ML20206S051
| ML20206S051 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf, Arkansas Nuclear, Waterford, 05000000 |
| Issue date: | 12/31/1986 |
| From: | Cain J NEW ORLEANS PUBLIC SERVICE CO. |
| To: | |
| Shared Package | |
| ML20206R980 | List: |
| References | |
| NUDOCS 8704220323 | |
| Download: ML20206S051 (36) | |
Text
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%%; 3C This 1986 Annual Report is prtparal for the information of stockholders, employtis, and other interested persons.
The Company's 1986 Annual Reimrt to the Sturities and Exchange Commission on Form 10-K (including financial statement scheduks) is availible to any stockholder without charge. Stockholders can obtain a copy by writing to:
M. II. McLetchie Senior \1ce1%sident-Avatatling' & Finance, and Thastmr l New Orleans Ibblic Stnice Inc. l P. O. IW G)3 40 l New Orleans, IA 70lR)
Tekphone: (Sni) 595-3100 i
Dear Fellow Stockholders and Another significant factor occurring Employees: in 19S6 was the Companys agreement to absorb $51.2 million of unrecovered cots The year 19S6 was somewhat of a associated with Grand Gulf I as part of the turning point for our Company and for rate settlement reached with the Council in those of vou who are stockholders in New .\ Luth 19% The $512 million of unnonml I
Orleans I ublic Smice Inc. or employees of Grand Gulf I cots were absorbal by the the Company. We were successful in getting Company in 1985 and, therefore, were ];
a number of our major problems behind us reflected in the 1985 financial results.
in the past year, thus enabling us to move Electric operating revenues for the forward with new ideas and innovative year were approximately $326.1 million, a .
programs to betterserve the energv needs of 4"o increase fmm 1985 electric operating g our adtomers. I am happy to say that revenues, while operating revenues fmm our f
because of some improvement in our finan- resale gas sptem were about $1017 million, cial picture, we were able to reinstate down 3"o from the previous year.
pavment of preferred dividends and to catch A new all-time record demand for up or ; hose proiotoly mired due to our electricity was established on the Company's earnings problem. electric sptem in the summer of 19S6 with one of our healthiest accemplish- a peak load of 1.lSiono kilowatts. This ments in 19S6 was to return our net income topped the proious peak of 1.111000 kihe to a positive position. As you may recall,in watts set in 1981 1985 the Company suffered a net loss of The Company's typical residential elec-
$18.8 million, the first operating loss in its tric customer used an average of 10.748 James .TI. Cain 63-war histort 'lhis operating loss us kilowatt-hours (kwh) of ekctricity in 1986 President of the Company largely due to our inability to obtain timely up 495 kwh from the average usage in 198i regtdatory authorization for recoverv of The average unit cost per residential kwh to onts associated in the Company's 17"o our customers in 1986 was 6.2 cents, as allocation of Grand Gulf 1. With the rate compared to an average unit cost per case settlement negotiated wnh the New residential kwh of iS9 cents in 198i of the Orleans City Council (Council) in March total average residential odt of electricity 19S6 on thee Grand Gulf 1-related cot 3. the in 19s6.12 cents per kwh or 3% was the Company was gr.mted sufficient rate relief, result of the odt of fuel used to generate together with a phase-in and deferral plan. electricity or for purchased power.
to allow 19S6 net income to reach appmxi- 1.argely due to the fuel savings associ-mately Salo million. Of course.19S6 net ated with the use of nuclear-generated income reflects the one-time impact of electricity. the July 19S6 fuel adjustment in deferring on our books for future reo>very customer electric bills was the lowest since
$15 9 million net of related income taxes. January 1980.
of Grand Gulf I ants that praiously had The typical residential gas ctotomer been expensed in 1981 This deferral was served by the Company used an average of authorim! by our regulators, the Council. as 611.8 ccf (hundred cubic feet) in 19S6, l part of the March 1986 rate settlement. an increase of los than 1"o fmm 1985 use.
l Aho similarly affected in 19S6 were The average umt est per residential ccf the Company's return on aserage capitaliza- of gas to our customers was 57.7 cents tion and return on aterage common equity. in 1986 as o>mpared with 5i7 cents per lloth showed significant increase when residential ccf in 1981 incnases in the compared with the negatiw returns experi- supply oot of gas to the Company from its enced in these two categories in 19Si suppliers accounted for all of the increased operating rnenue for 19S6 totalled oot to ctotomers in the past year. Of the unit l S dS S million, an increase of about SS.2 cot of a residential ccf of gas in 1986, l
million over 19Si operating revenues. At the 3S.7S cents or 6'"o was attnbutable to the same time. operating expenso for the year ont of gas purchawd for the sptem.
were $376.1 million, which represented a
$;12 milhon decrease from 1984 operating expene or a 13" decline.
19R6 ANNUAL REPORT l o
NEW OMLEANS PUELIC SERVICE INC.
,/ As investors, luu will recall that after having been forced to defer payment of pf , preferred dividends for two quarters, Public
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/ Senice was able to declare in April 1986 dividends on all series of preferred stock 7' D i-M '
presiously missed due to the Company's financial problems. These payment., were b h (M_ made on June 2,1986, which means that
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_ _ _ _ the Company is now current on all preferred
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'N not yet been successful in restoring common
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expenditures scrutinized carefully. Our con-
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$13,655,000, which represented necessary
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improtements to wr electic and gas sptems.
7 Ey The improved financial condition of the Company in 1986 permitted Public Service to resume its aaive imulvement in F~ At year-end, the Company was sening the community and to meet its responsibil-l a tot.d of 1%,822 electric customers and ity as a go(xl corporate citizen. The Com-165,059 gas customers in Orleans Parish. A pany embarked on sewral new programs complete look at the 1986 financial piaure during the year, all aimed at furthering such of the Company follows on pages 15 through imuhrment and demonstrating our concern 31 of the annual report. for our customers and the community One in other matters of interest, a settle- such effort was operation Mainstream.
j ment in the long-standing litigation between Sponsored by the DirA operation i the Company and United Gas Pipe Line Mainstream is a program that is attempting Company (United) was announced in Feb- to overcome adult illiteracy in New Orle:ms ruary 1987. If approved by the parties to the by sponsoring programs in which individu-suit and the courts, the settlement would als are taught to read and, thereby, help result in the refund of approximately $70 themselves in the job market. Public Senice l million to electric customers sened by the entered into the pmgram with the DICA l Company during the period 1973-1975. and pmsided advertising support to inform i The settlement arises out of a lawsuit the public about the pmgram as well as filed by thc Company in 1974 against United soliciting volunteer tutors. The results have for breach of contract stemming from been owrwhelming and a source of great United's failure to deliver obligated quanti- satisfaction to all of us.
ties of natural gas for power plant use.
Among other things, the suit sought dam-ages in behalf of the Company's elearic customers for the increased cost of power plant gas and alternate fuels that the Company was required to purchase to gener-ate electricity because of United's breach. In 1984, the Civil District Court for the Parish of Orleans ruled against United, awarding damages totaling $n4 million plus interest thereon. United subsequently appealed this decision to the louisiana Fourth Circuit Court of Appeals, where it was pending at the time of the sett:ement.
2 Assuat neront i9ns
SERVING... YESTERDAY, TODAY & T O nf 0 R R O W Not only were we successful in bring- Toward the end of 1986, the Company ing in numerous new students into Opera- announced plans for participation in yet tion Mainstream, but the program also another community project in early 1987 recruited over 1,300 volunteer tutors, many - DIN.0LGON, an exhibit of life-sized, of whom were Company employees. Our animated dinosaurs being co-sponsored with invohement in Operation 51ainstream also the louisiana Science and Nature Center in was a source of personal pride to me New Orle;ms. The exhibit opened January bxause I recognize how important educa- 17,1987 and will run until the end of May.
tion is to the economic development of Thousands of students and adults from our community. the Greater New Orleans area are expected Along with operation Mainstream, we to visit the exhibit during its stay in also participated in another community New Orleans.
education program called "G.ED. on K" While the majority of our nen was This program was aimed at helping prepare gmi in 1986 the year ended with some air individuals lacking a high school diploma of uncertainty still lingering over the out-to achieve equivalency certification ar high come of the prudence resiew undertaken by schcal graduates. the Council regarding the Company's deci-We also were imohtd in many other sion to participate in the Grand Gulf project.
community activities in 1986 in which we This prudence review was initiated by the made a sincere and dedicated effort to Council as part of its consideration of the become even more out-reaching in our rate increase request fik4 by the Company attempts to communicate, listen, and repond in 1985 to recover its Grand Gulf 1-related to our customers' needs. Pages 6 through 13 costs. Although a settlement was eventually of this year's annual report will give you reached between the Company and the more of an insight into these programs and Cotmcil on a rate increase in March 1986, what they are all about. the Council retained the right to conduct a Another highlight of 19S6 was the prudence review.
selection of Public Senice to receive a special Presidential Citation for Private Sec I tor laitiatives in rtegnition of the Compa- s j! ('k,',
ny's community service activities. NOPSI was one of 70 businesses and associations across
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the nation honored with such an award in June 1986 at the l'.S. Chamber of Commerce S sb \ N*/
f Building in Washington. D C. Needless to sav, L 3' \' /.T ' - ' .fm we were very proud to accept this award o'n behalf of the Company,its shar holders, and W
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An employee-volunteer organization,
" Family of Community and itdity Support- /
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'l' ers" ( FOCl S), abo came into being in 1986 h 7 NI' .~\ Q' Y and accomplished a number of out3tanding achievements during the year. ht note-b% \';/[ d
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worthy of the projects undertaken by FOCl S was the colketion of a record number of t
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fmni items which were turned over to the Greater New Orleans Fml Bank for needy '
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citizens. In addition, FOCL'S members par- {
ticip:lted in various fund raising activities for worthy projects in the community, sang Christmas ctrols at local nursing homes during the holiday season, and took part in other community actaities. All of us at Public Senice are extremely proud of the accomplishments of FO'IS m its first year of existence.
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N E W 'b n L E. A N S PUCLIC S E ht V I C E INC.
Numerous public hearings were held The Company made serral new offi-over the course of the year and volumes of cer appointments in 1986 and added two testimony were preented by all participants new members to the Ikxtrd of Directors.
in the prudence matter. A special hearing Among the officer chantes made were the examiner appointed by the Comicil prnided election of Shelton G. Ctnningham,Jr. as over the hearings and created an official Senior Vice President 41arketing & Rates; f record which, eventuallv. will be turned over Robert J Dtum as \ ice Preident-Administrative to the Goncil for a decis!on. Senices; Richard C. Guti rie as Vice President-llearings in connection with this pru- Public Affairs; and W J.1.annes, Ill as Vice dence roiew were being conducted as late President-Sptem Engineering. Ir. addition, as February 19S7. A final decision by the the title of G. E Delery, Ill was changed to Council is expected by mid-year. In the event Vice President 41arketing and la W. Randall the Council finds imprudence with regard to was rmmoted to Vice Prnident-Accounting the Company's arrangements for Grand Gulf & Finance, and Assistant Treasurer. Nolin J.
I,it may attempt to take action to force the Briley, Assistant Secretary for louisiana Pourr Company to absorb coss associated with & Light Company, was given the additional Grand Gulf 1 in excess of the unrecovemi reponsibility in 1986 of A4istant Sect:tary
$51.2 million resulting imm the March of Public Senice.
1986 settlement, and ua'e:s such action on May 12,19s6, the Company's were stapd by the cm ts, the Company's Ikurd of Directors elated Gerald 11 Mctrndon earnings, liquidity, firaecial condition, and to the Board. Until his retirement in April ability to meet its conti."uing obligations 1987, Mr. Mcitadon will serve in the (including its abihty to effect further financ- interlocking position of Executive Vice Presi-ing necessary to mee those obligations) dent for both Public Service and if&L could be adversely affected. The Company We also were pleased to have Dr.
would vigomusly oppose thmugh the courts llenry E. Braden, Ill elected to the Compa-any materially adverse decision of the ny's Ikurd of Directors on October 27,1986.
G)(mcil that may result from the Dr. Braden is a prominent New Orleans prudence inquiry. phpician who has been active in professional and civic affairs througlx>ut his ca eer.
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S E R V I N G . . . Y E S T E R D A Y , T O, D A Y & T 0 nf 0 R R O W 'l Retiring from the Company's lloard of A major New Orleans dtvelopment Directors in 1986 was A L Jung.Jr. who approved by voters in 1986 was the Aquar-reached the mandatory retirement age for a ium Project to be bt.ilt along the Riverfront director. Str.Jung had been a member of the near Canal Street. Plans are for this world-lloard since 1951. IIis retirement was effec- class aquarium to be managed by the tive Slay 12,1986. Audubon Park Commission. An opening date j in conjunction with the April 1,1987 of early 1990 is being planned for this new l retirement of Gerald D.11cl.endon, Executive f tcility. Also in January 1987, it was announcal Vice President, two new Executive Vice that New Orleans had been sektted as the ,
Presidents were electul by the Company's site for the 1988 National Republican Con- !
Iloard of Directors in early 1987. Elected as vention, an event that should bring the City Executive Vice Presidents were Donald llunter, a tremendous amount of nationwide public formerly Vice Prmident-Projects at Yankee attention as a major convention center.
Atomic Electric Company, and R. Drake Thus. the economic picture in New i Keith. Str. Keith had been Senior Vice Orleans is looking brighter and we are all l
President, Sptem Executive-Financial Offi- optimistic that 1987 will see even further cer at Sliddle South l'tikties, Inc., our parent improvement. llecausc we recognize that company. Str. Ilunter will have responsibihty economic devehipment and new jobs are as for the areas of Energy Supply-fossil. Energv important to our Company as they are to Delivery, and Administration and Planning. the community as a whole, Public Senice air. Keith will be responsible for Accounting will be working hand-in-hand with city
& Finance and Treasury, External Affairs, officials and other community leaders to and 11arketing and Rates. assure the continued economic recovery of Although the sluggish state economy our area.
carried over into New Orleans, the success of f
I several major new developments along the f .\lississippi Riverfront provided some ray of j optimism that 1986 may have marked the beginning of an economic recovery for the City. The Rouse Rwerwalk IAselopment got off to an exciting start in mid-vear with its more than 200 restaurants, sho'ps and cafes t opening for business. This facility is h>cated . ]we{p#
hgs l on a portion of the site formerly occupied by 18 q %.
the Inuisiana World Exposition. located ad- <ag ;,1kgt! <
jacent to the Rwerwalk Complet is the New o Orleans Convention Center, which enjoyed f, N r' b.y MMy 2 g ..:
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another successful year in 1986. .\ lore than %
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booked for 1987 in the Conwntion Center, L 4E with another 20 tentatively schedukd in i h dfi addition, theJackson lirewery Extension was completed in 1986, adding even more shop-ping and eatmg space to this popular tourist Sincerely, and local attraction in the French Quarter.
