal are charged to and salvage is credited to accu-D. Commitments and Contingencies mutated depreciation. In 1983, the Company changed I. Capital Commitments from the whole life to the remaining life method of At December 31,1984, estimated contractual obliga-computing depreciation; such change was approved tions for plant, nuclear fuel, and equipment were by the Massachusetts Department of Public Utilities approximately $146,112,000.
("MDPU") in the Company's May,198 3 retail rate
- 2. Lease Commitments order. The effect of the change ori the accompanying At December 31,1984 and 1983, the Company had financial statements is not matenal.
in facilidts ad gimnt Sm-Maintenance expense is charged for the cost of cur-of du km m "cgiul Ims a Afimd h On-rent repairs, replacement of items not accounted for as Financial Accounting Standards Board (FASB).
units of property, and minor betterments of plants ami Commencing in 19M 'he FASB required that regu-properties as they are m, curred.
lated utilities commence the capitalization of(ertain The cost of nuclear fuel is amoru. zed to fuel expeme leases. Ilad all leases which meet such criteria been based on the quantity of energy produced for the W nd, h ammmt of the asset and the liability generatmn of electnc ty. Nuclear fuel expense also h odd have been included in the balance sheets includes a provision for the costs associated with the
, g.Dmh 3h 19841983 ad 19M md h-(mct ulumate disposal of spent nuclear f uel; such estimated on expenses for each of those years would not have disposal costs are subject to review and are amoruzed been material.
to fuel expense, where they are being recovered Estimated minimum rental commitments under through the Company's fuel and purchased power noncancellable leases for years subsequent to 1984 are adjustment clause. (See Note G.)
3 7g;g.
- 3. Forecasted Fuel Clause
( n ihomando Total The Company's retail fuel and purchased power i935 3
,3,7,,
adjustment clause permits all fuel costs and the fuel 1986 16,st,o portion of pur hased power cmts to be billed to cus-i987 i5,550 tomers monthly utilizing a forecasted rate. The diller-1988 15.28) ence between actual and estimated cost is included in 1989 14,7 l 2 deferred debits on the accompanying balance sheet Years Thercaher I15.701 pending adjmtments of subsequent rates. The non.
A portion of the aforementioned rentals will be cap-fuel portion of certain purchased power costs are italized as part of comtruction cmts in the future.
recovered through base rates. The MDPU has the right Information with respect to rentals capitalized from to reduce subsequent fuel (lause billings if it finds that 1982 through 1984 is as follows:
the Company has been unreasonable or imprudent in capitalized as the operation of its generating units or in the procure-Part ol con.
ment of fuel; the Company does not anticipJte any On thousandQ Rem bpense strutlion coq billing reductions.
1984 511,1si
- 51. tion H. Cancelled Nuclear Unit 1981 12,100 1Aoo 1982 II,700 Lloo The Company is amortiting the cmt of the cancelled 35
ummmmmmmm-m Notes to Financial Statements
- 3. Nuclear Insurance The ef fective income tax rates reflected in the finan-The Company is a member of Nuclear Electric cial statements and the reasons for their dif ferences Insurance Limited; the Company may be assessed from the statutory Federalincome tax rate are additional premiums under its nuclear facility decon-explained below:
tamination liability ami excess property insurance, 19g4 1933 1932 and extra expease insurance if the insurers' losses statutory rate 46%
46%
46%
cxceed financi.d resources other than the retrospecove AHowance for other premiums. As of December 31,1984 the highest funds used during amount which could be assessed for losses during the construaion (2.3)
(2.5)
(2.0) current policy year was $15,394,000. While assess-Massa (husetts corporate ments may also be made for lowes ist certain prior pol-fran(hise tax 4.0 4.1 1.8 other (1,1)
(1.2)
(2.1) icy years, the Company is not aware of any lowes in such years which it believes are likely to result in an Ef fectise Rate 46.4 %
46.4 %
45.5%
awcwment.
