ML20204J927
| ML20204J927 | |
| Person / Time | |
|---|---|
| Site: | Hatch, Vogtle, 05000000 |
| Issue date: | 12/31/1984 |
| From: | John Miller, Scherer R GEORGIA POWER CO. |
| To: | |
| Shared Package | |
| ML20204J925 | List: |
| References | |
| NUDOCS 8504250230 | |
| Download: ML20204J927 (50) | |
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~I P
.About th'e'covef ;+
Georgia Power Company.
- 331 Piedmont Avenue' ' '
- i i A major milestone in the(com' letion of Plant Vogtle was reached in October'
.l
,. -;k.7 p
t of 1984 when aiS00-t6n steel dome'was placed atop the' Unit 2 contain.-
P.O. Box 4 545...
- ment building.' One of the world's largest mobile cranes was used to lift the Atlanta. Georgia 30302.
1
~ '
j l
[ dome 6$0 feet and.lcnver it onto the building;The nuclear facility.ls one of :
Telephone 404 5'26-6526,
' e i ; f
two. l.160-megawatt generating units under construction near.Waynesboro.
}<'
' ^
~
-. Georgia Pwer Company is an
' investor-owned electric utility sersing
,j
~
57.000 of;he state's 59.000 square -
t
(
7_
miles.Jhe Southern Company is thel
~
- parent firm for Georgia Power, as well
... as Alabama Power. Gulf. Power, and 1
'~
Mississip'pi Power. These comp
- ~
together with certain service and
?
special-purpose subsidiaries. com-prise the Southern electric system;
,r q.
~
- c.
' A copy of For n 10-K as filed with the l,C
^
g
' " Securities and Exchange Commission ;
4 will be providad upon written request -
I-L
[#
C
^.to the office of the Corporate..
~
- Secretary A copy of the Company's Financial and Statistical Review also is '. ' '
- i available. For additionalinformation. '
contact Mr.-W. L Westbrook. Senior ig a
1Vice President-Accounting an'd ~
J
- Finance and Secretary.
~'
h.
7 4
1:
I
.. Registrar, Transfer' Agent'and:
,' I l1
, Dividend Disbursing Agent l
r
' All series of Preferred Stock >
O
- Trust Company Bank l..
, 2 Corporate Trust Department j
l E
'. P. O.' Box 462 5.,
/
Atlanta Georgia 30302' 4
s Trustee. Registrar and_
' ~ '
' Interest Paying Agent :
All series of First Mortgage Bond's ~
~
Chemical Bank Conte'nts-Corporate Trust Department.
55 Water Street m.
I'
' Highlights New York New York 10041 letter to Investors
'2
.?,
Ouestions (, Answers 'About Plan: Vogtle 6
~
o j
Georgia Po.ver's Seven Strengths,
9 Divide'nds Pald -
L f'
Selected Firiancial Data'
.24 It has been determined that all divi-
' ' Management's Discussion & Analysis 26 dends paid on Georgia Power Com--
pany Preferred Stock and Class A
. Financial Statements Preferred Stock. for the year 1984.-
.30 are 100 percent taxable _
- Income
. e.
.30
- Earnings Retained in the Business :
30. This annual reportis submitted as
- Other Paid-in Capital
.3I information for stockholdersand is 3 Sources of Funds'for Cross Property Additions;,
.=, Balance Sheets.
.32 not intended for use in connection 7
- Capitalization.
.-3 3 w th any sale or purchase of, or any.
Notes to Financial Statements
.34 offers or solicitation of offers to buy.
JI Auditors' Report
.43 or sell, any securities except to the'
. Report of Management
.43 extent incorporated by reference in a I
' prospectus' I"
-Board of Directors
.44 s
.48 Company Officers.
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met ~ertoInvestors i
he year that just passed was one of the Financial picture favorable most successful in Georgia Power's recent Net income for 1984 increased 38.5 percent over 1983.
T history. financially and in several other im-Several factors contributed to this improvement in portant ways. Net income after dividends on eamings During 1984. we benefited from the $195.4-preferred stock for 1984 was $421.7 million. an increase million annual retail rate increases that we were granted of $117.2 million over 1983 eamings. Kilowatthour sales late in 1083. increased electricity sales that were the increased in all customer classifications in 1984 and result of growth in Georgia's overall economy and a totaled 59.1 billion. a 10.6 percent increase over last more aggressive marketing program also contributed to year. Total operating revenues increased 14.7 percent.
improved earnings. Retail kilowatthour sales increased giving the Company an all-time high of $3.1 billion.
5.8 percent. totaling 41.7 billion for the year.
Retum on average common equity for the year was our off-system marketing efforts are increasing.
i 18.43 percent.
This is one of the primary reasons the Company is on During the year. we achieved record earnings. re-solid financial footing. In 1979, the first year the Com-i directed ourselves toward stronger marketing strategies.
pany sold energy off-system in non-traditional ways. such i
I made major revisions in the Company's construction sales represented only.1 percent of Georgia Power's program, applied innovative financing techniques. and operating revenues in 1984, off-system sales amounted took actions to further improve our productivity and to 10.3 billion kilowatthours and represented 14.4 per-t l
efficiency.
cent of total operating revenues.
I t
NET INCOME OFF-SYSTEM SALES Mil as of Ddlars Millims of Ddlars i
500 500
(
400 l
400 f
i 300 300 t
i1 200 200 iOO iOO i
j 0
0 1980 1981 1982 1983 1984 1980 1981 1982 1983 1984 l
l 3
t
increased from $6.6 billion to $7.2 billion. With a 45.7 mettertO nVestors
- p.,c.nt o w n.,sh,p,nt.,.,t,n th. p, ant. o u,,h a,e,n-creased from $2.85 billion to $3.09 billion, or approxi-mately $240 million. The new projected cost of the Vogtle facility is attributable to increased engineering costs. a revision downward of productivity rates, and l
increases in wage and materials costs.
More than offsetting this increase. we cut or deferred j
more than $640 million planned for other construction The sale of an additional 5 percent of Plant Vogtle projects over the next five years. At the same time, the I
to the Municipal Electric Authority of Georgia (MEAG)
Company established a $250 million overall construc-further boosted our after-tax net income by $20.8 mil-tion reserve to cover possible cost increases. including lion for the year.
interest and inflation. The ne* tesult is an overall reduction in anticipated construction expenditures of Marketing takes new directions at least $150 million during the rest of the Plant Vogtle The establishment in 1984 of new marketing goals construction period.
for the Southem electric system is an indication of our There were several other events affecting construc-renewed emphasis on acquiring new customers and tion activities during 1984. As mentioned earlier we finding better ways for existing customers to use our sold 5 percent of Units I and 2 of Plant Vogtle to cc-product.
owner MEAG. Ownership of Plant Vogtle is now as fol-The Company's marketing strategies are currently lows: Georgia Power. 45.7 percent: MEAG. 22.7 per-aimed at selling power that is available when the de-cent: Oglethorpe Power Corp. 30 percent: and the city mand traditionally has been low-in winter and at night.
of Dalton.1.6 percent. The placement of the dome on The immediate focus is on the promotion of heat pumps Unit 2 at Vogtle was a milestone in the completion of and heat pump water heaters. We view an ir. crease in the plant. The 500-ton dome was lifted into place in the use of these appliances as a " win-win" situation.
October. Unit 1 is now about 75 percent complete.
since they efficiently and economically provide heat.
and Unit 2 is approximately 45 percent complete.
l air conditioning. and hot water for our customers. while Units I and 2 are scheduled for commercial operation making profitable use of the Company's generating sys-in 1987 and 1988. respectively.
tem. Our goals for 1985 include increasing sales by Also in October. one of Georgia Power's sister com-850 million kilowatthours above projected levels and panies. Gulf Power purchased 25 percent of Jnit 3 of helping dealers sell at least 15.000 heat pumps.
Plant Scherer. This unit is scheduled to go into opera-tion in 1987. We own 8.4 percent of Units I ar.d 2 of Construction program revised Plant Scherer. 75 percent of Unit 3. and 100 parcent A higher cost estimated for Plant Vogtle was ac-of Unit 4. At the end of the year. Unit 3 was 60 per-companied by major revisions in the balance of our cent complete and Unit 4 was approximately 6 per-construction program. The plant's estimated cost was cent complete.
GENERATING UNITS UNDER CONSTRUCTION at December 31.1984 mPlantSchererUn Rating Operation C omplete com pletion Nameplate commercial Perc ent cost at P
l i
l E'
Date at 12 3184 l
75.0 613.500 1987 60.0 581 Plant Scherer Unit 4 l
l 818.000 l
l l
l l
1000 1989 845 6.0 l
Plant Vogtle Unit !
l l
l l
l 2.263 l
45.7 1987 530.120 75.0 Nuclear Plant Vogtle Unit 2 l
l 530.120 l
l l
l 45.7 1988 823 45.0 Hydro Bartletts Ferry Units 5 & 6 100.0 108.000 1985 75.0 94
'f Rocky Mountain Units 1. 2 & 3 100.0 847.800 1991 15.0 895 3,
- Geory roar vertien enty eutukna amounts sold to wnt partwrants.
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innovative financing methods cpplied phase-in to begin with the commercial operation of In recent years. we have followed a financing phi-each unit and to continue for a period of three to six losophy designed to incorporate even greater flexibility.
years. The Georgia House of Representatives ad-This approach. which we refer to as prospective financ-iourned. however, before voting on the legislation. The ing. involves two major strategies-financing in advance bill will be pending before the House in the 1986 of required capital investment and maintaining broad legislative session. but there is no guarantee that ac-lines of credit. Recognizing that any delays in construc-tion will be taken on the proposal.
tion can be costly. we sell securities in advance of As construction enters the final stages, a maior focal need in order to ensure we will have the funds when point of the Vogtle project will be a series of hearings needed.
before a three-member panel appointed by the Nuclear Pollution control bonds and notes played an impor-Regulatory Commission. Public hearings-expected to tant part in our 1984 financing program. Because the begin in late 1985 or early 1986-will be held by the NRC interest is exempt from federal taxes for the purchaser, panel to determine whether Plant Vogtle meets strict 30-year pollution control bonds are issued at interest government standards for safety and. thus. can be rates some 2 to 4 percentage points below those of 30-year licensed to operate If the licensing process proceeds first mortgage bonds. Similarly, we pay lower interest on schedule fuel loading at Unit I is expected to take rates on pollution control notes than on other types. In place in September of 1986. Georgia Power then could 1964. we issued $540 million in pollution control bonds begin low-power testing and move to full-power opera-and at year end had $469 million in short-term pollu-tion and commercial startup as early as March of 1987.
tion control bond anticipation notes outstanding.
Right now. the completion and licensing of the Vogtle in addition to the issues of pollution control bonds. we nuclear facility and the inclusion of our portion of that sold $150 million in first mortgage bonds during 1984.
facility into the rate base are important concems for us in December of 1984. the Company also sold $50 We believe that in future years this plant will be among mit: ion of our first issue of adjustable rate preferred our most important assets as we strive to meet the stock at an initial c.vidend rate of 11.20 percent. The growth in Georgia Power's service area projected to rate for the first quarter of 1985 is 11.47 percent. The average 3 percent annually over the next decade To dividend rate will be reset quarterly based on the assure its successfulcompletion and operation we are highest among these three variables: the Treasury Bill building this facility to meet the highest quality rate the 10-year constant maturity rate. and the standards 20 year constant maturity rate for the dividend period.
Georgia Power is in an excel!ent position to con-The annual rate for any dividend period will be no tinue to provide electricity in one of the most rapidly less than 6.5. percent and no more than 14.5 percent.
growing states in the Sunbelt. The vast majority of the electricity we generate will come from coal-buming and ng msops M am &
nu Effklency and productivity improvements made pected to be the nations energy mainstays through the A third management improvement program. referred end of this century.
to within the Company as MIP-lil. was implemented in During this challenging period. continued support 1984. The program. which we announced in late 1983, from you and from the communities we serve is vital.
has among its goals improving efficiency and produc-We express our thanks for your support and we pledge tivity in the general office including a staff reduction of that we will work tirelessly for our investors and for 13 percent by the end of 1985. A significant step was the industries. businesses, and individuals who depend taken toward this goal in August, when. through a one-on electricity for their future prosperity.
time program.125 general office employees took early retirement.
In another move to improve productivity. we sp!it Sincerely, the area that was once Atlanta division into two divi-sions: East Metro and West Metro. Before the reor-ganization. the Atlanta division had more than 250.000 customers. After careful study. we concluded that the Pofert W. Schcirr territory could be managed more efficiently as tw Chair, nan of the Board divisions Looking ahead In another important development. a bill was passed by the Georgia Senate in February of 1985. re-a.es H. Millcr r.
quiring the Georgia Pub lic Service Commission to resHcnt phase into customer rates costs prudently incurred in the construction of Plant Vogtle The bill called for the March II.1985 5
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l Wfly has tfie cost of Plant Vogtle gone up l Has Georgia Pouer considered canceling so mucil?
Plant Vogtle?
You might look at it this way. If it took you 14 The simple truth is that the energy from Plant years to design. build and get proper govern-Vogtle will be needed. The economic well-being ment approvals on a new house, it obviously would cost of our state demands assurance of adequate electric significantly more at the end than it did when you first power. Without it. we would place a cap on economic decided to build it. You would have less than total con-growth and progress would halt. Plant Vogtle is a vital trol over the increased costs of your labor materials part of our efforts to see that this does not happen. It and interest rates.
will be a significant provider of electric 4y to our state Nev. regulatory requirements. including those after well into the next century.
the accident at Three Mile Island. tremendously increas-In addition. canceling the plant would bring our re-ed costs and substantially lengthened construction lead serve margins to dangerously low levels for a growing time. Longer construction schedulcs in turn intensified service area. The capacity from Plant Vogtle will be the impacts of inflation and financing costs. This was needed to meet the energy requirements of one of further compounded by sharp jumps in interest rates the fastest growing regions in the nation.