The louisiana I.and and Exploration Tower, the City's newest highriv office l s building, was necting completion at yer -
end, while the Eastover Development in eastern New Orleans, a community compkx JAllES .\l. CAIN featuring an IS-hole championship golf President of die Company course and over 200 homesites, is expectal to be completed in the fall of 1987. Also For the lloard underway in late 1986 was the Poydras 51 arch 5,1987 Square ikielopment located between the Superdome and the Ilyatt llotel. This new commercial deselopment is schedukst for completion by the end of 19ss.
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NEW ORLEANS PUCLIC S E R V I C'E I N ,C .
gpgg O As the corporate entity charged with the responsibility of providing elec-in an effort to further its com-munity involvement in 1986, Public Ser-Together To tric and gas senice in the City of New Orleans, New Orlean Public Service Inc.
vice extended itself into many new areas of the community where the Company Bud. d A Better is many interetea in the economic wen reit that its support was neeaea. ne ~
being and future of the conununity. Bat's ColniHUnity because a healthy community means Company became a leading proponent and cheerleader for Operation Main-more jobs, better wages, improved life- stream, a pmgram to reduce adult illit-styles, and a brighter tomorrow for all eracy in New Orleans. It sponsored free of its citizens. energy fairs in low-income areas of the During 1986 Public Senice renewed city and aggressively promoted a new its commitment to community involve- program to increase business opportuni-ment and pledged to increase its activi- ties for minority and women vendors.
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, ties as a socially responsible corporate Public Service expanded its customer ser-y ef ; y,; citizen. The Company f;rst made this sice activities to make the Company more
- ! commitment almost 65 years ago when accessible to its customers and devel-
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nized to bring together the electric, gas, individuals experiencing hardship situa-
\ and tr:ulsit operations in New Orleans tions or unusual circumstances in paying J-and to provide the communit) with ade- their energy bills.
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- throughout the years, Public Senice has stood by this pledge.
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S E R YI N G... Y E S T E R D A Y, TODAY $ JOMORROW In 1986, the Company and its par- Although the wings of corporate ent organization - Middle South I'til- social responsibility fan out far and wide ities, Inc., - reached out and joined and may differ from one business to hands with the community in an effort the next, the achievements realized by to improve the k) cal economy and make the Company during the past year are a i the future brighter for New Orleans. Des- source of pride and accomplishment to ignated as "New opportunities," this pro- the management, directors, and employ-l gram is a joint effort of Middle South as of Public Senice. They, likewise, should and its operating companies to aid in be to the Company's stockholders and the economic development of louisi- investors because they illustrate that Pub-ana, Mississippi, and Arkansas. The "New lic Service cares about the community Opportunities" program recognizes the it serves and wants to help New Orleans link between the quality of education become an even better place to live and and the area's potential for economic work.
development, striving to bring the two With this expanded sense of social together in concert through Company responsibility now firmly in place New support. In New Orleans, this effort has Orle:ms Pubhc Service pledges to con-been directed by Public Sen-ice at over- tinue working together to build a better coming adult illiteracy, encoumging those community in every way possible.
lacking high school diplomas to achieve General Equivalency Degrees (G.E.D.'s),
and supporting educational programs, particularly in the science fields. One such project, DINAMATION. wns announced in late 1986 in conjunction with the Inuisiana Nature and Science Center and features life-sized, fully animated dino-saurs in a Riverfront exhibit which will remain open until May 30,1987. Thou-sands of New Orleanians are expected to visit the exhibit while it is open.
These are some of the wau that New Orleans Public Service fulfilled its l commitment to become even more involved in the community in 1986 and to reach out to its customers. It also l i
l Was a way of recognizing that the Com-l pany and its investors have a stake in 3} ,
l the economic welfare in the commu- f , j nity: therefore, they want to see New l p /k j Orle:ms grow and prosper. "m
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1986 ANNUAL PEPORT 7
NEW ORLEANS PUSLIC SERVICE INC.
OPeration MoMohts B B Of Mainstream illiteracy in New Orleans Company Presi-dent Jim Cain personally appeared in a The Outreach Working jointly with the DICA.
serie or tetesision emmerciat8. citina
. .. md-life examples of lxnv ogration .\ lain-Activities Pubuc senice pmduced telesision, radio, stream had assisted many New Orleani-g $
and nempaper advertising calling pub-lic attention to Operation alainstream, ans in learning to read. The commercials appealed for volunteer tutors and for a pmgram aimed at combating adult interested students to join the program.
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, _ tion alainstmun commen'ials or the DICA to ask for more information almut the M/ program or to volunteer as tutors. The Company plans to continue its support l
I of Operation hiainstream in 1987.
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k17/ "G.E.D. on Television" was a series car-
$ %y ~ 37QN D ried by local affiliates of National Pub-lic Telesision which helped paltur sieum l to qualify for the equivalent of a high l 8 ANNUAL REPORT 19H8
SERVING...YESTEROAY, TODAY & TO$ORROW school diploma. In addition to sponsor- Helping 11 ands ing telesision commercials calling pub-lic attention to the series, the Company in 1986, contributions to llEl.P-also furnished fnt educational materi- ING ll\NDS, the energv assistance pro-als to the first group of students to sign gram originated by Public Senice and up for the program. its sister company, l.ouisiana Ibwer &
light Company, surj assed the $1 mil-lion mark. Initiated in 1983 in con-junction with the Councils on Aging.
Home Energ)' this pnigram pnnides emergency energv Shopping Sprees assistance to low-income people 9) years of age or older or handicapped individ-Tips on home energv conserva- uals in the community. IIELPING lliNDS " '
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tion techniques and free weatherization materials were featured as part of the is funded through contributions from Company customers via their monthly ;[y g' {y h*
AA four llome Eixrgv Shopping Sprees spon- bill payments, from patroll deductions '0 J
sored by the Company during the past by employees, and through other con- T s h N: - j year. The energy fairs were held in low tnbutions. To date, ont $298JW in enkt-
%} h .A y income areas of New Orleans and put together in conjunction with neighbor-gency erxrgv assistance has been provided to eligible individuals in New Orleans { Q~ / !k y(
hmx! community organizations. Evo of alone through the llEl. PING liANDS pro- x A I the events were held for llispanic and gram, with a total of 542 households .;,[ YQ;' '
Vietnamese-speaking citizens, respectively, helped in 1986 alone. " %
and were conducted by Public Service employees who were fluent in those lan-guages. A combined total of almost 500 individuals attended tlxse four c\ents in 19S6.
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NEW ORLEANS PUELIC SEMVICE INC.
Energy Management tedusps.1hirty-one npasentathts from For Religious Buildings 17 churches in the community attended four sepamte workshops conducted by Working jointly with representa- Company energy specialists. The goal of tives of the Edison Electric Institute, the this progr:uii w:is to help make the min.
Company instituted a program in 1986 isters more energy conscious and to assist to assist local churches and their clergy them in wuitherizing their religious facil-in energy consen'ation and wettherizing ities. Additional progt;uns of this nature are being considered for the future.
n Dr. Martin Luther King Ediibit t
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through s[Ycial mailings, hbhy dis-h plap, and advertising; helped organize j j {q '
a program and reception to open the i event; and assisted with the dnelop-i
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King exhibit, Puhhc Setrice in 19H6 salutet!
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ln 19S6, Public Senice manage-ment continued to meet regularly with a cross-section of the Company's cus-tomers in a roundtable discussion for-mat known as the Constuner Roundtable.
[#Uring these sessions, managenlent lis-tens to customer input about energ\-
n> lated mattet% dNtsso Company policies and practices, and answers questions on current issues. Since 19s when the Con-sullier Roundtable Was first e>Iahlished, the Roundtable has afforded the Com-pany a Valuable insight to particular custonu problems and how Public Ser-sice can hetter contnbute meaningfelty to the community.
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NEW OMLEANS PUSLIC SERVICE INC.
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Minority Vendor Program even more in the future - as well as tlle total lillnlhtf of niinority finlb doing As all off-shoot of l'ac NMCP l' air business with the Company.
share Agreement -- : .i19si.ihe Comp.uly's Minorit/ k i ior Prograni is dtsigned to seek athhti inal business opportunities for minority and women FOCUS vendors. To pnnide further emphasis to this progam, in 19s6. Public Senice A mlunker employee organiza-authorized a slot for a full time minor- tion known as lurS came into being ity vendor specialist in its Purchasing in 1986 and during the year logged more ikpartment. As a result, the dollar value than 2.sm hours of voluntett work in of purcluses from minority vendors has the community. A highlight of its activ-increaml - and is expected to increase ities was the colhttion of a record-breaking number of fml items by lurs members for the New Orleans th!Ilank for distnhution to nmly famdies. lurs 12 w a nrom m s
i SERVING... YESTERDAY, TODAY e T 0 nt O R R O W volunteers also participated in four tele- Presidential Citation thons or Walk-a-Thons for charitable Caux5; money-raixfs for the Cliild's Wish In recognition of the Company's program and Ronald Mcl)onald llouse; community-mindedness. Public Smice l
) and Christmas carolling at a number of was honored in 19S6 with a special kwal nursing homes dunng the holiday Presidential Citation, one of the highest sea. son. The group's acronym (FOCl'S) awards gisen for Private Sector initia-is derived from its formal name - tius. The award was accepted in Wash-
" Family of Community and l'tility ington, D.C. by Company President Jim Supporters" - a cros3-section of ('ain fi)llowing special ctrtillonies at the Company emplo}t'es who are dedicated l'.S. Chamber of Commerce lluilding to assisting their community. where Public Sen' ice and 70 other busi-ness and trade a3sociations from across the nation wtte rittgnizrd fiir their com-n1 unity senice. It was a fitting tribute School Programs to Ptd,lic Senice and its 1.60 employ-ees (br their co;nmu.iity spirit and the in 19S6. the Company both con- personal care exhibited for their fellow tinued and expanded its school related New Orleanians as a roult of these out-actinties by working more closely with reach actisities. udl it corporate social educators, schml administraton, and indi- rtsiwtsibilitv. a xuse of caring. or merely sidual students. As part of these actisi- reaching out to help New Orleans Pub-ties. seven major educational displap lic Senice is pnod to be wurking topthtf were erected by the Company in various with the community to build a better business ofIice hicatiolb dilrillg the } ear New Orlealls and a half do/en other topics were cob 4 ered in portable displays designed for
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175 ANNUAL REPORT 13
i NEW ORLEANS 9USLIC SERVICE INC..
REN)RT OF M.WA6DIENT AlDITORS' OPINION The management of New Orleans Public Senice Inc. has prepand and is New Orleans Public Senice Inc.:
repalsible for the financial statements and relatul financial information includul in We have namined the balance sheets of this annual rep rt. The fmancial statements New Orleans Public Senice Inc. as of are based on generalh acceptni accounting 1)ecember 31,1% and IW and the principles, consistenth applied. Financial relatut statements of income, retained information includal ebewhere in this repet earning uid chang.s in financial poition is consistent with the financial statements. for each of the thnt > cars in the niiod
'lo meet its Inponsibditio with nspri endal Iktender 31.19sh our namina-to financial information, management main- tions were made in accordance with tains and enforca a splem of internal generalh acceptal audaing standards accounting controb that is designed to and, accordingh, includal such tats of proside reasonable assurance, on a cost the accounting reconb and such other effective basis, as to the integrity, objectisity, auditing proculurn as we consideral ;
and reliability of the financial records and necosarv in the ciroimstancn. j as to protection of assets. This splem )
includes communication through written The accompanying financial statemeno )
policies and procedurn, as well as an include $1 M milhon of Gr;md Gulf 1 j organizational structure that provides for onb dtferred for future recovery. As {
appropriate dnision of responsibility and docnbed in Note .I of Note to financial )
the training of personnel. This sptem is Statements, the unincil of the Gty of abo tested by a comprehensise internal New Orleans (Onmcil) is conducting an audit program. imestigation into all aspects of the The board of directors pursues is respon- 0>mpanyi prudence regarding ib intohe-sibihty f(t reportal financial information nknt with Grand Gulf 1. If tlt Uninal l'Irough its audit commi!!ce, componi of determines that any actions t f decisions (ntbide dirwtors. The audit comnuttee m(rts of the Gimpany awociatn! with Grand priodicalh with management, the internal culf I were imprudent, it may attempt auditors, and the indelvndent public acoiun- to prohibit the Gimpany from recoscring tants to discuss auditing, irternal control, from ib ratepa}ers Grand Gulf I ants and financial nportmg natters. The inde- found to be imprudent.
lrndent pubhc aceuntano and the internal audnors have far acens to the auda lo our opinion. sub ett to the effech on committtt at any time. the 19Sb financial statemenb of such The independent public acountants aJiustments,if any, as might have been pnnide an objective assessment of the rnjuind lud tle outcome of tle nnattainty degne to which management nxtb its referrn! to in the pntn!mg paragraph rep >nsibihty fit fainxss of fmancial reprt- lxrn known, tir alementioned financial ing They regulath evaluate the spiem of statements pnsent fairh the financial internal acoamting control and perfrem poition of the Gimpany at iktemirr 31.
such tesb and other procedures they deem 1986 and 198; and the roulb of its necnsary to reach and npress an opinion oltrations and chango in us financial on the f.urness of the financial statements. poition for (ach of the three > cars in Management Ithevn that thne poli- the priod endnt Iktemlvt 31. l% in cies and pnicnlures pnwide reasonable assur- ainfornuty wnh generally acceptal ance that our oirrations are carrint out acoiunting principin apphed on a unh a high standard of businns conduct. oinsistent basis.