Under certain circumstances,in the event of nuticar Federalincome tax returns through 1979 have been examined and closed.
incidents at facilities covered under the Price-Ander_
son liability provisions of the Atomic Energy Act of F. Pensions 1954, as amended (due to expire August 1,1987), the The Company has a noncontributory funded plan Company could be awessed up to $5,000,000 per inci-(with certain voluntary contributory features) cover-dent but not more than $lo,000,000 in a calendar ing substantially all employees. Pension accruals and yer the portion added to construction costs were as I"U"W' E. Income Taxes The Company's income before income tax expense (in thousands) 1984 1981 1981 results solely from domestic operations. Delerred Total Accrued
$7,126
$6,811 56,458 income tax expense results from timing dif ferelRes in Added to Construction Cosis 1,618 1,571 1,485 the recognition of certain expenses for tax and finan cial statement purposes. Investment tax credits are The Compaay's policy is to fund pension costs reflected in income over the estimated usclul lives of accrued using the aggregate cost method. The actuarial the related property. Components of deferred income present value of accumulated plan benefits at the tax expense are as follows:
annual actuarial valuation dates were as follows:
(in thousands) 1984 1981 1982 (in thousands)
January I,1984 January 1,1981 Cancelled nudear Actuarial Present unit (Note 11)
$(8,997) $(8,54n) S 7,905 Value of Accumu-Euess tax depretia-lated Plan lienefits:
tion over book Vested
$142,700 il 11,800 depreciation 24,527 15,115 11,559 Nonvested 7,900 7,100 Deferred fuel Total 5150,600
$ 140,900 expense 4,708 1,629 (l8,14 0)
Debt portion of A nine percetit annual rate of return was awumed allowance for in determining the actuarial present value of accumu-funds used lated plan benefits for both 1984 and 1981.
The Company's basis for determining pension i ruaion 2,617 547 i,710 expense and funding of the plan considers the actuar-Other indire(t (on-struction unts 1,727 1,601 1,429 ial present value of accumulated plan benefits earned Mawathusetts cor-to date, as Well as benefits to be carned in the f uture.
porate frant hise At January 1,1984 and 1983, the pension plan had tax 6,494 4,116 (146) net awets available for plan benefits of $194,000,000 Pre Aprd 7,1981 and $17 3,000,000, respectively, which represent full Spent Nuclear funding of the actuarial present value of accumulated I uct Disposal plan benefits and partial funding of the benefits to be camt n utum Wa at Janum I, M w D tr d Nudear estimated to be $141,200,000)
Outage Expense 8,438 (2,027)
(l,106)
Extraordinary Storm 1. owes 1,742 0-Nudcar SaIcty Evaluation Costs 1,688 0-Other 4,110 (918) 4.071
$44,785 526,918
% 9,104 34
-Notes to Financial Statements G. Estimated Future Costs Related to Ultimate Disposal of Spent Nuclear Fuel and Generating Plants The Company has the capability to expand its spent statements. Depreciation expense includes a provision nuclear fuel storage facility at Pilgrim Nuclear Power for the decommissioning of Pdgrim Nuclear Power Station to include suf ficient capacity for spent nudear Station at the end of its useful life; such funds col-fuel through approximately the year 1992; however, lected are restricted in their use pursuant to retail rate pursuant to the Nudear Waste Policy Act of 1982, the orders.
United States Department of Energy (" DOE") will be The Company also participates as an investor in two responsible for the uhlmate disposal of spent nuclear other domestic nuclear units. Iloth of these units are fuel. The Company estimates that it will be required to recovering as part of their wholesale rates a provision pay the DOE approximately $40,587,000 for disposal for estimated charges for spent nuclear fuel disposal of nuclear fuel depleted through April 7,1983. Such costs and plant decommissioning costs. (See also amount is reflected in the accompanying financial Note A2.)