Between 1972 and 1982. interest rates on our new is-Another reason we can't cancel Plant Vogtle is that sues of first mortgage bonds rose from 7.5 percent to it would be an expensive proposition for us and our 17.5 percent.
customers. By the end of 1984, nearly $4 billion had These and other factors have resulted unavoidably already been invested in the plant. Furthermore. it's in much higher construction costs and longer lead not only Georgia Power making that investment. We times for all types of power plants-not just Plant Vogtle.
are just one of four groups which own the plant. Ogle-As an example. the cost to complete a coal-fired pow-thorpe Power Corporation. the Municipal Electric er plant has risen six-fold in the last decade and the Authority of Georgia and the city of Dalton own more time required for construction has increased. Further.
than half. There are contract obligations to these it should be pointed out that power generated from a co-owners.
newly planned coal-fired plant would be priced simi-Cancellation would cause electric rates to go up larly to that from Plant Vogtle.
without any of the benefits of Plant Vogtle's helping to assure Georgia adequate and reliable electric energy What are Georgia Pouvr's current reserte mar-ains of generating capacitu?
Why has the Plant's completion date been
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Georgia Power must have reserve capacity to guarantee customers reliable service. Generally.
There were delays for three basic reasons. First.
these planned reserves are in the range of 20 to 25 we had to suspend construction in 1974 for percent-or about 25 percent over the peak amount more than 2H years becat se of poor earnings and a used during any one hour of the year. Reserves allow tight money situation. Second. we have made adjust-for scheduled maintenance as well as for such uncer-ments in the timetable because of revised projections tainties as weather extremes. unexpected breakdowns in the growth rate in demand for electricity. Third. we unanticipated demand growth. and delays in start-up have had to meet new rege!atory requirements as well of new plants.
as respond to a significant number of NRC-mandated These uncertainties traditionally have reduced our changes in the wake of Tha e Mile Island.
planned reserve levels on peak days. For example.
Since the project was 'eactivated. all efforts have even though we anticipated a reserve margin of 30 concentrated on performing high quality work as percent in the summer of 1983. our actual reserves quickly and as safely as possible the day of the peak were less than 6 percent.
7
4 During one of the most dramatic events in 1984 construction activity, the Plant Vogtle Unit 2 dome is lifted 650 feet from its fabrication site to the top of the containment building.
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Georgia is the fourth fastest growing state in j
the nation and the increasing population will demand more electricity. This is something Georgia Power must plan for far in advance. it would be eco-j nomically disastrous to our state if we did not.
t We estimate that the peak demand for electricity in Georgia will grow in excess of 3 percent per year over t!'e next decade It also should be noted that even a relatively mod-erate growth rate such as this would produce a nearly 30 percent increase in electricity demand by the turn of the century-the equivalent of more than three times the canacity of both units at Plant Vogtle.
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While the present-day Georgia Cecil Miles, above right, and Harry worked in construction at Plant Hatch Power Company was started in the Gregory. opposite page. Plant vogtle come to Plant Vogtle. bringing with I
mid '20s. our forerunner compa-
,fy,7,3 {,8"y,',G y,h them the knowledge and experi-c
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nies go back roughly a century. A ence that can be gained only by joining the Vogtle team.
management chain that started in working at such a plant:' Gregory's the old Georgia Railway and Electric Company con-14 years in nuclear construction include eight years at j
tinues to this day. So does the tradition of building on Hatch and six years at Vogtle.
the knowledge and accomplishments of earlier opera-Georgia Power has also brought to Plant Vogtle tors and managers of the Company.
people with nuclear experience from other projects.
I One example is our nuclear operations We have Cecil Miles. who has headed the quality-related pro-been in the nuclear business since we started planning grams at Vogtle and Hatch. Once worked with DuPont Plant Hatch some 20 years ago.
at the Savannah River Nuclear Plant near Augusta.
r After the plant went lato operation in the mid '70s.
"During my career at Georgia Power. I've had a few l
many of the construction employees who helped build opportunities to move into higher management posi-t it-from management people down through the ranks-tions. but I've always felt I could make my most valu-i moved on to Plant Vogtle. Many of those who helped ab:e contribution in quality assurance. so that's where
[
build another nuclear plant in the Southern system.
I've stayed 'says the 14-year veteran employee.
I Alabama Power's Plant Farley in the 1970s. also now Miles started the Vogtle quality concerns program
(
work at the Vogtle project in engineering and licensing.
late in 1983. Through the program, anyone working at This ovenapping of construction schedules has the plant site may raise a quality-related question and l
helped us retain a core of experienced experts. a fact know that it will be addressed. A similar program has acknowledged in a Nuclear Regulatory Commission been established at Plant Hatch. " Experiences at other report on the nation's nuclear power plants prepared nuclear plants have taught us that if there is any doubt for Congress in 1984.
that any part of the plant is not built properly. that l
Tve been in construction all my working life" notes doubt should be cleared up as quickly as possible:'
j Harry Gregory, general manager. Vogtle nuclear con-explains Miles.
I struction department. "and I can tell you that building The NRC report noted that experience gave Georgia I
a nuc! car plant is not like building any other type. We Power "an understanding and appreciation of the com-l are fortunate to have about 200 people who had plexity of large nuclear station activities:'
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N Innovation.
Once the days of low fuel costs and Light Company increased from 415 rapidly rising demand for electricity megawatts in 1983 to 031 mega-
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were gone. electric utilities had to watts in 1984, contributing $228 4
look for new ways to operate their million to our 1984 revenues. This companies and market their prod-also has been very good for our i
uct. so that the companies remained off-system customers since it less-profitable while providing for the ens their dependence on oil and 4
needs of their customers. Georgia natural gas.
i Power has been a leader in finding During 1985. we will continue some of the new directions com-to pursue opportunities in the off-j i
panies are taking.
system markets.
While off-system sales are not To help us complete generating i
new to the electric utility industry.
plant construction projects during l
Georgia Power. through the South-times of rapidly escalating costs. we ern electric system. has taken some started a decade ago selling partial l
unprecedented steps in that area.
ownership in our generating facili-Bulk power sales to other systems ties. %b took as our largest part-i l
are making it possible for us to ners two Georgia electric groups j
have the financial resources to com-that had been our wholesale cus-
,1 plete our current construction prol-tomers for many years. Oglethorpe I
ects. Costs associated with these Power Corp. (first established as sales are not included in rates Oglethorpe Electric Membership charged to our Georgia customers.
Corp.). representing 39 customer-i
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Off-system sales rose from 7.1 owned electric membership corpo-billion kilowatthours in 1983 to rations. and Municipal Electric Au-l, 10.3 billion kilowatthours in 1984. a thority of Georgia. representing 46 45 percent increase. The Company municipalities and a county bought l
has increased sales by entering interests in Plant Hatch in the 1970s.
into two types of agreements for They. along with the city of Dalton.
l the sale of off-system power.
now own substantial portions of four i
Unit power sales provide for generating plants Georgia Power 1
the delivery of power from specific has built and is building. The Com-l generating units which have been pany in 1984 sold an additional 5 j
dedicated to these sales. Other percent of Plant Vogtle to MEAG.
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long term sales call for the delivery Rather than relying entirely on of specific amounts of power over traditional approaches to financing.
i a specified time period. if that we continually review market con-power is not needed in the ditions. tax laws and other factors Southern electric system. Total to find the most advantageous ways revenues from these sales in 1984 to sell our securities. In 1984. we amounted to $451 million.
undertook an unprecedented l
Our portion of the Southem amount of pollution control financ-j electric system s unit power con-ing. taking advantage of the lower tracts with the lacksonville Electric interest rates on tax-exempt j
Authority and Florida Power and securities.
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'lOTOUglness.
In recent years we have placed Another example of our com-
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renewed emphasis on excellence-mitment to thoroughness is the Readiness Review Program. through going well beyond the acceptable to which we are identifying early any the exceptional. Employees through-l out the Company are committed to issues that might arise during the this philosophy.
licensing process and minimizing j
i The Nuclear Regulatory Commis-potential delays by making certain j
sion (NRC). in a report released to those issues have been addressed Congressin mid-1984. complimented to the NRC's satisfaction.
construction work at Plant Vogtle.
Licensing a nuclear power plant
^
l The report noted. "At all levels in is a massive process that requires
,n,,y e th es ns of arlous types the management structure. the con-of materials and equipment.
hearings. evaluations. inspections.
4 viction appeared to prevail that and vast amounts of paperwork.
j public safety and Company profit-Both awards were based on number Through Readiness Review. we are i
ability demand assurance of quality of lost-workday accidents per man-making this process more manage-in construction and operation of hours worked.
able by breakingit down into phases.
l nuclear plants. and that it is less In May of 1984. Plant Vogtle A task force of 40 employees from expensive in the long run to 'do became the second Georgia Power Georgia Power and Southern Com-j the job right the first time: Em-construction site to be admitted pany Services evaluates each phase ployees at all levels appeared to to the Occupational Safety and of design, construction. and prepa-have a constructive attitude toward Health Administration's STAR pro-ration for operation to be sure it the need for quality in general and gram. Plant Scherer was inducted has been completed correctly and the proper application of quality last year. Vogtle was both the largest in accordance with NRC require-3 assurance, in specific:'
project and the first nuclear project ments. Also. an independent design j
!.ater in the year. the Company admitted to the b7AR program.
review group. working parallel to j
received another recognition from STAR members have demonstrated the task force. includes outside ex-the NRC. The agency's eva!uation such excellent safety standards. ex-perts from the electric utility indus-t of the Plant Hatch emergency drill ceeding what the government re-try who provide in-depth verifica-in August indicated that the exercise.
quires. that they are exempt from tion of the design of selected plant held as an annual event to satisf y routine OSHA inspections. Of the systems. As evaluation of each licensing requirements proceeded 17 projects in the STAR program.
phase is completed. we are able to flawlessly. The NRC said it found Vogt!e and Scherer are th<. only say to the NRC. "We're ready for i
l "no violations or deviations" in two that belong to a utility.
you to come in and inspect us on i
the drill.
Thirty members of the Vogtle this part of the project."
The Edison Electric Institute and project s top management team At the end of this Readiness the National Safety Council both moved in early 1984 from Georgia Review process. the NRC will have recognized our Company in 1984 Power headquarters to the con-reviewed essentially everything l
for having the best 1983 safety struction site. In,ddition. about weNe done to meet its criteria.
I record among investor-owned utili-300 engineering specialists from i
ties with 1000 or more employees.
Pechtel Power Corporation.
I Westinghouse Electric Company.
Georgia Power, and Southern Company Services now work full time at the plant.
14 I
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The InstaBatten of new lasulators near '
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la recent years. Georgia Power has August of 1984 marked the sec-Council was formed last year to moved more and more toward a ond anniversary of a management replace several standing executive team management approach. In improvement program (PACE) that committeess Composed of executive l
addition to involving an increasing encourages employee participation vice presidents and senior vice pres-l number of employees at all levels in the generating of ideas and the idents. this Council interprets direc-I in the decision-making process. the solving of problems. This is done tion from the office of the CEO and l
Company has initiated more inter-principally through quality circles recommends policy for approval by action between top executives and and problem-solving teams. At the the office of the CEO and. in some fellow employees.
end of 1984. Georgia Power had cases the Board of Directors.
more than 500 quality circles and Having all of these executives on more than 4.000 employees par-a singic committee has improved ticipating. " Quest fcr Excellence" communication among Company l
an ongoing performance improve-organizations. This system prevents
~y A
ment project. is another compo-possible conflicts or duplications nent of PACE.
between departments.
l To make more efficient use of Project boards for each of Georgia senior officers l time. a Management Power's major construction projects l
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new Atlanta Metro Group. At right,
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16
Securitle.s scles take Bob Scherer.
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...-:-;? ?.'_*;.. ,. k 7 g ,_: l.,y _ S....in ; ,n..s .p.-'. j 9;.: ;__g-% _( L. g.7 p e -+ Atlanta. opposite page, and the sur-rounding area is the site of much of Georgia's eenmercial and industrial growth, including, top right. the Itavinta building in nor6 Atlanta and g,-... M; ?: - q Midtown Plaza, at right. The YKK Zip- '., 9'.
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C '. per Ca in Macen. top left. and the O. ' '~. g,.f. l. , " j'.h./.y:# "% 4-Firestone building in Albany. abieve. ,f* t - are examples of growth pisewhere In .. l l;. . the. tats . ;.. v.35[7:f,, \\.1. 3; ji,(~ '. i>;. *..*.a . c... ?e .g ,' ?'* A..'. ? %' r,.... hm.. %& ~. W [ } F.O.. A 4, h... v s ~ a . m V.4... - u;' gen, gig,. , :~ w.. g >.., + .+ : \\- h / .t . ; t... n.. e ce i .+.
