ML20151E508
| ML20151E508 | |
| Person / Time | |
|---|---|
| Site: | Maine Yankee |
| Issue date: | 04/07/1988 |
| From: | Whittier G Maine Yankee |
| To: | NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM) |
| References | |
| 9782L-LMO, GDW-88-85, MN-88-40, NUDOCS 8804150274 | |
| Download: ML20151E508 (62) | |
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MaineYankee Pf uABLE ELECTRCTY FOR WA!NE SINCE 1972 EDISON DRIVE. AUGUSTA. MAINE 04330. (207) 622 4868 April 7, 1988 HN-88-40 GDH-88-85 United States Nuclear Regulatory Commission Attention: Occument Control Desk Hashington, D. C.
20555
References:
(a)
License No. DPR-36 (Docket No. 50-309)
Subject:
Annual Financial Report Gentlemen:
Pursuant to 10 CFR 50.71(b), please find enclosed a copy of the 1987 Annual Financial Report (Form 10K) for Maine Yankee Atomic Power Company. The original report is on file with the Securities and Exchange Commission.
Very truly yours, HAINE YANKEE AM /l/
G. D. Whittier, Manager Nuclear Engineering and Licensing GDH/bjp
Enclosure:
HYAPCo Form 10-K for the Fiscal Year Ended December 31, 1987 cc: Mr. Richard H. Nessman Mr. Hilliam T. Russell Mr. Patrick H.
Sears i
Hr. Cornelius F. Holden l
8804150274 071231 PDR ADOCK 05000309 I
PDR l
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9782L-LHO l
v-N SECURITIES AND EXCHANGE COMMISSION f
W:shington, DC 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission file number Decembe r 31, 1987 1-6554 MAINE YANKEE ATOMIC POWFR COMPANY (Exact name of registrant as specified in its charter)
Maine 01-0278125 (State or other jurisdiction of (I.R.S. Employer incorporation or organization)
Identification No.)
Edison Drive, Augusta, Maine 04336 (Address of principal executive (Zip Code) offices)
Registrant's telephone number including area code: _207-623-3521 Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange Title of each class on which registered First Mortgage Bonds, Series _t (Sinking Fund) 9.10% Due 2002 New York Stock Exchange, Inc.
First Mortgage Bonds. Series B (Sinking Fund) 81/2% Duo 2002 New York Stock Exchange, Inc.
First Mortgage Bonds, Series C (Sinking Fund) 7 5/8% Due 2002 New York Stock Exchange, Inc.
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 reg-istrant was required to file such reports), and (2) ha s been subject to such filing requirements for the past 90 days.
Yes x No The aggregate value of the voting stock held by non affiliates of the reg-i istrant is $50,000,000, based solely on the par value of the common stock.
There is no market in this security.
Indicate the numbe r of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Shares Outstanding Class as of March 15, 1983 Common Stock, $100 par value 500,000 l
h 1011A/3262A-1 l
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i' Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company Form 10-K - 1987 TABLE OF CONTENTS y
i Part I Item Number Item 1.
Business.
1 Item 2.
Properties..
7 Ites 3.
Legal Proceedings..
7 Item 4.
Submission of Matters to a Vote of Security Holders.
9 Part II Item 5.
Market for the Registrant's Common Equity and Related Stockholder Matters...
10 Item 6.
Selected Financial Data.
11 Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations............. 12 Item 8.
Financial Statements and Supplementary Data.........
16 Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..
38 Part III Item 10. Directors and Executive Officers of the Registrant.
39 Item 11. Executive Compensation..
45 Item 12. Security Ownership of Certain Beneficial Owners and 46 Management.
Item 13. Certain Relationships and Related Transactions....,.... 47 Part IV Item 14. Exhibits, financial Statement Schedules, and Reports on Form 8-K.
48 50 Signatures.
1011A/3262A-2
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Maine Yankee Atumic Power Company form 10-K - 1987 PART I ITEM 1 - BUSINESS (a) General.
Id'ine Yankee Atomic Power Company (the "Company" or "Maine Yankee"), inc sted under the laws of Maine on January 3, 1966, ovus and operates jressurized water nuclear powered electric generating plant at Wiscasaet, Maine, with a current net capability of approximately 855 megawatts electric (the "Plant").
The Company' sells its capacity and output to its ten sponsoring utilities.
The Company'.s principal office address is Edison Drive, Augusta, Maine 04336, and its telephone number is (207) 623-3521.
The Company is sponsored by ten investor-owned New England utilities (the "Sponsors" or the "Stockholders"), each of which committed itself under a Power Contract with the Company to purchase a specified percentage of the capacity and output of the Plant and pay therefor, beginning on January 1, 1973, a like percentage of amounts sufficient to pay its fuel costs, operating expenses (including a depreciation accrual at a rate suf ficient to fully amortize the investment in the Plant), interest"on its debt and.
a return on its equity.
Under amendments to the Power Contracts, in affect as of January 15, 1985, upon approval of a rate case settlement agreement by the Federal Energy Regulatory Commission ("FERC"), the Com-pany increased the amount of collections for future decomnissioning costs, its allowed rate of return on common equity was increased, and other ratemaking practices were changed.
The Company and its Sponsors have executed additional Power Contracts whien extend the term of the Power Contract f rom 2002 to the end of the useful life and the completion of decommissioning of the Plant.
For a further discussion of the 1985 settlement with the FERC and the Company's January 15, 1988, rate filing see Item 3 "Legal Proceedings".
Each Sponsor has also agreed under a Capital Funds Agreement with the Company to provide a like percentage of the Company's capital requirements not obtained from other sources, sub-ject to obtaining necessary authorizations of regulatory bodies in each instance.
All such obligations are subject to the continuing jurisdic-tion of various federal and state regulatory bodies.
(b) (i) Problems Affecting the Industry and the Company.
Events in March
'1979 at the Three Mile Island Nuclear Unit No. 2 in Pannsylvania ("TMI")
caused increased concern about the safety of nuclear generating plants.
This has prompted a rigorous reexamination of safety related equiphent and operating procedures in all nuclear facilities and has caused the United States Nuclear Regulatory Commission ("NRC") to promulgate numer-ous requirements in response to TMI, inc1"ding both near-term modifica-tions to upgrade certain safety systems and lustrumentations and longer-term design changes, ranging from equipment changes to operational sup-1011A/3262A-3
Maina Yankee Atomic Pewar Coupany Form 10-K - 1987 4
ITUI 1 - BUSINESS (continued)
(b)(i) Problems Affecting the Industry and the Company. (continued) port.
The Company has made the near-term modifications required by.the NRC and is continuing the process of completing the long-term modifica-tions.
World-wide concern was increased by an accident in April 1986 resulting in the release of radioactivity from the Chernobyl nuclear gen-erating facility in the Soviet Union, and concern in Maine was intensifi-
- ed by the identification of two locations in Ibine as potential sites for high-level nucicar waste disposal facilities by the federal Department of Energy ("DOE").
In addition, the NRC is continuing its safety reviews under both long-s.tanding and new regulations and may at any time issue orders which could materially affect the Company's affairs and financial condition and the operation of the Plant.
Public and repulatory attention has also focused on the disposal of both low-and high-level nuclear wastes.
Certain as-pects of the disposal of nuclear wastes and the decommissioning of nuclear generating facilities have been regulated under federal and Maine law and further regulation is likely in this area.
Public concern about the operation of nuclear generating facilities and the diaposal of naclear wastes has sometimes result.d in public campaigns to close such facilities.
See Item 1,(g),
- BUSINESS, "Maine Yankee Referendum".
Although affecting various nuclear gen.: rating facilities in varying degrees, such events, as well as other problems of the industry, have had, and will continue to have, a direct effect on the affairs and finan-cial condition of the Company.
(b) (ii) Seabrook.
Stockholders of the Company owning an aggregate of approximately 41% of the entitlement percentage of the Plant's output are participants in the Seabrook nuclear project, located 'in Seabrook, New Hampshire.
One of the stocR.olders of the Company, Public Service Com-pany of New Hampshire ("PSNH"), which is entitled to approximately 5% of the output of the Plant, filed on January 28, 1988, a petition f or pro-tection under Chapter 11 of the federal bankruptcy laws.
PSNH had paid in full the amount due under its Power Contract with the Company through January in advance of its filing on January 28, and has paid its post filing obligations to the Company as they have become due.
The Company expects that PSNH will make future Power Contract payments when due, although there is no firm assusance as yet that it will do so.
Other stockholders of the Company entitled it, the aggregate to approximately 52% of the Plant's output (including Central Maine Pcwer Company, whose entitlement is 38%) sold tneir interests in the Seabrook project in November 1986.
The Company cannot predict what effect t he bankruptcy filing t.ay have on the Seabrook Project.
l A default by a stockholder of the Company in making payments under the Power Contract or Capital Funds Agreement could have a material adverse l
effect on the Company, depending on the magnitude. of the default, and would constitute a default under the Company's First Mortgage Indenture and two other major credit agreements unless cured within applicabic i
grace pe riods by the defaulting Stockholder or other Stockholders.
I Although no assuranc.es can be given, management believes that in light of the operating history of the Plant and the relatively low cosc af power produced by the Plar.t, it is unlikely that the e would be a default by a t
l stockholder that would materially and adiersely affect the continued l
operation of the Plant. 1011A/3262A-4
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Maine Yankee Atomic Power Company Form 10-K - 1987 ITEM 1 - BUSINESS (continued)
I' (c) Regulation and Environscrital Matters.
The Plant is subject to exten-sive regulation by the NRC, which is empowered to authorize the siting, construction and operation of nuclear reactors after consideration of public health, safety, environmental and antitrust matters.
The United States Environmental Protection Agency ("EPA") administers programs established under the Federal Water Pollution Control Act and the Clean Air Act which affect the Plant.
The former Act establishes a national objective of complete elimination of discharges of pollutants into the nation's water and creates a rigorous permir program designed to achieve this objective.
The latter Act empowers EPA to establish clean air standards which are implemented and enforced by state agencies.
In addition, pursuant to the Federal Resource Conservation and Recovery Act of 1970, EPA regulates the generation, transportation, treatment, storage and disposal of hazardous wastes but not radioactive wastes.
The EPA has broad authority in administering these programs, including the ability to require installation of pollution control and mitigation de-vices.
i The National Environmental Policy Act of 1969 ("NEPA") requires that de-tailed statements of the environmental effects of major federal actions be prepared' by federal agencies.
. Major federal actions can include licenses or permits issued to the Company by the NRC and other federal agencies for construction or operation of generation and transmission facilities.
NEPA requires that federal licensing agencies make an inde-pendent evaluation of the environmental impact of, and alternatives to, the proposed action.
Future construction modifications or other activi-ties at the ?lant could require federal licenses or approvals that in-volve NEPA requirements.
The Company is also subject to regulation with regard to invironmental matters and land use by various state authorities.
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i Under their continuing jurisdiction, the NRC and one or more of the EPA i
I and the state authorities having jurisdiction over the Company's facil-
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ities may modify permits or licenses which have already been issued, or impose new conditions on such permits or licenses, and may require ad-ditional capital expenditures or require that the lesel of the operation of a unit be temporarily or permanently reduced.
See "Problems Affecting the Ir.dustry and the Company" above.
The Sponsors of the Compac.y have agreed, subject to limited exceptions including regulatory approval, l
(i) to provide the required capital not otherwise available, (ii) to take p
the total output of the Plant, and (iii) to pay all costs including capi-tal costs.
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Maine Yankee Atomic Power Company Form 10-K - 1987 ITEN 1 - BUSINESS (continued)
(d) Nuclear Fuel.
The Company has entered into a contract with the DOE for disposal of its spent nuclear fuel, as required by the Nuclear Waste Policy Act of 1982, pursuant to which a fee of $1.00 per megawatt-hour is currently assessed against net generation of electricity and paid to the s
DOE quarterly.
Under this Act, the DOE has assumed the responsibility for disposal of spent nuclear fuel produced in private nuclear reactors.
In addition, Maine Yankee is obligated to make a payment of $50,367,000 with respect to generation prior to April 7, 1983 (the date current DOE assessments began), all of which the Company has already collected from its customers.
The Company has elected under terms of this contract to make a single payment of this obligation prior to the first delivery of spent fuel to DOE, scheduled to take place in 1998.
The payment will consist of the $50,367,000, which is the approximate one-time fee charge, plus interest accrued at the 13-week Treasury Bill rate compounded on a quarterly basis from April 7,1983, through the date of the actual pay-ment.
Current costs incurred by the Company under this contract are re-coverable by it under the terms of its Power Contracts with its sponsor-ing utilities.
The, Company has accrued and billed $22,255,000 of in-tevest cost for the period April 7,1983, through December 31, 1987.
Maine Yankee has formed a trust to provide for payment of this long-term fuel obligation.
Funding of the trust is being made by deposits of ap-proximately $4,100,000 at lecst semiannually beginning December 1985 and continuing through May 1995 totaling approximately $86,828,000.
The estimated liability, including interest due at the time of disposal, is estimated to be approximately $160,665,000.
The Company estimates that trust fund deposits plus estimated earnings will meet this. total liabil-ity if operations continue without material changes.
The trust funds are included in Deferred Charges and Other Assets on the accompanying balance sheet.
A *..S. Internal Revenue Service ("IRS") agent conducting a review of the Company's income tax returns for 1982 and 1983 informed the Company he was taking exception to, among other things, a 1983 deduction for
$50,367,000 of the Company's long-term permanent fuel disposal obligation and associated interest.