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SERVING,.. YESTERDAY, TODAY & TOMORROW STATDIENTS OF INCO31E (LOSS)
For the years ended Decemler 31,19S6,19S5, and 1981 1986 19s; 19m OPER\ TING RFENI ES (Note 9): do Thousands)
Electric $326,095 $315,034 $322.060 Natural gas , .102,700 10;393 126 3'9 lbtal 428,795 420.627 448,439 OPER\ TING ENPENSES:
Oprations:
fuel for electric generation . 48,533 88,783 107,291 Purclused per (Note SD) 247,971 173,024 91,252 th ferred &ctric fuel costs (4,143) 1,850 2,598 Ga3 purchased for rnale 66,744 84,726 89,529 Ikferred rnale gas costs 5,699 3,084 (9.502)
Other 70,144 6S,011 63,311
\lainten ince 18,11i 18,162 17,903 l)epreciation 14,656 16,110 11348 Taxes other than income tasn 22,312 20,293 20,181 Income tasn (Note 3) (34,527) (26305) 13.S95 Rate deferrah:
Deferred Grand Gulf I esivnses (Notn IG. 2, and SA) (146,409) - -
Income ta\n (Note 3) 67.348 - -
lbt.d operating espemes . 376,440 4Rl;4 433.M)
OPER\ TING INC0\lE (LOSS) . 23.2s; 52J15 (12 063)
OTilER INC0\lE (I>EDirilo.iS):
i Allowance for etl tut) funth used during comtruction (Note IF) - -
31
.\liscellaneous - net 619 99)+ 9567 income taxes (Note 3)
(285) (43s6) (4 ms) lbtal ;303 334 4 'os INTERESI ANil OEllER GIARGFX internt on long-term debt 9,632 8318 8.v)6 Other internt - net 1,133 2,328 2,035 Allowance for borrowed funds used durm; constructmn (Nite IF)
(57) (si) (37) lbt.d 10.708 10362 10,i4 6 NET INC0\lE (105S)
L41,981, fils si') j_ l@ ;
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STATDIENTS OF RETAINED EARNINGS (DEFICIT) 1986 pis; losi for the years ended l>xemlvr 31,1% 1985, and 19si do The@
RlI\lNED EARNINGS (lif tl CIT),Januan 1 5(16,951) $ 10,151 $ 9,9,i Al >D' Net income (hisu 41,981 _ ( lx,s t ') is3s) lbt.d 25,030 (s (M) 2832S l l>F. lit G linidend3 ( Note 5):
Preferred sink 3,HI i 2.2s3 3,2SI Common stock -
59)' li s's ild a l - -
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lbt.d 3,8 lj S2s; Isr' REI\lNED F.\RNINGS ( DEllCIT), Iktember il ( Note 7) .
L21,216 f 061);l) }_InJ;]
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of*E W OMLEANS PUCLIC $ 'E R V I C E INC.
BAIANCE SilElTS December 31,1986 and 1985 ASSITS 1986 _.17;_
(in Timsands)
LTilflY PLANT: i Ekctric , $395,619 $3M215 Natural gas , 88,676 85,316 O>nstruction work in progress 2,052 1.077 lbtal 486,347 47640s Ins accumu'ated depreciation 237,820 227.0].3 l'tihty plant - net . 268,527 2 +9.;95 (Tiller PROPERLY ANI)IN\BT\ LENT:
Imestment in subsidiary company - at equity (Note SI) . I1,378 12 938 CI'RRENT ASSEl%
Gish and special delwib . 1,966 330 limporary imestments - at cost, which approxin'ates market:
Awociarn! companies (Note 4) , , 700 25.000 {
Other. 4,900 -
Accounts receivable:
Gntomer and other (less allowance for dmbtful accounts of $1,3009x) in 1986 and
$190#10 in 1985) 27,577 27.054 income taus receivable ( Note 3) 4,998 7,402 Accumulated dt ferral income taus (Note 3) 2,8 63 2,127
\tattriah and supplies - at aserage cost 7,686 7,420 Power purchaw advance paymenb (Note SI)) -
13.Ss4 Prepayments and other , 1,937 1J4; lbtal 52,607 84.262 I)EEERREI) 1)Llifl%
ik ferred Grand Gulf I expene (Notes IG. 2, and SA) , , 146,409 -
Other 1,5(g) 931 lbt.d 147,9 9 931 TOTAL. 1460d81 gi+63_j smo, nuwui sownwns 16 muu mw i.e
S E R V i N O . . . Y E ,S T E R D A Y , TODAY & TOMORROW GPITAlj7AT10N AND I.lABilJTIES 1986 1985 (In Tlxnisands)
CAPffAIJ7.\T10N:
uimmon stock, $10 par value, authorized 10Jn)000 shares; issued and outstanding 8,435.900 sharts (Note 5) . $ 84,359 5 84,359 Retained earnings (deficit)(Notes 5 and 7) 21.216 (16 4;l) 1btal common shareholder's equity 105,575 67,908 Preferral stock without sinking fund (Note 5) 20,117 20,117 Preferred stock with sinking fund (Note 5) 13,248 13,257 1.ong-term dat (Note 6) 133,415 114.428 lbtal 272,355 215.210 UTilER NONCI'RRENT IJAlllllTIES:
Accumulatal pnwision for property insurance 10,490 9,741 Accumulated pnwision for injuries and damages 2,213 3,943 Other -
50 lbtal 12,703 13.7 3 Cl'RRENT I.lAlilllTIES:
Noto payable (Note 4) 5,000 -
Currently matunng long-term debt (Note 6) 6,000 -
Aconints payaNe:
Awiciated companies 21,799 22,579 other. 19,011 23,795 Customer delusits 11,459 10,850 Tain accrun! . 7,702 7,152 Internt accrwd 3,526 2,143 l>isidends declarni(Note ;) 6,759 5,997 lieferrni electric fuel and resale gas cost 3 6,180 4.626 Other 1,367 1.053 lbtal 88,803 78 19; l>EFERREI) CREDflX Accumulated deferred income tain (Note 3) 64,103 17,425
&cumulatal deferrni intntment tax crnhts ( Note 3) 13,874 14.111 l'namortized pension ex;wnse (Notn ID and 10) . 7,168 6.692 Customer advance for construction and other 1,475 1,4S9 Ibtal 86,620 39.747 00\l\llTMENTS AND CONTINGENCIES (Notes 2 and 8)
TOTA!. $460,481 S M SS6 I
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STATDIENTS OF CIIANGES IN FINANCIAL POSITION For the years endtd December 31,1986,1985, and 1984 1986 1985 1934 ITNDS PROVIDFJ)IW:
Operations: (In Thousands)
Net income - -
$ 18,384 Depreciation .. . .
16.110 Deferred income taxes and investment tax credit adjustments - net - -
(4.444)
Allowance for ajuity funds used during construction . - -
(34)
Total funds provided by operations . - -
30.016 Allowance for equity funds used during construction . - -
34 Power purchase advance payments (Note 8D) . $ 13,884 5 63,84) -
l'namortized pension expense - 6,692 -
Sliscellaneous - net . .
4J)Si -
l Decrease in working capital * -
1843 11.SSI l lbtal funds provi&d excluding financing transactions 13,884 S0.423 41.931 Financing transactions:
Common stock . . . - 25,0lX) - l First mortgage bonds 25,000 - -
Short-term securities - net 24,400 -
4S5X)0 lbtal funds providal by financing transactions 49,400 29X)0 4S3Xx)
Total funds providal $ 63,284 $10i423 $ 00.S31 ITNDS APPUED TO:
Operations:
Net (income) hiss $(41,981) $ 18,817 -
Depreciation .. .. (14,654) (14,548) -
1)eferral income taxes and investment tax credit adjustments - net (45,695) 7,020 -
I eferred Grand Gulf I expenses (Notes 1G and 2) 146,409 - -
lbtal funds applied to operations . 44,079 11.289 -
l'tility plant additions:
Construction expenditures (includes allowance for funds used during construction) . 13,655 14,814 $ 14,916 Other:
Dividends declarul on common stock . -
5.997 14.875 Dividends declared on preferred stock . 3,814 2.287 3281 Investment in subsidiary company -
+11 969 Power purchase advance payments ( Note 8D) - 29,495 48,194 Miscellaneous - net .
421 -
1,112 Increase in working capital
- 1,305 - -
Total funds applini excluding financing transactions 63,274 64323 S3347 Financing tr;msactions:
Redemption of preferral stock .
10 -
1,484 l Retirement of first mortgage bonds - -
6,000 l Short-term securities - net - 41,100 -
lbtal funds apphal to financing transactions 10 41,100 7,4S4 Total funds applial $ 63,284 S105.423 $ 90.S31 Increase (decrease) in working capital
- Cash and special deposits . . $ 1,636 $ (1.699) $ (297)
Income taxes and accounts receivable (1,881) 5,011 (3,707)
Accounts payable:
Associatal companies 780 (16,563) 4.602 Other . .. ...
4,784 5,25; (3,399)
!):vidends declared . . ..
(762) (5,177) -
Deferred ekttric fuel and resale gas costs (1,554) 7,651 (5/a2)
Other (1,698) (321) (339S) lbtal $ 1,305 $ (;.S43) $(lI .SSI )
- Working capital does not include short-term securities - net, current matunties of long-term debt, deferral taxes, and power purchase advance payments includal in current assets or current liabilities se son to rmamai suamoas.
18 mma nucar su
Sp a rt N o...Y E S T E R D A Y, TODAY & TO Af0 M R O W N()TFS T() D. Postretirement Benefits The Company's policy is to continue The Company has potretirement plans to capitalize AFDC on projects during peri-FINANGAL STATDIENTS onring substantially all empk)3 tis. The Com- ods of interrupted construction when such th the years -nded December 31,19S6.1%5.
pany's policy is to fund pension costs in interruption is temporary and the continua-and 194 accordance with guidelines established by tion can be justified as being reasonable the Employee Retirement income Security under the circundtances.
- 1. Sl31%tMtY OF SIGNIFICBT Act of 19M Pension costs accrued in excess G. Rate Deferrals ACCOUNTING PoljCIES of amounts funded are amortized over 10 The Council has agreed to a rate A. System of Accounts years. The onts of other postretirement ben- phase-in plan for the Company as part of The acounts of the (.nmp;uly are ntun-efit plans are funded as incurred.
tained in xcordance with t! e sp tem of the March 1986 rate settlemen't in order to aconmts prescribed by the (;ounal E. ofIncome the Taxes reduce the immediate effect on ratepayers of City of New Orleans (tounol) uhich sys- The Company joins its parent. Middle the inclusion of Grand Gulf 1 adts in rates.
South Utihties. Inc.iMSE). in fihng a con- Under this plan certain costs are deferred in tem of accounts substantially confornd to that prescribed by the Federal Energv Regu- solidated federal income tax return. Income the earlv vears of commercial operation and taxes are allocated to the Company in pro- collectet} in the later rears fmm ctatomers.
latorv Commission (RRCL portion to its contribution to the consoli- The Company and the Council have agreed H. Resenues dated taxable income. Income taxes receivable upon an estimated Il-year phase-in plan.
The Company recor6 electric and gas represents esumated amounts due under the By deferring these to the future when they revenues as billed to its customers on a cycle tax allocation agreement. will be collecid thmugh increased mtts billed bdhng basis Revenue for enerry Jehvered n [e, g in3.ne taxc3 a rmvided for to ctotomers, the impact of the costs associ-but not biped at the end of th al period differencts between book and taxable income ated with the phase-in plan on the income is not accrunl.
to the extent permitted by the Company's statement has been removed. Ikcause the The tre schedules of the Company regulatorv bodies for rate' making purposes. actual collection of revenues to recover the !
include ektric fuel adiustmen and city gate Investment tax credits allocated to the Com- deferred amount will not occur until the gas ont adnotment clauses ut ler dich the (
pany are deferred and amortized based upon future. the Company records a deferred asset cost of fuel or generation. pur ha3ed power.
the average useful life of the related property representing the amount of the deferral and, and gas pun based for resale a on or below beginning with the year allow d in the con- at the same time, incurs additional capital the levels ab iwed in the varim s rate schul- (
sohdated tax return. requiremerits to finance this deferral (see ules are permmed to be billed e rn;uired to be crnhted to customers. The Company defers M rsed During Note 2, " Regulation and Rate Matters" and on its luoks fuel and purchased aas oots m Cowruction Note 8, " Commitments and Contingencies The Company capitalizes as an appm. - New Accounting Standard").
excess of the base rates until the e onts are re0ccted in bdlings to ctotomers i ursuant to d mdd plant an allowance for 11. Other Noncurrent Iiabilities the fuel and gas ont adiustment clauws. funds used during o>nstruction ( AmC) which it is the policy of the Company to s calculated and recorded as pmvided by the pnnide for uninsural property risks 'and for C. Ltility Plant and Depreciation regulaton setem of aco>unts. Under this claims for injuries and damages thmugh Ettlity plant is stated at onginal cot. utihtv inhtrv practice. construction work charges to operating expenses on an accrual The oot of addit uns to unhty plant includo in pmgress on the balance sheet is charged basis. Such expenses have been allowed for o>ntracted work, threct labor. materials alh*
and the income statement is credited for the ratemaking purposes.
cable overheal, and an allowance for the approximate composite interest cost of bor-compmite ont of funa used during oin- 2. REGUIATION AND RATE 31XITERS mwed funds and for a rea30nable return on struction. The oots of umb of pnpern retired The rompany hokls indeterminate per-the equity funds used for construction. This are remorni from unhn plant, and such mits to provide electric and gas senice in pradure is intended to remove from the oot3 plus remmul oots kss salage are charpti the City of New Orleans (City). The ordi-nalme statement the effect of the ont of to accumulated depreciation. Maintenance nances under which the Companv operates financing the o>nstruction pmgram. It effec-and repair 3 of property and nplacement of state, among other things, that tlie city has titely results in treatmg the AFDC charges in items deternuned to be kss than units of a continuing option to purchase the coinpa-the same manner as construction labor and pnperty are charged to operating expenses nv's pmperties. A report by consultants for material cots in that each is capitalized Principally all of the utilin pfant is subject the Council, the Ta3k Force on Municipahza-other tbm exynsd. As non-cash items- tion, recommended that the City commence to the lien of the Company s , Mortgage and thee crdas to the income statement have Iktsi of Trust.. the steps necessary to effectively acquire the no dfect on current cash earnings. After the hprttiation o.o>mputed on the straight- Company's ekctric pnperties and operations.
pnpeny is placed in senice the AWC chargd hne basis at rates based on the otimated The report was received by the Council on to o>nstruction cots is recoverable fmm ctb-senice lives of the various classes of prop- January 17,1985. On March 7,1985, a public tomers thmugh deprttiation pnwisions includd erty. Ikpreciation pnaided on aserage depre- power authority was created for the purpose, in rates charged for utihty senice. The effec-among other things, of acquiring and oper-ciable propert) in 19A 1983, and 19S1 tive compmite AFDC rate for the Company amounted to appnnimately ill L.115 " ating electric power utilities within the City.
was %,8%. and 9.1"o for 1941985, and li9"o. respecurely.
and 1981 respettively.