~.. l h t Invovement i Citizenship and community service are among our another way Georgia Power works hand-in-hand with i oldest traditions Rooted in the belief that good cit-the communities we serve Last year, the Georgia Chap-I izenship is good business, these traditions have existed ter of the Wildlife Society presented us its Industry since the Company's earliest history. However, the Wildlife Conservation Award for the Company's wildlife methods of serving and interacting with the commurity management activities in central Georgia. We are cur-t have changed as the needs and interests of the com-rently working with the Georgia Department of Natural munity have changed. Resources officials to find the best ways to protect two The movement of businesses to suburban areas has endangered plants found on Company land-persistent been a damaging trend for the state's downtown areas. trillium and baptisia arachnifera. and we are taking an active role in helping to revitalize Other community involvement projects include the Georgia's downtowns. Through our Downtown Georgia Summer Youth Program, which in 1984 completed its program, we are working to third year of helping disadvan-attract newcommercialbusiness P ~, ~ and the Lend A Helping Hand taged inner-city youngsters. to sagging downtown areas. ~
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The Company itself set an ex-
- L Program. which was recently i
ample in June of 1984. when SW O.Q recognized by the Georgia we moved our Macon division U Govemor's Office of Energy } ~ offices into the remodeled Resources for its innovation in 68-year-old train terminal hiring senior citizens. l Our time-honored slogan. l building in the heart of the city. "A Citizen wherever We Serve" l When a major exhibition of Chinese culture. science reflects a commitment felt by empt yeesthroughouttheCom-l and technology was brought p ny Am ng w m re 6an to Atlanta in November of 1984 14.500 employees arc volun-by the Georgia Institute of teer firemen. local and na-l i Technology. we were one of tional officers in civic organiza-20 corporate sponsors. The tions. counselors in youth pro-exhibit. called " China: 7.000 grams, charity fund raisers. and Years of Discovery" attracted many others who work tirelessly thousands of visitors each to make their communities week from throughout the f better places to live President i state and from nearby states-Jim Miller is among those vol-By helping to sponsor one of unteers.1.ast year he headed i the largest cu'tural events to oneof the United NegroCollege come to the United States, we Fund's most successful Atlanta l L encouraged the type of cultural campaigns. helping to raise l activities that make Georgia a .'~y more than $730.000 for the highly desirable place in y scholarship foundation and l l which to live and work. exceeding the organization's l l Environmental protection is The building that was once The Augusta Hotells Campaign goal. l becoming more modern and more energy ef ficient i through Georgia Power's Downtown Georgia program. Renovation, which includes the installation of a heat pump, is making the structure suitable for use as an office building. i 22 l i
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Se ectec. Financial Data,oottsas,s 1soussmos, Years Ended December 31 1984 1983 1982* Condensed Income Statement: Operating Revenues $ 3.132.880 S 2.730.574 S 2.457.201 Operating Expenses: Opera' ion and maintenance. 2.071.136 1.775.903 1.622.200 Depreciation and amortization. 191,205 176.735 162.796 Taxes other than income taxes. 106.908 95.797 93.271 Federal and state income taxes 268.654 231.565 185.944 Total operating expenses. 2.637,9,0_3 2.280.000 2.064.211 Operating Income 494.977 450.574 392.990 Other Income, Net. 206.76{ 129.093 97.908 Income Before Interest Charges 701,743 579.667 490.898 Net Interest Charges. 224.407 219.544 206.495 Income Before Change in Method of Recording Revenues 477,336 360.123 284.403 Cumulative effect as of January 1.1982 of accruing unbilled revenues. less income taxes of $22.320t000). 23.009 Net Income. 477.336 360,123 307.412 Dividends on Preferred Stock. 55.617 55.568 48.468 Net income After Dividends on Preferred Stock. S 421,719 $ 304.555 S 258.944 Pro Forma Net income After Dividends on Preferred Stock assuming change in method of recording revenues was applied retroactively N/A NIA $ 235.935 Cash Dividends Declared on Common Stock. $ 225.500 S 189.600 $ 154.700 Return on Average Common Equity tpercent). 18.43 15.86 16.14 Total Assets $ 7.880.072 S 6.746.247 S 6.159.663 Capitalization: Common stock equity. $ 2.486.172 S 2.089.171 S 1.751.186 Preferred stock 482.844 432.844 432.844 Preferred stock subject to mandatory redemption. 127,500 131.250 135.000 Long-term debt. 3.432.606 3.128.500 2.997.760 Total capitalization. $ 6.529.I22 S 5.781.765 $ 5.316.790 Gross Property Additions.. $ 1.396.846 $ 1.015.274 S 912.145 Kilowatthour Sales (in thousands): l Residential. I I,548,787 11.443.257 I l.075.560 Commercial. 10,902.163 10.181.953 9.890.108 Industrial... 18.862,531 17.415.441 16.203.691 Sales for resale. 7.113.291 6.919.459 7.342.957 Other. 342.047 331.804 320.893 Total territorial sales. 48.768.819 46.291.914 44.833.209 Sales to utilities outside territory. 10.285.892 7.116.061 4.869.513 Total kilowatthour sales. 59.054.711 53.407.975 49.702.722 Operating Revenues: Residential.. $ 754.163 $ 686.269 S 645.289 Commercial. 739,035 649.932 625.446 Industrial.... 858.536 747.305 711.085 Sales for resale. 277.848 275.148 284.206 Other. 24.388 20.972 19.439 Total revenues from territorial sales. 2.653.970 2.379.626 2.285.465 Revenues from sales to utilities outside terntory. 450.928 323.671 147.565 lbtal revenues from sales O electricity 3,104.898 2.703.297 2.433.030 Other revenues. 27.982 27.277 24.171 Total operating revenues $ 3.132.880 $ 2.730.574 S 2.457.201 Average Revenue Per Kilowatthour-Total Sales (cents).. 5.26 5 06 4.90 Average Cost of Fuel Per Net Kilowatthour Generated Icentsi I.85 1.82 1.84 Customers lend of year). l.352,235 1.311.063 1.272.859 Employees lend of year). 14.562 14.535 14.076
- In 1982. the Company inan aaruin rewnues for servues rendered i,ut uninlied. See Note I to the fmandal rtatements 24 i
Georgia Power Company 1981 1980 1979 1978 1977 1976 1975 1974 S 2.015.810 S 1 808.408 6 1.519.942 $ I.475.024 S l.301.237 $ 1.170.046 $ 1.079.175 S 787.919 1.326.359 1.087.389 935.210 921.465 813.987 690.953 615.343 515.497 157.336 153.245 133.888 118,208 109.944 100.347 89.677 80.087 83.780 71454 67.736 65.364 58.939 53.630 46.548 37.203 141.196 178.032 118.424 126.953 118.514 94.645 109.007 8.213 I.708.671 1.492.120 1.255.258 1.231.990 1.101.384 939.575 860.575 641.000 307.139 316.288 264.684 243.034 199.853 230.471 218.600 146.919 76.222 71.974 67.119 52.510 67.400 62.857 75.188 65.631 383.361 388.262 331.803 295.544 267.253 293.328 293.788 212,550 170.901 157.693 151.505 129.050 125.087 144.348 136.207 126.665 212.460 230.569 180.298 166.494 142.166 148.980 157.581 85.885 212.460 230.569 180.298 166.494 142.166 148.980 157.581 85.885 40.366 35.224 34.786 30.480 30.480 27.862 18.451 17.190 $ 172.094 S 195.345 S 145.512 $ 136.014 S 111.686 S 121.118 S 139.130 S 68.095 $ 175.515 S 196.709 $ 140.706 S 137.236 S 117.086 $ 121.978 $ 142.763 S 69.094 S 131.000 $ 136.400 $ 131.100 $ 119.225 $ 109.400 $ 100.400 $ 100.000 75.700 12.41 15.47 12.21 12.04 10.51 12.06 14.90 8.16 S 5.271.846 $ 4.728.977 S 4.341.295 $ 4.084.794 S 3.803.627 S 3.591.063 S 3,352.590 S 3.263.623 S 1.458.240 S 1.314.315 S 1.210.868 S l.173.036 $ 1.086.247 $ l.038.961 S 969.057 S 898.397 357.844 357.844 357.844 307.844 307.844 307.844 257.844 257.844 138.674 67.500 71.250 75.000 75.000 75.000 75.000 2.667.372 2.326.627 2.168.272 1.953.553 1.880.798 1.827.470 1.757.541 1.514.705 $ 4.622.130 $ 4.066.286 S 3.808.234 S 3.509.433 $ 3.349.889 S 3.249.275 S 3.059.442 S 2.670.946 $ 730.454 S 690.959 $ 607.616 S 500.719 S 534.153 S 404.435 $ 438.097 $ 662.683 11.153.588 11.297.518 10.340.375 10.829.488 10.470.674 9.512.592 9.260.034 9.013.966 9.464.443 9.184.086 8.735.947 8.827.281 10.278.012 9.712.599 8.795.788 8.508.118 16.813.165 16.299.666 16.225.971 15.682.025 13.236.290 12.629.263 11.654.106 12.296.202 7.361.961 7.127.310 7.632.216 8.580.211 9.617.229 9.262.454 9,095.581 8.590.045 306.724 294.700 246.055 226 113 216.621 213.058 204.009 197.065 45.099 881 44.203.280 43.180.564 44.145.118 43.818.826 41.329.966 39.009.518 38.605.396 2.642.547 2.102.461 54.128 ' 47.742.428 46.305.741 43.234.692 44.145.118 43.818.826 41.329.966 39.007.518 38.605.396 $ 540.004 S 514.860 S 414.500 $ 417.696 S 358.933 S 31).226 S 301.541 $ 223.417 499.653 454.049 386.176 369.808 385.889 355.405 317.879 233.342 608.713 547.256 488.044 449.719 328.407 290.983 275.591 194.962 251.572 205.030 204.280 213.310 203.914 191.110 166.777 122.316 15.428 14.169 10.971 9.856 8.957 8.542 8.012 6.688 1,915.370 1.735.364 1.503.971 1.460.398 1.286.100 1,161.266 1.069.800 780.725 82.048 56.911 1.261 1.997.418 1.792.275 1.505.232 1.460.398 1.286.100 1.161.266 1.069.800 780.725 18.392 16,133 14.710 14.626 15.137 8.780 9.375 7.194 S 2.015.810 S 1.808.408 S 1.519.942 S 1.475.024 S 1.301.237 $ I.170.046 S 1.079.175 S 787.919 4.18 3.87 3.48 3.31 2.94 2.81 2.74 2.02 1.66 1.51 1.42 1.37 1.27 1.12 1.11 0.91 1.249.126 1.215.714 1.192.770 1.164.822 1.138.470 1.112.063 1.083.646 1.078.223 13.451 13.034 12.522 12.067 11.485 10.194 9.052 9.385 25
l l Manage 111ent's l l Discussion & na sis ResultsofOperatiods l Wholesale (8.8%) Georgia Power's net income after dividends on preferred Off-System Sales (14.4%) stock for 1984 was $421.7 million which provided an 18.43% return on average common equity. Eamings for 1984 in-e Residentia creased $117.2 million or 38.5% over 1983 earnings and $162.8 million over 1982 results. Included in 1984 net in-Industrial come was a S20.8 million gain. net of taxes, on the sale of (27.4%) (24.1%) a 57 interest in Plant Vogtie. Net income in 1982 was in-creased $23.5 million as a result of a change in the Compa-ny's method of recording revenues. i REVENUES Increases in operating revenues are the result of rate increases recovery of increased fuel costs and in-creased energy sales. Retail revenues for 1984 increased ' S271.6 million or 12.9% over 1983 and $374.9 million or Commercial (23.6%) 18.7% over 1982. The increase for 1984 reflected a full year l of increased retail rates granted in late 1983 and a 5.8% in-1984 crease in kilowatthour sales due to an expanding economy OPERATING within the Company's service area. The Company was REVENUES granted a $108.9 million annual retail rate increase effective September.1983, and an additional $86.5 million annual retail rate increase effective October,1983. Off-system sales revenues increased $303.4 million from 1982 to 1984. This increase was the result of increased power sales to off- 'lhxes (14.2%) system utilities due primarily from additional sales agree-Depreciation & ments. 'Ibtal off-system sales amounted to $450.9 million. $323.7 million and $147.6 million in 1984.1983 and 1982. Amortization Fuel 37.9%) (7.3%) respectively. See "Off-System Sales Agreements" in Note 4 i to the financial statements for additional information on l these agreements. 1btal kilowatthour sales increased 10.6% in 1984 and 7.5% in 1983 for a cumulative increase of 18.8% from 49.7 billion kilowatthours in 1982 to 59.1 billion kilowatthours in Other 1984. The primary reason for this increase was increased Operation & retail sales and additional sales to off-system utilities. Retail Maintenance sales increased 11.1% to 41.7 billion kilowatthours and off-(24.3%) system sales increased 111.2% to 10.3 billion kilowatthours Purchased Ibwer (16.3%) for the period 1982 to 1984. The combined 1984 demand of the Company's customers and the customers of Ogle-1984 thorpe Power Corporation (OPC). the Municipal Electric OPERATING Authority of Georgia (MEAG). and the City of Dalton reached a summer peak of 12.061 megawatts on June 20. EXPENSES 1984. and a winter peak of 10.073 megawatts. The 1983 summer and winter peak demands were 12.527 and 9.304 I megawatts. respectively. I 26
EXPENSES lbtal operation and maintenance expenses, in-ings. It is expected that higher operating costs and carrying
- ciuding fuel and purchased power. Increased in 1984 due charges on increased investment in plant, if not offset by primarily to increased energy requirements. These ex-proportionate increases in operating revenues (either by penses totaled $2.1 billion in 1984, an increase of 16.6%
periodic rate increases or increases in sales) or expense over 1983 and 27.7% over 1982. Net purchased power ex-reductions. will adversely affect future eamings. In recent . penses increased from $305.4 million in 1982 to $429.5 years. eamings have tended to decline during periods fol-million in 1984. This increase was primarily the result of the lowing the full 12 months' realization of general rate in-purchase of capacity and energy from jointly owned plants creases and prior to the receipt of further rate increases, in accordance with contractual agreements. Additionally. Future increases in sales will be affected by the rate of eco-energy was available at times from the Southern electric nomic growth in the Company's service area. the weather, system power pool at a lower cost than the Company's cost the elasticity of demand. energy conservation. and market to produce equivalent energy. Fuel costs increased $172.1 conditions applicable to neighboring utilities. million from 1982 to 1984. Under fuel cost recovery provi-Additionally. future earnings potential is contingent upon sions, the Company is entitled to recover the actual cost of successful completion of the Company's construction pro- ' fuel bumed and the energy portion of purchased power gram. including Plant Vogtle a two-unit nuclear facility cur-transactions. See Note 2 to the financial statements for in-rently under construction. See Note 3 to the financial formation conceming a recent application to the Georgia statements for further information about the construction ~ Public Service Commission (GPSC) for an increase in the program. fuel cost recovery rate . increases in depreciation and amortization each year are due principally to the continued growth in depreciable plant in service The composite straight-line depreciation rate was FinancialConditon approximately 3.7% in 1984 and 1983 and 3.6% in 1982. Fluctuations in income taxes resulted from changes in pre-tax income Federal and state income tax provisions are detailed in Note 5 to the financial statements. Gross property additions for the period 1982 through 1984 Net interest charges increased to $224.4 million in 1984 totaled $3.3 billion. These additions included construction from $219.5 million in 1983. While the Company has in-of maior generating projects. and the constructing and up-creased long-term borrowings, the effect of this has been grading of transmission and distribution lines. substations partially offset by an increase in the capitalized portion of and other facilities. The funds for gross property additions interest charges. were provided as follows: While the rate of inflation has decreased. inflation still oonars in husands etwent ondtal continues to have an adverse effect on the Company due 0982 through 1984) Funds Provided to regulatory constraints and the large investment in utility Net Funds Provided Frorn: plant. See Note 10 to the financial statements for supplemen. operations... si.336.326 40.2% . tary information conceming the estimated effects of inflation. ndng and otha Soms. 8 ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION ' Allowance for Funds Used During Construction (AFUDC) re-See the Statements of Sources of Funds for Gross Property presents the cost of capital for utility plant under construc-Additions for further details of the past three years. l tion which is presently not included in rate base The equity portion of this credit represents non-cash income However. CAPITAL STRUCTURE The Company's capitalization ratios
- pormalization of the income tax effect of the debt portion continued to improve during 1984. The Company's com-results in a non-cash charge against income. Additionally.