H. Selected Financial Statistics Supplementary Financial Information (Unaudited)
(In Thousands of Dollars Earnings Except Earnings Per Operating Operating Net Halan(c Available for Per Share of Share)
Revenues Income Income Common Stmk Conunon Stock
- Quarterly Financial Data 1984 Hrst Quarter
$ 322,925
$ 36,475
$20,898
$17,377
$ 1.14 Second Quarter 100,436 31,744 15,615 12,089 0.79 Third Quarter 169.916 52,038 15,940 32,448 2.09 Fourth Quarter 123,191 31.551 16,396 12.897 0.82 1983 lirst Quarter
$261,657
$ 32,981
$ 17,747
$ 14,168
$0.96 Second Quarter 231,I57 30,925 16,262 12,663 0.85 Third Quarter 293,839 42,314 23,929 20,352 1.36 Fourth Quarter 280,632 23,891 9,913 6,392 0.42
- B.ned upea quanaly weighird astrage number ofiommon shares numanihng Quarterly Stock Data Following are the reported high and low sales prices of Iloston Edison Company's common stock on the New York Stock Exchange Consolidated Tape for each of the quarters of 1984 and 1983 and the dividends declared per share during ca(h of those quarters:
1984 1983 liigh Imv Dividends liigh Low Dividends First Quarter 28 %
24 %
.75 28 %
25
.72 Second Quarter 27 %
25
.75 28 %
26 %
.72 Third Quarter 30 %
26
.81 28 %
26 %
.72 Fourth Quarter 35 %
29 %
.81 29 %
26 %
.75 37
==mummmmmmin Nstso to Fincncimi Ststemsnts I. Information Regarding Jointly-Owned Electric Plant and Long Term Purchased Power Contracts
- 1. Jointly-Owned Electric Plant
- 2. Long-Term Contracts for the Purchase of The Company is a joint owner of W. F. Wyman Unit Electricity
- 4, which was constructed by Central Maine power The Company has certain long-term contracts for Company and connuenced operations in 1979; the purchase of electric power. The Company is obli-included in the accompanying balance sheets is the gated to pay its proportionate share of the operating Company's proportionate share (5.888%) of plant in costs (including depreciation and a return on capital) service of $12,054,000 for both 1984 and 1983 and through the contract expiration date. The total annual accumulated depreciation of $2,545,000 and costs under these contracts are induded with pur-
$2,116,000 for 1984 and 1983, respectively. The Com-chased power expense in the Company's Statements pany include,its share of direct expenses of W. F.
of Income. The contracts are as follows:
Wyman Up:t #4 in the corresponding operating (In Timusands) expense, on its income statement.
1984 Proponionate Share Units of Company Share-of-Contract Capacity Minimum Interest Portion Debt outstanding Expiration Purt hased Debt of Minimum Through Cont.
Generating Unit Date MW Servite Debt Sersice Exp. Date Canal U0it # 1 2001(a) 25.0 142
$712
$198
$ 2,965 Connecticut Yankee Atomic 1998 9.5 55 1.107 918 6,315(b)
Yankee Atomic 1991 9.5 17 499 259 1,989(c)
Point trpreau/Ilear Swamp 1988/
1990(d)
(c) 200 28.100 22.268 21.126(h
$ 10.6 I 8
$21.841
$14.595 Total fixed and variable tosts for thew wntratts for ihe ) cars ended Detember 11.1984.1981. and 1982 were $100.615.000. 584.056.000 and $55.328.000. respettwely. The variable component icprewnts fuel tosts w hic h are included in net purt hased pouca on the statements of income.
The aggregate printipal amounts of these future unsonditional purthase obligat;ons due in the Inc icars 1985 through 1989 are 540.441.000. 540.782.000, 540.710.000. 542.292.000 and 5 to.915.000, respcttiuly. The aggregate prewnt salue of suth ot ligations b 5111.726.000.
(a) Reprewnts 4.42% of the Company's installed net tapability; the remaining units aggregate 9.02%
(b) of this amount the Company has guaranteed 54.184.000.
- 4) In addition. the Company has guaranteed 51.125.000 for in o rewhing (recht lines.
(d) The point Lepreau tontratt may be estended by the Company for three additional twelve month perioth.
(c) The Company has purchawd 15.625% < 100 Mw) of point lepreau'uapatity and 17.1% 1100 Mw) of llear swamp's capatity.
(f) These wntracts do not estend for the hie of the unit: honescr. the amount reprewnts the estimated delq payments through the wntract espiration dates.
The Company also has sescral transmiwion wn ratts which relate to thew purchawd power wntracts: honeser. the cifett of such iontratis on the auompanying financial statements is not material.
Report of Independent Certified Public Accountants To the Stockholders and Directors of Boston Edison Company We have examined the balance sheets of Iloston in our opinion, the financial statements referred to Edison Company at December 31,1984 and 1983 and above present fairly the financial position of 11oston the related statements of income, retained earnings Edison Company at December 31,1984 and 1983 and and sources of construction funds ior each of the three the results of its operations and sources of construc-years in the period ended December 31,1984. Our tion funds for each of the three years in the period examinations were made in accordance with gener-ended December 31,1984 in conformity with gener-ally accepted auditing standards, and, acwrdingly, ally accepted accounting principles applied on a con-induded such tests of the accounting records and such sistent basis.
other auditing procedures as we considered necessary
/
in the circumstances.