19t36 ANNUAL REPOm 19
'N E W ORLEANS PusLIC s E R V I C 'E ' I N C .
On March 25,1986, the Company Although the .\ larch 1986 rate settle- On November 14,1935, the company accepted a March 20,1986 settlement offer ment agreement continues in effect, the par- and SERI filed a complaint in the District from the Onmcil regarding the Company's ties thereto agreed that the legal rights of Gort seeking a temporary restraining order.
.\ lay 17,1985 application for an electric rate the City, the Council, and the Company, as preliminary and permanent injunctive relief, increase. The rate settlement prosided that a the case may be, regarding (1) potential and a declaratory judgment enjoining the portion of the company's non-fuel Grand municipalization of the Company,(2) the Council and its indnidual members from Gulf I costs be deferred and phased into Councifs continuing prudence investigation pmceeding with its prudence investigation.
rates and for current recovery of certain of the Company with regard to Grand Gulf 1 On December 18.1986, the District Court portions of such costs and of assumed carry- (discussed below) and (3) pending litiga- granted the Council's motion to dismiss the ing charges on the amounts defernd. The tion concerning the Company's contractual complaint, without prejudice to the right to l settlement pnnidal. among other thing, that arntngements with Sprem Energy Resources, refile the complaint, on the grounds, that (1) for bills renderd on and during the first Inc. (SERI), ( formerly .\ liddle South Energv. since the Council has not yet acted in the year after April 9,19S6, the Company is Inc.), are not affected. prudence investigation, the issues presented allowed to increase its base rates by $60 on October 17,1985, the Council ini- are not ripe for adjudication and that in million annually but shall cease charging a tiated an investig:aion into all aspects of any event the fedend aurt should abstain temprary 10% surcharge autluized on March the Company's prudence reganling its intoht- from taking jurisdiction in a local regtda-6.1986 by the Gamcil and shall " unfreeze" ment with Grand Gulf 1. Although the Com- tory matter. On Januarv 16.1987, the Com-its fuel ost adjustment reducing same to a pany has participated in the hearing before pany and SERI filed a Notice of Appeal with rate consistent with the pnwisions of the the Council, it has done so under a full res- the l'nited States Court of Appeals for the Company's tariffs. the net effect of all of the ervation of rights in comection with its poi- Fifth Cirtuit (Fifth Cinuit). Rttenth the Com-foregoing being an estimated increase in tion that the Council is barred by federal pany and SERI filed a motion to stay fur-revenues for the first year of appmximately law from conducting such a pmdence inquirv ther proceedinp in the Fifth Circuit pending
$26 million; (2) for bills rendered on and As part of the prudence inquiry and related dispoition by the l'.S. Supreme Court of a after April 9,1987.1988.1989, and 1990, the proceeding, the Council has initiated re ieus petition for writ of certiorari to review a Company is allowul to increase its base rates of the effect of the Tax Reform Act of 1986 September 2,1986 ruling of the Fifth Cir-by additional amounts of $294 million. $211 upon the Company's ba3e rates and Grand cuit. Speaficalk on August 1,1985, the Com-million. $214 million. and $24.8 million, Gulf I c ot recovery. If the Council deter- pany filed a petitmn in the District Court respective 4 on an annual basis; and (3) for mines that any actions or decisions of the for injunctive relief against the Council. the bills rendered on and after April 9 of years Company associated with Grand Gulf I are City. and the indisidual aunolmen to lega'ly subsequent to 1990, the Company is entitled imprudent and that it has jurisdiction to require these parties to recognize the legiti-to increase its base rates by 6"o of $439 deny on that ground the recovery in rates macy of the Company's portion of FERC-million compunded annually untd its Grand of FERC-alkrated costs of Gnuid Gulf 1, it alheated costs associated with Grand Gulf 1.
Gulf I oots are being fully ncovered on a may attempt to prohibit the Company fmm The District Court dismissed the case, and current basis and the amounts proiously nontring fmm its ratepa)tn tlw cots ass + on Februarv 14.1986, the Fifth Circuit defernd have been fully recovered. ciated with Grand Gulf 1 that the Gamcil reversed the District Court but subsequent 4 l'nder the terms of the settlement, the determines to have been incurred as a result on September 2,1986. the Fifth Circuit Company agard to absorb $51.2 million of of imprudent actions or decisions. In the modified its opinion so as to uphold the Grand Gulf I cots that it had pre tously event that the Council determines that any District Court's dismi>>al. The Company incurred and expensed and to withdraw a of the Company's actions or decisions assm then filed, on Octoba 3.1986, its petition request for an additional Si3 million increase ciated with Grand Gulf I were imprudent. for wTit of certiorari with the (LS. Supreme in annual revenues related to non-Grand and imposes disallowances in addition to court for review of the September 2.1986 Gulf 1 issue Aktitiona18 the Gimpany agrtid the Sil.2 million of incurred Grand Gulf I ruling of the Fifth Circuit. The matter not to request any non-Grand Gulf 1 electric onts that were aldorbed by the Company is pending.
rate increase to take effect prior to pursuant to the Rtrch 1986 Rate Agree-January 1.19SS. ment. and in the event that such actions As a result of this settlement. $29.5 by the Guncil were not stawd pending judi-million of the SSO.7 million of unrecowred cial revic v thereof, the Company's earning.
Gnmd Gulf I costs (including carrving char- liquiditv. financial condition, and ability to ges) that had Iren expensed during 1985 meet its continuing obligations (including were deferred in March 19S6 and endited its ability to effect further financing neces-against first quarter 1986 operating expatss. s:uy to mttt such obligations) cold, depend-
%e $29.5 mdlion will be nontad om future ing upon the extent of the disallowances.
periods. Ilad this event occurred in 1985 be severely impaind. The Company beliews Iki ino)me for that >ttir wruld haw incniad that all of its actions and decisions with
$119 million reduong the net hos of $18.8 respect to Grand Gulf I were prudent and million to a net hos of $19 million. that the Company would ultimately be successful in defending against a findmg of imprudence.
l 20 muum me
S E R V I N G . . . .Y E S .T E R D A Y , TODAY & TO n00 M M O W
- 3. INCOME TAXES The tax effect of the portion of the locome tax expense (benefit) consists 1986 federal tax loss that is carried forward of the following: has been recorded as a reduction of deferred 1986 198 . E income taxes. This loss of $416 million is available to offset taxable income in future (In TEs~ ands) years and, if not utilized, will expire in the year 2001. L'nused investment tax credits at t al $(12.589) $(16.241) $22,347
"* ** "" ' N'9 *b lion before any reduction resulting from the State -
1342 -
Tax Reform A0t of 1986. These credits may Total ,
(12.589) (14.899) 22347 be applied against federal income tax lia-Deferred - net: bilities in future years. If not used, they will Deferred Grand Gulf I expenses . 67349 - -
expire in 1992 thmugh 2001.
Reduction due to tax loss carryforward (20,053) - - Cumulative income tax timing differ-t Deferred fuel costs (716) 3,520 (2,613) ences for which deferred income taxes have l'nbilled rewnue 1.264 (921) not been provided are Sli7 million. S22.4 (918)
Pension expense . (2,824) million, and $18.6 million as of the end of (187) -
Adjustment of prior years' tax provisions (5,103) 1986,1985, and 1984, respectively.
(356) -
Provision for estimated losses (1,683) (1,890) -
See Managements Financial Discus-Other sion and Analpis for a discussion of the Tax 344 (683) (1 823)
Ref rm Act of 1986 on page ..9 of this report Total . 45'967 (7 90I) ( 354) and its impact on the Compam.
Investment tax credit adjustments - net . (267) 881 910 Recorded income tax expense (benefit) $ 31106 $(21,919) $17,903 Charged to operations S 32.821 $(26305) $11895 Charged to other income 2si 4386 4.008 Total income taxes S 31106 $(21.919) $17.903 Total income taxes differ from the amounts computed by applying the statu-torv federal income tax rate to income before taxes. The reasons for the differences are as follows (dollars in thousands):
M M M
%of %of %of Pre-Tax Pre-Tax Pre-Tax Amount income Amotmt income Amount income Computed at
, statutory rate . $34.540 46.0% $(18,739) 46.0% $16.692 46.0%
l Increases (reductions) in tax resulting from:
Adjustment of prior v, ears' tax provisions (355) (0.5) (1.919) 4.7 - -
Difference betwttn book depreciation and tax straight-line deprec ation . (495) (0.6) (1,215) 30 1,586 4.4 Other - net . (W) 10 8) (46) _0J (375) {Jil) l Total income l taws $31106 ga o $(21319) g% 1173 g%
i 1986 ANNUAL REPORT 21
NEW OMLEANS PURL I - ;S E M V I C E INC.
i
- 4. LINES OF CREDIT AND REIATED The short-term borrowings and the BORROH1NGS applicable internt rates (determined by disid-At December 31,1986, the Company ing applicable interest expense by the aver-had a revohing credit agreement with bor- age amount lxmmd) for the Company were rowings to be secured by a security interest as follows:
in qr lien upon accounts receivahie of the 1986 1985 19 4 Company subject to certain limitations con- (Dollars In Thousands) tained in the agreement. The amount of bor-mwings shall not exceed the lesser of (1) Maximum borrowing 59,700 $19,300 $16.100 90% of current aggregate eligible receivables, Year-end borrowing $5,000 - $16,100 (2) 125% of the amount of the prior year's Average bormwing:
aggregate eligible receivables, or (3 ) Bank loans . - $ 1,850 -
$30.000,000. This agreement expires August Associated companies . $1,003 $ 8,793 $ 356 21,1987. The Company also shares with Other $ 419 - -
louisiana Power & Light Company (LP&L) Average interest rate during the period:
a $10 million line of credit with a New Bank loans . - -
9.8%
Orleans bank. Additionally, the Company par-
, Assoc ated companies , 6.5% 8.2% 8.2%
ticipates with certain other companies of other 9'0%
the Middle South Sptem in a money pool Average interest rate at end of period:
arrangement wherebv those companies with Bank loans . - - -
available funds make short-term loans to ,
Associ ted companies . - -
8.7%
other companies in the Sprem having short.
term borrowing requirements. The Company other 9.0L - -
may bormw fmm the money pool and other available sources subject only to its maxi-mum authorized level of short-term borrow- 5. PREFERRED AND COMMON STOCK ings and the availability of funds. The Com- Preferred stock at December 31,1986 pany has received authorization from the and 1985 consisted of the following:
Securities and Exchange Commission (SEC) e Authwized l under the Public itdity llolding Company I nd outstanding at Amounts at t.urrent Act of 1935 to have ou'tstanding at any one December 31, December 31. Call Price time short-term borrowings aggregating not Cunluknius Slon Par Value 1986 19s; 1986 1985 Per Share more than 10% of the Company's capitaliza.
tion. At the end of 1986, subject to certain (In Thousands) limitations listal abme, $16.3 million remained Without sinking fund; avaihtble for borrowing under the revohing 4.75% Series 77,798 77,798 $ 7,780 $ 7.780 $105.00 credit agreement while all $10 million of 4.36% Series 60,000 60.000 6,000 6.000 1 46.58 the shared line of credit with a New Orleans 5.56% Series 60,000 60,000 61100 6.000 102.59 j
bank remained unused. At the end of 1985, Premium - -
337 337 the Company's only avaihible source of short- 197.79s 197,798 $20117 $20.117 Total.
term borrowings was the Middle South Sp-tem Monev Pool With sinking fund:
During the period March 1985 through lisi% Series 134,995 135J)95 S13.500 $13,509 s111.58 August 1985, MSU made interest-free exten. Issuance Expense - -
(2;2) (252) sions of credit to the company totalling $15 Total. 134.49; 13; 095 $13,2is $13.2;7 million in order to enable the Company to continue to nk'et its financial obligations.
The 15.h% preferred stock series has tional 100 shares in July 1986. In August provisions for a sinking fund sufficient to 1985, the Company sold 2.500m) shares of retire annually a minimum of 7,500 shares common stock at $10 per share to MSU, and a maximum of 15.000 shares at $100 There were no changes with respect to the per share plus accrued dividends. The sink- Company's common stock, $10 par value, in ing fund requirements commenced m 1985. the years 1986 and 1986. In 1985, the Com-In 19M, the Company retired 14,905 shares pany's Articles of h1 corporation wrre ameikled of the Company's 15.4n series of preferral to increase the number of authorized shares stock in order to meet its 1985 and substan- of common stock from 7.000.000 to tially all of the 1986 requirements. The rem- 10,000,000 shares.
pany was able to satisfy the remainder of its 1986 requirements and thereby eliminate all sinking fund arrearages b} retiring an addi-22 munmomm
S E R V I N O . . . Y E 'S T E R D A Y , TOOAY & T O Af 0 R R'O W During the second quarter of 19S6, were paid in 1986 constitute a return of 7. RIMINED 13RNINGS tb Company eliminatal all arrearages that capital for federal income tax purposes. The The indentures relating to the Compa-existed with respect to preferred stock divi- Company also believes that a substantial ny's long-term debt and provisions of the dends and remained current with respect to portion of any preferral stock dividends that Articles of Incorporation relating to the Com-payment of its quarterly prefermi stock disi- may be paid in 1987 and pmximal subse- nany's preferred stock proside for restric-dends thmughout 1986. The Company has quent years may also constitute a return of tons on the pa) ment of cash dividends on determined that, primarily as a result of the capital. Common stock dividends have not common stock. As of December 31,1986, opration of the phase-in plan prosidal by been paid since December 19M and have S11.926.000 were free from such restrictions.
the March 20,19S6 rate settlement with the not been declam! sinceJune 1985. As of Council, all disidends on all outstanding December 31,19S6. 55,997,000 of common
- 8. COMMff3tEVfS AM) CONTINGENCIES shares of the Company's preferred stock that stock dividends that were declared in 1985 A. Capital Requirements and Financing had not been paid. At December 31,1986, the Company's most significant commitments and contin-gencies related to (I) the financing of the costs associated with the phase-in plan included in rate relief obtained for Grand Gulf I-related costs, (2) the future status of Grand Gulf 2 and the possible allocation to the Company of costs associated with that unit (see " Grand Gulf 2" below). (3) the outcome of a prudence investigation by the Goncil with regard to the Gimpuw's imulw-
- 6. IONG-TERM DEBT '
ment with Grand Gulf 1 (See Note 2, " Reg-Inng-term debt at December 31.19S6 ulation and Rate Matters"), and (4) the and 19S, consisted of the following.
outcome of challenges to the FERC alk)ca-
~ ~
tion of capacity and energy from Grand Gulf First Mortgage Ibnds: (in Thousands)
I, which could have a significant impact on A", & ries due 1987 . S 6.000 s 6.0M the Company.