Af ter the Company had protested the IRS posi-tion, the IRS in February 1987 informed the Company that it was re-open-ing the audit to add $4,800,000 to the caalienged amount for the Com-pany's DOE obligation with respect to generation subsequent to April 7, 1983.
If the IRS were to prevail, these adjustments would significantly affect reported current and deferred inc me taxes and investment tax credits.
Management believes that the devuctions taken are proper and intends to contest any proposed disallowance.
Under the terms of a license amendment approved by the NRC in 1984, the present storage capacity of the spent fuel pool at the Picat will be re ached in 1999 and after 1996 the availaPe capacity of the pool would not accommodate a full core removal.
Tv Atomic Safety and Licensing Board has approved the Company's proposa) to demonstrate a further modifi-1011A/3262A-6
l Maine Yankee Atomic Power Company Form 10-K - 1987 ITEM 1 - BUSINESS (continued) l (d) Nuclear Fuel. (continued) cation which would, if implemented, permit storage capacity through the -
operating life of the Plant.
That implementation would require further approval from the NRC.
A Maine statute proviues that af ter July 1,1992, spent nuclear fuel may not be stored on-site for a period exceeding three years from the date of removal of the fuel from the reactor. The Company estimates that shipments of spent nuclear fuel to the DOE will not com-mence until 1998 at the earliest.
The Company cannot predict whether, or to what extent, the Maine statute and storage capacity limitations re-ferred to above may be modified and whether, or to what extent, they will affect the operation of the Plant.
(e) Decommissioning.
The NRC currently recognizes three decommissioning methods complete dismantling and removal, in-place encapsulat' ion or "entombment" and mothballing - or a combination of these methods.
The Company currently proposes to use, consistent with its understanding of NRC and FERC staff policy, the complete dismantling and removal method.
Through 1987 the Company had collected $17,697,948 for decommissiosing.
The Decommissioning Fund balance as of December 31,1987, was $20,360,719 (including interest earned) and 'is included in Deferred Charges and Other Assets on the accompanying balance sheet.
The State of Maine enacted a statute in 1982 which requires the Company to submit a detailed decommissioning financing plan to the Public' Utili-ties Commission of the State of Maine ("PUC") for approval.
The Company 2
completed the filing of its decommissioning financing plan on January 18, 1984, but the PUC h4 not yet accepted the plan and the Company is unable to predict whether u..
plan will be accepted.
The statute further pro-vides that if the decommissioning trust fund is insufficient to decommis-sion the Plant the Company as licensee would be responsible for the de-i ficiency, but if the Company were unable to provide the full amount the statute provides that owners would be jointly and severally responsible for the balance.
Funds now being collected for decommissioning are de-posited in a trust account by the Company pending their ultimate use.
In January 1987, the Company flied with the IRS a request for an initial schedule of deductible "rnling amounts" pursuant to section 468A of the Internal Revenue Code of 1s54, as amended, with respect to its payments to a "qualifying" decommissioning trust and the earnings of the qualify-ing trust fund for the tax, years 1984 through 2008, based on certain as-sumptions.
The level of the ruling amounts is based on the Company's deconmissioning collections for 1984 through 1987 under rates determined in its 1982 and 1985 FERC rate case sectiements and $6.1 million per year thereafter.
The latter amount has been calculated pursuant to IRS tem-porary regulations, except that it is on (he basis of an "estimated use-ful life" thrcugh the period the Plant has been licensed to operate by the NRC (through 2008).
Calculation on the basis of an "estimated useful life" through the original depreciable life of the Plant (through 2002) 1011A/3262A-7
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_l Maine Yankee Atomic Power Company corm 10-K - 1987 ITEM 1 - BUSINESS (continued)
(e) Decommissioning. (continued) as proposed by the IRS in its current temporary regulations would reduce the requested deduction and funding amount to the qualifying trust fund af ter 1987 by about 10%.
The Company cannot predict the results of its request. - Maine Yankee intends to fund the balance of the collections for decommissicning, not funded in the qualifying trust fund, over the oper-ating life of the Plant through contributions to a second "non qualify-ing" trust, to which contributions under current tax law would not be deductible until actually paid as decommissioning costs.
For further information on decommissioning, see Note 1 of the Notes to Financial Statements.
(f) Low-level Waste Disposal.
On January 15, 1986, the federal Low-Level Radioactive Waste Policy Amendments Act was enacted.
This Act requires the present disposal sites to accept low-level nuclear wastec from other states until December 31, 1992.
The Act also sets limits on the volume of waste each disposal facility must accept from each state, establishes "milestones for the non-sited states to establish sites within their states or regions (pursuant to regional compacts) and authori:es increas-ing surcharges on waste disposal until 1992.
Af ter 1992 the operating disposal sites would be permitted to refuse to accept wastes generated outside their state or compact region.
On November 5, 1985, haine voters approved an initiated proposal which requires voter approval prior to construction or operation of any facil-ity in Maine for the storage or disposal of low-level radioactive vastes.
The proposal also requires voter approval prior to Maine's entering into any compact or agreement with any state or the federal government con-cerning the disposal or storage of low-level radioactive vastes inside or outside of Maine. The Company currently has the capacity to store approx-imately five years' production of low-level waste at its Plant site and intends to ship its wastes to present off-site facilities as long as I
possible in order to preserve that capacity. The Company cannot predict, however, the long-term effects of the Maine legislation.
(g) Maine Yankee Referendum.
On November 3, 1987, the Maine electorate defeated in referendum by a margin of 59 percent to 41 percent an initiated bill which was intended to, shot down the Company's nuclear gen-erating plant on July 4, 1988.
This was the third attempt within an eight year period to close the Company's nuclear generating plant through the referendum process.
(h) Faployees. At December 31, 1987, the Company had 336 employees. 1011A/3262A-8
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l Maine Yankee Atomic Power Company Form 10-K - 1987 ITEM 2 - PROPERTIES The Plant is located on tidewater on Bailey Point in Wiscasset, Maine, on a 740-acre site which is owned in fee by the Company and is adequate for the Plant and for the associated switchyard facilities (which are owned in part and operated by Central Maine Power Company).
It is a nuclear powered electric generating plant, utilizing a pressuriz-ed water reactor, fueled with olightly enriched uranium oxide.
The nuclear steam supply system and certain other equipment were designed and fabricated by Combustiorv Enginee ring, Inc.
The turbine generator was supplied by Westinghouse Electric Corporation.
Stone & Webster Engineer-ing Corporation, as engineer and constructor, designed and constructed the Plant.
The nuclear design and construction of the Plant were super-vised by the Nuclear Services Division of Yhnkee Atomic Electric Company, which has supervised the design and construction of other nuclear gener-ating plants in New England.
Construction of the Plant, which began in 1967, was completed in 1972 except for certain discharge temperature con-trol facilities designed to neet the requirements of the Maine Board of Environmental Protection, which were completed in 1975L Under the terms of the Indenture securing the First Mortgage Bonds, substantially all electric plant of the Company is subject to a first mortgage lien.
ITEM 3 - LEGAL PROCEEDINGS
'(a) General.
The operation of existing nuclear units and the const ruc-tien of nuclear units in the United States continue to be a subject of public controversy.
Various groups have filed law suits and participated in administrative proceedings claiming that the present state of nuclear technology presents risks to public health and safety and to the environ-ment.
In addition, certain of these groups have proposed restrictive legislation relating to nuclear power.
Some of the claims made by such groups, if they should prevail, or the existence of the controversy it-self, could cause substantial modifications to or extended shutdowns of plants presently in operation.
See Item 1, BUSINESS, "Problems Affecting the Industry and the Company" above.
The Maine Yankee Plant was declared commercial on December 28, 1972, wit'l regular operation at approximately 570 megawatts electric (net) starting on January 1, 1973, in accordance with the Power Contracts.
Hearings on the Company's application for a forty year license at full operation were completed in 1972 and the license for full operation at approximately 790 megawatts electric (net) was granted by the Atomic Energy Commission, the i
predecessor of the NRC, on June 29, 1973.
In 1978 the NRC authorized an j
increare in the output rating of the Plant to approximately 855 megawatts electric (net).
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Maine Yankee Atomic Power Company Form 10-K - 1987 ITD1 3 - LEGAL PROCEEDINGS (continued)
(a) General. (continued)
The original Power Contracts between Maine Yankee and its Sponsors re-quire the Sponsors to continue to make monthly payments thereunder through 2002 whether or not tha Plant is in operation except under cir-cumstances not now applicable which would entitle the Sponsors to cancel the Power Contracts.
Additional Power Contracts, which have the effect of extending the terms of the Power Contracts from 2002 to the end of the useful life and the completion of decommissioning of the Plant, have been executed by the Company and its Sponsors.
Subject to limited exception including regulatory approval, the Sponsors are also obligated under the Capital Funds Agreements with Maine Yankee to pay their respective shares of the capital requirements of Maine Yankee, not otherwise obtainable, which would include the cost of any modifications to the Plant that may be required pursuant to an NRC order.
The Price-Anderson Act is a federal statute providing, among other things, with respect to plants licensed before August 1, 1987, th, the maximum liability for damages resulting from a nuclear incident would be the greater of the maximum amount of financial protection required to be carried by a licensee or $720 million, based on the current number of licenses.
As required by NRC regulations, prior to operation of a nuclear reactor, the licenu e of the reactor is required to insure against this exposure by purchasing the maximum available private insur-ance (presently $100 million), the balance of the $720 million to be covered by retrospective premium insurance and by an indemnity agreement with the NRC.
Under amendments to that Act, owners of operating nuclear facilities may be assessed a retrospective premium of up to $5 million for each reactor owned in the event of any one nuclear incident occurring at any reactor in the United States, with a maximum assessment of $10 million per year per reactor owned.
Legislation is pending in the Con-gress which would ameed or modify the Act, but the Company cannot predict what final action the Congress will take or what effect any such amend-ment or modification would have on the Company.
In addition to the insurance required by the Price-Anderson Act, the Com-
. pany carries an all risk nuclear property damage insurance in the amount of $500 million plus additional excess nuclear property insurance in the amount of $1,025 million effective January 19, 1988.
Of this additional insurance, $775 million is provided by the nuclear electric utility industry's Bermuda-based insurance pool, which provides such coverage from commercial sources and from participating utilities through a com-bination of current premium and retrospective premium adjustments.
If the insurance pool experiences losses in excess of its capacity to pay them a participatins utility may be assessed a retrospective premium adjustment of up to 7.5 times its annual premium with respect to losses l
in any policy year.
Based on current premium rates this adjustment could range up to approximately $11.7 million.
The remaining coverage of $250 million effective January 19, 1988 is not subject to ret rospec tive pre-uium adjustments.
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Maina Yankae Atomic Powar Company Form 10-X - 1987 ITDi 3 - LEGAL PROCEEDINGS (continued)
(b) Rates.
On April 10, 1985, the FERC approved a Settlement Agreement (the "1985 Settlement Agreement") in the Company's most recent full rate case regarding amendments to the Company's Power Contracts.
The 1985 Settlement Agreement provided for a rate of return on common equity of 15.5%, an increase in annual decommissioning collections from $1.8 mil-lion to $4.0 million, a current return on up to 50% of construction work and nuclear fuel in process, and an increase in the depreciation life of the Plant to reflect' a plant operating life equal to the NRC operating life (to the year 2008).
The 1985 Settlement Agreement further provided that the Company may not request a change in the rate of return on common equity, or an increase in its depreciation rates, to take effect prior to January 15, 1988.
On January 29, 1987, the Connecticut. Division of Consumer Counsel (the "Division") filed a complaint with FERC alleging that the allowed rates of return on equity of the Company, Yankee Atomic Electric Company, Connecticut Yankee Atomic Power Company and Vermont Yankee Nuclear Power Corporation were excessive and should be lowered to reflect current con-ditions.
The Division further alleged that the Company, unlike other electric utilities, is "virtually risk free" and that its allowed rate of return on equity of 15.5% should therefore be reduced to a level of 100 basis points below the then generic rate of approximately 11.2% estab-lished by FERC.
As a result of informal discussions with the FERC, the Company proposed a modification of the 1985 Settlement Agreement that i
would provide for a reduction in the return on common equity from 15.5%
i to 13.6% and an increase of $796,000 in the annual decommissioning col-1ection to be effective June 1, 1987, with all other conditions of the i
1985 Settlement Agreement to remain in effect.
The modifications to the 1985 Settlement Agreement were approved by the FERC on June 19, 1987, and 4
the complaint filed by the Division was dismissed.
On January 15, 1988, the Company filed a request with the FERC to modify certain billing calculations and to increase its collection for decommis-i sioning. The request seeks FERC approval to decrease the level of return on common equity from its current level of 13.6% to 13.5%, to provide for depreciation expense based on the recognition of shorter useful lives for certain classes of assets than had previously been assumed, to provide
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for the amortization of materials and supplies and the last fuel core and to increase the annual decommissioning collection from $4,796,000 to
$14,466,000 effective March 15, 1988, based on full recovery by 1998, rather than over the full operatin8 life of the Plant.
e On M m h 15, 1988 the FERC issued an order accepting Maine Yankee's fil-4 ing, suspending the proposed rate increase until August 16, 1988, summar-11y rejecting the proposed accelerated decommissionin3 schedule and
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l establishing hearing procedures.
The Company is planning to ask the FERC i.*
for a rehearing on the issue of accelerated decommissioning collections.
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The Company is unable to predict the outcome of its proposed increase in
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rates, but intends to take all reasonable steps necessary to maintain its rate of return at an adequate level and to ensure that the level of de-commissioning collections is adequate to deconmission the Plant at the end of its operatind life.