Iloston, Massachusetts January 24,1985 38 s
Supp1:montcry infermntien Supplementary Information to Disclose the Effects of Changing Prices (Unaudited)
The following supplementary information is supplied Fuelinventories and the cost of fossil fuel used in in accordance with the requirements of the State-generation have not been restated from their historical ment of Financial Accounting Standards No. 33, as ost in nominal dollars. Regulation limits the recmcry amended, for the purpose of providing certain of fuel through the operation of adjustment clauses infonnation about the effect of changing prices. It and/or adjustments in basic rate schedules to actual should be viewed as an estimate of the approximate c asts. For this reason, fuel inventories are effectively elfect ofinflation, rather than as a precise measure.
monetary assets.
The Company suggests that.his information be Depreciation is determined by applying the viewed with caution as, in the Company's opinion, Company's composite depreciation rate to the indexed the information presented does not properly depict plant amounts.
the effects of inflation.
Since only historical costs are deductible for income Constant dollar amounts represent historical costs tax purposes, the income tax expense in the historical stated in terms of dollars of equal purchasing power, cost financial statements is not adjusted.
as measured by the Consumer Price Index for all Under rate-making prescribed by the regulatory Urban Consumer (CPI-U). Current cost amounts commissions to which the Company is subject, only reflect the changes in specific prices of plant from the the historical cost of plant is recoverable in revenues as date the plant was acquired to the present, and differ depreciation. Therefore, the excess of the cost of plant from constant dollar amounts to the extent that stated in terms of constant dollars or current cost that specific prices have increased more or less rapidly than exceed the historical cost of plant is not presently the general rate of inflation. The current cost of plant recoverable in rates as depreciation, and is reflected as is determined primarily by indexing surviving plant a reduction to net recoverable cost. While the rate-by the llandy-Whitman Index of Public Utility making process gives no recognition to current cost of Construction Costs. Since the utility plant is not replacing property, plant, and equipment, based on expected to be replaced precisely in kind, current cost past practices, the Company believes it will be allowed does not necessarily represent the replacement cost of to earn on the increased cost of its net investment the company's productive capacity.
when replacement of facilities actually occurs.
The Company, by holding assets such as receiv-ables, prepayment, and inventory, suffers a loss of purchasing power during periods of inflation because the amount of cash received in the future for these items will purchase less. Conversely, by holding monetary liabilities, primarily long-term debt, the Company benefits because the payment in the future will be made with nominal dollars having less parchasing power. The Company has significant amounts of long-term debt outstanding which will be paid back in dollars having less purchasing power and, therefore, for purposes of these calculations, has a net gain from holding monetary liabilities in excess of monetary assets.
39
Supplementary Information (in r/wusands)
Statement of Income from Continuing Operations Adjusted for Changing Prices (Unaudited)
Current Cost Conventional Ascrage 1984 For the Year Ended December 31,1984 Ilistoric Cost Dollars Revenues
$ 1,316,668
$ 1.316,668 Expenses:
Operation awl maintenance exduding nudear fuel amortization 906,027 906,027 Nudear fuel amertization 5,760 5,771 Depreciation 74,821 153,859 Amortization of deferred cost of cancelled nuclear unit 24,381 24,381 Taxes - property and other 76,981 76,981 Income Taxes 76,890 76,890 Interest Charges 72,906 72,906 Other Income (9.947)
(9.947)
Total Expenses 1,227,819 1,306.868 Income from operations culuding adjustments to net recoverable amount 88.849 9,800 Increase in specific prices (current cost) of plant held during the year *
$ 205,135 Adjustment to net recoverable amount (63,597)
Effect of increase in general price level (125,448)
Net 16,090 Gain from dedine in purchasing pmver of net amounts owed 37,925 Total 54,015
=
- At December 31,1984, current unt of property, plant and equipment net ol atcumulated depreciation was $3,348,735 w hile historical mst or net cost remverable through depretiation was $ t,70),971 enluding remvery of spent nutlear fuel dispmal msts of $21,764, u hith is mnsidered to be a monetary item.