5 "o Series due 1991 15fXX) 15JXX) The O)mpany's obligation for payments e",, &fies due 1992 . 8000 8,mo to SFRI for Grand Gulf I capacity and entigv 5% Series due 1996 - 23.250 23.250 is approximately $13 million per month.
I1 "o & fin due 1996* 25fxx) -
1)eferrai purchased power costs in connec-n"., Series due 1997 12.000 12.0m tion with the 0>mpany's phase-in plan were 10 "o &tm due 2nN , 35,mo 35fn) 5116.9 million (excluding $29.5 million of 90"o & ries due 2nOS . 15.000 liDx) 19S5 expenses defermi in March 1986) in l l'namortim! premium and discount on long-term debt - net 165 173 1986. The Company estimates that it will l
Total inng-litm Debt 114,428 incur tow apnal mjukements of ap 139.415 less: Amount due within one year 6m) -
proximately $250 million during the period of 1987-1989 m connection with the defer-Inng/litm debt excluding amount due within one year $133,415 5114328 ral or phase-in of Grand Gulf I costs pur-
- In July 1% the Company sold $25 mdlion principal amount of intermediate term secured notes at suant to the terms of its settlement agrtement an annual mternt rate of 1I"... On Septembtt 25.194 the Gimpany collaterahm! these secured as discussa! in Note 2. " Regulation and notes by depmiting first mortgage bonds in that amount with the trustee for such notes effectiwlyRate Matters."
makine such notn of equal rank with the outstandmg first mortgage bonds of the Company The Company's construction program
! contemplates expenditures (including AFDC)
The Company has made an applica- f approximately $28A million in 1987,$30 At December 31.19S6, the sinking fund tion to the SEC and the O>uncil to inue and rnluirements and maturities for long-term *illI""I" I988'*"d 838'9 *ilII"" IU I989 wil up to 575 million of an initial series of debt for the years 19S7 thmugh 1991 are B. Potential Debt Acceleration General and Refundmg Rate Recovery Mort- as follows (in thousands): and Related Matters gage Ibnds i9ual under a General and Refund- Certain of the other Middle South Sp-ing Mortgage. The proceeds from the bond Sinkn.
Fund,y tem operating companies'(Sptem op(tating sa!e would be used to fmance a port!on of Maturities companies) retad rate orders with respect to deferred Grand Gulf I costs which r he 1987 SID65 $ 6JWx) their alk)cated costs for Grand Gulf I capac-recmemt f brough revenues pursuant t > the 19SS l#)5 -
ity and energy are still being challenged and March 19S6 rate settlement betwttn the Com- 19S9 1.005 -
reconsideral. On February 25,1987. Missis-pany and the u>uncil (See Note 2. "Regula- 1990 1.173 - sippi Power and Light Company's (Mp&L) tmn and Rate Matters") 1991 1,023 lim) rate order was reversed on appeal by the
" Sinking fund mjuirements may be met hv Mississippi Supreme Court and remanded to cert fication of property adhtiom at the ~ the Mississippi Public Sersice O)mmission rate of In. of such reymrements. for reconsideration.
m mue uom 23
NEW OMLEANS PUBLIC SERVICE INC.
Certain of Sptem Fuels,Inc.'s (SFl) full cost of service all of serfs 90". share obligated to make its share of the pa)ments l financing agreements and leaxs may rapire of the caprity and energy from Gnuid Gulf or advances only if the other Sptem oper- l payments by the Company and the other 1 in accordance with the following per- ating companies had been unable to nuet Sptem operating companies, MSl', or SERI centage alkrations: the Company.17b; Arkan- their contractual obligations. Ilowever, the in the event SFis obligations under such sas Pmver & l.ight Company (AP&L),36'k FERC's June 13 Decision supersedes the dccuments are accelerated as a result of the IP&L in :uxi MP&L 33% iayments thmugh Reallocation Agreement insofar as it insolvency of a Sptem operating company the March 15,1986 payment were reduced relates to Grand Go!f 1.
and SFl is unable to meet these obligations by credit 3 for power purchase advance par- I'. Grand Gulf 2 or otherwise to satisfy these obligations n'lents presiously made to SERI. On Januarv As of December 31,1986, SERI had through the sale of the collateral aturing 6,1987, the L'nited States Court of Appeals' invested approximately $90s miHion in such thligations. Insolvency of any Sutem for the District of Columbia Circuit affirmed Grand Gulf 2 (induding approximately $390 openning company would 'cause accelera- the FERC's June 13 Decision. Various parties million of AFDC) which was appmximately tion of SERis indebtedness under certain have fded requests for rehearing with the 34 grcent complete bax4 on the estimated agreements unless waivers were obtained Court of Appeals and petitions for certiorari man-hours needed to complete the unit.
under these agreements. Acceleration of such with the t'nital States Supreme Court. From late 1979 until September 1985, only a indebtedness of SERI could also occur if a On March 23,19M. the City filed suit limited amount of construction was per-Mississippi Public Service Commission pm- against the Compant. MSl', and SERI in the formal on Grand Gulf 2. Effective September ceeding relating to the certificate of conve- Civil District Court for the Parish of Orle:ms. 18.19M, o>nstruction activities on Grand nience and necessity for the Grand Gulf State of Inuisiana, atking a dedaratorv judg. Gulf 2 um suspen&d foHowing an order of Station were to mak'e the continued opera- ment and a permanent injunction or other the Mississippi Public Ser ice Commission.
tion of Grand Gulf 1 impractical. Given the order alkging that the Company's obliga. Since that time. SERI has continued suspen-substantial amount of tlxse oldigations, SERI. tions undt certain Grand Gulf Stittion-relatal sion of construction on Grand Gulf 2 and with its financial asources currently lim- agreements are unenforceable until the Com- has limited expenditures to only those l ited, would not be able to meet these obli- pany obtains a Certificate of Public Conte. activities that are absolutely necessary for gations. if accektatal. I'n&T SERis financing nience and Necesity fnnu the Gulcil. During demibilization and suspension. In Dttem-agreements. SISl'. and not the Sptem oper- oral arguments, tlie City voluntarilv with. btt 19S6 serfs Ik>ard of Directors (with the ating almpanio, would be responsible to drew the Request for Iniunctive Rel'ief and MSl' ikurd concurring) adopted the recom-pay serfs accelerated obligations. MSl'. with limital the City's suit to a Rapest for Dedar. mendation of a special group of Middle its financial rtsmrca currentij hnuted, indud- atory Judgment. The Company, MSl', and South Sprem officials that suspension of ing limitations on its abilav to hrmw funds SERI intend to take all necessary and appm. con 3truction be continued and that a fur-or issue addaional shares of its common priate action and have filed ole'adings denv. ther decision be made by 1990 on the future stock, would not be in a position to satisfy ing the City's contentions :md have assertid status of Grand Gulf 2 in light of alterna-serfs accelerated obligations and or pro- special defenses un&T state and fedend law. tives avaihtble at that time.
vide the Onnputy with deirtd osumm stock The matter is pending. During the periixi of continued sus-equity. In a&htion, insohtncy of me or more pension. SERIs expendaures on Grand Gulf E. Availability and Reath> cation 2. as well as the increase in its investment Millle South Sprem companie ondd impair the ability to obtain financing in the Agreements in the unit wiU be limited. Further, SERI l capital markets for other Middle South
& Spiem ograting companies are does not intend to make an application to meraHy obhpunt to SERI under the Avail- the FERC during the griod of suspension Sptem osmpanies.
abdity Agnement in accordance with stated with respect to recmtry thmugh rates of its C. I)isidend Suspension percentages (the Company,2G,; AP&l., investment in Grand Gulf 2. In addition, in light of the uncertainties continu- i, p.,. i,pg;, 2g,. MP&I, 31f..) to make SERI will consider. among other things, ing to face the Middle South Sptem as wen pa)ments ic subordinated advances adequate windxt ctttain apipment or facihties sholdd as the need to consttre cash resources in to ontr all of the optating expenses indud- continue to be carried at their full cost.
view of thne uncertainties, the Company ing depreciation of SERI. The Sprem oper- Any determination that the value of SERis and the other Sptem operating companies ating compania in November 1981 entered imlsinant should be nducal;ux! the amount have not dedared dividends on their com- into a ReaNcation Agntment that woldd of anv such nduction written off conhl mon stock since the second quarter of 1%.. have aHoc;ued die capacity and energy avail- adversely affect various companies in the MSI has been unable to deckur its own own-able to SERI from the Grand Gulf Station to Middle South Swtem. indudmg the unnpany.
mon stock dnidend since that time. RoumP- dw Ompany. IP&l, and MP&l These com- In connection with the ultimate deci-tion of the Lompany's and MSl's common panin had agreal to a3sume all the repon- sion regarding the future of Grand Gulf 2. l stock disidends may depend. among other ubihties and obligations of AP&l. with rojtet SERI udl. at an appropriate time, make a things upon the further resolution or mod- to d e Grand Gulf Station under the Avada- determination as to the appropriate recov-enulon of thee uncertainties and further biluy Agntnknt arxlIhuf Purcitise Adv;uia- erv of its invntment. Any action by SERI to impnnrment in the financial condition of 1%nwnt Agntment.widi AP&l.re!inquishing seek recoverv of Grand G'ulf 2 aists wotdd the Middle Sotah Sptem. Its rights widi nw to the Grand Gulf Sta- likelv imohe a fding with the FERC request-D. l' nit Power Sales Agreement tion. Each of the Sptem opfating compa- ing 'uch s recovery, over a period of years.
The I nit Power Sales Agreement, as nie, indudmg AP&l., individually wudd Inne thnnigh charges to the Sptem opeduing appnml by the IT.RC on June 11 19M (June remained pnmarily liable to SERI and its companin. and related fdings by the Sp-13 Decision) oblig.nes the Sptem operat- assignees for pa) ment < or advancn under tem omfating companies before state or ing owngmio to pirduw fnm SERI at serfs these agntments. AP&l. woldd have been kwal regulatory authorities to ncognize the 24 muwom e
FERC-allowtd charges in retail rates. Such common law neghgent misrepresentation proceedings andd be protracted and strongly ments amountal to $160mun) of which in connection with the financial condition $l313n).000 was oubtanding at that date.
contested on various grounds, including of .\lSl' and prayed for compensatory and Also. SFfs parent companies, including the imprudence. If oots associated with Grand punitive damages, legal onts and fees. and Company. have made similar convenants Gulf 2 were alk)cated to the Company; and other pmgr relief agairtst MSr various odxt and agreements in connection with long-it were unable to recowr thne costs from Sptem companies, including the Company, term leases by SFl of oil storage and han-its custonuts, the Company's financial con-certain officers (and former officers) and dling facihkies and coal hopper cars. At dition could be materially, adwrsely affected. dinttors of MSI'. the Q)mpany's outside audi- December 31,19S6 the aggregate dis-G. New Accounting Standard tors, and certain underwriters of MSl' Com-oiunted value of tlxse lease arrangemeilts The accramting standards related spe- mon Stock. In April 1986, MSU and the was $76.100.000 cific'.ilv to public utdities and certain other other defendants. including the Company. SFI has contracted with a joint ven-n ,ulated enterpriso are set forth by the fded a motion to dismiss or, in the alterna- ture for a supply of coal from a mine in i mancial Acciunting Stuidards lhtrd ( FASB) tive, a motion for summary judgment. On Wyuming. which based on estimated resents in Statement of Financial Accounting Stand- January 111987, the District Court enteral is preently expected to pmvide for at least ards tSFAS) No. 71. In Decemixt 19S6 the a judgment granting defendanti motion for thirty years of the projected requirements FASB inued SFAS No. 90, " Regulated Enter- summary judgment and dismissed the suit. of the independence Station. SFI's parent priso Accounting for Abandonments and on February 6,1987, the plaintiffs in the companies. includmg the G)mpany, each Disallowancn of Plant Gots", as an amend- consolidated action filed a Notice of Appeal acting in accordance with their share of ment of SFAS No. 71. SFAS No. 90 pmvides in the l S. Quirt of Appeals for the Fifth the ownership of SITS common stock, joined that, when an abandonment of a plant or Circuit. The defendants intend to oppose in, ratifint confirma!. and adopted the con-a disallowance of newly completed plant sigonnisly the appeal of the District tract and the oNigations of SFI thereunder becimo probable, the following amounts. Courts decision.