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ITD14 - SUBnISSION OF MAITERS TO A VOTE OF SECURITY HOLDF3S,
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Not applicable.
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Maine Yankee Atomic Power Company h
Form 10-K - 1987 PART II i
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND REIATED STOCK-
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HOLDER MATTERS The Company's Common Stock, owned by the Company's ten utility Sponsors, is not publicly traded.
Transfer of the Common Stock is restricted by the Company's bylaws.
The Company has paid cash dividends on its Common Stock to its ten utility Sponsors in each year of operation,1973 through 1987.
The following table shows cash dividends paid for years 1987 and 1986:
Shares Outstanding
_ 1987 1986 Per Share _
Per Share i
January 500,000
$ 4.45
$ 5.20 April 500,000 4.00 5.20 July 500,000 2.00 5.20 October 500,000 1.g 5.00
$1k:M.
$U.t.@
The Company's net income and earnings per share of common stock were at reduced levels in 1987 due to' expenditures relating to the November 1987 referendum which sought to close the Plant.
Expenditures for the purpose of influencing public opinion with respect to referenda issues are not i
recover,ble through the Company's cost of service and, therefore, lower the Company's return on equity.
The payment of dividends on the Company's Common Stock is subject to the following restrictions:
(1)
The Company's First Nortgage Indenture provides that the Company shall not declare or pay any dividend on any class of its stock, except out of earned surplus, and shall not declare or pay any such dividend or i,
directly or indirectly make any payment on account of the purchase, re-demption, acquisition. or other retirement of any shares of its stock,
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unless, af ter giving effect to such declaration or payment, the Company's j
l Equity shall be at least 35% of Plant Construction Financing, and the s i
Company's Common Equity shall be at least 30% of Plant Construction i
Financing. The Company was in compliance through December 31, 1987, with the dividend restriction of the First Mortgage Indenture.
(2) The Company's Articles of Incorporation provide that so long as any
- l shares of the Company's Cumulative Preferred Stock, 7.48% Series (Sinking
[
J Fund) are outstanding, the payment of dividends on the Common Stock (other than dividends in Common Stock) and the makina of distributions I
thereon is limited to 50% of Net Income Available for Dividends on Common t
I Stock for the preceding twelve months if the Common Stock Equity (af ter such action) is less than 20% of Total Capitalization, and to 75% of such Net Income if such Common Stock Equity (after such action) is 20% or more L
l but less than 25% of Total Capitalization.
The Company was in compliance i
through December 31, 1987, with the dividend restriction of the Articles i
of Incorporation. )
1011A/3262A-12
.=.
- O Maine Yankee Atomic ' Power Company Form 10-K - 1987 Item 6 - Selected financial Data (Dollars in Thousands Except Per Share Amounts) 1987 1986 1985 1984 1983 Selected Income Statement Data:
Electric Operating Revenues
$144,404
$122,965
$134,785
$128,080
$120,471 Earnings Applicable to Common Stock 4,499 9,891 9,879 6,730 6,437 Earnings Per Share of Common Stock 9.00.
19.78 19.76 13.46 12.87 Dividends Declared Per Share of Common Stock 8.50 19.85 20.70 12.45 12.75 i
Selected Balance Sheet Data:
T Total Assets
$375,967
$368,399
$370,427
$371,075
$388,105
- s sn First Mortgage Bonds 67,751 72,970 76,750 81,924 86,294 E'
a Nuclear Fuel Financing Notes 30,800 27,950 37,850 39,350 47,750 Long-Term Fuel Disposal Liability 72,622 68,331 b4,171 59,076 53,650 3S Trust Fund to Satisfy Long-Term Fuel 5N Disposal Liability 26,559 17,091 4,167 gg e a Redeemable Preferred Stock 8,380 8,449 9,055 10,069 10,296 GI
$,a 4:x e
1011A/3262A-13
s Maine Yankee Atomic Power Company Form,10-X - 1987 ITDI 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For a period commencing Januany 1,
1973, extending for thirty years thereafter, and subsequently extended to 2008, in accordance with the Power Contracts as amended and subject to certain limitations, each Spon-sor receives its entitlement percentage of Plant output and is obligated to pay its entitlement percentage of the Company's total costs, including a return on invested capital, regardless of the level of operation of the Plant.
The following is management's analysis of cortain significant factors which have affected the Company's operatina results and financial condi-tion.
Operating Results Fuel Amortization expense is based on the cost of nuclear fuel in the reactor core and is allocated to the accounting period based on the level of energy production.
Fuel Amortization decreased by $11.3 million from 1986 due to the decrease in the level of generation.
This decrease was the result of the scheduled refueling and maintenance out&ge which occur-red from March 27, 1987, to June 18, 1987, and the subsequent non-scheduled outage and shutdown due to low pressure turbine vibration from June 19 to August 24, 1987.
The turbinesi located on the non-nuclear side of the Plant, were analyzed and repaired, and the Plant has been operational since August 24, 1987.
In 1986 fuel amortization increased by $3.1 million from 1985 due to a 16.6% increase in generation.
This accomplishment was aided by the fact thdt the Plant did not shut down for refueling during 1986.
Fuel Disposal expense results from a disposal fee of $1.00 per megawatt-hour of net generation which is assessed by the DOE and is paid quarter-ly.
Fuel Disposal expense therefore fluctuates with the level of genera-tion.
Operation and !bintenance expenses increased by $30.2 million in 1987.
These increases are associated with the scheduled 1987 maintenance and refueling outage and the subsequent non-scheduled outage to repair the low pressure turbine rotors.
During 1986 Operation and Maintenance ex-penses decreased by $13.8 million from the $55.0 million incurred in 1985.
The 1986 decrease is primarily due to the absence of a refueling and maintenance shutdown during 1986 while such an outage occurred in 1985.
Depreciation expense increases for 1987 and 1986 reflect the impact of increased depreciable property resulting f rom additional operating prop-erty placed in service.
Decommissioning costs increased by $.5 million in 1987 from the 1936 level of $4 million.
This increase resulted from a modification to the 1985 Settlement Agreement to increase decommissioning collection by
$796,000 annually, effective June 1, 1987.
See Note 3, Ratemakins Mat -
ters, of Notes to Financial Statements with respect to certain decommis-sioning issues. 1011A/3262A-14
=
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Maine Yankee Atomic Power Company Form 10-K - 1987 ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
(
RESULTS OF OPERATIONS (continued)
The increase in the 1987 income tax expense was due primarily from the decreased amortization of investment tax credits on nuclear fuel.
The 5
reduction in 1986 income tax expense was primarily from the increased amortization of investment tax credits on nuclear fuel.
L While the Company's revenue requirements were reduced as a result of the 3
lower corporate federal income tax rate, as provided by the Tax Reform Act of 1986, several aspects of the Act could result in a significant increase in capital requirements for the utility industry and the Com-pany.
These potential increases depend heavily upon the level of future construction activities and relate primarily to the elimination of in-vestment tax credits and the slowing of the depreciation for newly ac-quired or constructed assets.
The Financial Accounting Standards Board has enacted a change in the accounting for income taxes which would re-quire adjusting deferred tax balances to reflect changes in tax rates.
r For utilities, however, such immediate adjustments are currently re-stricted by income tax law.
Since income taxes are fully recoverable as t
a component of the Company's cost of service, these changes in the tax laws will not affect net income.
The primary impact on Other Income, during 1987 was the expenditure of
$5.6 million associated with the opposition to an initiated bill for i
referendum held on November '3,1987, to shut down the Company's nuclear i
generating plant on July 4, 1988.
Expenditures for the purpose of in-fluencing public opinion with respect to referenda issues are not re-coverable through the Company's cost of service and therefore lower the Company's return on equity.
The Maine electorate defeated this referen-dum by a margin of 59 percent to 41 percent.
Fluctuations in the amount of allowance for funds (equity and borrowed)
]
normally occur as the result of changes in the level of investments in construction and nuclear fuel in process, and/or the rate used for capi-l talization of these funds.
During 1987, Allowances for Funds Used During Construction ("AFC") were higher than in 1986 due to an increased level of investment in construction work in progress while Allowances for Nuclear Fuel in Process ("AFN") were substantially lower due to lower r
levels of nuclear fuel in the process of construction.
In 1986, allow-ances for funds were substantially lower than in 1985 due to reduced av-erage levels of investments in construction work in progress and nuclear i
i.
fuel in process, coupled with lower interest rates.
t 1
4 I
l r 1011A/3262A-15
e
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Maine Yankee Atomic Power Company Form 10-K - 1987 ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
The Company is accruing interest on an obligation to the DOE for fuel burned prior to April 7,
1983.
This interest expense is compounded quarterly on the original obligation of $50.4 million at the 13-week Treasury Bill rate.
The interest expense. associated with this liability is reflected as Interest Charges - Fuel Disposal Liability.
During 1987 the average interest rate, while lower. than 1986, was offset by the
' quarterly compounding of interest expense. The decrease in this interest
' expense for 1986 from 1985 resulted from lower interest rates.
Interest expense for fuel financing notes were at similar levels in 1987 and 1986 as there was little change in the average interest rate or level
'of borrowing. This expense item decreased in 1986 due to lower levels of borrowing coupled with lower interest rates.
Liquidity and Capital Resources Financing and Capitalization Cash provided by operating activities in 1987 totalled $43.4 million.
Dividends on common and preferred stock, sinking fund requirements and deposits to the decommissioning and fuel disposal trust, net of the issuance of fuel financing notes, consumed $20.7 million.
The balance of
$22.6 million was used to fund the construction of electric property and the acquisition of nuclear fuel.
The Company's current budget for construction of electric property and procurement of nuclear fuel for 1988 is $49.7 million exclusive of AFC and AFN.
See Note 10 "Commitments and Contingencies", for additional information concerning the Company's 1988 construccion program and the projected Acquisition of Nuclear Fuel requirements for 1988 through 1992.
The Company currently has capital resources available from secured and unsecured lines of credit totaling $91,000,000, of which $30,800,000 was utilized at year-end. See Notes 4, 6 and 7 of Notes to Financial State-ments for further discussion.
The Company, as well as the nuclear electric industry in general, has been challenged by common problems in recent years including those of increasing ope rating costs and expenditures for Plant modifications attributable to greater regulatory requirements and uncertainties caused 1
by political involvement in nuclear utility regulation.
It is not possi-ble at this time to predict what impact these uncertainties would have on the future financial operation of the Company.
Liquidity In addition to funding its short-term needs the Company must also fund the payment of its spent fuel disposal liability of $50.4 million and accrual of interest from April 7,1983, through December 31, 1987, which amounts to $22.2 million.
Maine Yankee has entered into an Indenture of 1011A/3262A-16
~
Haine Yankee Atomic Power Company Form 10-K - 1987 ITEM 7 - MANAGDtENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Trust with a trustee to provide for payments for future disposal services for spent nuclear fuel used prior to April 7, 1983.
Payment from the trust to the DOE is scheduled for 1998.
Funding of the trust is being made by deposits of $4.1 million at least semiannually from December 1985 through May 1995 totaling $86.8 million.
The estimated liability includ-ing interest due at time of disposal is approximately $160.7 million.
The trust fund deposits plus estimated earniitas are projected to meet this total liability if operations continue without.saterial changes.
b e
S 9
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e I
?
e D 1011A/3262A-17
Maine Yankee Atomic Power Company -
Form 10-K - 1987 ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX OF FINANCIAL STATEMENTS AND SCHEDULES The information required to be furnished in response to this Item is subsitted on the following pages:
Pg Report of Independent Public Accountants 17 Financial Statements:
Statement of Income for each of the three years ended December 31, 1987 18 Balance Sheet at December 31, 1987 and 1986 19 Statement of Capitalization at December 31, c'
1987 and 1986 21
, Statement of Changes in Common Stock Investment for each of the three years ended December 31, 1987 22 Statement of Cash Flows for each of the three years ended December 31, 1987 23 Notes to Financial Statements 24 l
s' t
e f
~
a I
I 4
, 1011A/3262A-18
Maine Yankee Atomic Power Company Form 10-K - 1987 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS OF MAINE YANKEE ATOMIC POWER COMPANY:
We have examined the balance sheet and statement of capitalization of MAINE YANKEE ATOMIC POWER COMPANY (a Maine corporation) as of Decem-i ber 31, 1987 and 1986 and the related statements of income, changes in common stock investment and cash flows for each of the three years in the period ended December 31, 1987.
Our examications were made in accordance with generally accepted auditing standards cad, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial position of MAINE YANKEE ATOMIC POWER COMPANY as of Decem-ber 31, 1987 and 1986 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1987, in conformity with generally accepted accounting principles applied on a consistent basis.
Our examinations were made for the purpose of forming an opinion on the basic financial statements taken as a whole.
The schedules listed in the index of financial statement schedules are presented for purposes of com-plying with the Securities and Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been sub-jected to the auditing procedures applied in the examinations of the basic financial a tt.tements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
boston, Massachusetts, February 9,1988.