Five Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices (In thousands, except per share amounts and Consumer Price Index (CPI), of average 1984 dollars)
Years Ended December 31, 1984 1983*
1982*
1981*
1980*
Operating revenues
$1,316,668 $ 1,114,779
$ 1,136,226
$ 1,19 3,780
$ 1,116,732 Current Cost Information Income (loss) from continuing operations (exduding adjustment to net recoverable cost) 9,800 $ (14,132) $
(7,244) $
7,835 2,264 Loss per common share (after dividend require-ments on preferred stock)
(0.27) $
( 1.95) $
( 1,58) $
(0.64) $
(1.22)
Excess (deficiency) of increase in current cost of electric plan, held during the year over changes in the general price level 5
79,687 62.818 $
21.390 $ (135,842) $ (104,356)
Adjustment to net recoverable cost
$ (63,597) $ (27.245) $ (12,886) $
62.489 $ (20,506)
Net assets at year-end at net recoverable cost S 641,225 $ 623.308 $ 619,798 5 636,252 $ 667,216 GeneralInformation Gain from decline in purchasing [xnver of net amounts owned 5
37,925 $ 28,830 $
66.130 $
90,263
$ 127,171 Cash dividends declared per common share 3.12 5
3.03 3.03 3.19 3.44 Market price per common share at year-end 5
34.625 5 29.58 27.96 25.13 27.11 Average (estimated) CPI 311.2 298.5 289.3 272.4 246.8 o
' Restated to aserage 1984 Constant Dollars 4o l
5:13cted Optrating Stctiatics 1984 1983 1982 1981 1980 1979 Capability (NEPEX Net Claimed Winter Maximum-MW);
New Boston Station 760 760 760 760 760 760 Pilgrim Nuclear Pmter Station 670 670 670 670 670 670 Mystic Station 1,030 1,016 1,025 1,046 1,046 1.046 L Street Station 23 23 23 23 48 48 W.F. Wyman Unit #4 36 16 36 16 36 36 Gas Turbines 264 264 237 267 267 267 Totai 2,783 2,769 2,751 2,802 2.827 2,827 Contract Purthases 432 436 32 3 539 309 314 Contract Sales (263)
(322)
(182)
(590)
(337)
(243)
Net Capability at Year-end 2,952 2,883 2,692 2,751 2,799 2,898 Net Capability at Peak 2,861 2.844 2,603 2,753 2,888 2,815 Capability Responsibility to NEPOOL at Peak 2,684 2,468 2,436 2,480 2,460 2,411 Edison Territory Hourly Peak.
MW 2,387 2,233 2,181 2,077 2,100 2,002 Edison Territory Load Factor 57.6 %
59.0 %
56.8 %
58.5 %
57.8"o 59.7 %
Generating Station Economy BTU per Net kWh Generated 10,234 10.217 10,112 10,170 10.095 10,171 Average Cost of Fuel (Company)-
Cents per Million BTU:
Fossil 447.61 426.02 442.12 507.52 417.37 313.11 Nudear 48.27 47,18 40.77 38.98 27.57 Composite 285.10 125.71 358.66 321.34 202.60 Capability (Net kW):
Fossil 77*A 77%
79 %
79 %
80 %
80 %
Nuclear 23%
23%
21"6 21 %
20 %
20 %
Generation (System kWh):
Fossil 88*4 61 %
73%
' 70%
78 %
65%
Nudcar 12 %
39 %
27 %
30 %
22 %
35%
Utility Plant In Service (000):
Additions (gross) 5 250,569 $
131,263 $
140.209 $
143,316 $
150,454 $
105.761 Retirements 17,916 16,262 23,130 11.119 9,699 12,219 Accumulated Depreciation 626,109 581,951 533,762 493,087 451,578 403,737 Amount of Depreciabic Plant 2,130,619 1,873,270 1,762,337 1,669,411 1,615,846 1,514.123 Utility Plant in Service 2,239,933 2,007,226 1.892,775 1,781,060 1,909,038 1,770,038 Per Average Customer (dollars) 3,769 3,432 3,282 3,127 3,400 3,194 Per Average Employee (dollars) 531,924 498,938 492,397 453,311 488,319 459,870 Per $1 Hase Operating Revenue (dollars) 2.97 3.04 3.15 3.11 3.77 3.84 Electric Plant in Service per Edison Territory llourly Peak (dollars per kW) 896 841 806 800 768 752 Number of Employees at Year-end 4,252 4.115 3,874 3,876 3,954 3,874 41