mon equity ratio was 38.1% at December 31.1984, as com- - previously capitalized amounts are increasing current cash pared to 36.1% at the end of 1983 and 33.0% at December flow significantly since revenues are higher because of in-31.1982. The composite interest rate on long-term debt in-creased rate base and additional depreciation expense. creased from 9.39% at December 31.1981 to 10.62% at ' AFUDC. net of income taxes. as a percent of net income December 31.1984 and the composite dividend rate on after dividends on preferred stock amounted to 57% in preferred stock rose from 9.19% to 9.91% during this same - 1984. 52% in 1983 and 40% in 1982. This ratio has risen period. b2cause of an increasing Jevel of construction work in prog-resss a significant portion of which is applicable to the Com-CAPITAL REQUIREMENTS The Company currently esti-pany's ownership interests in Plant Vogtle (nuclear) and mates that gross property additions during the period 1985 Plant Scherer (fossil). through 1987 will total approximately $4.4 billion. In addi-FUTURE EARNINGS POTENTIAL The results of operations . discussed above are not necessarily indicative of future eam-continued 7. 27 i
Management's Discussion &Anaysis FinancialCondition Actual constructica expenditures. including AFUDC. ap-plicable to the Company's 45.7% ownership interest. as of December 31.1984. were $1.6 billion for Unit No. I and common facilities and $313 million for Unit No. 2. The total tion these amounts reflect. for the total construction pro-estimated construction cost to completion of the Company's gram. a financial and economic contingency reserve of current ownership share. including AFUDC. is $2.3 billion $250 million covering the remaining period of construction and $823 million for Unit No. I and common facilities and for Plant Vogtle for possible increases in interest costs, the Unit No. 2. respectively. rate of inflation. escalation and direct construction costs Estimated total plant additions at completion for Plant and uncertainties in nuclear regulation or other as yet Vogtle were increased from $6.6 billion to $7.2 billion in undefined economic pressures. August.1984. This represented an increase of $240 million The construction program is subject to revision depend-(8.4%) for the Company's 45.7% ownership interest. This ir.- ing upon such factors as changes in business conditions: crease reflected. among other things. then current esti-fluctuating rates of load growth; environmental require-mates of engineering costs. staffing levels and wage and ments: design changes in nuclear plants to meet changing materials costs. as well as a revision downward of certain requirements: unforeseen nuclear plant licensing require-productivity rates. As previously reported. the projected ments: equipment delivery schedules; increasing costs of productivity rates were higher than those then being ex-labor, equipment and materials: cost of capital and the perienced at the plant. Since August.1984, productivity granting of timely and adequate retail rate increases by ap-rates have improved. although not as much as was forecast. propriate commissions At December 31.1984, substantial if the Company's continuing efforts to improve productivity purchase commitments were outstanding in connection with rates further are not successful, a portion of the $250 mil-the construction program and for the purchase of coal and lion financial and contingency reserve included in the Com-nuclear fuel under long-term contracts. pany's construction program could be required for Plant The US. Environmental Protection Agency has proposed Vogtle. new air quality control regulations relating to the stack At the conclusion of the 1985 legislative session in height requirements of the Clean Air Act. which could re-March, there was pending before the Georgia House of quire construction of costly flue-gas desulfurization equip-Representatives a bill that would require the GPSC to ment or use of more expensive low sulfur fuel at affected phase the Company's prudently incurred construction costs coal-fired generating facilities. The regulationss as proposed. for Plant Vogtle into its retail rate base. See " Regulatory would have a significant effect on certain facilities. However. Requirements" in Note 3 to the financial statements for fur-the ultimate impact cannot be accurately determined until ther details on this pending legislation. final regulations are promulgated and the state environmen-it will be necessary for the Company to finance part of tal agencies determine what actions must be taken by the its construction program from the issuance of preferred Company to comply with the regulations. The application stock and long-term debt. The Company must receive ap-of such regulations to the Company's plants currently in proval of the GPSC and the Securities and Exchange Com-service or under construction is uncertain. In addition, in mission (SEC) before issuing such senior securities. See the past few years several bills have been before Congress " Financing" in Note 3 to the financial statements for further conceming acid rain which would make additional pollution information on the Company's financing applications. control equipment mandatory for coal-fired electric power Approximately S76 million will be required in the 1985 plants. The enactment of legislation or regulations mandat-to 1987 period in connection with the present sinking fund ing reductions in sulfur emissions in the service area of the requirements and maturities of long-term debt and Company would substantially increase capital requirements preferred stock subject to mandatory redemption. andbr operating costs. The U.S. Treasury Department has proposed tax legisla-Georgia Power's construction program includes Plant tion that would greatly curtail accelerated depreciation and Scherer (fossil) located near Forsyth. Plant Vogtle (nuclear) investment tax credits. Although the 'lteasury proposal is located near Augusta, the Rocky Mountain Hydro Project expected to be substantially altered during the legislative located near Rome and the Bartletts Ferry Hydro Project process, any decrease in the availability of these two items located near Columbus. would require the Company to obtain the funds from other Plant Vogtle consists of two nuclear generating units sources. with planned commercial operation dates of March 1987 It is anticipated that the funds required for construction and September.1988 for Units Nos. I and 2. respectively. and other purposes will be derived from sources in form At December 31.1984. Unit Not I was approximately 75% and quantity similar to those used in the past. However. complete and Unit No. 2 was approximately 45% complete. the type and timing of financing will depend on market 28
CAPITALIZATION Billats of Ddlars 7 6 l l l 5 nu 1 nterest charges on first mortgage bonds is requireJ for the issuance of additional bonds and a coverage of one and one-half times annual interest charges and preferred stock dividends is required for the issuance of additional preferred stock. The coverages for the years ended Decem-4 ber 31.1984 and 1983. were 2.51 and 2.40. respectively for bonds and 1.77 and 1.80. respectively. for preferred stock. The improvement in first mortgage bond coverage is pri-marily due to improved earnings in 1984 resulting from the 3 effects of 1983 retail and wholesale rate increases and to increased energy sales. primarily to off-system utilities. The reduction in preferred stock coverage resulted from the an-nualized interest and dividend requirements of pollution 2 control obligations and preferred stock issued in 1984. To provide flexibility. the Company issues senior securi-ties in advance of actual cash requirements. placing the pro-l ceeds from these sales in temporary cash investments. To I indicate the impact on the common equity ratio and cover-age ratios which results from this prospective financing ap-proach. these ratios also are computed on an adjusted basis. The adjustment deducts temporary cash investments. up to O the amount of senior securities issued during the year. from 1980 1981 1982 1983 1984 fong-term debt and total capitalization before computing O Debt the common equity ratio. and eliminates the impact of such Preferred Stock Common Equity security issues on the applicable interest and dividend re-quirements associated with the coverage ratios. This adjust-ment would result in an increase in the reported 1984 com-mon equity ratio from 38.1% to 39.3% and an increase in conditions. maintenance of adequate eamings and regula-the reported 1984 bond coverage from 2.51 to 2.70 and an tory authority. increase in the preferred stock coverage from 1.77 to 1.86. At December 31.1984. the Company had $462 million The ability to maintain the required coverages. to gener-of temporary cash investments to assist in meeting cash re-ate funds for day-to-day operations and to finance the con-quirements. To provide additional financing flexibility. the struction program is dependent on receiving adequate and Company also had revolving credit agreements totaling timely rate increases. The Company is cammitted to main- $1.565 billion with eleven banks. The agreements cover the taining financial integrity by continued emphasis on operat-six-year period erding December 31.1990. During the term ing efficiency and by pursuit of rate increases when appro-of these agreements. the Company may convert short-term priate. Should the Company be unable to obtain funds from borrowings into term loans. Such term loans would be pay-external sources in amounts which, together with internally able in 12 equal quarterly installments during the years generated funds, will be adequate to carry out tne present 1991 through 1993. or at an earlier date at the Company's construction program. delays or cancellations of certain option. Such term loans are subject to authorization from projects could become necessary. A delay could result in the GPSC and the SEC. Also. the Company has S120 mil-significant additional construction costs. lion in other lines of credit subject to annual renewal. No other short-term bank loans associated with the revolving credit agreement or lines of credit were outstanding at year-end. At December 31.1984, the Company had drawn down from the depositary $109.4 million of the $469 mil-lion of short-term pollution control bond anticipation notes outstanding with various maturities in 1985. The Company must comply with certain earnings cover-age requirements contained in its mortgage indenture and corporate charter to issue additional first mortgage bonds and preferred stock. An earnings coverage of two times an-29
T STATEMENTS OF InCO1Tle IN THOUSANDS Georgia Power Company Years Ended Dece Tiber 31 1984 1983 1982 Operating Reventes. $3.132.880 $2.730.574 $2.457.201 Operating Expenses Operation-Fuel. I,000.434 884.037 828.340 Purchased and interchanged power. net. 429,522 339.958 305.437 Other. 412,803 361.642 313.817 Maintenance.... 228.377 190.266 174.606 Depreciation and amortization 191,205 176.735 162.796 Taxes other than income taxes. 106,908 95.797 93.271 Federal and state income taxes. 268.654 231.565 185.944 Tbtal operating expenses 2.637,903 2.280.000 2.064.211 Operating Income. 494.977 450.574 392.990 Other Income (Expense) Allowance for equity funds used during construction. 162.057 107.682 70.593 Gains on sales of facilities. 48,914 6.939 Interest income 34.074 37.234 42.891 (601) (895) 92 Other, net. (37.678) (14.928) (22.6a Income taxes applicable to other income. Income Before Interest Charges. 701,743 579.667 490.898 Interest Charges Interest on long-term debt.... 35I,855 315.443 267.863 Allowance for debt funds used during construction (150,931) (99.845) (65.109) Amortization of debt discount. premium and expense. net 1,680 1.485 1.256 Other interest charges. 21.803 2.461 2.485 Net interest charges 224.407 219.544 206.495 Income Before Change in Method of Recording Revenues. 477,336 360.123 284.403 Cumulative effect as of January 1.1982 of accruing unbilled revenues. less income taxes of $22.320(000) (Note 1). 23.009 Net income 477,336 360.123 307.412 Dividends on Preferred Stock. 55.617 55.568 48.468 Net income After Dividends on Preferred Stock. S 421.719 S 304.555 S 258.944 STATEMENTS OF Earnings Retainec inthe Business is TsOusAsos Wars Ended December 31 1984 1983 1982 Balance, beginning of period. S 528.223 $ 413.299 $ 311.487 Add (deduct): Net income after dividends on preferred stock 421,719 304.555 258.944 Cash dividends paid on common stock (225.500) (189.600) Il 54.700) Preferred stock issuance expense. (1,378) (31) (2.432) Balance, end of period. S 723.064 $ 528.223 S 413.299 85e'r"Paic-In a3 ital is1sOusAsos Years Ended December 31 1984 1983 1982 Balance, beginning of period. $ 1,213.800 $ 990.800 $ 799.800 Cash contribution to capital by parent company. 202.000 223.000 191.000 Balance, end of period. S I.415.800 S1.213.800 S 990.800 The accompanying notes are an integral part of these statements. 30
STATEMENTS OF Sources or,Func s r,or Gross Property ccitionsiNTsousANos ceOrgia Power Company Years Ended December 31 1984 1983 1982 Funds from Operations: Net income. $ 477,336 $ 360.123 S307.412 Add (deduct) principal noncash items-Depreciation and amortization. 219.301 209.733 191.394 D2ferred income taxes, net.. 145,266 143.511 129.334 Deferred investment tax credits. 61,252 83.266 78.183 Allowance for equity funds used during construction. (162.057) (107.682) 170.593) 741,098 688.951 635.730 Less-Dividends on common stock. 225,500 189.600 154.700 Dividends on preferred stock. 55.617 55.568 48.468 281.117 245.168 203.168 Net funds prov'ded from operations. 459.981 443.783 432.562 Funds from Financings and Capital Contributions: First mortgage bonds... 150.000 125.000 2 5G.000 Bonds retired. reacquired. or refunded at maturity (26.084) (18.273) (20.030) 123,916 106.727 229.970 Preferred stock 50.000 75.000 Preferred stock reacquired (2.380) (4.378) (666) Capital contributions from parent company. 202.000 223.000 191.0N) Pollution control obligations. 190,577 28.827 96.194 Increase (decrease) in other long-term debt. (276) 3.617 4.082 Pollution control bond anticipation notes payat,le. 109.356 Net funds provided from financings and capital contributions. 673,193 357.793 595.580 Funds from Other Sources: Decrease (increase)in temporary cash investments (164,540) 238.746 (200.509) Decrease (increase) in other net current assets (excluding notes payable and long-term debt and preferred stock due within one year)......... 108,400 (64.287) 67.459 Sales of property net Look value. 269,283 19.562 Other-net (including allowance for equity funds used during construction). 50.529 39.239 (2.509) Net funds provided from other sources. 263.672 213.698 (I15.997) Gross Property Additions l including allowance for funds used during construction in the amount of $240.7981000)in 1984. SI58.455(000)in 1983 and $103.642(000)in 1982l. $ 1.396.846 S t.015.274 $912.145 i The accompanying notes are an integral part of these statements. 31
Balance Sheets iNTsousANos ceorgia Power Company December 31 1984 1983 ASSETS Utility Plant Plant in service. at original cost... $6,195,791 $5.813.075 Less-accumulated provision for depreciation. 1,701,484 1.543.689 4,494,307 4.269.386 Nuclear fuel. at amortized cost 23I,456 204.162 Construction work in progress (Note 31. 2.694,628 2.038.763 Total. 7,420,?91 6.512.311 Less-property-related accumulated deferred income taxes. 873.')24 771.671
- Total, 6,547, y 5.740.640 Other Property and Investments Southern Electric Generating Company. at equity.