- 1011A/3262A-19
'e
[*
e Maine Yankee Atomic Power Company Form 10-K - 1987 -
Maine Yankee Atomic Power Company STATEMENT OF INCOME (Dollars in Thousands Except Per Share Amounts)
Year Ended December 31, 1987 1986 g5, ELECTRIC OPERATING REVENUES
$144,404
$122,965
$134,785 OPERATING EXPENSES ruel Amortization (Note 1) 21,893 33,203 30,128
.r'-
Disposal Cost (Note 1) 4,043 5,687 5.567
- - 1 Operation 48,257 37,527 39,809 Maintenance 23,206 3,716 15.240 Depreciation (Note 1) 9,465 9,305 8,379 Decommissioning (Note 1) 4,464 4,000 3,918 Taxes Federal and State Income (Note 2) 4,831 1,974 3,200 s
Local Property 6,294 5,784 5,349 Total Operating Expenses 122,453_
101,196 111,590 OPERATING INCOME 21,951 21,769 23,195 OTHER INCOME (EXPENSE)
Allowance for Equity Funds Used During Construction (Note 1) 188 74 431 For Nuclear Fuel (Note 1) 16 234 437 Other, Net (4,667) 49 (275)
INCOME BEFORE INTEREST CHARGES 17,488 22,126 23,788 INTEREST CHARGES Long-Term Debt (Note 5) 5,839 6.060 6,572 Fuel Disposal Liability (Note 1) 4,291 4,159 5,095 Fuel Financing Notes (Notes 6 and 7) 2,298 2,469 3,677 Other Interest Charges (Note 4) 433 111 137 Allowance for Borrowed Funds Used During Construction (Note 1)
(111)
(45)
(314)
For. Nuclear Fuel (Note 1)
(392)
(1,153)
(1,935)
Total Interest Charges 12,358 11,001 13,232 NET INCOME 5,130 10,525 10,556 Dividends on Preferred Stock 631 634 677 EARNINGS APPLICABLE TO COMMON STOCK
$M 9.891,
$ 9.879 SRARES OF COMMON STOCK OUTSTANDING 500.000 500.000 500.000 EARNINGS PER SHARE OF COMMON STOCX 9.00
$ 19.78
$ 19.76 DIVIDENDS DECLARED PER SHARE OF
~~
COMMON STOCK
$2
$ 19.85
$R The accompanying notes are an integral part of these financial statements. 1011A/3262A-20
-e Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company BALANCE SHEET (Dollars in Thousands)
ASSETS December 31,
- 1987, 1986-ELECTRIC PROPERTY, at Original Cost e
(Note 5) (Sch. V)
$326,368
$316,167 Less: Accumulated Depreciation and Amortization (Note 1) (Sch. VI) 120,444 110,895 205,924 205,272 Construction Work in Progress 861 3,375 Net Electric Property 206,785 208,o47 NUCLEAR FUEL, at Original Cost (Note 1) (Sch. V)
[
Nuclear Fuel in Reactor 136,432 131,720 Nuclear Fuel-Spent 204,414 166,032 Nuclear Fuel-Stock 8,950 37,280 349,796 335,032 Less: Accumulated Amortization (Note 1)
(Sch. VI) 276,928 255,035 72,868 79,997 Nuclear Fuel in Process 15,457 15,006 Net Nuclear Fuel 88,325 95,005 Net Electric' Property and Nuclear Fuel 295,110 303,650 CURRENT ASSETS Cash (Nota 4) 50 33 Accounts Receivable 14,008 14,318 l
Materials and Supplies, at Average Cost 8,542 7,798 7
Prepayments
)
__,434 3,514 t
Total Current Assets 26,034 25,663 DEFERRED CHARGES AND OTHER ASSETS (Note 1) i Trust Funds Plant Decommissioning 20,361 15,042 Fuel Disposal 26,559 17,091 Accumulated Prepaid Income Taxes 6,897 6,302
,({
Other Deferred Charges and Other Assets 1,006 651 i
Total Deferred Charges and Other Assets 54,823 39,086
$375.967
$)_6_8. 399 The accompanying notes are an integral part of these financial statements. 1011A/3261A-21 I
s
?
Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company BALANCE SHEET (Dollars in Thousands)
STOCKHOLDERS' INVESTMENT AND LIABILITIES December 31, 1987 1986 CAPITALIZATION (See Separate Statement)
Common Stock Investment
$ 68,139
$ 67,888 Redeemable Preferred Stock 8,38 0 8,449 Ioag-Term Debc 67,751 72,970 Total Capitalization 144,270 149,307 LONG-TERM FUEL DISPOSAL LIABILITY (Note 1) 72,622 68,331 NUCLEAR FUEL FINANCING NOTES (Notes 6 and 7) 30,800 27,950 CURRENT LIABILITIES Notes Payable to Banks (Note 4) (Sch. IX) 775 Current Sinking Fund Requirements (Note 5) 1,470 Accounts Payable 7,051 8,254 Fuel Disposal Cost Payable (Note 1) 1,763 1,805 Dividends Payable 907 2,383 Accrued Interest and Taxes 1,321 2,759 Other Current Liabilities 282 237 Total Current Liabilities 12,794 16,213
[
COMMITMENTS AND CONTINGENCIES (Note 10)
RESERVES AND DEFERRED CREDITS Plant Decommissioning Reserve (Note 1)
(Sch. VIII) 20,828 15,440 i
Deferred Credits Accumulated Deferred Income Taxes (Note 2) 73,992 68,595 Unamortized Investment Tax Credits (Note 2) 12,909 14,479 Unamortized Gains on Reacquired Debt (Note 1) 7,439 7,714 Other Deferred Credits 313 370 Total Reserves and Deferred Credits 115,481 106,598 t
.$375.967
$368.399 The accompanying notes are an integral part of these financial statements.
i l
r
. 1011A/3262A-22
1 e
Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Pcver Company STATDIENT OF CAPITALIZATION (Dollars in Thousands)
December 31, 1987 1986 COMMON STOCK INVESTMENT,.
Common Stock, $100 Par Value, 500,000 Shares Authorized and Outstanding
$50,000
$ 50,000 Other Paid-in Capital 16,764 16,774 Capital Stock Expense (138)
(149)
Gain on Redemption of Preferred Stock 1,073 1,071 Premiums on Preferred Stock 123 124 Retained Earnings 317 68 68,139 67,888 REDEEMABLE PREFERRED STOCK - 7.48% Series,
$100 Par Value, Authorized 170,000 Shares, outstanding 83,800 in 1967 and 84,490 in 1986 (Note 8) 8,380 8,449 LONG-TERM DEBT (Note 5)
First and General Mortgage Bonds Series A - 9.10 % due May 1, 2002 37,854 39,931 Series B - 8 1/2% due May 1, 2002 24,866 25,481 Series C - 7 5/81 due May 1, 2002 6,569 7,632 69,289 73,044
! ass: Current Sinking Fund Requirements 1,470 Unamortized Debt Discount, Net of Premium 68 74 67,751 72,970
[
Total Capitalization
$M
$149.307 i
I The accompanying notes are an integral part of these financial' statements.
l l 1011A/3262A-23 L
. g le
+6,'
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~
Maine Yankee Atomic Power Company Form 10-K - 1987 2
.,5 Maine Yankee Atomic Power Company
'l STATD(ENT OF CHANGES IN COMMON STOCK INVESTMENT for the Three Years Ended December 31, 1987 i.
(Dollars in Thousands)
Amount at Retained d.
Shares Par Value Other, Net Earninas Total Balance-December 31, 1964 500,000 450,000
$17,562 4
573
$68,135 Add (Deduct):
10,556 10,556 Net Income Cash Dividends-Declared on -
I Common Stock (10,350) (10,350)
(677)
.(677)
Preferred Stock Redemption of 210 210 Preferred Stock (17)
(17)
Capital Stock Expense Balance-December 31, 1985 500,000 50,000 17',755 102 67.857 Add (Deduct):
10.525 10,525 Not Income Cash Dividends Declared on -
(9,925)
(9.925)
Common Stock (634)
(634)
Preferred Stock
-)'
Redemption of 68 68 Preferred Stock (3)
(3)
Capital Stock Expense Balance-December 31, 1986-500,000 50,000 17,820 68 67,888 Add (Deduct):
5,130 5,130 Net Income Cash Dividends i
Declared on -
(4,250)
(4,250)
Common Stock (631)
(631)
Preferred Stock Redemption of 2
2 Preferred Stock
', t Balance-December 51, 1937 500.000
$50,000
$17.822 317
$68.139 e
't 6
The accompanying notes are an integral part of these financial statements.
f 1011A/3262A-24
E T
Maine Yankee Atomic Power Company Fom 10-K '- 1987 Maine Yankee Atomic Power Company STATEMEN7 0F CASH FLOWS (Dollars in Thousands)
Year Ended Decemoer 31 1967 1986 1985 Operating Activities Net income
$ 5.130
$10,b25
$10.s56 Items Not Requiring (Providing) Cash Fuel Amortization 21,893 33,203 30.128 Depreciation and Decomeissioning 13,92V 13.305 12.297 Amortization of Deferred Charges 625 6.081 Deferred Income Taxes and Investment t
Tax Credits. Net
-3.232 98 (734)
Allowance for Equity Funds Used for Nuclear Fuel and During Constrvction (204)
(308)
(868)
/
Long FN Recovery and Interest IncomeTere Fuel Disposal Interest. Net of A in Trust 2.820 2.862 3,820 Other, Net 1,060 885 297 Changes in certain Assets and Liabf11tles Accounts Receivable 310 2.516 1,559 Other Current Assets (664)
(1,819)
(841)
Accounts Payable (2.676) 877 (2.137)
Accrued Interest and Taxes (1.438) 297 (924)
Net Cash Provided by Operating Activities 43.33 63.066 58,614 Investing Activities Acquisition of Nuclear Fuel (15,440)
(19.902)
(16 854) 199)
(7 (3.e40)
(15,025)
Constrvction of Electric Property Net Cash Used by Investing Activities (22.oJ9)
(23.602)
(31,879)
Financing Activities issuances Fuel Financing Notes. Net 2,850 Sank Notes, het 775 Re demptions Long-foru Debt (3,755)
(4,045)
(5,137)
Preferred Stock (69)
(606)
(1,014)
Fuel Financing Notes. Net (9,900)
(1,600)
Sank Notes Net (775)
Dividend Payments Coamen Stock (5.725)
(10(645)) (8(696) 300 w$0)
Preferred Stock (632)
Trust Fund Deposits Fuel Disposal (8.235)
(12.353)
(4,118)
Plant Decometssioning (4.395)
(4.269)
(3.508)
Net Cash Used by Financing Activities (20.736)
(41,343)
(24.923)
Net Increase (Decrease) in Cash and Cash Equivalents 17 (1.87W) 1,812 Cash and Cash Equivalents at Beginning of Year 33 1.912 100 Cash and Cash Equivalents at End of Year L,,j,Q, W
M a
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest (net of amounts capitalized) 38.581,
38,632 li8,919 Income taats li3.303 S2,432 S4.482 hur osNs N hk 's atNnt of c;sh flows, the Company considers cash investments acquired for the purpose of temporarily investing cash to be cash and cash e@f valents.
The accompanying notes are en integral part of these financial stateaents.
, 1011 A/3262A-25
Maine Yankee Atomic Power Company
?
Form 10-X - 1987 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES The Companyt The Company owns and operates a pressurized-water nuclear powered electric generating plant with a current rated net capacity of approximately 855 megawatts (the "Plant").
The Plant commenced commercial operation on January 1,1973.
The following New England electric utilities own all of the Company's common stockt Ownership Sponsor / Participant Interest Central Maine Power Company 38%
New England Power Company 20 The Connecticut Light and Power Company 12 Bangor Hydro-Electric Company 7
Maine Public Service Company 5
Public Service Company of New Hampshire 5
Cambridge Electric Light Company 4
Montaup Electric Company 4
Western Massachusetts Electric Company 3
Central Vermont Public Service Corporation 2
19)d3 For a period commencing January 1,1973, extending for thirty years thereaf ter, and subsequently extended to 2008, in accordance with the Power Contracts as amended and subject to certain limitations, each participant receives its entitlement percentage of Plant out-put and is obligated to pay its entitlement percentage of the Com-pany's total costs, including a return on invested capital, re-gardless of the level of operation of the Plant.
On January 28, 1988, a 5% 5tockholder of the Conpany fi. led for protection from its creditors under Chapter 'll of the Federal Bankruptcy Code. Management believes that in light of the operat-ing history of the Plant and the relatively low cost of power pro-duced by the Plant, it is unlikely this event will materially and adversely affect the continued operation of the Plant.
Under amendments to the Power Contracts as approved by the Federal Energy Regulatory Commission ("FERC") order issued Apcil 15, 1985, i
the Company increased the amount of the Company's collections for future decommissioning costs and its rate of return on common equity was increased, and other ratemaking practices were changed. 1114A/9302A-1
m-
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Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atoeie Power Company NOTES TO FINANCIAL STATEM NTS
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued) effective as of January 15, 1985.
In January 1987, the connecti-cut Division of Consumer Counsel filed a complaint with the FERC alleging that the Company's allowed rate of return was excessive
.t and should be lowered to reflect then current conditions.
In-formal discussions with the FERC were held resulting in a reduc-tion in the return on common equity from 15.5% to 13.6% and an
~ l increase of $796,000 in the annual decommissioni'na collection to be effective June 1, 1987.
Regulation The Company is subject to the regulatory authority of the FERC, the Nuclear Regulatory Commission ("NRC") and the Public Utilities Commission of the State of P.aine as to rates, account-ing, operations and othar matters.
Depreciation:
Depreciation is provided using a composite remain-ing life method designed to fully depreciate the' original cost of electric Plant over the Plant operating life.
Under the composite method, at the time depreciable property is retired, the original cost, plus cost of removal, less salvage, of such property is charged to accumulated depreciation.
The FERC's April 1985 order extended the depreciation recovery period effective January 15, 1985, to correspond to the NRC operating license life, that is, through October 2008.