J. Transit Divestiture Obligation net of related tax benefits should be reported I. System Fuels, Inc. On June 30,1983, the Company sold eitixt bv rot.tting die appropriate prior yeari The (:ompany has a 13"o interet in its transit operations to a political sulxiivi-financtd statements or by chargmg it against SR. a jointly ow11ed subsidiary of the Com- sion of the State of Louisiana. In accor-current income- (1) oob of abandontd gen- pany, if&L Ap&L and Mp&L SFI operates dance with the sale agreement, the Com-erating plants in exce9 of the prnent value on a non-profit basis for the purpose of pany is obligated to reimburse the pur-of estimated reontnes and (2) the amount planning and implementing programs for cluser, the Regional Transit Authority. 513 of partial dnallowancn of recently com- the procurement of fuel supplies for all of million plus a 9" upward adiustment factor pletal generating plants for ratemaking pur- the operating companies and SERI. Its costs gr .mnum for future in3unulce premiums poses. The FASil had presiously indicated are primarily recoveral thnnigh charges for or benefit payments. As ofI)ecembtf 31, that the new standard wouhl also include fuel delivered 19S6. the balance for such premiums and resisjons in accountino for the pluse-in of Tla parent companies of SFI have payments a SM nulhon.
rato asociated with the cots of new gen-erating plants. %lule SFAS No. 90 did not made loans to SFl to finance its fuel supplv K. Consolidation with LP&L business under a loan agarment dated Jan: la the interest of increased economic addres the aconmtmg for rate phase-m uarv 1,198t as amended January 1,1987, efficiencv the Gimpany and If&L hamkwl-plan 3 and thus does not afktt the (om- '
pany, the Edll has resumed dehberations which provido for SFl to imrrow'up to ogd a long-term plan to consolidat > the on the appninate aconmting for phase-m sil.0 nom) fmm ib parent companin two companies and their opfations. I'nder thnnigh Decembtf 31,1987. As of December the proposed arrangement, subject to the plans. The tempanys rate pluse-in plan 31.19% de Gepany had loanal $990Jm receipt of neassary regtdatory and other for recmerv of it3 share of the onts of to Sn pursuant to thiiloan agreement and approvals, the two companies wouhl be con-Grand Gulf I currently meets the require-de Ompanti share of die unuwd Imn sohdatal into a new company to be callal ments of SFAS No. 71.
commitment' was Ston0000. Notn under inuisiana power & Light Oimpany. MSl'.
II. MSF Shareholder Litigation this agreement mature Decemhtf 31,1992. which currently owns all the outstanding MSl'. ctrtain other Middle South aim- In addition, the Gimpany had loanal SFI common stock of the Company and ITAL panics, including the Gimpany. and indi- Slo.385Jm under presious loan agree- unuhl own all of the common stock of siduals were defendants in a purportal class ments. Noto mature in 2n02 aixi 2nos untky the new company.
action suit. The initial o>mplaint was filed the pnosions of the pntious loan agntments.
in August 19Si by an MSI'sharelmhkt (pur-L Gas Contract Settlement In oinnection with certain of SFI's A setthment has been negotiated
- porting to repnsent a cbss that purchased borrowing arrangements. SFli parent between the Gimpany and a gas supplier MSF common stock) and uas followed by companies, including the Company. haw four simi!ar annplamts filed by MSI share-in long-standing litigation stemming from oninanted and agreni, severally in accord- the gas suppher's failure to dehwr oNi-hokkrs in August and Septemb(r 1985. The ance with their respective sharn of owner-gatal quantities of natural gas for power fne actions were consohdated in the I1S. ship of SR's common stock. that they will plant use during the priod 1941975. If Dotrict Giurt for the Eastttn lustrict of take any and all action necessary to keep Louisiana The omsohdated, amended, and appnned by the parties to the suit and the SH in a sound financial condition and to onirts. the settlement wauki rnult in the supplemental complaint allegal siolations place SFl in a position to discharge, and to refund of appnninutely $~0 nullion to ekt-of the dnchoure rniuirements of the Swu- cause Sn to discharge its oNigations under ntin Exchange Act of 1934 and the Securi- tric customers sened by the Gimpany in these arrang(ments. At January 1.1987, the ties Act of 19h common IdW fraud, and that time frame. Ammuncement of tiie set-total loan comnuiment under these arnmge- dement was made in february 1957
-uem 25
I
- 9. BUSINESS SEGMENT INFORMATION I
As an operating public utility, the Onn-pany supplies electric and natural gas ser-vice in the Citv, Segment information about the Company's opratior.s is as follows (in thousands):
1986 19Si JM Electric Gas Electric Gas Electric Gas Operating rewnues . S326,095 $102,701 $315,034 $105,593 $322.060 $126379 Revenue fmm sales to unaffiliated ctotomers . 325,639 102.701 303,978 105,593 317,200 126 379 Operating income (hos) before income taxes . M365* 812 (11,822) 2,555 31,780 5,400 Operating inoime (hiss) 50,S89* 1,467 (13,771) SOS 19.261 4,024 Net utility plant 197,978 50,550 3)316 49,279 201,037 48360 Depreciation exg11se 11,882 2,772 11,S60 2.688 13.486 2.624 Capital expend; tuns 9,5S5 4.070 11,186 3.62S 11,439 3,478
- Includes the &ferral of Grand Gulf I expenses apphcaNe to 1985, the effect of which mcreaxsl operating income before income taxes and operating income by $29.5 mdhou and $15.9 mdhon, respectively.
- 10. POSTRLTIREMENT BENEFITS During 19Si, new standanh fit empk>y- A comparison of the actuarial pasent The companies of the Middle South ui acounting fit paions wtw issual (SE\S values of accumulatal pension plan bene-Sprem have various potretirement benefit Na S7). The Sptem companies will adopt fits and plan net awets for the defined ben-plans covering substantially all of their the new pension aco unting and dischoure efit plans is pnsentalIrbnv. This comparism emplo3ees. starxiards in 1987. Ihmmt. it is not expected was determined in acordance with the pnr podion plans are administend by a that the new standards will have a nute- visions of SFAS Na 36 which ratuires the
- tnotee who is responsible for pension pay- rial impact on the Sprem compmks' finan- use of certain assumptions that are differ-l ments to retirtis. Various interment man- cial poition or nsults of operations. ent from those used by the Comptn> s actu-agers have responsibility for management As part of the sale of the transit opt- ary in determining an appn priate lesel of of the plans' assets. In addition, an inde- ation on June 30 1983, the Comptny agrtid fundmg for the Company.
pendent actuan perfornd the necesary actu- to transfer the pension plan assets and lia-Januarvi" arial valuations for the individual bilities of the transit related participants to 1956 1985 company plans. a separate plan to be maintainea tiy the lbtal p1 mon expense of the Com- successor employer. uile such transfer was (In Thous mds) pany for 19S6,19Si, and 194 was $477JWin, effative as of the date of the sale, the tnud- Actuarial present value 52,5n9,0lX), and $ L13SJWX), nspttiwly. The fer was not aimpleted until October 1956. of accumulated decrease in 1986 expense comparn! to 1985 pension plan nsultal pnmanly fnm indtoion of Si,WJnt) honefax*
in 1985 for a special early retirement pnp Vestal $ 6S.239 $;9,563 gram that was offeral fir a limital stim! Nonwstal , l#il 2.M0 5md was not available in 19S(t T5e decrease Tel .$ M 9no $61'13 m 19S5 pension expense compand with 19M resultu! from changes in actuarial Net acet3 available f<<
assumptions and ont methab used by the pension benefits * . SloS,22S $91,186 Compiny.1ke dungts indudal an incnee
- FMu&s amounts attnkaaNe to fonar transa in the assunxd rate of return used in deter- parucipants as desed anne.
mining the actuarial present value of pm-lectal plan Irne6ts fmm 7"u to % and an incease of 2% at each age in expected sal ~
The assumed rate of return used in an liycreaxs fit active plan partiopants. determining the actuarial pnsent value of Mlitionally, the (nmpany dungni the actu- accumulated pension plan Iwnefits was %.
arial ost methal and amortization methal The Company also pnwides certain for recognizing the d;fftfence betwwn asets khh cm md hfe insmsce Nndts he and past service liabihties and amended the m d sphm submially all spig-plan effectiw J.muary 1.1985 to comply with the Retiremert Equity Act.
m nuv hde d#le 6r tbe htts d th h>adi retirement age whde stdl work-ing for the Company. These lentfas and similar benefas for active employees are pnwidnt through variota means indudmg 26 m un upont m
payments of premiums to insurance com-panies and/or accruals far self-insurance policies managed by insurance companio.
The Company recognizes the ont of pro-viding thne benefits by expensing the pay-ments made to the insurance companies or accruing the cost as recommended by the managing insurance company. The cost of providing these benefits fi r retirees is not separable from the cost of providing bene-fits for active employees. The total oot of pmviding thee benefits and the aserage number of actiw employees and retirees for the last three fiscal years were as follows:
) 1% 198; 1984 lbtal ont of health care and hfe insurance (in thousands) $5.188 $2.171* $3,891 Numht of active employees . 1,428 1.455 1,520 Number of retirees 775 687 651
- Relkets a group hfe insurance refund of $13 mdhon.
I1. TRANMCTIONS ETI'll AITil.lATES 12. Ql'ARTERLY REST'LTS (l'naudited)
The Company buys electricity from l'naudited operating results for the and or sells electricity to the other operat- four quarters of 1986 and 1985 follow:
ing subsidianes of AISI', induding SERL under rate schtsfu!es fikt! with the FERC. In addj. Operating Net tion, the Company purch. des fuel from Sfl Quarter Operating income income and receises technical and advisory senices Ended Revenun (im) (I m )
from 11SI' Sptem Senices, Inc. ( formerly Middle South Senices, Inc.). (In Thousands) 1986; Operating rnenues include revenues March (1) $109,115 $2bS6 $23.856 from saks to affdiato amounting to $.5 mdlion in 1986, $11.1 million in 1985, and June 98,539 7,%9 5,685 Septemht 118,166 1248 9,489
$19 mdlion in 19Si Operating expenso mdude charges fmm affiliates for fuel cost, 1)ecemht (2) 102 925 6.242 2,953 g93;.
purchaxt! power, and technical and adsisort 33 arch . $105Mi senices totalkng $255 2 milhon m 1986. $ 7.3si $ 6.132
$170.4 milhon in 19S5, and $S2.3 million June 96 61,/ u24 1413 in198t Septemht (3) I15,960 (9,741) (l1,150)
Ikcemht (4) 102,9Si (16,130) (18,212)
(1)opfating mcome and net income for the quarter ended March 31,19S6 nflett the net of tax one time impact of defernng Grand Gulf I exgnses apphcable to 19Si the cffat of which increased opetaung income anJ net income by $15 9 mdhon.
(2) The quarter entksi liecembtf 31,19S6 reflects a (kcre;oe in opfaung income and net income of
$21 milhon net of tax due to the pnnision for esumated hees for the Company's share of certain mts associated with indtfmitely delags! fossil-fuel generating facihties.
(3)optaung income (km and net income tbas) for the third quarter of 1985 indade a (ktrease of
$23 3 nullion due to Grand Gulf I expenses. an increase of $1.1 mdhon from rnenues apphcable to nuclear fuel s.nmgs. and an incre.oc of $L1 mdhon rou!ung from gnsion expense adiustments.
3
( 0 0pt;uing income (hns) and net income t kw for the 1.ot quartet of IWi include a decre.oc of
$22 I mdhon due to Grand Gulf I e\penses a decre.be of $$.5 mdllon ;b a rbult of a prt Alsion for otunated bxsn for the Company's share of cittam onts associated with indefuntely delayed future find generaung facihun, an increme of $ n nullion from resenun apphcable to nudear fuel s.nings, and an mcrease of $1.9 nullion due to an adiustment of prior leari income taxes.
The business of the Company is sub- for gas. Accordmgly, earnings information lett to seawnal fluctuations wah peak peri- for any three month peind shotdd not be mis occurring during the summer numths considered as a basis for estimating the for electric and dunng the winter months roults of opfations for a full ear.
3 me mueomt 27
NEW ORLEANS PUSLIC SERVICE I .N C .
l Management's Financial 1985. At year-end 1986, appnnimately $6 the Q>mpany would be permitted, among mdhon of common stock dnidends that were other things, to issue up to an aggregate of Discussion And Analysis 5280 million of hmg-term debt (designated dedared in 1985 had not been paid.
FINANCIAI. CONDITION as Rate Reanery Stortgage ikmds) to finance lhe 0>mpany's impnned financial con- or refinance deferred Grant' ru lf I costs 1.lQUIDITY AND CAPITAI RES01RCES dition at Ihember 31,19S6 refhts the effats During 19S6. the Company's primary without h.ning to fund unfanard propert) of a rate settlement agreement reached capital requirements included tl$e financing athhtions ahhough the (amany would h.ne between the Company and the Giuncil of of the costs related to Grand Gulf I that to satisfy certain other hsonce conditions, the City of New Orleans (Q uncil) on %! arch were defernx! and must be finance i until induding an appropriate two-times interest 25,1986 with respect to Grand Gulf I related phased into rates, and the costs of its con. merage earnings test. In this connection. l costs. The rate settlement agnement pne struction program. In order to meet its capi. the Compan) has fiks! with the Securities tal nenis, the Gimpany obtained $25 million and hchange Q>rr. mission (SEC) and the vided for current ntmery of certain por-tions of non-fuel Grand Gulf I related onts In>m the sale of intermedute-term secured unmcil for authority to issue up to $75 mil-and portions of the carrying cmts and for a notes in the second quarter of 1986 (such lion of an initial ser;es of Rate Neonery portion of such costs and carrying costs to notes were collaterali/ed by a like amount stortgage ik>nds.
he deferred and pha3cd into rates in the of first mortgage Imnds in September 19S6). Omcerning possible saks by the 0)m-future. Induded in the settlement is a pnni- and secured a remhing credit agreement pany of additional common stock to its par-sion that the Giuncil is not requ red to cease with an institutional lender thereb) enabhng ent,31Sl', the u>mpany belieses that 5150 its inquiry into the prudence of the Compa. the O>mpany to obtain up to an additional would he willing to pnnide additional com-n> s inwhoment in the (irand Gulf Station $30 million on a short term basis (the hor- mon equity capit.d to the Compan) if the or refrain Inim issuing orders with respnt nmings being secured by a security interest Gimpany is able to obtain ackhtional long-thereto unkss so onlered by a court of com- in or lien upon xcounts nteivable of the term debt financing (such as the Rate Remw pctent jurisdiction. (See Note 2. " Regulation Company). At December 31,19S6. the Com- ery \lortgage ikmds) to meet a substantial and Rate statters") The Council has contin- pany had bornmed appnnim.itely $5 mil- portion of its capital requirements. the Gim-ued to conduct proceedmgs regarding the lion under this reu>hing credit agreement. pany s financial condition mntinues to impnne prudence of the Gimpany's imohement in The balance of the Company's cash needs so that the Gimpany can resume paying com-Grand Gulf I and, in late 1986. the Coun- was satisfied through internall> generated mon dnidends to \l30. and the rate struc-cili con 3ulunts nrommended that the u>m- funds ture pnnided for in the \l.irch 1986 rate p.in) could financially sustain substantial (her the next three ) ears, the Com- settlement agreement between the G>mpany dnallowances with nspect to its allocated pany pnijects that capit.il will be rnjuired and the Giuncd remains in effett.