16,804 18.003 Nonutility property. net 21.339 4.520 Total. 38.143 22.523 Current Assets Cash. 22,608 19.755 Temporary cash investments. at cost 462.403 297.863 Receivables-Customer accounts receivable. 233.505 212.606 Accrued utility revenues 44,504 55.864 Other accounts and notes receivable 86,665 30.671 Affiliated companies. 32.627 30.131 Accumulated provision for uncollectible accounts. (2,600) (2.896) Fossil fuel stock. at average cost 289,807 230.758 Materials and supplies. at average cost. 67,861 61.138 6.697 8.093 Prepayments..... 26.600 24.800 Vacation pay deferred Total. 1.270.677 968.783 Deferred Charges Debt expense, being amortized. I1.218 8.837 Miscellaneous. 12,667 5.464 lbtal. 23.885 14.301 Total Assets. $7,880,072 $6.746.247 CAPITALIZATION AND LIABILITIES Capitalization (See accompanying statements) Coramon stock equity $2.486,172 $2.089.171 Preferred stock... 482,844 432.844 Preferred stock subject to mandatory redemption 127,500 131.250 long-term debt. 3,432.606 3.128.500 Total. 6,529.122 5.781.765 Current Liabilities Preferred stock sinking fund requirement 3,750 2.380 Long-term debt due within one yaar. 21,324 24.100 Pollution control bond anticipati n notes payable (Note 6) 109,356 i Accounts payable-Affiliated companies. 22,837 16.916 Other... 316,759 185.460 Nuclear fuel disposal fee. 25,452 1,193 Customer deposits. 34,838 31.851 Taxes accrued-Federal and state income 98,264 59.296 Other. 53,174 48.457 Interest accrued.. I17,759 89.626 Vacation pay accrued. 26,600 24.800 Miscellaneous. 37,874 30.204 Tbtal. 867.987 514.283 Deferred Credits and Other Liabilities Accumulated deferred investment tax credits. 47I,640 421.821 Nuclear fuel disposal fee. 21.374 Miscellaneous. I I,323 7.004 Commitments and Contingent Matte rs (Notes 3. 4. 7 and 8)....................... 482,963 450.199 Total........... Total Capitalization and Liabilities. $7.880.072 $6.746.247 32 The accompaning notes are an integral part of these statements.
STATEMENTS OF apita1iZatiOn IN THOUSANDS Georgia Power Company December 31 1984 % of Total 1983 % of Total Common Stock Equity Common stock (without par value) authorized 15.000.000 shares. outstanding 7.761.500 shares S 344.250 S 344.250 Other paid-in capital..... 1.415.800 1.213.800 Premium on preferred stock. 3.058 2.898 Earnings retained in the business. 723.064 528.223 "Ibtal common stock equity. 2.486.172 38.1% 2.089.171 36.1% Cumulative Preferred Stock (without par value) authorized 26.750.000 shares. outstanding 11.578.439 shares Class $100 stated value- $4.60 to $6.60 Series. I17.844 117.844 S7.72 to $7.80 Series. 105.000 105.000 $8.20 to $9.08 Series. 35.000 35.000 S25 stated value- $2.52 Series. 50.000 50.000 S2.56 Series. 50.000 50.000 $3.44 Series. 75.000 75.000 Adjustable Rate - 11.20% at December 31.1984. 50.000 Total l annual dividend requirement $43.405(000)l. 482.844 7.4 432.844 7.5 Cumulative Preferred Stock (without par value). subject to mandatory redemption authorized and outstanding 5.250.000 shares $25 stated value-S2.75 Series. 56.250 58.630 $3.76 Series.. 75.000 75.000 lannual dividend requirement $17.468(000)) Less amount due within one year 3.750 2.380 Total. excluding amount due within one year. 127.500 1.9 131.250 2.3 Long-Term Debt First Mortgage Bonds Maturity Interest Rates April 1.1984 . 34% 11.000 May 1.1985. .3%% 11.988 11.988 April I.1986. .3%% 12.000 12.000 June 1.1987 .5K%. 8.978 8.978 March I 1988. . 4 4% 24.000 24.000 October 1.1991 .17 H% 122.500 123.750 1990-1994. .4%% to 4%%. 103.000 103.000 1995-1999 - .4%% to 84%. 246.868 246.868 '2000-2004. .7%% to I1%% 926.955 937.039 2005-2009. .9%% to I1%%. 565.968 565.968 2010 2014 .13%% to 16%%. 767.500 621.250 Total first mortgage bonds 2.789.757 2.665.841 Other long-term debt. 702.946 512.645 Unamortized debt premium (discount). net (38.773) (25.886) Tbtal long-term debt lannual interest requirement $409.843(000)l. 3,453,930 3.152.600 Less amount due within one year 21.324 24.100 Long-term debt. excluding amount due within one year. 3.432.606 52.6 3.128.500 54.1 Total Capitalization (Note 6). $6.529.122 100.0 % $5.781.765 100.0% e h 4 The auempanying notes are av integral part of these statements. 33 L
I 1'otes to ~ Financia Statements Note I. Summary of Significant Accounting Policies: on preferred stock for 1982 as reported was $258.944.000 General. The Company is a wholly owned subsidiary of and on a pro forma basis, assuming the change had been The Southern Company which is the parent company of applied retroactively, would have been $235.935.000. four operating companies, a system service company and Fuel Costs. Fuel costs are expensed as the fuel is used. Southern Electric International. Inc. (SEl). The operating The Company is authorized by state law and FERC regula-companies provide electric service in four southeastem tions to recover fuel costs and net purchased energy costs states. Contracts among the companies-dealing with tomtly through fuel cost recovery provisions which may be adjust-owned generating facilities. mterconnecting transmission ed as necessary to reflect increases or decreases in such lines. and exchange of efectnc power-are regulated by the costs. Revenues are adjusted for differences between recover-Federal Energy Regulatory Commission (FERC) or the Secu-able fuel costs and amounts actually recovered in current rates. rities and Exchange C ommission (SEC). The system service The cost of nuclear fuel is amortized to fuel expense company provides. a cost. technical and other specialized based on the estimated thermal units utilized to generate services to The Southem Company and to each of the sub-electric energy and includes a provision for the disposal of sidiary companies. SEl markets to utilities and industrial spent nuclear fuel. This expense was $17.851.000 in 1984 concerns the technic;.I expertise of the Southem electric $22.240.000 in 1983 and $15.728.000 in 1982. The Compa-system m planning and operating electric power facilities. ny has signed a contract with the Department of Energy The Southern Company is registered as a holding com-(DOE) that provides for the permanent disposal of spent pany under the Public Utility Holding Company Act of 1935. nuclear fuel. The services provided by DOE are scheduled Both The Southern Company and its subsidiaries are sub-to begin in 1998. Pending permanent disposition of the lect to the regulatory provisions of the Act. The Company spent fuel. sufficient storage capacity is presently available also,s subject to regulation by the FERC and the Georgia at Plant Hatch through the year 2001 and will be available i Public Service Commission (GPSC). The Company follows at Plant Vogtle through the year 2003. generally accepted accounting principles and complies with the accounting policies and practices prescribed by the re-Pension Costs. The Company has a defined benefit, trust-spective commissions. eed. and noncontributory pension plan which covers sub-stantially all regular employees. The policy of the Company Utility Plant. Utility plant is stated at original cost. This is to Nnd ead wars aM pension cost as hm,M cost includes appropriate administrative and general costs: usin;;its actuarial cost method. the,' entry age normal method payroll-related costs such as taxes, pensions and other with frozen initial liability". In 1984. changes were made in benefits: and the estimated cost of funds used during con-certain actuarial assumptions used in determining annual struction. The cost of maintenance. repairs and replacement plan cost and contribution. The most significant changes of minor items of property is charged to maintenance ex-were an increase in the assumed rate of return on plan in-pense accounts. The cost of property replacements (exclu-vestments from 5% to 7% and an increase in the assumed sive of minor items of property) is charged to utility plant. annual rate of salary increases from 4% to 6%. These changes l resulted in a net decrease of $109.636.000 in the accrued Revenues. Tb more closely match revenues and e :penses. liability for the plan and decreased 1984 contributions to in 1982 the Company began accruing revenues for service the plan by $15.669.000. Accrucd pension cost amounted rer.dered but unbilled. Prior to 1982. the Company recog-to $33.617.000 in 1984. S46.304.000 in 1983 and S41.216.000 nized revenues concurrent with billings to customers on a in 1982 which represented 7.3%.11.2% and 11.4% respec-cycle billing basis. This change increased 1982 net income tively, of employee wages and salaries in each year. Of by S498.000 before the cumulative effect of the change as these amounts. $16.407.000 in 1984. $25.672.000 in 1983 I of January 1.1982. The cumulative effect. less income taxes and $26.080.000 in 1982 were charged to operating ex-l of $22.320.000. amounted to $23.009.000 and was included penses and the balance was charged to construction and I in 1982 income. The amount of net income after dividends other accounts. In 1984 the Company also provided approx-34 i.
imately $13.000.000 to cover the estimated cost of an early deducted from the plant investment in the accompanying retirement incentive program. Accumulated pension benefit Balance Sheets and in arriving at the rate base used in rate- - information as of the valuation dates (January I of each making proceedings. Other deferred income taxes are in-year) follows (in thousands): ciuded in taxes accrued. See Note 5 for further information regarding income taxes. Allowance for Funds Used During Construction.