Decommissioninst The Company has accounted for decommissioning costs in accordance with FERC orders.
The Company began collect-ing annual decommissioning charges in December 1981.
The FERC's April 1985 order permitted the collection of an annual decommis-sioning enarse of $4,000,000.
The order was subsequently amended in June 1987 to allow the annual collection of $4.796,000.
The Company's most.recent study, conducted in 1987 by an external engineering consultant, estimated decommissioning costs of
$178,098.000 (in 1987 dollars). The updated decommissioning study was filed with the FERC on January 15,1988 (see Note 3. Ratemak-ing Matters).
The Company recognizes the relative uncertainty of
,I decommissioning, the changing technology of decommissioning and the possibility of new requirecents of law and therefore recos-
+
nizes the need' to monitor and adjust decommissioning collections
^ j through supplemental rate filings.
Funds being collected for decommissioning are deposited in a trust account by the Company pending their ultimate use, and are includ-ed in Deferred Charges and Other Assets on the accompanying bal-ance sheet. 1114A/9302A-2
~
Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Amortization of Nuclear Fuelt The cost of nuclear fuel in the reactor is amortized to Fuel Expense based on the ratio of energy' produced during the period to the estimated total core capability.
j Fuel Disposal Cost In 1983 the Company entered into a contract with the Wpartment of Energy ("DOE") for disposal of its spent nuclear fuel, pursuant to which a fee of $1.00 per megawatt-hour is assessed against current generation and is paid to the DOE quarterly.
The Company also has an obligation of $50,367,000 with respect to generation prior to April 7, 1983, all of which the Company has already collected from its customers.
The Company has elected under terms of this contract to make a single payment of this obligation prior to the first delivery of spent fuel to DOE, scheduled to begin in 1998.. Interest on the obligation accrues at the 13-week Treasury Bill rate compounded on a quarterly basis from April 7,1983, through the date of the actual payment and is billed under the terms of the Power Contract.
Interest accrued and billed through December 31, 1087, amounted to $22,255,000.
The Company has formed a trust to provide for payment of this long-term fuel obligation.
Funding of the trust is being made by deposits of approximately
$4,100,000 at least semiannually beginning December 1985 and continuing through May 1995 totaling approximately $86,828,000.
The trust funds are included in Deferred Charges and Other Assets on the accompanying balance sheet.
The trust fund deposita plus estimated earnings are projected to meet the total estimated liability of $160,665,000 if operations continue without material changes.
Allowance for Funds Used During Construction ("AFC") and Allowance for Funds Used for Nuclear Fuel ("AFN"):
Under the Company's April 1985 rate case settlement agreement, the. Company earns a current return on up to 50% of Construction Work in Progress
("CVIP") and 50% of Nuclear Fuel in Process ("NFIP"), subject to certain limitations.
The Company records the net cost o' borrowed funds and the allowed rate of return on equity funds used to finance its remaining construction and nuclear fuel acquisition costs as AFC and AFN.
The amount of the allowance recordad is determined by nultiplying the applicable average monthly balance
-i of CW1P and NFIP by the weighted average cost rate of the capital used to finance the respective additions.
i
! 1114A/9302A-3
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j Maine Yankee Atoalc Power Company Form 10-X - 1987 l
l Maine Yankee Atomic Power Company
(
i
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NOTF.S TO FINANCIAL STATEMENTS 1..
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The following table contains the rates used for the most recent th oe annual periods:
.i AFC AFN on CWIP on NFIP l
1987 10.28%
8.74%
1986 9.99 8.64 1985 9.91 10.74 Unamortized Gain or Loss on R'esequired Debt:
Gains and losses on bonds reacquired to satisfy sinking fund requirements of First Mort.
3 age Bonds are deferred and amortised to income over the remaining i
original terms of the applicable aeries as prescribed by the Uniform
[
System of Accounts of the FERC.
1 2.
INCOME TAX EXPENSE The components of federal and state income taxes reflected in the Statement of Income are as follows:
[
,s Year Ended December 31, t
1HT' 1986 1985 (Dollars in '4housands)
Federal Current
$ 1,251 541
$ 2,386 Deferred 3,709 (2,104)
(1,862) i Investment tax credits, net
(
)
'gf State current 348 1,335 1,548 Deferred 1,093
_ (360)
(740)
L 1,441 975 808 i
4 Total federal and state i
,j income taxes
$M
$ lulQ2 2
l t
i f
f'
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Maine Yankee Atomic Power Company Fora 10-K - 1987 I
Maine Yankee Atomic Power Company i
NOTES TO FINANCIAL STATEMENTS
- 2. INCOME TAX EXPENSE (continued)
The Company provides deferred ' taxes for the tax effects of all timing differences, primarily accelerated depreciation of property and nuclear fuel for tax purposes.
J Investment tax credits utilized to reduce federal income taxes currently payable are deferred and amortized over the lives of the related assets.
At December 31, 1987, the Company had available approminately $3,697,000 of additional investment tax credit, net of the 35% reduction required by the Tax Reform Act of 1986, which is expected to reduce federal income taxes otherwise payable in 1988.
i A U.S. Internal Revenue Service ("IRS") agent conducting a review of the Company's income tax returns for 1982 and 1983 has informed the Company he is taking exception to, among other things, a 1983 deduction for $50,367,000 of its long-ters permanent fuel disposal obligation and associated interest thereon, and $4,800,000 of cur-rent DOE spent fuel obligations for generation subsequent to April 7, 1983.
If the IRS were to prevail, this adjustment would significantly affect reported current and deferred income taxes and investment tax credits.
Managenett believes that the deduc-
.l tions taken are proper and intends to contest any proposed disal-lowance.
The following table reconciles the statutory "4eral in. tor.e tax rate to the rate determined by dividing the t9 al federal income tax expense by income before that expense.
Dollars in Thousands 1987 1986 1985
~
Amount Amot.nt 1
Amount 1
Statutory federal income t
tax rate
$ 3,404 40.0 $ 5,301 46.0
$ 5,956 46.0 Increase (reduction) in taxes resulting from:
<,y Amortization of invest-I ment tax credits (2,441) (28.7) (4,896) (42.4)
(2,167) (16.7) 1 Referendua Expenses 2,202 25.9 AFC/AFN equity adjustment (1,736) (13.4) per FERC compliance audit Other 225 2.6 594 5.1 339 2.6 Calculated rate
$ Ja),9,Q
),LJ, $
999 b.7.
$ L.121 b 28-1114A/9302A-5
Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 2. INCOME TAX EXPENSE (continued)
In December 1987, the Financial Accounting Standards Board (FASB) issued a new standard on accounting for income taxes. The Company is required to adopt the new accounting and disclosure rules no later than in its 1989 financial statement. 'although earlier im-plementation is permitted.
The Company expects to adopt the new standard effective January 1, 1989, and does not plan to restate prior pe riods.
The standard requires the use of the liability method under which existing deferred taxes will be adjusted cur-rently to reflect the effect of tax rates applicable to the years in which these taxu would become payable.
The Company has not completed its analysis of the impact of this new accounting standard, but, based on current ratemaking and tax law, and since income taxes are fully recoverable aa a component of the Company's cost of service, there will not be an tapact on earnings upon adoption of the new standard.
There will be adjust-ments required to accumulated deferred taxes and the recognition of a liability for deferred taxes established in excess of the amount calculated asing income tax rates applicable to 1989 and future years.
- 3. RATLMAKING MATTERS On Apr41 10, 1985, the FERC approved a sett12 ment agreement regard-ing amendments to the Company's Power Contracts.
Effective Janu-ary 15, 1985, the settlement agreement provided for (1) an in-crease in the Company's rate of return on common equity from 10.0%
to 15.5%, (2) an increase in annual dece.nissioning collections from $1,826.100 to $4,000,000 (exclusive of any income tax liabil-ity), (3) a cuirent return on up to 50% of CWIP and NFIP and (4) a change in the depreefation recovery period to reflect a Plant operati'2g life equal to the NRC operating license life (that is, to the year 2008).
On January 29, 1987', the Connecticut Division of Consumer Counsel (the "Division") filed a complaint with FERC alleging that the i'.
allowed rates of return on equity of Maine Yankee, Yankee Atomic EIectric Company, Connecticut Yankee Atomic Power Company and i
Vermont Yankee Nuclear Power Corporation were excesshe and should l
be lowered to reflect then current conditions.
i 1114A/9302A-6
Maine Y:nkea Atomic Power Company Fcrm 10-K - 1987 Maine Yankee Atomic Power Company NOTES TO F.TNANCIAL STATDIF.NTS
- 3. RATD!AKING MATTERS (continued)
As a result of informal discussions with the FERC, the Company proposed a modification of the setticment agreement that provided for a reduction in the return on common equity from 15.5% to 13.6%
and an increase of $796,000 in the annual decommissioning collec-tion eff ective - June 1, 1987.
The modifications to the settlement agreement were approved by FERC on June 19, 1987, and the com-plaint filed by the Division was dismissed.
On January 15, 1988, the Company filed a request with the FERC to modify certain billing calculations and 'to increase its collection for decommissioning to be effective March 15, 1988.
The request seeks FERC approval to decrease the level of rt. turn on common equity from its current level of 13.6%
to 13.5%,
to provide for depreciation expense based on the recognition of shorter useful lives for certain classes of assets than had' previously been assumed, to provide for the amortization of materials end supplies and the last fuel core and to increase the annus1 decommissioning collection from $4,796,000 to $14,466,000 based on full recovery by 1998, rather than over the full operating life of tne Plant.
On March 15, 1988 the FERC issued an order accepting Maine Yankee's filing, suspending the proposed rate increase until August 16, 1988, summarily rejecting the proposed accelerated decommissioning schedule and establishing hearing procedures.
The Company is plan-aing to ask the FERC for a rehearing on the issue of accelerated decocaissioning collections.
The Company is enable to predict the outcome of its proposed increase in rates, but intends to take all reasonable steps necessary to maintain its rate of return at an adequate level and to ensure that tne level of decommissioning collections is adequate to decommission the Plant at the end of its operating life.
4.. NOTES PAYABLE TO BANKS The Company had bank lines of credit totaling $21,000,000 as of December 31, 1987, of which $13,000,000 requires an annual fee of 1/4 of it of. the line and $7,000,000 requires 3/8 of 1% of the line.
The remaining $1,000,000 line requires a compensating bal-ance of 10% of the line or 20% of any outstanding h21ance.
As of December 31, 1987, no loans were outstanding under the lines of credit.
- 5. FIRST MORTGAGE BONDS i
The annual sinking fund requirements of the First Mortgage Bonds currently outstanding for each of the years 1988 through 1992 amount to $4,775,000.
Bonds repurchased in advance amounted to $3,861,000 at December 31,
- 1987, and
$4,881,000 at December 31, 1986.
Under the terus of the Indenture securing the First Mortgage Bands, substantially an electric plant of t he Company is subject to a first mortgage lien. 1114A/9302A-7
.' 's
'A 1
x Maine Yankee Atomic. rower Company Form 10-K - 1987.
- r Maine Yankee Atomic Power Company.
NOTES TO FINANCIAL STATEMENTS l
-6. MYA FUEL COMPANY NOTES U
The Company has a Loan Agreement covering the issuance of up to
$50,000,000 principal amount of promissory notes.to MYA Fuel Coa-
- - M-pany, a wholly-owned subsidiary of Broad Street Contract Service.4, Inc.
Borrowings are secured by the Company's nuclear fuel invest-
- 3' ment and the Company pays a commitment fee at the annual rate of 1/8 of 1% of the line. Certain other information relating to this '
loan arrangement is as follows Year Ended December 31,
'C 1987 1986 1985 I
(Dollars in Thousands)
Promissory notes outstanding
$20,800
$ 8,950
$37,850 Average daily outstanding borrowings
$ 8,882
$23,948
$37,560 Highe~st level of borrowings
$28,950
$42,500
$46,350 Annual interest rate at end I
of periods
- 8.96%.
7.68%
9.37%
Effective average annual interest rate
- 8.35%
8.49%
8.43%
l
- Includes administrative fees.
t In September 1985 the Sponsors of the Company agreed to guarantee unconditionally the payment obJigations of the Company under a Ioan Agreement with MYA Fuel Company.
Each Sponsor's guarantee is l:
limited to the percentage of act payment default corresponding to i
its respective percentage under iis Power Contract and Capital l~
Funds Agreement with the Company.
Tt.e amended Ioac.*greement also provides that the arrangement will automatically extend until h
terminated upon twelve month notice by the lender or 90 days by the Company.
- 7. EURODOLLAR REVOLVING CREDIT AGRFJMENT s.
Effective September 30, 1985, the Company entered into a Eurodol-lar Revolving Credit Agreement with a group of major international banks under which the Company may borrow amounts up to $20,000,000 o -
to meet its short-tera requirements.
Each loan is due'and payable
['
one year af ter the date of the loan (unless an earlier agreement i-termination date applies), and bears interest based on the LIBOR rate plus 3/4 percent.
A quarterly commitment fee of 3/8 of 1%
per annun is required on the' unused portion of the line. The loans i
i
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1114A/9302A-8
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z Maine Yankee Atomic Power Company Form 10-K - 1987
?
Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
,1
- 7. EURODOLLAR REVOLVING CREDIT AGREEMENT (continued) are secured by a second lien oh, the Company's nuclear fuel inven-t tory (excluding nuclear fuel inserted in the reactor) a' d on cer-n tain rights under its Power Contracts and Capital Funds Agreements requiring payment; or financing of fuel-related costs.
The Agree-ment may be terminated on one year's notice by either the banks or
~
the Company.