share of Grand Gulf I cmts. If the Giuncil, for the financing of deferred Grand Gulf I In onter to satisy its short tenn nec is in conjunction with the prudence inquiry, cost 3 of appnmmatel) $103.1 milhon in 198*. for cash, pending permanent financing. the should attempt to take attion to dnalkm. $S2 million in 1988, and $65 million in 1989; Gimpan) is currently authorized by the SLC and thereh) force the Gimpany to absorb. (omtruction expenditures of appnnimately to effnt short-term hornmings of up to 10%
costs assocuted with Grand Gulf I in excew $2Sa million in 198', $30 milhon m 19sS. of capitalintion, subject to the asailahiht) of the $il 2 mdlion of such costs presiously and $38 9 milhon in 1989; retirement of of short term credit sources. The Compan) absorbed pursuant to the rate settlement short term horrowings and preferred stml ahn has an unsecured bank line of casht of agn ement, and such action by the Council is totalling $i' nulhon in 1987; retirement of approximately $10 million, none of which not sta>cd b) the tuurts. the Companyi carn- additional preferred stock issues of $0.~ md- uas utdized at Iktember 31.1986. This line ings. liquidn) fin.mcial omdition. and ability hon in both 1958 and 1989, and retirement of casht from a louisiana bank,is shared to meet its continumg obliptions (indudmg of first mortpge bonth of $6 mdlion in 198'. by the Company and louisiana 1%er & Light it3 abiht) to effnt further financing to meet The Company plans to meet a portion of Company. Additional borrowings (an be sua h ohkynons) coukt dependmg upon the these nsluirements through internally gen- effected through the \hthlle South System estent of the disallowance. he seserely erated funds and to obtain the balance from \loney Pool, subject to the asailabiht) of impaired. The Company wouhl sigorously esternal sources, induthng the issuance of funds, whith at any parti (ular time may be opinse any simb .anin h) the Gaml thniugh long term debt of appnnimatel) $75 mil- limited. At December 31.1956, the Com-the courts hon. $30 million. and 5 in million in 198', pany had no outstanding short term bor-Net mcome for 1956 was appnni- 1988, and 1989, respetthely; the sale of nmings fnim awtlated tumpanies thnmgh mately $ 62 nulhon. an increase of $60 S nul- appnnim.itely $30 nulhon of pn ferrni stmk the \loney Pool hon mer 19si in \tanh 1986. $29.i nulhon in 1988. and the sale of appnnimatel) $20 The Companis carninp cmcrage for of unntmered 1985 Grand Gulf I related nullion. $10 mdhon. and $25 million of tum- its first mortpge bonds increased to pmi-tosts were deferred .ind (nshtnl apmst 19S6 mon stmk to its parent. \ liddle South l tik- the "i times the annual mortuge bond operating espenses The after in ellett on ties. Inc. ( SISI ) in 198',1988, and 1989, interest nspurements at 3c.ir-end 1956 from net inwmc for 1956 w.is $15 9 nulhon lhe resputhcl). negathe I'2 times at } car end 198i At ) car-
.unount defernst udi be ntmern! mer future with reprd to long-term debt, in siew end 198 s. the e.irnings cmerage for first penmh of the Gimpan>% latk of unfunded bondable mortyge bond 3 was til times the annual As a result of the Gimpanis impnned property (appnnimatd> $9.3 mdlion at 1986 mortpge bond interest requirements.1.arn-fin.urt.il condition. the Gimpan) bname cur- 3 ear end) to support the iwuance of addi- inn onerages for its preferrnt sink imrcasal rent with respnt to pa) ment of its pre- tional bonds under its first mortpge inden- to pmithe 3 is times the annual interest Ierrnt stutk dnidends pnIernst stotk sinking ture. the Company contempi.ites estahlkhing clurges anti prefern d sink dhilend require-fund redemptiom were ahn brought up to a new general .tod refunthng mortpge inden- ments in 1986 from a neptise 0 60 timn at tkite. lloucser the Gimp.tny has not daland ture to pnnide for all future bsuances of ) car end 1985 The preferred simk carniags or paid tummon sim k dnidends since June long term debt l'nder this new indenture. onerage was 2.16 times at ) car end 198 s.
28 ANNUAL, RUOM N
S ER VIN G... Y E S T E R D A Y, T O~O A Y & T O nt O R R O W .
The 1986 earnings oneragn refktt the net lion refktting increasc3 in hae rates and ment of financial Accounting Standard No.
of in one time impxt of diferring in 1986 energt s. des. .unt interim rate rehef of appnn- 89 which rescinded the nquirement to pro-
$15.9 nullion of Grand Gulf I expenses appli- inutel) $10 I milhon. Although all other classes side certain supplementary information con-cable to 1985. The minimum earnings oner- of customer us. ige increawd in 1985,indus- cerning the effect of changing prices on the age requirements for inuing first mortgage trial usage tkthned 26% as compan d to the Sptem. This information which was pre-bonds (other than for refundmg purpo>n) presious year. sented in presious 3 cars as a note to the and preferred sto(k are 2 0 times and 1.5 Gas operating resenues decreasn! $2.9 financial statements. has been deleted fnim times. respittisel). on a pro fornu bais. nullion or 3% in 1986 and $20 8 million or this year's report.
Huet! solely on carmng3 onerages at Det'em- 16"o in 1985 as compared in each case to lhe Gimpany's operations were not sig-ber 31.19S6. and an assumed interest rate the preceding year. The (ktrease in 1986 1.ificantly impxted b) inflation in 1986,19Xi.
of 10% the Gimpany could hac iwued up was due to a $2.2 million dttrea.se in the and 1981 as inflation rates were bdow prior to appnnimate!) $318 milhon of first mort- rmner) of g3 costs and a 13"o decrea.se in lear lesels. The opposite was the case in gage himth (if adniuate property ackhtiom gmernmental sales. In 1985, the decrede in certain presious years when inflation rates were asailable for that purpose) or approsi- gas operating resenues was due primanly to were high in the future. shoukt inflation mately $199 nulhon of preferred stock. Ilow- a (kcrease in the ntinery of ga costs of ratts increa.se the Gimpmi)'s operations cotdd eser, the amount of first mortgage honth $168 mdhon .ind a 13Mktnuse in gas sak s. be negatisely affecttt!if timely and ade-that oiuld hae btrn inued at Detember The dttrease in 1985 s. des was due prima- quate rate rehef is not nteised 31.1986 based upon available propert) .ukh- rdy to a 26"o (ktrease in indu3tri.tl gas sales.
tions, we only $5 6 nullion As notal ahme. In 1986. the Gimp.my deferred for EITECTS OF Tile TH REF0lut ACF the amount of long term de bt that the Gim- future ntmerv thniugh rates $116.4 nul- 0F 1986 pany may nsue in the future will depend hon of Grand Gulf 1 rel.ited costs pursuant on tktober 22.1986. the president upon the terms axi conthrions of a pn>- to the phase-m plan. hwluded in thi3 anmunt signed into 1.iw the Tn Rt form .kt of 1986 powd new general and refundmg bond mort- wa $29.i milhon of costs apphcable to 1985. Oct). portions of which couki h.ne a sigmf.
gage linienture. lhe Gimpan) ha fded for H) deferring these cost 3 to the future when icant impxt on the utiht) industry. The .kt regulator) authorvation of the inuante of-nwnun will be colktted thniugh increased has pnnisions that repeal the imotment the initial wrin of king-term ik ht thereuntk r rates hilled to customers, the impxt of the in cretht, duninish the s alue of imestment phne-m plan on the income st.nement has in (redit carr> forwards, impose an aherna-RFM LTS Or OPimTIONs been remined. Ikrause the actual colkttion tise minimum in, and redtac the marginal Net mcome for 19s6 was $12 mdhon. of resenues to ntuer the th ferred amounts corporate income in rate. It h anticipated
.i $60 S mdhon incre.ise ener the 1955 not "di not occur untd the future the phac-in that the Gimpan) will esperience a redue low of $18 S nulhon This intrease wa due plxi rnults in Akhnonal capital ntjuirements. Hon in its 198' income in npense due to m substanual part to the f.ut that m 1985 The (omhmed fuel. punhawd jwmer. the effetts of the in rate thange, to thanges the Gimpan) had in(urred $13 6 nulhon of mkl ik ferntl ekstnc fuel tusts inc reased $28.' in the treatment of unhdled roenun, and Grand Gulf I npenws. net of In. without nulhon or 11% in 19S6 and $62.5 mdlion or to the effetts of the in rate thange on pre-sigmhcant rate relwf. and that m lush. $1;9 31% in 1985 a compared in each case to siously deferred inmme taes not related to milhon, not of tn. of Graial Gulf I npensn the pnor year. lhese narcases are due to accelerated depntiation. It h further antiti-applwahle to 10S; were deferred.1he net 1*'uer punhen fnim Grand Gulf I par- pared that the Council wdi reduce the Gmd loss for D)si wa $18 M milhon. whwh was ti.dly olfwt by (ktredo in the tust of pimer panyi bne rain to refkst the thangn
$372 nulhon los than lost not income.11os plant ge and detreded generanon- rnulting fnan the.ht in the nent of such low w.ts due principally to Grand Gulf I the total of gn punhased for rnate rethution, the Gimpany would nperience a power punhen whah were not dekrred and deferred rnale ga tusts (kireased $2 S reduttion of cash flow in 19S'. 41ule thne and therefore nproed. and . unte off of milhon or t i. in 1986 and $1'.4 mdhon or reduced colkttions udi lower intern.d cash the Compan>i share of certain costs esoti- 19 L in 1985 a compared to 19S5 and 198 #. generation. cash flow h not n;xtted to be ated wah indefinitel) delayed future fowd. rnlws tnel) in both Scars the (ktreaso were so sescrely imp.wted a to substantially fuel generaung faulitin parnally offwt b) due to disreen in the per-unit gd costs increde the need for nternal financings intenm rate rehef and intume tarv (See and (ktrean in the solume of ga punheed Note 12. ' Qu.irterl) Rnults t I nauthted)") Inmme inn intluded in operating SITlilAlW thstric operating rnenun irarcawd inwmc iiureawd $59 I mdhon in loS6 and Receipt of rate rehef ha mipnned the
$11.1 nulhon or siin 1986 and (ktre.ised iktreased $ in 2 milhon in 1985 as com- finmaial conditnin of the Gimpan) 1he futurc
$' nnihon or 2 L in 19xi when tump. ired to pared in e.nh (de to the pnor lear Thi Immwial stahikt) of the Gimpany wdl & pend 198i and 19S 6. rnixttnel) the increase in uwrene and ditrede were due to a wrre- upon the tuntinued efftttnenew of the retal 19n6 wa due pnmanly to a $s2 S mdhon sinnihng intrede mal durcase in book liwona-rate phac in plan prosidctl by the Gimpa-imrease in base ratn nsulung from the \tanh before manne inn for rath lear n>i \lanh 1986 rate settlement agreement 19Xh rate seulement with the Gty Omnol other inmme .ind dethwtions iksreawd with the Giunol. the outcome of the pru-parnally offwt b) a $32 6 mdhon detreaw $ e a mdhon or 93 L in 1986 n mmpan d to dente inquir) being mnducted b) the Omn-in the reoner) of fuel msts thnmgh the 1085 thn wa due pnmanly to rn%tions al tor haganon related thereto), the abiht) fuel Al iustment (lause .tnd a $10 6 milhon m internt intume on lwmer punb .se Ahare of the Gimpan) to secure netewar) fmane detrede in saln to affikated unhoet the pay ments prnioinly made to System I nergs ing to fund a substantial porton of ib ik fernti 19Mi tktrede in (littnc operating rnenun Rnouan. Inc Grand Gulf I-related costs untd the) are ml-ua due pnmanly to duredeil fuel reon-htted through ratn. and upon sarious other er) of approumatcl) 535 i nulhon partiall> 11FECIS OF 1\FIAfl0N fattors (See Notn 2 and S. "Regalation and offwt by increned saln to other unlitin of in Detember 1986. the finantal Rate Wtters" and Gimnutments and Gm-
$M6 nulhon,intreased rnenun of $91 md- 'uounting Standanh Board nsued State- tmgeiwin." respetint !) )
ne assuai. nwont 29
N'E W ORLEA NS PURL IC SEMVICE INC.