- ,n$n"N "*
Allowance for Funds Used During Construction (AFUDC) vested... s256.7 o s228.408 represents the estimated debt and equity costs of capital Nonvested. 3.684 4.556 funds which are applicable to utility plant while under con- 'rotal actuarial present value of struction. While cash is not realized currently from such al-accumulated plan benefits. s_260.394 s232.964 lowance. it is realized over the service life of the plant weighted average rates of return. through increased revenues resulting from a higher rate usumed in determining actuarial base and higher depreciation expense. For 1984.1983 and present value of accumulated 1982, the AFUDC rate was adjusted monthly and com-plan benefits.. 8% 8% ounded semi-annually and ranged from 8.75% to 9.55%. Het assets available for benefits. s456.318 S364.993 9.07% to 9.35% and 8.72% to 9.11%. respectively net of in-come tax. The Company accounts for the income tax effect The actuarial present value of accumulated plan benefits of capitalized debt cost as a charge to income tax expense was determined on the basis of accrued benefits as of associated with operations and a corresponding credit to lanuary 1 of the respective years, whereas the plan is fund-allowance for debt funds used during construction. The in-ed based on the premise that the plan will continue in exis-come tax effect of capitalized debt cost was $72.190.000. tence, which requires that future events be considered. $49.072.000 and $32.060.000 in 1984,1983 and 1982. re-Vacation Pay. The Company's employees ena their vaca_ spectively. AFUDC. net of income taxes as a percent of net tion in one year and take it in the subsequent year. However, income after dividends on preferred stock, amounted to for ratemaking purposes vacation pay is recognized as an 57%. 52%. and 40% for 1984.1983 and 1982. respectively. allowable expense only when paid. Consistent with this rate-making treatment, the Company accrues a current liability Note 2. Rate Proceedings: for earned vacation pay and records a current asset repre-Effective September 7.1983, the GPSC granted the Compa-senting the tuture recoverability of this cost. Such arcounts ny an annual retail increase of $108.9 million. The Compa-were S26.600.000 and $24.800.000 at December 31.1984 ny subsequently filed a motion with the GPSC for reconsid-and 1983. respectively. In 1985, approximately 60% of this eration and rehearing of the rate case. Effective October 1. cost of vacations will be expensed. and the balance will be 1983. the GPSC granted an additional $86.5 million in an-charged to construction and other accounts. nual retail revenues. The Company has agreed not to file another retail rate increase before July I.1985. In March. Depreciation. Depreciation is provided on the original 1935 the Georgia Court of Appeals. reversing a decision cost of depreciable utility plant in service, principally on a of the Superior Court of Fulton County ruled that a straight-line basis over the estimated composite service life consumer group has standing to seek judicial review of the of the property. The depreciation provisions approximated GPSC's 1983 rate orders. The Court of Appeals remanded 3.7% in 1984 and 1983 and 3.6% in 1982 of the average the case to the Superior Court for such a review. The Com-cost of depreciable utility plant. Such provisions include a pany currently intends to appeal the decision of the Court factor to provide for the expected cost of decommissioning of Appeals. nuclear facilities. This factor is based on an estimated decom-On April 16.1984. Georgia Power filed a request for an missioning cost of approximately $32.000.000 each for the ncreasd in the fuel cost recovery rate with the GPSC to Company's portion of the two units at Plant Hatch. This fac-cover estimated increases in fuel cost and unrecovered fuel 7 tor will be adjusted periodically to reflect changing price cost from prior periods. The GPSC granted an allowance t levels and technology. When property subject to deprecia" whic h is deficient in covering the Company's prior period tion is retired or otherwise disposed of in the normal course fuel cost by approximately $22.300.000. This amount is of business. its cost together with its cost of remc, val. less recc4dcd in Customer Accounts Receivable on the 1984 l salvage. is charged to the accumulated provision for depre-Balance Sheet. The Company filed a petition regarding this ciation. matter with the Superior Court of Fulton County on July 6. 1984, and a motion for reconsideration and rehearing with income 'Ihxes. The Company follows deferred income tax the GPSC on July 13.1984. The motion for reconsideration accounting for all income tax timing differences. Investment tax credits utilized are deferred and amortized over th and rehearing was denied by the GPSC on August 7.1984. - average lives of the related property. The Company is ?The petition filed with the Superior Court of Fulton County in-cluded in the consolidated federal income tax return filed was taken under advisement at a hearing on November 16. 1984. In March.1985, the Superior Court affirmed the by The Southern Company. Provisions for property-related deferred income taxes (eg. accelerated cost recovery and GPSC's order. The Company currently intends to appeal the litnralized depreciation) reflect consumption of part of the court's decision. In management's opinion. the settlement value of the plant and equipment to which they relate. Con ~ of this issue will not have a material impact on the Company. sequently, they are similar to depreciation provisions and the related accumulated deferred income taxes like the ac. continued cumulated provision for depreciation. is a valuation reserve 35
' Note 3. Construction Program: Vogtle for possible increases in interest costs. the rate of in-The Company is engaged in a continuous construction pro-flation. escalation and direct construction costs, and uncer-gram and presently estimates gross property additions to tainties in nuclear regulation or other as yet undefined be approximately $1.566 billion in 1985: $1.655 billion in economic pressures. At December 31.1984, substantial 1986: and $1.177 billion in 1987. These additions include purchase commitments were outstanding in connection AFUDC (net of income taxes) of $361 million in 1985 $440 with the construction program. million in 1986 and $245 million in 1987. In additic:. these Major Projects. The chart below shows the status of maior arrounts reflect. for the total construction program, a finan-construction projects as of December 31.1984 (dollars in cial and economic contingency reserve of S250 million thousands)'- covering the remaining period of construction for Plant Plant Vogtle ill Plant scaerer (1) Unit No I and Unit Unit Common Rocky Bartletts Na 3 No. 4 Facihties Unit Na 2 Mountain (2) Ferry Coal Coal Nuclear Nuclear Hydro Hydro Fuellype Planned Commercial Operation Date. 1987 1989 1987 1988 1991 1985 Current Georgia Owr.ership. 75 % 100% 45 7% 45 7% 100% 100% Kilowatts of Nameplate Capacity Icterent ownership). 613.500 818.000 530.120 530.120 847.800 108.000 Total Plant Additions through December 31.1984 Estimated Plant Additions at . $308.674 S 63.988 S t.594.557 $312.726 S133.271 $63.560 l Completion excluding AFUDC.. . S460.478 $647.751 $1.515.528 $547.777 S606.406 S81.803 Estimated AFUDC at Completion (31 . $120.823 $196 951 $ 747.091 $275.104 S288.363 $12.061 Estimated 'Ibtal Plant Additions at Completion. . $581.301 $844.702 S2.262.619 S822.881 $894.769 $93.864 Estimated Percentage of Completion at December 31.1984 (4) 60 % 6% 75% 45% 15% 75% NOTES: til The data shown for Plant Vogtle reflect the sale of an additional 5% (31 Estimated AFUDCatcompletionassumesnophase-in of plantsintorate interest to MEAG in March.1984 and for Plant scherer reflect the sale base before or after completion of construction. of a 2 interest in Unit No 3 to Gulf Power Company. an affiliate, in (4) Plant Vogtle estimated percentage of completion figures are based upon an equal allocation of common facilities between Unit No I and Unit No 2. (2) The completion of the Rocky Mountain project has been deferred trom 1989 to 1991. The construction budget estimates set forth above reflect the conclusion in August.1984. cs an extensive review of the construction program. The construction program is reviewed periodically. and actual construction costs to be incurred and planned commercial operation dates may vary from the above estimates because of factors such as changes in business conditions: fluctuating rates of load growth: en-vironmental requirements: design changes in nudear plants to meet changing requirements: unforeseen nuclear plant licensing requirements: equipment delivery schedules: in-4 creasing costs of labor equipment and materials: cost of capital and the granting of timely and adequate wholesale and retail rate increases by appropriate commissions. As a result of the aforementioned review estimated to-tal plant additions at completion for Plant Vogtle were increased from $6.6 billion to $7.2 billion. This represents an increase of $240 million (8.4%) for the Company's 45.7% 36
ownership interest. This increase reflected. among other deferral of cost recovery. See Note 4 for information regard-things. then current estimates of engineering costs. staffing ing required capacity and energy purchases from joint own-levels and wage and materials costs. as well as a downward ers. The House bill will remain pending at the commencement revision of certain productivity rates. As previously report-of the next legislative session. expected in January 1986. ed. the projected productivity rates for construction work What. if any. action on phase-in legislation may be taken in were higher than those then being experienced at the the future by the Georgia General Assembly cannot now be plant. Since the conclusion of such review. productivity determined. rates have improved. although not as much as was forecast. If the Ccmpany's continuing effcrts to improve productivity Financing. The Company's gross procerty additions are ex-rates further are not successful. a portion of the $250 mil-pected to be financed from the issuance of preferred stock lion financial and contingency reserve descnbed above and long-term debt. the receipt of common equity contribu-could be required for Plant Vogtle. tions from The Southern Company and interm! sources. The revised construction program estimates also reflect Should the Company be unable to obtain funds from sah a decrease in expenditures relating to non-generating methods of financing. the Company would have to use categories and other major generating projects aggregating short-term indebtedness or other alternative and possibly S640.000.000 for the period through 1988. costlier means of financing or it could become necessary to cancel or delay certain construction projects. A delay could Regulatory Requirements. Before operation of a nuclear result in significant additional construction costs. unit. an operating license for such unit must be obtained As of December 31.1984. the Company had revolving from the Nuclear Regulatory Commission (NRC). Proce. credit agreements aggregating $1.565.000.000 with 11 banks. dures for obtaining operating licenses afford an opportunity The agreements are effective until December 31.1990. Dur-for interested parties to request a public hearing on health ing the term of these agreements. the Company may con-and safety. environmental and antitrust issues. Issuance of vert short-term borrowings into term loans. Such term ioans operating licenses by the NRC may be conditioned upon re. would be payable in 12 equal quarterly installments during quiring substantial changes in proposed operation or upon the years 1991 through 1993. or at an earlier date at the installing additional equipment to meet upgraded safety or Company's option. Such term loans would be subject to environmental regulations with consequent delay and add. uthorization from the GPSC and the SEC Additionally. the ed cost. Company has $120.000.000 in other lines of credit subject Plant Hatch Units Nos. I and 2 are being operated under to annual renewal. operating licenses issued by the NRC The Company applied in connection with the credit agreements and the lines for operating licenses for Plant Vogtle Units Nos. I and 2 in of credit. the Company has agreed to pay certain fees and'or September 1983. The NRC's Atomic Safety and Licensing maintain compensating balances with the banks. These bal-Board (ASLB) held a Prehearing Conference on May 30. ances are not legally restricted as to withdrawal by the Com-1984. to define issues to be addressed in the Plant Vogtle p ny. Average compensating balances during 1984 were licensing hearings. On September 5.1984. the ASLB grant. pproximately $9.000.000 and at December 31.1984, were ed intervenor status to two organizations and docketed cer. approximately $6,000.000. tain contentions for consideration during the future in 1984. the GPSC approved the issuance and sale by licensing hearings. If the licensing process proceeds on the Company of up to $100.000.000 of preferred stock and schedule. fuel loading at Unit No.1 is expected to take up to $650.000.000 of first mortgage bonds and pollution place in Septembcr.1986. The Company then would begin control obligations. The GPSC's orders authorizing the low-power testing and move to full-power operation and Company's 1984 financings provide that no portion of the commercial start up as early as March.1987. approved securities "or any monies associated with these At the conclusion of the 1985 legislative session in securities be allowed for ratemaking purposes until such March. there was pending before the Georgia House of time as there has been a thorough study of the Company's Representatives a bill that would require the GPSC to phase construction programs which have been used to justify the the Company's prudently incurred construction costs for need for these securities:' The orders further state that be-each unit of Plant Vogtle into its retail rate base in equal an. fore the GPSC acts on any other financing application filed nual installments over a period of not less than three nor continued more than six years from the date of commercial operation of such unit. Similar legislation previously had been passed by the Georgia Senate. Under the House bill. the rate base and cost recovery would be limited to the Company's proportionate share of $7.2 billion. costs directly attributable to new NRC requirements. costs due to delay in operation caused by ludicial or regulatory action not resulting from the Company's failure to comply with governing regulations. car-rying costs (AFUDC) attributable to the deferral of cost recovery. and other costs necessary to avoid confiscatory rates as a result of the bill. Costs found by the GPSC to have been imprudently incurred would not be included in the rate base or nuclear purchased power expense. The bill also would permit the GPSC to equalize nuclear purchased pow-er expenses over the period such expenses are to be in-curred. giving effect to the carrying costs assc(iated with the 37
by the Company, the GPSC "will consider up front or ba-Note 4. Facility Sales Joint Ownership Agreements and fore the fact construction programs in relation to its regu-Off-System Sales Agreements: latory functions. I Facility Sales. The Company has sold undivided interests Pursuant to such orders and in connection with the in Plants Hatch. Wansley. Scherer and Vogtle in varying Company's pending financing application. the GPSC com-amounts together with transmission facilities. to Oglethorpe missioned a prospective study of the economic feasibility Power Corporation (An Electric Membership Generation & of the Company's construction program. This study. which 'Iransmission Corporation) (OPC). the Municipal Electric Au-does not address past decisions relating to construction thority of Georgia. a public corporation and an instrumen-expenditures, was completed in February.1985. The study tality of the State of Georgia (MEAG). the City of Dalton. concludes that. under the current budget. completion of Georgia, and Gulf Power Company. an affiliate. These sales Plant Vodtle and Plant Scherer Units Nos. 3 and 4 is resulted in a gain, after income taxes, of $21.250.000 in 1984 reasonable, economically justifiable and in the interests of and $3.873.000 in 1982. There were no such sales in 1983. the Company's retail customers. The study also finds that The after-tax gain in 1984 resulted from the sale of a 5% the cost of Plant Vogtle Unit No. 2 appears uncertain. It fur-additional undivided interest in Plant Vogtle to MEAG. Ad-ther concludes. based upon assumptions made by the con-ditionally. the Company sold a 25% undivided interest in sultant. that the Rocky Mountain pumped storage project is Plant Scherer Unit No. 3 to Gulf Power Company. This sale uneconomic and that cancellation of the project should be had no impact on 1984 net income. cousidered. At December 31.1984, the Company had ap-Joint Ownership Agreements. At December 31.1984. the proximately $133 million mvested in the Rocky Mountain Company's percentage ownership and investment in these project. The Company currently is continuing its planned jointly owned facilities, exclusive of nuclear fuel, were as construction activities relating to Rocky Mountain. The f !! ws (dollars m thousands): Company believes that the Rocky Mountain project is eco-nomic over its entire life. which extends almost fifty years beyond the twenty-five year time horizon on which the Total percent construction consultant's conclusion is based. Megawatt Company Plant %brk in %pe Capacity Ownership
- in Service Progrcss During 1984, the Company issued $540 million in long-Plant Hatch.
term pollution control obligations (S40 million from a previ. ous GPSC authonzation). $150 million in first mortgage bonds pi,nt w,nsi,y . and $50 million in preferred stock. The GPSC extended until .. Fossil i.779 53.5 289.857 746 May I 1985. the Company's authority to issue an addition-Plant Scherer-at $50 million in preferred stock. Units Nos. I F sd L636 84 82.3 H 31 in its pending GPSC application. the Company requests u"N N authorization to issue up to $550 million in first mortgage .Foss0 818 75 o 276.625 or pollution control bonds and up to $100 million in pre-commen ferred stock. The application also seeks permission to bor. Facilities-All units. 23.5 68.247 6.637 row up to $1 billion in term loans from the banks partici. pating in the revolving credit agreements < The amounts of [c*i l,3_ term loan authority available to the Company will subse-unique to quently be reduced by the net cash proceeds realized from Units Not the sale of first mortgage or pollution control bonds pre. 3 and 4 87.5 27.275 Plant Vo ferred stock. or capital contributions from the Company's parent. The Southern Company. Hearings on this applica-
- Joint Owners are OPC. MEAG and the City of Dalton except for Plant Scherer tion are expected to be held in April.1985-Unit Na 3. and common facilities unique to Units Nos. 3 and 4 of which Gulf PowerCompany.an affiliate.ownsinterestsof 25% and 12.5%.respectively Each participant provides its own construction financing.