Certain other information relating to this loan arrangement is as follows:
Year Ended December 31, 1987 1986 (Dollars in Thousands)
Promissory notes outstanding
$10,000
$19,000 Average daily outstanding borrowings
$18,433
$ 5,419 Highest level of borrowings
$20,000
$20,000 Annual interect rate at end of periods 8.62%
7.25%
Effective average annual interest rate 7.87%
6.96%
- 8. REDEEMABLE PREFERRED STOCK The Company must redeem and cancel 6,000 shares annually of the 7.48% Series Prefertad Stock at par value. At the election of the Company, an additional 6,000 shares may be redeemed and cancelled at par on each redemption date.
The optional provision is not cumulative.
The annual sinking fund requirements through Decem-ber 31, 1992 will be $600,000 annually.
The Company may redeem, in whole or in part, any. additional shares of the 7.48% Series Preferred Stock upon not less than thirty or i
more than fif ty days' notice at $103.37 per share on or before December 31, 1992, and at amounts decreasing annually thereaf ter, to $100.00 per share in each case plus accrued dividends.
Preferred Stock repurchased in advance and not cancelled amounted to 6,200 shares at December 31, 1987, 11,510 shares at December 31, 1986, and 11,455 shares at December 31, 1985.
e
- 9. PENSION PLANS The Company has two separate non-contributory defined benefit pen-sion plans which cover substantially all of its union and non-union employees.
The Company's funding policy is to contribute amounts to the separate plans which are sufficient to meet the.
1114A/9302A-9
. ~
Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS fl. PENSION PLANS ' continued) funding requirements set forth in the Employee Retirement Income.
Security Act ("ERISA"), plus such additional amounts as the Com-pany may determine to be appropriate.
Total pension expense related to these plans amounted to $410,000 in 1987, $647,000 in 1986 and $557,000 in 1985. The principal reasons for the decrease in pension expense in 1987 from 1986 were adoption of the FASB Statemeat of Financial Accounting Standards Number 87, "Esployers' Accounting for Pensions", which required certain changes in the methodology of calculating pension expense, and a change in the assumed discount rate from 7.25% used in 1985 and 1986 to 8.75%
used in 1987.
Plan benefits under the union retirement plan are based on average career earnings and length of employee service.
Plan benefits under the non-union retirement plan are based on average final earnings, as de'ined within the plan, and length of employee ser-vice.
A summary of th.s components of net periodic pension cost 'for the union and non-union defined benefit plans in 1987 and the total contributions charged to pension expense are as follows:
Union Non-Union (Dollars in Thousands)
Service Cost-Benefits Earned During the Period
$144
$361 Interest Cost on Projected Benefit Obligation 88 265 Estimated Return on Plan Assets (Gain) Loss 66 186 Net Amortization and N.ferral (191)
(509)
Net Periodic Pension C Jt Assumptions used in the accounting for the union and non-union defined benefit plans in 1987 were as follows:
Weighted Average Dis' count Rate 8.75%
Rate of Increase in Future Compensation I4vels 7.0%
Expected Long-Term Return on Assets 8.50%
t
. 1114A/9302A-10~
d t
Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company
=
NOTES TO PINANCIAL STATEME'iTS
- 9. PENSION PLANS (continued) 1 The following table sets forth the actuarial present value of pen-sion benefit obligations, the funded status of the plans and the liabilities recognized on the Company's balance sheet at Decem-ber 31,1987:
Union Non-Union (Dollars in 1housands)
Actuarial Present Value of Benefit Obligations:
Vested Benefit Obligation i 201
$ 767 Accumulated Benefit Obligation
$ 428
$1 146 Projected Benefit' Obligation
$ 970 Plan Assets s't Estimated Market Value (primarily guaranteed annuity contracts) 1,248 3,511 Funded Status-Projected Benefit Obligation in Excess of (Less Than) Plan Assets (278)
(524)
Unrecognized Net Gain (Loss) 41 97 Unrecognized Net Asset (Net Obligation) 493 686 Net Pension Liability (Asset)
Recognized in the Balance Sheet
$__2).f.
$ _212.
l The relationship of vested and non-vested benefits and assets of the plans for 1987 and 1986 are shown below:
January 1, p
1987 1986 l
(Dollars in Thousands)
Actuarial Present Value of Accumulated Plan Benefits:
!. i Vdsted
$1,083
$ 823 Nonvested 676 503
$1d1%
$Aa.lls Net Assets Available for
$13862 Benefits
$,15 1g 8
' 1,
~34-l 1114A/9302A-11
Maine Yaakee Atomic Power Cotapany Form 10-K - 1987 Maina Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS I
- 9. PENSION PLANS (continued)
In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for substantially all of its retired employees.
These and similar benefits for active employees are provided through insurance companies acting either as an insuisr or plan administrator, and premiums are based on the benefits paid during the year.
The Company recognizes the cost of providing these benefits through charging expense in the current period.
The cost of health care and life insurance bene-fits, substantially all of which relates to active employees, aggregated approximately $573,000 in 1987, $456,000 in 1986 and
$481,000 in 1985.
'0.
COMMITMENTS AND CONTINGENCIES Construction:
The Company anticipates construction expenditures to amount to $26.1 million (exclusive of AFC) for 1988.
Nuclear Fuel The Company anticipates nuclesr. fuel expenditures of $23.6 milliotz (exclusive of.uN) for 1988 and $70.3 million for the period 1989 through 1992 (exclusive of AFN).
l I
Nuclear Fuel Storage:
Under the terms of a license amendment I
approved by the NRC in 1984, the present storage capa. city of the spent fuel pool at the Company's Plant will be reached in 1999 and j.
af ter 1996 the available capacity of the pool would act accommo-date a full core removal.
The Atomic Safety and Licensing Board has approved the Company's proposal to demonstrate a further modification which would, if implemented, permit storage capacity through the operating life of the Plant.
That implementation would require further approval from the NRC. A Maine statute pro-vides that after July 1,
1992, spent nuclear fuel may not be stored on-site for a period exceeding three years from the date of a
l removal of the fuel from the reactor.
The Company estimates that shipments of spent nuclear fuel to the DOE will not commence until
[
1998 at the earliest.
The Company cannot predict whether, or to what extent, the, Maine statute and storage capacity limitations referred to above may be modified and whether, or to what extent, t
they will affect the operation of the Plant.
.1 l
.9 l t i.
l 1114A/9302A-12 h
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4
(
e Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 10. COMMITMENTS AND CONTINGENCIES (continued)
Nuclear Insurance:
The Price-Anderson Act is a federal statute providing, among other things, with respect to plants licensed before August 1,1987, that the maximum liability for damages re-sulting from a nuclear incident would be the greater of the maxi-mum amount of financial protection required to be carried by a licensee or. $720 million, based on the current number of licenses.
As required by the NRC regulations, prior to operation of a nuclear reactor, de license: of the reactor is required to insure against this exposure by purchasing the maximum available private insur-ance (presently $160 million), the balance of the $720 million to be covered by retrospective premium insurance and by an indemnity agreement with the NRC.
Under amendments to that Act, owners of operating nuclear facilities may be assessed a retrospective prem-ium of up to $5 million for each reactor owned in the event of any one nuclear incident occurring at any reactor in the United States, with a maximum assessment of $10 million per year per reactor owned.
Legislation is pending in Congress which would amend or modify the Act, but the Company cannot predict what final action the Congress will take or what effect any such amendment or l
modification would have on the Company.
In addition to the insurance required by the Price-Anderson Act, the Company carries all-risk nuclear property damage insurance in the amount of $500 million plus additional excess nuclear property insurance in the amount of $1,025 million effective January 19, 1988.
Of this additional insurance, 4775 million is provided by the nuclear electric utility industry's Berlaudn-based insurance pool, which provides such coverage from commercial sources and from participating utilities through a combination of current premium and retrospective premium adjustments.
If the insurance pool experiences losses in excess of its capacity to pay them a participating utility may be assessed a retrospective premium adjustment of up to 7.5 times its annual premiuu with respect to losses in any policy year.
Based on current premium rates this adjustment could range up to approximately, $11.7 million.
The remaining coverage of $250 million effective Jancery 19, 1988 is l
not subject to retrospective premium adjustments.
L
- 11. UNAUDITED QUARTERLY FINANCIAL DATA The Company's net income and earnings per share of common stock l
were at reduced levels in 1987 due to expenditures relating to the November 1987 referendum which sought to close the Plaat.
Expend-itures for the purpose.of influencing public opinion with respect to referenda issues are not recoverable through the Cospany's cost of se crice and therefore lower the Company's ret;;,rn on equity. !
1114A/9302A-13
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s Maine Yankee Atomic Power Company Form 10-K - 1987 Maine Yankee Atomic Power Company N'0TES TO FINANCIAL STATEMENTS s
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- 11. UNAUDITED QUARTERLY FINANCIAL DATA (continued)
.- (
Unaudited quarterly financial data pertaining to. the results of g
, operations are shown below.
Quarter Ended' d-March 31 June 30 September 30 December 31
,J (Dollars in Thousands, Except Per Share Amounts) 1987 Electric Operating Revenues
$31,373
$41,351
$36,050
$35,630 Operating Income 5,319-6,047 5,384 5,201 Net Income (Loss) 2,405 2,018
.933 (226)
Earnings (Loss) Per A
Share of Common Stock 4.49 3.72 1.55
(.76) i 1986 Electric _ Operating Revenues.
$30,292
$30,691
$28,211
$33,771 Operating Income 5,904 5,689 5,334 4,842 Net Income 2,777 2,732 2,757 2,259 Earnings Per Share of Common Stock 5.24 5.14 5.20 4.20
- 12. TRANSACTIONS WITH ASSOCIATED COMPANIES During
- 1987, 1986 and
- 1985, the Company paid
$7,692,007,
$6,629,675, and $7,612,550, respectively, to Yankee Atomic Elec-i tric Company, an associate of several of the Sponsors, for serv-ices at cost for its engineering and nuclear services department.
Central Maine Power Company has furnished the Company certain 1
engineering, administrative and legal services, and furnished car-tain facilities at cost, and electric servi' e at its filed rates.
c
- ,j During 1987,1986 and 1985, Central Maine Power Company was reia-bursed in the amount of $6,231,498, $4,562,868, and $4,462,073, respectively, for such services.
It is expected that Yankee Atomic Electric Company and Central Maine Power Company will con-tinue to perfors such services for the Company in the future, for which they will be reimbursed by the Company.
!l '
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1114A/9302A-14 7
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Maine Yankee Atomic Power Company Form 10-K - 1987 ITEM 9 - CHANGES IN AND DISAGREDfENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.
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1011A/3262A-26
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Maine Yankee Atomic Power Company Form 10-K - 1987 y
PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REUISTRA!TI A.
Directors The directors of the Company and their principal occupations and all positions and offices with the Company are as follbws:
i Name, Age and Year First Elected Director Principal Occupation l
Charles E. Monty, 61, 1971, Executive Vice Pre'sident and Chief President (Principal Execu ~
Operating Officer, Central Maine tive Officer) and Director Power Company John B. Randazza, 59, 1975, Vice President, Nuclear Resources, Executive Vice President, Central Maine Power Company Chief Operating Officer and Director Charles D. Frizzle, Jr., 45, Vice President, Nuclear Operations, 1987, Vice President and Central Maine Power Company Manager of Operations and Director William F. Burt, 62, 1978, Assistant to the Chief Executive Director Officer, COM/ Energy Services Company John F. G. Eichorn, Jr., 64, Chairman and Chief Executive Officer, 1971, Director Eastern Utilities Associates Bernard M. Fox, 45, 1986, Executive Vice President and Chief Director Financial and Administrative Officer, Northeast Utilities Frederic E. Greenman, 51 Senior Vice President and General 1984, Director Counsel and Secretary, New England Electric System Thomas A. Greenquist, 59, Chairman and President, Barsor Hydro-1973, Director Electric Company Robert J. Harrison, 56, 1984, President and Chief Executive Director Officer, Public Service Company of New Hampshire t
% 1011AN262A.
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Maine Yankea At c.ie Power Cstp*.ny Farm 10-K - 1987 T
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
A.
Directors (continued)
G. Melvin Hovey, 58, 1984, President and Chief Executive Offi-Director cer, Maine Public Service Company Matthew Hunter, 53, 1983, Senior Vice President, Customer Director Services and Division Operations, Central Maine Power Company Carroll R. Lee, 38,.1979, Vice President - Planning and Develop-Director ment, Bangor' Hydro-Electric Company John F. Opeka, 47, 1986, Executive Vice President of Director Engineering and Operations, Northeast Utilities Service Company John W. Rowe, 42, 1984, President and Chief Executive Director Officer, Central Maine Power j
Company Jeffrey D. Tranen, 41, 1984, Vice President, New England Power Director Company Thomas C. Webb, 53, 1986, President and Chief Executive Officer, Director Central Vermont Public Service Corporation Effective April 1,
1988, Messrs. Randazza and Frizzle have been elected President and Vice President, Operations, respec tively, of the Company and will no longer be employees of Central Maine Power Company.
Mr. Monty will become Chairman of the Board of the Company, but will remain with Central Maine Power Company.
On January 28, 1988, Public Service Company of New Hampshire,- of which Mr. Harrison is President and Chief Executive Officer, filed a petition for a reorganization under Chapter 11 of the United States Bankruptcy Code.
Each of ' the directors, exce,,t John W.
Rowe, has been for the past five years, and each of the directors is now, an officer or employee of one of the Sponsors or an associated company thereof.