Selected Sales Stati ~ tic 3 1984 1983 1982 1981 1980 1979 Electric Energy:
(kWh in thoustnds)
Sources:
Net system output:
Generated 7,777,441 12,774,656 11.344,914 11.124,788 12,357,687 12,758,756 Purchased 2,999,560 1,793,484 1,562,753 1,294,664 1,535,889 1,642,064 Interchange 1,946,469 (584,985) 44,263 482,323 (1,091,794) (1,293,915)
Total 12,723,470 13,983.155 12.951,930 12,901,775 12,801,782 13,106,905 Disposition:
Sales Commercial 5,724,941 5,280,963 4.931,918 4,798,108 4,654,964 4,549,642 Residential 2,890,242 2.777,653 2,647,217 2,594,708 2,651,979 2,597,364 Industrial 1,868,664 1,737,999 1,650,793 1,694.869 1,771,784 1,758,163 Street Lighting 134,905 137,136 136,762 136.541 130,809 125,166 Railroads 27,524 55,729 79,444 60,562 55,397 33,484 Total Retail 10,646,276 9,989,480 9,446,134 9,284,788 9,264,933 9,063,819 Sales for Resale-Total Requirements 447,686 508.153 494,182 482,154 471,443 459,871 Edison Territory Total 11,093,962 10,497,633 9,940,316 9,766,942 9,736,376 9,523,690 Sales for Resale-Partial Requirements 644,873 2,431,197 2,089.938 2,257,000 2,132,352 2,631,798 Total-Edison System 11,738,835 12,928,830 12.030,254 12,023,942 11,868,728 12,155,488 Miscellaneous Usage:
Company 124,173 100,262 112.206 108,930 121,236 114,427 Transmission 237,030 314.583 264,290 255,609 313.356 357,573 Distribution 573,432 639,480 545,180 513,294 498,462 479,417 Total 12,723,470 13,983.155 12,951,930 12,901.775 12,801,782 13.106.905 Kilowatthours-Annual Growth Percent:
l.
Commercial 8.4 7.1 2.8 3.1 2.3 2.7 Residential 4.1 4.9 2.0 (2.2 )
2.1 1.5 Industrial 7.5 5.3 (2.6)
(4.3) 0.8 1.7 Street Lighting (1.6) 0.3 0.2 4.4 4.5 3.6 Railroads (50.6)
(29.9 )
31.1 9.3 65.4 57.2 Total Retail 6.6 5.8 1.7 0.2 2.2 2.3 Sales for Resale -
Total Requirements (11.9) 2.8 2.5 2.3 2.5 1.5 Edison Territory Total 5.7 5.6 1.8 0.3 2.2 2.3 Sales for Resale -
Partial Requitements (73.5) 16.3 (7.4) 5.9
( 19.0) 13.6 Total-Edison System (9.2) 7.5 0.1 1.3 (2.4) 4.5 Territory Sales by Class: (%)
Commercial 52 50 50 49 48 48 Residential 26 27 27 27 27 27 Industrial 17 17 17 17 18 18 Other 5
6 6
7 7
7 Sales Statistics:
Residential Averages:
Annual kWh Use 5,551 5,407 5,224 5,190 5,378 5,340 Revenue per kWh II.48c 9.39c 9.64c 9.54e 8.05e 6.39e Annual Bill
$636.96
$507.75
$503.59
$495.12
$4 32.76
$341.13 Customer:
Meters at Year.end 629,377 623,020 615,342 610,764 602,636 596,523 Average Number 594,343 584.773 576.754 569,511 562,076 554.105 42 l
l
Selsctsd Fin::ncirl St:tiatics 1984 1983 1982 1981 1980 197)
Operating Revenues (000)
$ 1,316,'368
$ 1,069,285
$1,056,267
$ 1,044,941
$885,614
$697,668 Balance for Common Shares (000) 574,811
$53,575
$45,882
$58,462
$48,879
$43,267 Earnings Per Common Share
$4.85
$ 3.60
$ 3.18
$4.15
$ 3.55
$ 3.49 Dividends Declared Per Common Share
$3.12
$2.91
$2.82
$2.80
$2.74
$2.51 Payout Ratio (Common) 63%
80%
88 %
67 %
77 %
72 %
Book Value Per Common Share
$ 33.61
$ 32.21
$ 31.71
$ 31.68
$ 30.52 529.93 Cash Flow Per Common Share
$ 14.17
$ 13.90
$ 10.80
$ 10.42
$8.54
$9.69 Return on Average Common Equity 14.69 %
11.24 %
10.02 %
13.35 %
11.73%
11.37 %
Year-Er'd Common Dividend Yield 9.36 %
10.57 %
11.08 %
12.72 %
13.02 %
12.36 %
Fixed Charge Coverage (SEC) 3.02x 2.67x 2.28x 2.25 x 2.28x 2.52x Capitalization:
Long-Term Debt 50 %
51 %
53%
54 %
51 %
52 %
Preferred and Preference Equity 11%
12 %
12 %
12 %
14 %
14 %
Corunon Equity 39*/.