The Company includes its proportionate share of plant oper-ating expenses in the corresponding operating expenses in the Statements of income. The Company has contracted to complete those jointly owned units still under construction and to operate and maintain the units as agent for the joint owners. In connection with these sales, the Company has entered into agreements whereby the Company is required to pur-chase declining fractions of OPC's and MEAG's capacity and energy of the respective generating units during periods of up to ten years following commercial operation (and. in the case of a portion of the 5% interest in Plant Vogtle owned by MEAG. during periods commencing on the earlier of the proposed initial commercial operation dates or the actual commercial operation dates of the Plant Vogtle units until the latter of the retirement of such units or the latest stated maturity date of MEAG's bonds issued to finance such cwnership interest) with the payments for such capacity 38
made whether or not any capacity is available. The energy Not3 5. Income Thxes: cost of such purchases is a function of each entity's variable A detail of the federal and state income tax provisions is set op2 rating costs. The cost of such capacity and energy is in. forth as follows (in thousands): l ciuded in purchased and interchanged power in the Com-pany's Statements of income The capacity payments totaled 19s4 1983 1982 S211.352 000. Sil5.737.000, and $115.374.000 in 1984, 1983 and 1982. respectively. The current projected capacity p[si n f nne me taxes payments for the next five years are as follows: $180.509.000 currently payabic. s si.7oo s 6.069 s 13.083 in 1985; $150.918.000 in 1986: $372.354.000 in 1987: Deferred-current year. 209.304 195.215 159.827 $421.336.000 in 1988: and $480.466.000 in 1989. The in. -Reversal of prior years. (82.114) (67.366) (48.009) crease in capacity payments in 1987.1988 and 1989 re. Deferred investment tax credits 61.252 83.266 78.183 flects the additional buybacks from the scheduled commer. 270. r 42 217.184 - 203.084 cial operation of Plant Vogtle Units Nos. I and 2. state-c en yabi The Company and an affiliate Alabama Power Company. h ,ent year. own equally all of the outstanding capital stock of Southem -Reversal of prior years. ti l.io6 19.145p (5 886) Electric Generating Company (SEGCO). which owns electric 36.190 29.309 27.787 generating units with a total rated capacity of 1.019.680 Tdtal. 306.332 246.493 230.871 kilowatts, together with associated transmission facilities. Less-The capacity of the units has been sold equally to the Com-income taxes charged to other pany and Alabama Power Company under a contract expir-InIoEaxes associated with' ing in 1994 which. in substance requires payrnents sufficent a the cumulative effect as of to provide for the operating expenses. taxes and debt ser-lanuary 1. ;982 vice including retum on imestment. whether or not SEGCO of accruing unbilled revenues 22.320 has any capacity and energy available. The Company's Federal and state income taxes share of such amounts totaled $82.570.000. S80.704.000 charged to operations. s268.654 s231.565 s185.944 and $74.066.000 in 1984,1983 and 1982. respectively, and these amounts are included in purchased and interchanged Deferred income taxes result from the Company's use pcwer in the Statements of Income. At December 31.1984, f accelerated methods of depreciation and other write-offs the capitalization of SECCO consisted of $33.608.000 of f property costs. as provided for by the income tax laws. equity and $51.532.000 of long-term debt on which the an-being greater than the book depreaation of such costs. nual interest requirement is $4.036.000. Other deferred income taxes are provided for certain costs or revenues that are recognized for income tax purposes in Off-System Sales Agn.u..^. The Company and its different periods than for book purposes. Income taxes de-three affiliated operating companies of the Southem elec-ferred in prior years are reversed (credited) to income when tric system have entered into several agreements for the the book depreciation of property costs exceeds the relat-sale of long-erm power to off-system utilities. These agree-ed tax deductions or when other timing differences reverse ments cover the sale of power from specific fossil generat-The provision for income taxes includes the tax effects of ing units (unit power) and the sale of other power from the reversals of prior years' timing differences for which de-system fossil units (other long-term power). The impact on ferred income taxes were not provided. At December 31. revenues of these agreements is indicated in the following 1984. the remaining balance of such timing differences was chart (in thousands): approximately $141.687.000. The total provision for federal income tax as a percent of year Unit power tong m power income before income tax amounted to 36.1% 37.6% and Total 39.8% for 1984.1983 and 1982, respectively. The differ-1932 s $147.565 $147.565 ence between the 1984.1983 and 1982 rates and the fed-1983 186,060 137.611 323.671 eral statutory rate of 46% was due primarily to the exclusion j 1984 228 395 222.533 450 928 from taxable income of the allowance for equity funds used 1btal s414 455 s507.709 s922.164 during construction (10.0% in 1984. 8.6% in 1983 and 6.4% Unit power is being sold to Morida Power & Ught Com-pany, lacksonville Electric Authority and beginning in 1985 continued to Gulf States Utilities Company. Other long-term power is b2ing sold to Morida Power Corporation Morida Power & Light Company. Gulf States Utilities Company. Jacksonville Electric Authority. Mississippi Power & Light Company and the City of Tallahassee. Morida. The unit power sales agreements from Plant Scherer amount to 1.280 megawatts in 1985. The acreements reach a maximum at 1.946 megawatts in mid-1989 and decline grad-ually thereafter through 1995. The other long-term power agreements with Morida Power & Ught. Jacksonville Elec-tric. Florida Power and Mississippi Power & Light expire in 1986. Similar contracts with Gulf States Utilities and the City of Taliahassee Florida expire in 1992. 39 ~ -
Note Cx Capitalization: stated value of $25.00 per share. The Company will have the Pollution Control Bond Anticipation Notes Pay:ble. option to purchase and cancel the required number of During 1984, the Company incurred obligations in connec-shares annually. tion with the sale by public authorities of tax-exempt, short-Adjustable Rate Preferred Stock. The Company issued term Pollution Control Bond Antrapation Notes to various 2.000.000 shares of Adjustable Rate Class A Preferred Stock banks totaling $595 million. In August and October 1984 (First 1984 Series) in December 1984. with a stated value of the Company refunded $56 million and $70 million respec- $25 per share. The epplicable dividend rate for each divi-tively. of such securities leaving $469 million outstanding dend period. determined in advance of such period will be as follows (in thousandsl: (a) the highest of the Treasury Bill Rate. the Ten Year Con-Due April 1.1985 s 25.500 stant Maturity Rate and the Twenty Year Constant Maturity Due August 12.1985. 150.000 Rate for such d!vidend period. minus ib).25%. However, the Due September 16.1985. 85 000 Applicable Rate for any dividend period shall in no event be less than 6.50% per annum nor greater than 14.50% per D ember 9. i985 annum. The dividend rate at December 31.1984 was 11.20% 49000 Less funds on deposit with depositaries. 359 644 per annum and is 11.47% per annum for the first quarter of 1985. siO9 356 Other Long-Term Debt. Details of other long-term debt are These notes bear interest at 60% to 63% of prime and as follows (in thousands): have a 270 day maturity. The Company intends to refund the notes during 1985 with the proceeds from the sale by 19s4 i983 public authorities of additional long-term Pollution Coatrol obligations incurred in connection with the sale Bonds: however. long-term refunding requires the approval by pubhc authorities of tax-of the GPSC and the SEC as previously discussed in exempt pollution control and mdustrial Note 3. development revenue bonds-5 95% to 13.75% due 2002 to 2012. $417.500 $417.500 Common Stock Dividend Restrictions. The Company's Ii.625% to 12 25% due 2014 540.000 first mortgage bond indenture contains various common 957.500 417.500 stock dividend restrictions which remain in effect so long as the bonds are outstanding. At December 31.1984 Less funds on deposit with trustees. 365.s25 16.402 wi.675 40: 098 S273.575.000 of retained earnings was restricted against ca a a the payment of cash dividends on common stock under ia c 1.607 15.779 terms of the mortgage indenture. Corporate headquarters building. 92.577 89.448 The terms of the sinking funds for the Company's pres-other office buildings 3.9ss 4.528 ently outstanding $2.75 and $3.76 Class A Preferred Stock 110.172 109.755 prohibit the payment of cash dividends on common stock uscellaneous note payable-during a default in the performance of the sinking fund ob. o% due through 1986. 1.099 1792 ligations. No such default has occurred. $702.946 ss i 2.645 The Company's charter limits cash dividends on common stock to 75% of net income available for such stock during The Company has authenticated and delivered to trustees a prior period of twelve months if calculated on a corporate an aggregate of $382.500.000 of its first mortgage bonds basis. the ratio of common stock equity to total capitaliza-which are pledged as security for its obligations under pol-tion. induding retained eamings, adjuste.i to reflect the pay. lution control and industrial development contracts. No in-ment of the proposed dividend. is below 25% and to 50% terest on these first mortgage bonds is payable unless and of such net income if such ratio is less than 20%. At Decem. until a default occurs on the installment purchase or loan ber 31.1984. the ratio was 38%. agreements. An aggregate of $575.000.000 of the authori-ties' bonds are secured by a subordinated interest in specific Cumulative Preferred Stock Subject to Mandatory Re-property of the Company. demption. The S2.75 Class A Preferred Stock has a cumu-Assets acquired under capital leases are recorded in the lative sinking fund provision requiring the redemption of Company's Balance Sheets as utility plant in service and the 150.000 shares annually through 1999 at the stated value related obligation is classified as other long-term debt. The of $25.00 per share. The Company has the option to pur-net book value of assets acquired under capitalized leases chase and cancel the required number of shares annually. was $106.878.000 and $106.628.000 at December 31.1984 The gains on such reacquisitions amounted to $160.000. and 1983. respectively. At December 31.1984 the compos- $61.000, and $134.000 for the years 1984,1983 and 1982 ite interest rate for the leased rail cars was 9.55%. the in-respectively. and are included with premium on preferred terest rate for the corporate headquarters lease was 8.23% stock in the Company's Statements of Capitalization. and the composite interest rate for the other leased build-The Company issued 3.000.000 shares of $3.76 Class A ings was 5.44%. preferred Stock in 1981. On or before lune 1.1986. and an-The current portion of other long-term debt for each year nually through 2005.150.000 shares must be redeemed through 1989 is as fol!ows: $3.586.000 in 1985: $2.857.000 through the operation of a cumulative sinking fund at the in 1986: $2.178.000in 1987: $2.814.000in 1988:and $3.057.000 in 1989. The lease agreement for the corporate headquarters building provides for payments which are minimal in early years and escalate through the first 20 years of the lease. 40
. Through 1986, for the first six yeaa of the lease. the pay-ithe maximum araount presently available) and the mma;a-ments are not sufficient to cover the interest requirements. ing coverage is provided by a mandatory program of de-l The accrued interest in excess of the leise payments is in-ferred premiums which would be assessed, after a nuclear cluded la the lease obligation. Beginning in the year 2009. incident. aga'nst all owners of nuclear reactors. A company i the aggregate lease payments will be sufficient to cover the could be assessed up to $5,000.000 per incident for each accrued interest and begin to reduce the capitalized lease licensed reactor operated by it but not more than $10.000.000 l obligation. For ratemaking purposes, the GpSC has treated per reactor to be paid in a calendar year. On the basis of the lease c:en operating lease and has allowed only the its ownership interest in the two nuclear reactors now in ' lease payments in cost of service. The difference between service. the Company could be assessed a maximum of i the accrued expense and the lease payments allowed for S5.010.000 for any incident. but not more than $10.020.000 ratemaking purposes is being deferred as a cost to be re-to be paid in any one year. covered in the future as ordered by the GPSC. At Decem. The Company is a member of Nuclear Mutual Limited ber 31.1984 and 1983, the amounts deferred and included (NML). a mutual insurer established to provide property in plant in service in the Balance Sheets are $30.145.000 damage insurance in an amount up to $500.000.000 for - and $25.273.000. respectively. members' nuclear generating facilities. Thc. Company is sub-Long-Term Debt Due Within One Year. The $21.324.000 ject to a retrospective premium adjustment in the event that of long-term debt due within one year at December 31.1984 mspect to ea6 poh war. ad anmdad n mp ys mattmm assms is hW m consists of first mortgage bonds maturing iri 1985. $11.988.000; ment poh,, un er the current portion of other long term debt. $3.586.000; and Additionally. the Company has policies that provide first mortgage bonds redeemed in lanuary 1985 used in par-c ver ge up to $560.000.000 for losses in excess of the tial satisfaction of the annual sinking fund requirement. $500.000.000 NML coverage. This excess insurance is pro-4 Th dentures annual first mortgage bcnd sinising fund vided by Nuclear Electric insurance Limited INEIL). 9 mutual insurance cornpany and American Nuclear insurers Mutual requirement (1% of the sum of bonds authenticated prior to sc Energy Liability Underwriters and covers both de-lanuary 1 of each year) amounts to approximately $35.352.000 contam, nation and debris removal and excess property dam-i and is due on or before lune 1.1985. The Company partial-ly satisfied this requirement by redemption at par of $5.750.000 ge y also com b aka ets wM M N w, curred in obtaining replacement power durina a prolonged first mortgage bonds in January.1985 and redemption and ccidental outage of a member's nuclear plara. Members cancellation of $5.000.000 of 11%% first mortgage bonds in re insured against the mcreased osts of replacement c 1984. The remainder of the requirement was satisfied power up to $2.800.000 per unit per week (starting 26 through the use of a sm. king fund bond specifically authen-weeks after the outagel for one year and up to $1.400.000 ticated for such purpose against unfunded property addi-per unit per week for the second year. Under each of the tions equal to 166M% of such requirement. NEIL policies. the Company is subject to retroactive assess-The gains on reacquisitions of debt to sa:Isfy sinking ments if losses, with respect to each policy year. exceed fund requirements are included in miscellaneous deferred the accumulated funds available to the insurer under that credits in the balance sheets and are being amortized over poi cy. The p;esent maximum assessments for the Compa- - the remaining life of the original issue-ny under the current policy would be approximately 2 Assets Subject to Lien. The Company's mortgage dated $5.000.000 under the property damage policy and as of March 1.1941. as amended and supplemented. secur- $11.000.000 under the replacement power policy. ing the first mortgage bonds issued by the Company. con-stitutes a direct lien on substantially all of the Company's Note 9. Quarterly Financial Data (Unaudited): fixed property and franchises. Summarized quarterly financial information for 1984 and Not2 7. Fuel Commitments: To supply a portion of the fuel requirements of its generat-First Second Third Fourth mg plants. the Company has entered into various long-term ouarter ouarter ouarter cuarter . commitments for the procurement of fossil and nuclear fuel.