Mr. Rowe was elected President, Chief Executive Officer and a Director of Cen-t
(
tral Maine Power Company on December 15, 1983, effective January 9, p
1984, and on February 17, 1984, was elected a Director of Maine Yankee Atomic Power Company.
Mr. Rowe previously served as Senior Vice President of Consolidated Rail Corporation ("Conrail") since 1982 and as Vice President - Iaw of Conrail since 1980.
Prior to 1980, Mr. Rowe was affiliated with the law firm of Isham, Lincoln &
Beale, Chicago, Illinois.
Each of the Sponsors is represented on the Company's Board of Direc-tors, but there is no formal arrangement with respect to such repre-
'sentation. The directors are elected at the annual meeting of stock-holders and hold office until their successors are elected and quali-fled. -
1011A/3262A-28
Maina Ycnkca Atinic Pcw;r Cocpany Form 10-K - 1987 ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
B.
Executive Officers The following are the executive officers of the Company with all positions and offices held:
Name Age Office and Year First Elected Charles E. Monty 61 President (Principal Executive Officer) - 1983 to April 1, 1988 Director - 1971 Chairman of the Board, effective April 1,1988 I
John B. Randazza 59 Executive Vice President, Chief Operating Officer and Director'
- 1975 to April 1, 1988 President, effective April 1, 1988 (Principal Executive Officer)
Patrick S. Lydon 45 -
Vice President, Finance and Admin-istration (Principal Financial Officer) - 1985 Andrew C. Kadak 42 Vice President, Nuclear Services
- 1987
[
Charles D. Frizzle, Jr.
45 Vice President and Manager of Operations - 1983 Director - 1987 Vice President, Operations, effective April 1, 1988 John H. Garrity 39 Assistant Vice President, Engineerind
- 1988 Lee E. Maillet 38 Treasurer - 1985 Robert S. Howe 48 Comptroller and Chief Accounting Officer (Principal Accounting Officer) - 1980 William M. Finn 51 Secretary - 1984
'l' Clerk - 1984 - 1987, 1988 Peter B. Webster 47 Clerk - 1987 (Resigned February,1988)
Anne H. Pare 34 Assistant Secretary - 1988 e,
Each of the executive officers except Peter B.
Webster, has been-for the past five years and is now an officer or employee of the Conpany or l
one of the Sponsors or an associated company thereof.
Mr. Webster has been a partner in the law firm of Verrill & Dana, Portland, Maine, since 1967.
Effective April 1,1988, Messrs. Randazza, Frizzle, Lydon and Maillet will be compensated by the Conpany and will no longer be employees o'f Central Maine Power Company.
The executive officers are elected annually by the Board of Directors and hold of fice until their successors are elected and qualiff ed. 16114/19&i4 90
4 y
)
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Maine Yankee Atomic Power Company Form 10-K - 1987 ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
J B.
Executive Officers (continued)
-l There are no family relationships between any directors or executive officers nor any arrangements or understandings pursuant to which any c
were selected as officers or directors.
, ~;
C.
Other Directorships l
The following directors of the registrant hold other directorships as follows:
~['
Director Other Directorships Held William F. Burt Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Connecticut Yankee Atomic Power Cespany COM/ Energy Services Company John F. G. Eichorn, Jr.
Eastern Utilities Associates (Trustee)
Montaup Electric Company s
EUA Service Corporation-EUA Power Corporation EUA Cogenex l
Blackstone Valley Electric Company l,
Eastern Edison Company i
Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company Vermont Yankee Nuclear Power Corporation Electric Council of New England Edison Electric Institute l
Executive Committee of Seabrook Joint Owners Management Committee of New England Power Pool Bernard M. Fox Connecticut Yankee Atomic Power Company l
Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company The Institute of Living Connecticut Mutual Financial Services, Inc.
Duncaster, Inc.
j Northeast Utilities (Trustee) p The Connecticut Light and Power Company Holyoke Power & Electric Company Holyoke Water Power Company Northeast Utilities Service Company l.,
Northeast Nuclear Energy Company Western Massachusetts Electric Company l
The Quinnehtuk Company The Rocky River Realty Company l
Research Park, Inc.
The Shelton Canal Company 42-1011A/3262A-30
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Maine Yankee Atomic Power Company Form 10-K - 1987 ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C.
Other Directorships (continued)
Director Other Directorships Held Frederic E. Greenman New England Electric Transmission Corporation New England Hydro-Transmission Corporation New England Hydro-Transmission Electric Company, Inc.
New England Wholesale Electric Company g.,
New England Energy Incorporated New England Power Company New England Power Se'evice Company Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company Granite State Electric Company Narragansett Energy Resources Company i
Thomas A. Greenquist Bangor Hydro-Electric Company East Branch Improvement Company s
Robert J. Harrison Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Public Service Company of New Hampshire Numerica Financial Corporation American Heart Association, NH Affiliate Easter Seal Foundation of NH and VT Federated Arts (of Manchester, NH)
G. Melvin Hovey Maine & New Brunswick Electrical Power Company, Limited
,e Maine Public Service Company Maine Electric Power Company, Inc.
4 Matthew Hunter Central Securi ies Corporation Cumberland Securities Corporation Uplift, Inc. of Hallowell Pine Tree Society for Handicapped Children and Adults 1
Carroll R. Lee Maine Electric Power Company East Branch improvement Company I :
Penobscot Hydro Co., Inc.
l Charles E. Monty Central Maine Power Company l
Maine Electric Power Company, Inc.
l-The Union Water-Power Company Kennebec Water Power Company Central Securities Corporation 1011A/3262A-31
[4
Maine Yankee Atomic Power Company Form 10-K - 1987
<1
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ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C.
Other Directorships (continued)
Director Other Directorships Held i
Charles E. Monty Cumberland Securities Corporation (continued)
Q-M Enterprises, Inc.
Androscoggin Reservoir Company Kennebec Hydro Resources, Inc.
~~
Maine Energy Resources, Inc.
John F. Opeka Connecticut Yankee Atomic Power Company Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Northeast Utilities Service Company The Connecticut Light and Power Company Western Massachusetts Electric Company The Quinnehtuk Company Holyoke Water Power Company Holyoke Power & Electric Company The Rocky River Realty Company Research Park, Inc.
The Shelton Canal Company Northeast Nuclear Energy' Company Opportunities Industrialization Center of New London County John B. Randazza Vermont Yankee Nucleat Power Corporation Connecticut Yankee Atomic Power Company
['
Yankee Atomic Electric Company John W. Rowe Central Maine Power Company Maine Electric Power Company, Inc.
Central Securities Corporation Cumberland Securities Corporation The Union Water-Power Company Key Bank of Central Maine MidSouth Rail Corporation
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Northcare, Inc.
Maine Chamber of Commerce and Industry Forum A MidSouth Corporation f
Thomas College UNUM Corp.
t.
1011A/3262A-32
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Maine Yankee Atomic Power Company Form 10-K - 1987
]
2 3
ITai 10 - DIRECTORS AND EXECUTIVE OFFICE $lS CF THE REGISTRANT (continued)
C.
Other Directorships (continued)
Director Other Directorships Held Jeffrey D. Tranen Connecticut Yankee Atomic Power Company Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Thomas C. Webb Central Vermont Public Service Corporation 7
Connecticut Valley Electric Company, Inc.
Central Vermont Public Service Corpora-tion-Bradford Hydroelectric, Inc.
Central Vermont Public Service Corpora-tion-East Barnet Hydroelectric, Inc.
C. V. Realty, Inc.
Vermont Yankee Nuclear Power Corporation Vermont Electric Power Company, Inc.
Vermont Electric Transmission Company, Inc.
Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company United Vermont Bancorporation Edison Electric Institute Electric Council of New England Comprehensive Health Resources, Inc.
9 ITEM 11 - EXECUTIVE COMPENSATION Except for participation by some officers in incentive compensation and benefit plans, the Company's officers and directors have been compensated by the Sponsors or other associated companies by which they are princi-pally employed.
Commencing April 1,1988, however, Company officers John B. Randazza, Charles D. Frizzle, Jr., Patrick S. Lydon and Lee E. Maillet will be employees of, and compensated by, the Company, and will no longer
~
l be employees of Central Maine Power Company.
John H. Garrity, who was first elected an officer of the Company in February 1988, will continue to be compensated by *.he Company.
In complying with regulatory require-ments, the Company has reinbursed Central Maine Power Company for services rendered by its employees including Maine Yankee officers and directors. See Item 13, CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
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1011A/3262A-33
Maine Yankee Atomic Power Company Form 10-K - 1987 ITEN 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table shows the ownership of the Company's 500,000 shares of $100 par value Common Stock, all of which is issued and outstanding and all of which is held of record and beneficially.
None is held by
' I management.
Amount Percentage Name Owned of Class Central Maine Power Company 190,000 shares 38%
Edison Drive Augusta, Maine 04336 New England Power Company 100,000 20 25 Research Drive Westborough, Massachusetts 01582 The Connecticut Light and Power Company 60,000 12 P.O. Box 270 Hartford, Connecticut 06141 Bangor Hydro-Electric Company 35,000 7
33 State Street Bangor, Maine 04401 Maine Public Service Company 25,000 5
209 State Street
~
Presque Isle, Maine 04769 1
Public Service Company of New Hampshire 25,000 5
1000 Elm Street Manchester, New Hampshire 03105 Cambridge Electric Light Company 20,000 4
t One Main Street Cambridge, Massachusetts 02142-9150 Montaup Electric Company 20,000 4
P.O. Box 2333 Boston, Massachusetts 02107 l
Western Massachusetts Electric Company 15,000 3
l P.O. Box 270 l-Hartford, Connecticut 06141 l
i' Central Vermont Public Service Corporation 10,000 2
77 Grove Street Rutland, Vermont' 05701 500.000 shares M%
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l' 1011A/3262A-34
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ir Maine Yankee Atomic Power Company Form 10-K - 1987 9
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the construction period, no return was paid to Sponsors on the money paid by them for Common Stock, but a return (at the rate of 7% per annum through November 30, 1970, and at the rate of 10% per annum there-af ter) was charged to plant in a manner similar to that now followed by utility companies in recording plant construction costs.
The amounts so charged were recorded as paid-in capital.
This practice terminated as of December 31, 1972, the last day of the last month of the construction period.
These amounts are to be paid to the Sponsors on the redemption of Common Stock.
The Company's First Mortgage Indenture and the provi-sions of its Articles of Incorporation relating to its capital stock con-tain varfous limitations on redemption.
During 1987 and 1986, the Company paid $7,692,007 and $6,62D,675, re-spectively, to Yankee Atomic Electric Company, an associate of several of the Sponsors, for services at cost for its engineering and nuclear ser-vices department.
Central Maine Power Company has furnished the Company certain engineering, administrative and legal services, and furnished certain facilities at cost, and electric service at its filed rates.
During 1987 and 1986, Central Maine Power Company was reimbursed in the amount of $6,231,498 and $4,562,868, respectively, for such services.
It is expected that Yankee Atomic Electric Company and Central Maine Power i
Company will continue to perform such services for the Company in the future, for which they will be reimbursed by the Company.
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1011A/3262A-35
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Maine Yankee Atomic Power Company Form 10-K - 1987 PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1.
The followf ng financial statements are filed as a part of this report:
INDEX OF FINANCIAL INFORMATION P_ age a
Report of Independent Public Accountants 17 Financial Statements:
Statement of Income for each of the three years ended December 31, 1987 18 Balance Sheet at December 31, 1987 and 1986 19 Statement of Capitalization at December 31, 1987 and 1986 21 Statement of Changes in Common Stock Investment for each of the three years ended December 31, 1987 22 Stat' ment of Cash Flows for each of the three years e
ended December 31, 1987 23 Notes to Financial Statements 24 (a) 2.
The following financial statement s,cliedules of the Company are filed herewith and included in response to Item 14(d):
INDEXOFFINANCIALSTATkMENTSCHEDULES Lass Schedule V - Electric Property and Nuclear Fuel F-1 4
Schedule VI - Accumulated Provision for Depreciation of Electric Plant and Amortizatio?. of Nuclear Fuel F-4 Schedule VIII - Reserves Exclusive of Reseives for Depreciation F-5 Schedule IX - Short-Term Borrowings F-6 All other schedules are omitted as the required information is not applicable or the information is presented in the Financial Statements or related notes.
(b) Reports on Form 8-K.
The Company filed the following reports on Forn 8-K during the last quarter of 1987 and thereaf ter to date:
Date of Report Items Reported November 3,1987 On November 3,1987, the Maine electorate defeated in referendum by a margin of 59% to 41% an initiated bill which was intended to shut down the Company's
-nuclear generating plant on July 4, 1988.
s 1011A/3262A-36
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.i Maine Yankee Atomic Power Company Form 10-K - 1987
+
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (continued)
(c) The exhibits which are filed with this Form 10-K or are incorporated herein by reference are set forth in the Exhibit Inder, which i
immediately precedes the exhibits to this report.
(d) The financial statement schedules required to be filed under this paragraph are listed under paragraph (a) 2. of this Item.
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Mains Yanken Atonic Power Co2 piny Form 10-K - 1987 SIGNATURES Pursuant to t he requirements of Section 13 or 15(d) of the Securi-ties Exchange Act of 1934, the registrant has duly caused this report' to be signed on its behalf by the undersigned, thereunto duly authorized.