37 %
35 %
34 %
35 %
34 %
Long-Term Debt (000)
$674,125
$674,895
$706.503
$704,83 3
$619,440
$621,080 Cumulative Preference Stock, Redeemable (000)
$35,264
$17,162
$ 39,235
$40,965
$44,514
$46,488 Total Assets (000) 52,246,464
$1,995.42 5
$1,929,940
$ 1.918,013
$ 1,782.909
$1,659,268 Funds Generated Internally (000)
$181,657
$ I 61,248
$ 115,013
$ 107,170
$79,696
$88,505 Construction Expenditures
{000)
$264,248
$ 151,284
$ 136,461
$ 136.715
$ 134,249
$ 107,967 Percent Internal Generation 69%
107 %
84 %
78 %
59 %
82 %
Stockholders (Common) at Year-end 53,570 56,950 58,353 59,478 61,533 61,564 l
Common Shares outstanding:
(Wtd. Ave.)
15,435,659 14,902,418 14,434,415 14,073,823 13,763,062 12,389,065 (Year-end) 15,747,689 15,146,284 14,665,213 14.218,986 13,927,582 13,626,439 Commen Stock Price I
- liigh 35 %
29 %
26 %
24 %
24 %
24 %
- Low 24 %
25 20 19 %
18 %
19 %
- Year-end 34 %
28 %
26 22 21 %
22
. Year-end (Common) Market Value (000)
$545,264
$429,776
$381,296
$ 312,818
$299,443
$299,782 Trading Volume (Common Shares) 8,175,300 4,344,600 3,750,400 2,738,900 2,643,000 2,485,000 Market / Book Value (Year-end) 1.03
.88
.82
.69
.70
.73 Price / Earnings Ratio (Year-end) 7.1 7.9 8.2 5.3 6.1 6.3 43
Dividsnd Rsinva:tmsnt Pirn Impcrtant Shershnidsr Informstian same The Dividend Reinvestment and Conunon Sto(k Pur-Annual Meeting chase Plan is available to common, preferred and prel-The Annual Meeting of Stockholders of the company erence shareholders. Under the plan, common will be held on April 16,1985, at 11:00 a.m. A copy of shareholders may have their dividends reinvested in the Frevdent's Remarks will be sent on request.
conunon stock at 95 percent of current market prices.
Company Contact Preferred and preference shareholders may have their Diane M. Kinch, Clerk of the Corporation dividends mvested in common stock at current market prices. All participants may invest optional cash con-General Offices tributions, up to a maximum of $5,000 per quarter, 800 Boylston Street, Boston, Massyhusetts 02199 which will be invested at the current market price.
(617)424-2000 Participants do not pay fees or conunissions.
Stock Listings The Economic Recovery Tax Act of 1981 makes New York and Boston stock exchanges certam tax benefits available - beginning January 1, 1982, and ending December 3/,1935 - to individual Stock Symbol stockholders who reinvest their dividends under the BSE Plan. Each individual stockholder may elect to exclude Dividend Payment Dates from income for federal income tax purposes up to Common and Preferred
$750 each year ($1,500 on a joint return) of dividends ist of February, May, August, November reinvested under the Plan. This election is made on the Preferen(e stockholders' federalincome tax return for the taxable 1st of March, June, September, December year in which the dividends would otherwise be includable in income.
Tax Status of 1984 Dividends When an election has been made as to the com.
Dividends paid on Boston Edison common, preferred mon stock so purchased, that stock (" Qualified Rein.
and preference stock in 1984 are 100 percent taxable vested Dividend Stock") has a tax bau of zero. If the as dividend income for federal income tax purposes.
Qualified Reinvested Dividend Stock is hekt as a capi.
Participants in the reinvestment plan should also refer to the " Dividend Reinvestment Plan" section of this tal asset for more than one year, it will be taxed at long term capital gains rates when sokl; however, report for tax treatment of reinvested dividends.
long-term capital gains treatment will not be available Dividend Reinvestment Plan Agent and the entire sale proceeds will be taxed as ordinary The First National Bank of Boston income if the Qualified Reinvested Dividend Stock is Stock Transfer Agent and Reg,strar of Stock i
sold within one year after the Investment Date or if it The First National Bank of Boston is deemed to have been sold between the record date of the dividend and the date which is one year af ter SEC Form 10-K the Investment Date.