- 393, in most cases. such contracts contain provisions for price operaung revenues r742.lo2 5773.793 s884.285 $732 695 escalations. minimum production levels and other financial operating income 105 083 115.917 159.702 114 275 commitments. Additional commitments for coal and for nu-Net income after dwidends clear fuels will be required in the future to supply the Com.
on preferred stock 102.800 8&779 137.739 92.40i pany's fuel needs. ,933 operating revenues S610.740 $626.419 s799.738 $693.677 Not2 8. Nuclear !nsurance: operatmg income 80.522 88.676 145.827 13?.549 Under the Price-Anderson Act, the Company maintains agree- $"p', *e reN i[d nds ments of indemnity with the NRC which. together with pri-vate insurance. cover third-party liability arising from any nuclear incident occurring at the Company's nuclear power plant. The Act limits public liability claims that could arise continued from a single nuclear incident to $620.000.000. Each reac-tor at the Company's nuclear plant is insured against this liability to a maximum of $160.000.000 by private insurance 41
Not) 10. Supplementary 11 formation on Reporting the Effects cf inflation (Unaudited): The following information is an estimate of the economic The Company is subject to rate regulation and income impact inflation had on Georgia Power and the common tax la'vs that are based on the recovery of historical cost stockholder's investment during 1984. The information is only. Therefore. inflation creates an economic loss because presented in accordance with the general concepts set the Company is recovering its cost of investments in do!'ars forth in Financial Accounting Standards Board Statement that have less purchasing power. Conventional accounting No. 33 as amended and should be viewed as an estimate for historical cost does not recognize this economic loss or of the approximate effects of inflation. rather than as a pre-the partially offsetting gain tnat arises through financing fa-cise measure. The current cost information is expressed in cilities with fixed monetary obligations. such as long-term average 1984 dollars as measured by the Consumer Price debt and preferred stock. Index for All Urban Consumers. Supplementary Information on the Effects of Inflation (Unaudited) Current (in millions of dollars) Cost Net utility plant at year-end (historical cost or net cost recoverable through depreciation was $7.188.9 million) S12.811.4(a) Erosion of common stockholder's equity due to inflatior.: Additional depreciation S 235.1 Adjustment of utility plant to net recoverable cost (61.8) Economic gain from holding fixed money obligations. (155.6) Excess of general level of prices ($459.3) in the current year over increase in specific price changes ($389.5) 69.8 Net erosion of common stockholder's equity due to inflation. S 87.5 Annual Percentage increase (Decrease) Average 1984 Dollars Between (in millions of dollars) 1984 1983 1982 1981 1980 1984 and 1980 Operating revenue $3.132.9 2.839.8 2.653.8 2.305.9 2.282.1 37.3% Earnings on common stock (b). S 334.2 236.9 187.9 73.4 72.2 362.9 Economic gain from holding fixed money obligations. S I55.6 149.8 137.9 267.2 391.9 (60.3) Excess of the general level of prices over increase in specific price changes., S 69.8 94.1 31.1 33.3 211.9 (67.1) Common stockholder's investment (net assets) at year-end. S2.461.3 2.151 8 1.856.3 1.644.2 1.600.7 53.8 Return on average common equity (b). 14.49 11.82 10.74 4.52 4.43 227.1 Cash dividends declared S 225.5 197.2 167.1 149.3 171.9 31.2 Average consumer price index. 311.1 298.4 289.1 272.4 246.8 26.1 lat Current cost of utility plant was determir.ed pnmarily by applying the Handy-atxwe ll only the add:tional depreaation were deducted from the reported Whitman Index of Public Utility Construction (Ws to the.$nplKable histoncal amount of such earnmgs adjusted earnings would be SI86 6. 575 4 $12 2. costs $452 h and SIS 1. respectively Ibi Adiusted to reflect the net erovon of.ommon stockholders equity as shown 42
ucitors/ . e 3 o r t Toth..oa,do,m,,.cto,so, Georgia Power Company: wb have examined the balance sheets and statements of capitalization of Georgia Power Company (a Georgia corporation) as of December 31.1984 and 1983, and the related statements of income, eamings retained in the business, other paid-in capital and sources of funds for gross property additions for each of the three years in the period ended December 31.1984. Our examinations were made in accordance with generally a:_cepted auditing standards and. accordingly, included such tests of the accountir,, records and such other auditing procedures as we considered necessary in the circumstances. In our opinion. the finaacial statements referred to above present fairly the fi-nancial position of Georgia Power Company as of December 31.1984 and 1983. and the results of its operations and the sources of funds for gross property addi-tions for the periods stated, in conformity with generally accepted accounting prin-ciples consistently applied during the periods subsequent to the change with which we concur. made as of January I.1982, in the method of recoraing revenues as described in Note I to the financial statements. ARTHUR ANDERSEN & CO. Atlanta. Georgia. March 6.1985. The management of Georgia Power Company has prepared this report and is "- { ]- responsible for the financial statements and related information. These statements were prepared in accordance with generally accepted accounting pnnaples ap- ,V,hbh mob the best estimates and judgements of management. Financial information through-propriate in the circumstances, and necessarily include amounts that are based on out this annual report is consistent with the financial statements. The Company maintains a system of intemal accounting controls to provide reasonable assurance that assets are safeguarded and that the books and records reflect only authorized transactions of the Company. Limitations exist in any sys-tem of internal control based upon the recognition that the cost of the system should not exceed its benefits. The Company believes that its system of intemal accounting control. together with the intemal auditing function, maintains an ap-propriate cost / benefit relationship. The Company's independent public accountants (Arthur Andersen & Co.) pro-vide an objective assessment of how well management meets its responsibility for fair financial reporting. Arthur Andersen & Co. regularly reviews the system of intemal accounting controls and performs such tests and other procedures as deemed necessary to reach and express an opinion on the faimess of the finan-cial statements. The Audit Committee of the Board of Directors, which is composed of five outside directors. provides a broad overview of management's financial reporting and contro: functions. At least three times a year this committee meets with management. the intemal auditors. and the independent public accountants to en-sure that these groups are fulfilling their obligations and to discuss auditing. inter-nal control and financial reporting matters. The intemal auditors and independent public accountants have access to the members of the Audit Committee at any time Management believes that its policies and procedures provide reasonable as-surance that the Company's operations are conducted with a high standard of business ethics. In management's opinion. the financial statements present fairly the financial positon. results of operations. and sources of funds for gross prop-eny additions of ( eorgia Power Company. 43
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s r s )i T WILL ETURNER'"I.[ ~[ ',, 3f' <- ( -. Chaannan of the Board & ^ * / Chief Execetive Offker, --[i< t #;T. W. C Bradley Company k'- 4s (manufacturing N, kN. "g[ ... Columbus,1965 '8f ? g ..'f...;.. 3.
Honorary W* ~ ' r 'i Directors I W. E. EHRENSPERGER Atlanta.1981 v IOHN W. IANGDALE President 8 The Langdaie Company Valdosta.1983 ALLEN & WILSON Atlanta.1982 Nat Puwed ALVIN W. VOGTLE. JR. E l Atlanta.1983 tres gned it 'l 841 BOARD Richard I. Kelly lack C. Causey rreeman R. O'Neal, fr. Charles O. Rawlins COMMITTEES Executive VKe President-Vice Pres: dent and General VKe President Assistant Deasurer Power Supply Manager-leffectne 10,17 841 Robert C Ford Executive Committee Age 62 Fossd and Hydro Operations Robert W Scherer. Chairman Years of Servre. 35
- l. A. Parramore, fr.
Assistant Secretary and lames H MWer, ir Wayne 1 Dahlke VKe President Assistant Treasurer Wdham A Parker ir R.E.Conway VKe President and General Regulatory and Consumer H G Patt:llo Senior Vice President Manager-Affairs E. Ray Perry Robert Sinckland Nuclear Power Fossd and Hydro Proiects Ass stant Secretary and Carl Ware Age 46 Richard I. Pershing Assistant Treasurer Wars of Semte 28 James K. Davis Reasurer Audit Committee Vice President R. H. Pinson DIVISION L G Hardman lli Chafrman A. W. Dahlberg Corporate Relations Walter G Autrey Senior VKe President Vice President OFFICERS D. E. Dutton Engmeenng and Bennett A Brown Marketmg 1.angdon S. Flowers tresigned 9,1841 V ce President Construc tion Semces lohn C Hemby. Jr.
- 1. A. Gants k$
e Gona M Shatt Paul D. Ik.ce Senior Vice President-n Compensation Committee Senior Vke President Hydroelectnc Projects VKe President At!anta Metro Group H G Partdlo. Chatrman Dmsion Operations Quahty A-surance
- 3. O Rittenhouse Donald O. Foster leffectne r017 84 wdham A Fickhng. Ir Age el VKe Fresident-Wditam A Parker. Ir Years of Semce 37 VKe President and ohn G. Fichardson East Metro Division Wdl.am B Turner General Manager-VKe Preddent-Customer (effeCfWe 8 I 843 George F. Head Vogtle Protect Thomas R Wdhams Senior VKe Preszdent Accountmg and Gene R. Hodges Nuclear Operations Fossd and Hydro Power
- 1. M. Griffith Accountmg ServKes Vice President-Overview Committee Age 55 VKe President leffectwe 919 841 West Metro Dmsion L G Hardman.111. Chairman Years of Semce 30 Pubhc Affa.rs Ichn A. Roberts teffectiw 8 'l 84)
%dham A Fn.khrg Ir Langdon S Flowers R. P. Head. fr. C & Harreld Vice President Ben H. %Illiams H G Patt$o Semor VKe President Comptrouer Retad Marketing A mimstrative Services C C jones I. W. Talley. Ir. Athens Dmston \\K4[*yg"y }}{(W"g E. A. Yates. Ir. GENERAL Years of Sersice 37 p OFFICERS lames P. O Reitty R. C.%ter Ruble A. Thomas Atlanta Dmsion i Semor VKe President VKe President VKe President tretired7,31 841 Robert W. Scherer Nudear Operations Land Vogde Nuclear Licensing E W. Rainwater Cha:rman of the Board and Age 56 teHectne 8 I 84 leHectn,e 2 U 841 Chief Executive OffKer teffectwe2'20 851 VKe Prevdent
- 1. Wyman Lamb Fred D. Williams Augusta Dmsron a'5 Se"K' 38 Romney E. Scott VKe President VKe President Semor Vice Pres! dent Andrew & Speed sk Managemm Bu% her Mahs lames H. Miller, fr.
Ec?nomic Serywes Vice President President Age 41 Q N. MacLemore Jr, Columbus Dmsron Age 62 Years of Service 8 VKe President and Chief Charles R. Minors
- #5 IS'"*' 38 W. L Westbrook Engmeer Ass:stant VKe President id H. Grady Baker. Ir.
Semor Vice President-PNer SUPPLY Erg:neermg Consumer Affa rs Macon DMsion and ServKes tretired 7ill 84) Executive Vice President-Accounting and Finance "* I 3I 8 I b AU'"' N' Marketmg and and Secretary M. I Brown, fr. { WeMn t Admmistrative ServKes Age 45 C E McManus. lr. Assistant ComptrcSer U"' O**" Age 55 Years of ServKe 21 y,c, p,esident leffectwe 12 19 84
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Edward L. Addison Bu k Power Dehvery
- 1. l. Cordova R. R.
Ook We Preident George W. Edwards lr. Vice President Wade S. Manning Assistant Comptroller
- E' VKe President leffectwe 121984
- 1. I Beckham. Jr.
Exte IA rs Age 45 Vice President and General W. & Poss ed 7 318p Wars of ServKe 15 Manager-Assistant Com".ro!!er tres# ed 4 M 851 Nuclear Operations F. G. Mitchell. Jr. Guerry P. Strickland Warren Y. lobe Thomas G. Boren ea P t Assistant Secretary l Executne V ce Presidert-VKe Preedent Finance Corporate IVrformance P. F. Winn i p Assistant Secretary Age 44 yyg Years of ServKe 14 teffectwe 1219 fl4 48 -}}