MAINE YANKEE ATOMIC POWER COMPANY By Robert S. Howe s/s Robert S. Howe, Comptroller and Chief Accounting Officer (Principal Accounting Officer)
March 29, 1988 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By Charles E. Monty s/s By Thomas'A. Greenquist s/s Charles E. Monty, President Thomas A. Greenquist, Director (Principal Executive Officer)
March 29,1988 and Director March 29, 1988 By Robert J. Harrican s/s Rotort J. Marrjsca, Director By Patrick S. Lydon s/s March 29, 198" Patrick S. Lydon, Vice President, Finance and Administration By G. Melvin Hovey s/s (Principal Financial Officer)
G. Helvin Movey, Director March 29, 1988 March 29, 1988 1
By John B. Randazza s/s By Matthew Hunter s/s John B. Randazza, Execative Matthew Hunter, Director Vice President, Chief Operating March 29, 1988 Officer and Director March 29, 1988 By Carroll R. Lee s /,s Carroll R. Lee, Director By Charles D. Frizzle s/s March 29, 1988 Charles D. Frizzle, Jr., Vice President and Manager of Opera-By John F. Opeka s/s tions and Director John F. Opeka, firector March 29, 1088 March 29, 1988 By William F. Burt s/s By John W. Rowe s/s William F. Burt, Director John W. Rowe, Director 3
March 29, 1988 March 29, 1988 By John F. G. Eichorn, Jr.
s/s By Jeffrey D. Trannen s/s I
John F. G. Eichorn, Jr., Director Jeffrey D. Tranen, Director March 29, 1988 March 29, 1988 By Bernard M. Fox s/s By Thomas C. Webb s/s Bernard M. Fox, Director Thonas C. Webb, Director March 29, 1988 March 29, 1988 By Frederic E. Greenaan s/s l
Frederic E. Greenman, Director March 29, 1988 [
1011A/3262A-38
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Maine Yankee Atomic Power Company Form 10-K - 1987
'4 9
~j Schedule V (1987)
_ Maine Yankee Atomic Power Company ELECTRIC PROPERTY AND NUCLEAR FUEL For The Year Ended December 31, 1987 (Dollars in Thousands)
Balance at Retire Balance Beginning Additions ments Transfers &
at End of Period at' Cost or Sales Other Charges of Period Electric Property Organization 7
7 Miscellaneous Intangible Plant 510 510 Land and Land Rights 473 478 Structures and Improvaments 65,965 4
706 66,671 Reactor Plant
.?
Equipasnt 134,581 (232) 7,845 142,194 Turbogenerator j
Units 82,437 340 548 83,325 Accessory Electric 4
Equipent 17,452 (49)
(9) 17,394 Miscellaneous Power Plant Equip.
9,877 1,052 10,929 Substation Equip.
4,786 4,786 Miscellaneous Electric Property 74 74 Unfinished Construction 3,375 7,628 (10,142) 861 l
Total Electric
.s Property
$319.542
$ 7.628
$ jg
$327.229 Nuclear Fuel LI Nuclear Fuel in Reactor
$131,720 18
$ 4,694
$136,432 Nuclear Fuel in Process 15,006 15,197 (14,746) 15,457 Nuclear Fuel -
-l Spent 166,032 38,382 204,414 L4 Nuclear Fuel -
Stock 37,280 (28,330) 8,950 E
L j:
Total Nuclear Fuel
$ 350.03_8,
$15.215,
$365.253 5
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1011A/3262A-39
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a Maine Yankee Atomic Power Company Form 10-K - 1987 Schedule V (1987)
Maine Yankee Atomic Power Company 1
ELECTRIC PROPERTY AND NUCLEAR FUEL For The Year Ended December 31, 1986 (Dollars in Thousands)
Balance at Retire Balance Beginning Additions ments Transfers &
at End of Period at Cost or Sales Other Charges of Period Electric Property Organization 7
7 Miscellaneoua Intangible Plant 510 510 land and Land Righ:s 478 478 Structures and Improvements 65,940 25 65,965 Reactor Plant Equipment 133,940 641 134,581 Turbogenerator 416 82,437 Units 82,021 Accessory Electric Equip'sent 16,993 459 17,452 l
Miscellaneous l
Power Plant Equip.
9,643 (27) 261 9,877 l
Substation Equip.
4,786 4,786 Miscellaneous Electric Property 74 74 Unfinished Construction 1,463
_3.714 (1,802) 3,375 Total Electric y
Property
$2112311
$ 3.714
$1(()
$319.542 Nuclear Fuel j
Nuclear Fuel in I
Reactor
$131,720
$131,720
[
Nuclear Fuel in (32,873) 15,006 Process 27,683 20,196 Nuclear Fuel -
l Spent 166,032 166,032 l
Nuclear Fuel -
Stock 4,407 32,873 37,280 Total Nuclear Fuel
$329.842
$20.196
$_350.038 F-2 l
1011A/3262A-40
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Maine Yankee Atomic Power Company Form 10-K - 1987 Schedule V (1987)
Maine Yankee Atomic Power Company ELECTRIC PROPERTY AND NUCLEAR FUEL For The Year Ended December 31, 1985 (Dollars in Thousands) r Balance at Retire Balance Beginning Additions ments Transfers &
at End of Period at Cost or Sales Other Charges of Period Electric Property Organization 7'
7 Miscellaneous Intangible Plant 510
-4 510 Land and Land Rights 485 (7) 478 Structures and
~
Improvements 63,907 (3) 2,036 65,940 Reactor Plant Equipment 129,285 (1,267) 5,922 133,940 Turbogenerator Units 70,608 (4,684) 16,097 82,021 Accessory Electric Equipment 16,578 415 16,993 Miscellaneous l-Power Plant Equip.
9,246 397 9,643 Substation Equip.
4,786 4,786 Miscellaneous Electric Property 74 74 Unfinished j
Construction 10,867 15,456 (24,860) 1,463 i-Total Electric f'
Property
$306.353
$15.456 $(12911)
$2115111 I'
I Nuclear Fuel Nuclear Fuel in Reactor
$125,031
$ 6,689
$131,720 Nuclear Fuel in Process 56,588 17,290 (46,195) 27,683 Nuclear Fuel -
l-Spent 126,404 39,628 166,032 Nuclear Fuel -
Stock 4,529 (122) 4,407 j
Total Nuclear Fuel
$312.552
$17.290 $,_ ___
$,3HJ,41 4
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F-3 1011A/32'62A-41 L
3 Maine Yankee Atomic Power Company Form 10-K - 1987 Schedule VI Maine Yankee Atomic Power Company
'i ACCUMULATED PROVISION.FOR DEPRECIATION OF ELECTRIC.P,LANT AND AMORTIZATION OF NUCLEAR FUEL For' The Years Ended December 3),
(Do11 ass in Thousands)
~
Balance Balance Beginning Charged Other at End of Period to Income
- Retirements Changes of Period 1987 Electric Property
$110.895
$ 9.465 59
$J
$120.444 Nuclear Fuel
$255.035
$21.893
$g
$M 1986 Electric Property
$101.630
$_L)Q1 43)
$M).
$110d21 Nuclear Fuel
$_221.832_
$33.203
$4
$M 1985 Electric Property
$g
$ 8.379
$(5.954)
$g)
$101.630 Nuclear Fuel
$191.705
$1.Q.d21
$2
$221.832
- Excludes aLounts collected through depreciation rates for Decommissionin8 and P3rmanent Disposal Cost. See Note 1 of Notes to Financial Statements for the Company's depreciation and fuel amortization policies.
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4 F-4 1011A/3262A-42
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Naine Yankee Atomic Power Company Form 10-K - 1987 S
Schedule VIII Maine Yankee Atomic Power Company j
RESERVES EXCLUSIVE OF RESERVES FOR DEPRECIATION For the Years Ended December 31, (Dollars in Thousands)
Balance at Charged Charged Deductions Balance Beginning to to Other From at Close of Period Income Accounts Reserves of Period 1987 Decommissioning Reserve
$15.440 -
$M
$2Q.d2&
1986 Decommissioning Reserve
$1Q.d41
$4 Q,QQ,
$15.440 j
1985 Decommissioning Reserve
$ 6.446
$M?3
$g
$10.846 l~.
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_Ms.ine Yankee Atomic Power, Company Form 10-K - 1987 Schedule IX SHORT-TERM BORROWINGS (Dollars in Thousanda)
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,t Coluna C h
Weighted Column F Column A Column B Average Colunn D Column E Weighted Daily Category of Balance at Interest Maximum Mount Average Amount Average Short-Tern End of Rate Outstanding Outstanding Interest Rate Borrowings Year at End of Period During the Year During the Year During the Year Year Ended
- 8 December 31,.1987 Banks (1)
$13,000
$ 5,133 7.48%
Year I.nded Decer:ber 31, 1986 Banks (1)
$775 7.50%
$ 1,700 95 8.37%
g.
Year Ended a
December 31, 1985 Banks (1)
$ 6,825 620 9.70%
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5R A8 (1) See Note 4 of Notes to Financial Statements E
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8x 1011A/3262A-44 e
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Maine Yankee Atomic Power Company Form 10-K - 1987 EXHIBIT INDEX The following designated exhibits, as indicated below, are either filed herewith or have heretofore been filed with the Securities and Exchange Commission under the Securities Act of 1933, the Securities Exchange Act of 1934 or the Public Utility Holding Company Act of 1935 and are incorporated herein by reference to such filings.
Reference is made to Item 8 of this Form 10-K for a listing of certain financial information and statements incorporated by reference herein.
^
Filed Prior SEC Herewith Exhibit Number And Description Of Document Exhibit No.
Docket at Page (3) Articles of Incorporation and Bylaws Incorporated herein by reference:
3-1 Articles of Incorporation 3.1, 3.3 2-38547 3-2 Amendment to Exhibit 3-1 setting forth terms of Cumulative Preferred ' Stock 3.2 2-46226 3-3 Bylaws, as amended 3.2 2-38547 3-4 Amendment to Exhibit 3-3 3.5 2-46226 i
(4) Instruments defining the rights of i
4 security holders Incorporated herein by reference's 4-1 First Mortgage Indenture from the Company to Old Colony Trust Company, Trustee, dated as of i
^
November 1,1970 3.2 1-0554 4-2 First Supplemental Indenture l
from the Company to The First National Bank of Boston, Trustee, dated as of March 1, 1971 4
70-4976*
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Maine Yankee Atomic F wer Company 7
Form 10-K -
87 Filed Prior SEC Herewith Exhibit Number And Description Of Document Exhibit No.
Docket at Page (4) Instruments defining the rights of security holders (continued) 4-3 Second Supplemental Indenture from the Caspany to The First National Bank of Boston, Trustee, dated as of December 1,1972
' 4.3 2-46226 4-4 Third Supplemental Indenture from the Company to the First National Bank of Boston, Trustee, dated as of February 15, 1984 4.4 1-6554 4-5 Fourth Supplemental Indenture from the Company to the First National Bank of Boston, Trustee, date as of April 1, 1986 4.5 1-6554 (10) Material Contracts Incorporated herein by reference:
10-1 Composite copy of Power Con-l tract between the Company and (Included in pro-l.
Sponsors dated as of May 20, 1968 spectus in 2-46226) l 10-2 Composite copy of Capital Funds Agreement between the l
Company and Sponsors, dated (Included in pro-as of May 20, 1968 spectus in 2-46226) 10-3 Stockholders Agreemsnt dated as of May 20, 1968 among the (Included in pro-j.-
Sponsors spectus in 2-46226)
L 10-4 Loan Agreement between the Company and MYA Fuel Company, B-1 70-5805 i
i-dated as of August 26, 1976 B-1 70-6765 as amended B-1 7d-7117 10-5 Eurodollar Revolving Credit
[
Agreement between the Company j ~
and a group of international banks, with Union Bank of Switzerland as Agent Bank, dated as of September 30, 1985 B-1 70-7165 E-2 l
1011A/3262A-46
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':cP Maine Yankee Atomic Poder Company
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l Form 10-K - 1987 Filed Prior SEC Herewith Exhibit Number And Description Of Document Exhibit No.
Docket at Page (10) Material contracts (continued) 10-1.1 Amendment No.1 to Exhibit 10-1, dated as of March 1, 1984 10-1.1 1-6554 10-1.2 Amendment No. 2 to Exhibit 10-1,
~ 4 dated as of January 1,1984 10-1.2 1-6554 10-1.3 Amendment No. 3 to Exhibit 10-1, dated as of October 1,1984 10-1.3 1-6554 10-1.4 Additional Power Contract be-j tween the Company and Sponsors, dated as of February 1, 1984 10-1.4 1~6554 10-2.1 Amendment No.1 to Exhibit 10-2, dated as of August 1, 1985 10-2.1 1-6554 10-6 Indenture of Trust dated as of March 14, 1988 between the Com-pany and Maine National Bank re-lating to decommissioning trust fund.
63
+7 10-7 Indenture of Trust dated as of Oc-tober 16,1985 between the Company d
and Norstar Bank of Maine relating j
to the spent fuel disposal funds. 10-7 (11) Statements re computation of per share earnings Not applicable t
(12) Statements re computation of ratios Not applicable (13) Annual report to security holders Not applicable (18) letter re change in accounting principles Not applicable (19) Previously unfiled documents
\\
Not applicable E-3 1011A/3262A-47 f-
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Maine Yankee Atomic Power Company Form 10-X - 1987 C
Filed Prior SEC Herewith Exhibit Number And Description Of Document Exhibit No.
Docket at Page
(
(22) Subsidiaries of the registrant None (23) Published repcrt concerning a' tters a
submitted to vote of security holders Not applicable (24) Consents of experta and counsel Not applicable (23) Power of attorney Not applicable (28) Additfonal exhibits None e
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E-4 1911A/3262A-48