Stockholders may obtain a copy of Boston Edison The special tax treatment provided by the Act Company's annual report to the Securities and does not apply to shares purchased under the Plan Exchange Commission, on Form 10-K, including the with optienal cash payments, shares purchased for financial statements and schedules thereto, by making accounts under the company's Employee Stock Own-a written request to the Clerk of the Corporation.
ership Plan, or shares purchased with dividends which Inquiries Concerning Stock Ryou hamluntions concaning your &&nd par ir es ii i for which an election is not, ments, taxpayer identification number, change of or cannot, be made by a participant will be treated for address, consolidatmn of accounts, stock certificates, federal income tax purposes in the same way as divi-transfa of ownudup and otha stock account manas, dends payable to non-participating shareholders.
please contact the Stock Transfer Agent at the follow-All holders of record of shares of Common, Pre-ing address:
ferred or Preference Stock are eligible to participate directly in the Plan. Beneficial owners of the compa-The First National Bank of Boston ny's stock whose shares are registered in names other P. O. Box 644 than their own (e.g., a broker or bank nominee) must Boston, Massachusetts 02102 arrange participation with the record holder. If for any reason a beneficial owner is unable to arrange partici-pation with his broker or bank nomince, he must become a record holder by having the shares trans-ferred to his own name.
Allinquiries concerning the plan should be directed to the Plan Agent: The First National Bank of Boston, Dividend Reinvestment Plan, P. O. Box 1681, Boston, Massa (husetts 02105.
44
Officers Direct:re Thomas J. Galligan, Jr., Chairman of the Board Helene R. Cahners (Mrs. Norman L Cahners),
Stephen J. Sweeney, President and Chief Executive Officer Thomas G. Dignan, Jr., Attorney-at-Law. Partner.
Joseph P. Tytreki, Exnutive Vice President Frank L. Farwell, Honorary Chairman of the Board.
James M. Lydon, Exantive Vice Presidart Liberty Mutual Insurance Company William D. Harrington, Senior Vice Prcsident Thomas J. Galligan, Jr., Chairman of the Board. Bos-Eleanor T. Daly, Vice President and Assistant to the ton Edison Company Chief Exuntive Oficer Kenneth I. Guscott, President. Ken Guscott Associ-Victor H. Kazanjian, Vice President and ates (management consultants) c f
Gareral Counsel Nelson S. Gifford, President. Dennison Manufactur-J. Edward Howard, Vice President - Nuclear En.;i-ing Company (manufacturers of paper products and neering and Quality Assurance systems)
David J. O'Connor,1r., Vice President -
Joseph P. Healey, Former Chairman of the Paard and Customer and Corporate information Services Chief Exeactive Officer. Refrigerated Food Express, Inc.
C. Bruce Damrell, Vice President -
Richard D. HiII, Former Chairman of the Board and Engineering and Distributiert Chief Executive 0)) cer. Bank of Boston Corporation (bank holding company)
Craig D. Pcffer. Vice President - Commercial James M. Lydon, Executive Vice President. Boston John R. Stevens, Vice President - Energy Supply and Edison Company Corporate Relations Wlillam D. Manty, Exeattive Vice President,' Cabot Cameron H. Daley, Vice President - Steam Corporation (energy, engineered products and per-and Elutric operations formance chemicals)
Richard J. Coughlin, Vice Presidart -
Bernard J. O'Keefe, Chairman of the Board. EG&G, Procurement. Storcs and Service Inc. (technological services)
Thomas J. May, Vice President and Treasurer Herbert Roth, Jr., Chairman and Chief Executive Ofi-cer. LFE Corporation (manufacturer of equipment Marc S. Alpert, Vice President - Rates and systems for traffic and industrial process A. Lee Oxsen, Vice President - Nuclear Operations control)
Warren F. Roche, Vice Presidatt - Human Resources Stephen J. Sweeney, President and Chief Executive and Labor Relations Officer. Boston Edison Company Diane M. Kinch, Clerk of the Corporation Joseph P. Tyrrell, Executive Vice President. Boston Edison Company Timothy J. Heffernan, Assistant Treasurer Paul E. Tsongas, Attorney-at-Law. Partner. Foley, Walter E. Skowronski, Assistant Treasurer Hoag and Elliot Barbara M. Donahue, Assistant Clerk of Member of Executive Committee the Corporan.on Member of Audit Committee Member of Executive Personnel Committee Robert J. Weafer, Jr., Controller Member of Nuclear Operations Review Comnu,ttee
.f Director as of January 2,1985 Died January 12.1985 As of January 1.1985
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