FINANCIAL AND OPERATING STATISTICS Selected Financial Data 19n6 1*4 lui ist im lwl imo 19'9 19's 19 " 19'6 (Dollars in Millkm)
Tidal kwts . $ 460.5 $ 3469 $ 3;98 $ 34i2 $ 3480 $ 345.3 $ 3310 $ 3058 $ 2928 $ 2x98 $ 2828 Totalltihty Plant .. . $ 486.3 $4'66 $ 4639 $ .i;0 5 5 4W8 $ 4466 $ 4240 $4110 $3%5 $ 380.3 $ r0.9
& cumulated Pnwnion for Deptmation . $ 237.8 $ 2270 $ 2165 $ '19M $ 19hl $ 1834 $ 1713 $1613 $ 1550 $ l 63 $ 13'.6 Captahzatm luig Term Ditt . $ 139.4 $ 114 4 $ 114.4 , 120.5 $ 12ft5 $155 $1265 $155 $ 1266 $ 1217 $ 1213 Prefermi stak with Smlung Fund 13.3 133 113 la 6 14 6 14 6 14 6 - - - -
Prefermi stak withmt Smkmg Fund . 20.1 311 20 1 2tt1 20 1 20 1 20 1 311 N1 20 1 M1 Gunnum stock . 84.4 84 4 59 4 59.4 59 4 59 4 S94 49 4 59 4 49 4 59 4 Retamed Earmnp 21.2 t i? n) 10 1 Ino ?x 10 3 151 19 3 19 4 14 2 1s t T4al . $ 2?8.4 $ 214 2 $ 21'3 $ 2246 $ 22x 4 $ 2W9 $ 243? $ 224 4 $ 225 4 $ 219 4 $ 216' Tidat Optating Rewnuo (hduchng Intenkpartmmtal) . . $ 428.8 $ 4206 $ 448 4 $ 4214 $ 457.7 $4W9 5 3485 $ 3296 $ 2tol $2M4 $ 203 7 Operating 1ncome .$ $2.4 $ (130) $ 233 $ 13 0 $ ll6 $ 161 $ 141 $ 173 $ l'J4 $ 172 $ 216 income fnun Gotmmng opratums .$ 42.0 $ (IMM) $ 18.4 $ $3 $ 77 $ 94 $ 60 $ 93 $ 101 $ 101 $ 166 Net income (Nte 1) .$ 42.0 $ (188) $ 184 $ 8A $ 90 $ 10.5 $ 67 $ 100 $ 106 $ 10 5 $ 10 t Captaluatum Rata Dmg-Term Dtti ... . 50.1% Si h 517'% 53 6'% ii4% $4 8's 54 1 % %5 ;6 h 54.5'k %h Prefermi Stak with Smking Fund 4.8 62 61 65 6+ (t3 63 - - - -
Prefermi stak othout smkmg rand . 7.2 94 92 90 83 87 86 89 89 91 92 Gimnxm Stock . 30.3 39 2 27.3 26 5 26 0 25 7 25 4 26 3 26 3 27.1 2'.4 Retamed tarning 7.6 t*91 47 4+ 44 44 46 N6 86 M4 ??
T4al 100.0% im m. Imtys Imtrg imirt Im an Im an lm art Im rrt Im frt Im trs Dnidt'nd Declared on Preferred Stock .$ 3.8 $ 23 $ 33 $ 33 $ 33 $ 33 $ If $ 10 $ 10 $ 10 $ 10 Emplmees - ) car fad (Nde 2) 1,t24 1.452 1.412 1.922 l'86 2r8 2.913 1945 18 % IMI 2.7%
Gas Operations Optratmg R6enues 1 Excluding interdtpartmmtal)
(Dollars m Mdhorst Reakmtul . .$ 54.7 $ 43 2 $ 6'O $ 68 4 $ 5M3 $ 444 $ 3'l $ 3? ! $ 42 4 $ 27.7 $ 224 (ommercial . 19.1 18 4 li b 25 1 22 8 l' 4 152 13 5 11 6 99 73 i hihatnal 7.4 90 12 2 13 9 145 15 4 167 22 3 118 115 90 Gwernment and Mumoral . 20.1 J 244 2' 2 24 4 14 4 121 12 ? Il l 96 64 Total R6enue fnim Retad Qatomers $ 101.3 $ 1041 $ 124 2 $ 1346 $ 1195 $ %i $ "J $ M6* $ 689 $ 59 7 $ 45 2 Mntellannm . l.4 15 !? 15 12 19 I? 4 6 3 Tota . $ 102.7 $ IM6 $ 126 4 $ 1%I $ 1.'n ' $ W4 $ 'x9 $ M3 $ U)4 $ m4 $ 444 salo t hdudmg Interdepartmental)
Mdine of (ac Fert)
Rnkirntul . 9.5 9.4 11 3 10 9 10 6 11 3 11 6 123 13 1 129 14 2 GimnwrctA . 3.6 46 40 42 44 46 4' 43 th 54 is indtotnal 1.9 19 26 17 19 42 61 96 ?? 19 81 Gnmmient and Vumoral 4.1 i' 48 4' 4? 41 sn 45 62 61 61 TwM 19.1 19 ? 22 ? 22 4 22 6 24 2 2' 6 til 42 M 42 4 32 9 nnumts-) ear Dxl (Tlumanal Rnidentu! . 153.7 1%4 199 4 160 8 162 4 1643 IM 9 1644 lbi l IM 4 IM M T 4a! 165.1 IM 2 l'l i 173 0 174 9 174 9 176 5 l l 17' 9 l'M o l'M 6 Mtural Ga IMhael iBdlum of Ohc Fwt)-
For Roale . 19.5 22 1 22 1 14 8 22 7 25 4 2M % 34M 33 5 33 2 349 for Ital in Companis F2Mnc Grmfating $tamm . 26.9 2x 4 in i 24 ' 46 6 46
- n] 3M iij 16 6 N6 Td2 R4 40 6 42 6 4' t 49 4 '21 '24 M6 4' ' 49 4 41 4 Wumum 24 timt Rnde Demand t%!him of Ghc fwt) . 19N 2% 239 24 224 2M 242 Jh' 272 29 4 2 59 l Ileatmg Ivant Dm (N4e it ktud 1,111 1344 1.183 13'6 941 1 115 1.10. l ini 1.i92 13H 1.45
%rmA 1,319 1314 1314 13M 1352 13 % 134i 13'2 13'9 1359 1362 Rnnkmtal Gntimt Data herage 4muallw t11nnana of Ght ino 61,18 0162 'n N9 6'64 M e4 M t9 'O M 7'.% U92 '8 01 79 M teragr %muA NI . $352.83 $il'MI fil9 P fili al $4hl 2M $2' inh $22'M $225 34 $1%n2 $16' P $14i 5e herar Raenuc pt Tinn.uid Ghc Fwt .$ 5.77 $ i t' $ 592 $ 6 23 $ 942 $ 3 4, $ 324 $ 291 $ 2 42 $ 215 $ l.'o 1
l l
30 assu4t atroat ion
S E R VIN G... Y E S T E R D A Y, TQDAY & T O nt,0 R R O W 1
l FINANCIAI. AND OPERATING STATihTICs 13cctric Operanons 19M6 Im; Ime Imt Im2 Iml imo 14N 19's 19 7 ICh
@tanng k6enues IEwludmg latif.kpartnuta!)
t N1an m Mdi m i Roulenti.d . . $ IIM.I $ 10'9 $ l(N 2 $ 9'3 $ 10'.1 $ 1063 $ 84 3 $ '4 2 $ MM $ 64 2 5 53 9 Genarctal . 131.9 120 5 1250 1(h 3 IW I 10io M18 ?i6 06 4 64 8 i? 0 liahntrial 22.9 25 1 64 %4 40 8 41 1 34 8 31 6 2' O 26.2 23 1 GiMinme!!l and Mwaopal . 43.I 42 5 446 4l l 43 4 49 6 .'9 5 25 5 21 5 '04 lM 2 T4.d Rrwnua Ingn int.nl fmtmnen .
. $ 316.3 $ ?ti0 $ 312 2 $ 2'96 $ 403 $ 292 5 $ lil 4 $ 20i' $ IM7 $ l'60 $ 192 2 Pubhc i uhty 5.1 162 56 4; 68 %2 110 as 34 5 3x l li' br!!anma -4.7 44 44 32 23 22 20 ( ;) ti') (1091 12 T 4.d
.$ 326.1 $ (14 0 $ 3??l $ 5' 4 $ 33'l $ 3 +0 4 $ 2696 $ 2 63 4 $Imt $INI $ Isx 2
, Sah :Esdudmg Intenkyartmmtali (ildhian of kdowau lhm)
Rnilentui . 1,906 13H 1.'22 1.hti 1.'00 1.'06 lASi 1.56; IAIM l.47 lMi tomnarcial . 1,990 1.939 13 % lAie t h41 1 622 1.i?] l.54' l.53' ice 92 136 likhntn.d 44M Ni 6'O 72M 7% M23 Mt 8'i X'i K63 816 (mtnnent xal Mumoral . kna sa N '% '62 '% '23 6'3 62' 624 Ni2 5'3 Tol Sab lo ktixl fusnmen 5.146 5.o'? 4.043 4.'s' 4M3 4.x'4 4,810 4 602 46;4 Uli 4 240 Pulk i tiht) 19M $44 Its 91 M8 ml 'm 1 226 G9 ** '02 Tol 5,366 4410 ( 141 erg (stl 4 6; U19 < sin 4 213 4 012 4 ,42 fu*nnn-kar Fod (Tlwxkbi Riwk nh.d 176.0 l'80 IN9 l'M 1 I" ' l'62 l'48 l'33 l'24 l'03 IM 3 1 01 196.M I?lo 201 0 IW 2 198.6 IM 19ii 1938 1940 191 1 139 ;
Summit N4 6 n.rahrg f.apbdt tTivinxhb of klowattu 1,077 1.0" 1.n'? I l'0 13' I3' 13' 13' IS' l .li' 13?
Maumum ther Nt locund iCompam bru (Tlannxhb of klowaN 1,lM5 l lli 1 992 1.106 1OH I(O' l.091 981 9h' %i 917 N t ouput - H omrma in a)
(Ndhi.In td khlwar! !han) %,49% i.M i.it] 50i' i llj i.19h 4.120 4.Ni 4966 4y06 4,66'
\ l ihgput - lht d Iilhm of kJowatt ikiru 9,700 isil ;iM i.l'l 5)H 6.110 60'0 6 162 5.%I sy2 4 ? 50 tmual loaJ iaibr ib4nren irea p $ 23*. %irt H't ilts %h H 6't 4 4 4't 4 6't u n't 46 f t Si tt o.ug i n,-s.n, Vtu.d 3,214 2M' l '49 2h89 4.4W 4.u9 394 (Oil 4.%9 4.4% 1 610 N emal 2,9 :0 2.946 194, 19;3 2%2 23W 1sM 1xil 2320 l '91 2312 knak ntui t # tome r luta W rage innual l w ( Adowatt ibe l 10,7 tM 1H 24 96?? 9 2 is 99 4 9 6'?
9.'24 90W 9 41' 9 36' N 624 Ntgr innual lid! $666.9M po( 6 $mpix $no so $48 04 $NN 64 $ 6611 $ 424 42 $ 44 t '0 $ 4" 90 $ 41921 htxe lwnur per kdout lh.or 6.204 W 6W iw h hk 62M iw itM 407 4M 3 'tM Md6 of odhhkton Ohn!riJ and I nditgr inn.h 7,930 '3'n
?,9 % '.91 ' 'p H ?>01 'Ali '.% ',' to ?A2; ?,bi a 1i %i e omt for lWi mdudn $15 9 medi of ik k rnd brand half I relahl altnn irt of In. applulle to IM ili 11r t onpu s wid in tranut .ptam43 m Jmr to Imt t 4) i shn are mdn atne of t!r rdarw la erg nPnewnh and nynwnt tfr wmmatm of ddirne trten M*F and attual nyan dxly atmot rnc i dn hdb tempitaturn for all I dan .4 Im than 6M F nun Nemal nynch 20 u at nmnmg errage endni pnum war i u iihe my mdume of ile nbtne u..hng nyun monts and nyns ni tfe mmmamo of d>flernan lermn M'F xk! adual nr.ui d.uh atnu9htw dr) kdh Irmpiritures 6ir all Jan of mon than hi i nwan %eul rej nvnh 20 war ruf mmg mitige t1nted pnwen war Transfer Agent Registrar Trustee
< for Preferrni Nm k) (for Preferrni Stock) (for hrst Wrtg. ige lionds)
%Ilon Securities Trust Comlun) llams Trust Conilun) of New York The Lluse mnlutten llank. NA F liroad Slrn1 Ninth lloor Corporate Tnnt New York, New York lum ll0 bllidm $tntt Muunistratne [Mbion l
New York, New York 1003S 1 New York Plata.16th floor l New York. kw York luNI tes Annual nt portf M
NEW ORLEANS 9USLIC SERVICE INC.
I E3 ,
LA T' BANK OF ORLE ANS PARISH '
( El 1tr6c6 y and Gas)
TVI DT BANK OF ORLE ANS PARISH -
Ca . ;
LAKE P C I: TCHAGTMAIN LAKE 60RGNE s'
SERVICI: AHF.\/ Thniugh their affikation with .\ liddle SI:R\lCE TI:RRITORY New Orleans Public Senice Inc. South I tihtin. Inc . Pubhc Sonice alk! the Middle Sainth Ltilities Systenti orher ihddle Saith I tilinn Sptim compa- January 1,19M7 New Orleans Pubhc Srn ne Inc. snn nin g.un op ratmg and inwme tax benefus. The \hddle Nnnh I nhnn Sptem the Cay of New Orleans (Orle.uts Pansh), a a s>urce of conunon cijoity capital, and comp.unn pnnidt ehttric senice to more land area of approximately 2nn quare expert asntance when wlkng winor wun. tlun 17 nulhon customen in a 92pxb miln. Natural g.u is pnnided for the entire tin to (nunce propert) ackhnons and for quare nule area uninn Vkans.n. lunisi-pan >h winle eketncay n supphed for all other corporate puriws intirconnations an.i. \hseippi, and Southe.nt Ainsoon are.is of the parish except the lith Ward nuke it lwihle to pnn ble more driendable New Orleain Pubhc SenIce Inc. aho wnn
( Alglero, an 1s-stuare nule wction on the elatric vnice wnh ins total generating g n Ontomen m the En> of New Orleans wot bank of the Mnwippi kner. The cap.icit) and to kntall largtr generaung Amuted Natural G o tompany, a suWde Compan>i citt.tne and g.a o[wranons are uruts luung lowt r irantment costs p r an of Ark.unas hmtr & l.ight Comp.m),
rtgtll.ited b) the Counal of the City of kilowatt and lHghrr elhtiencin M nn g.n cinlomth m parts of Ark,Un.n New Orleans and boun Tile Iollr 5)strin ojtrating coillp.Inin
- Ark.un.n l'ov er & Iight Compan),
louidou Powtr & light Compan), bn-sIppl hlwer & IIgllt Con 1p.lli), alid New Orl rain l'ublic SrnIce lnc. - h.ne kned (Hidt r cotilllioll oulirhlup ;lnd oli all lille TLollllitled b.nn for lllure llull ho )r;1h 32 48%uat ne roar in
DIRECTORS DR. IIENRY E. liR\ DEN Ill' A.1 Jt'NG.JR.' GER\ED D. \tcEENi>0N' JACK .\l. 4YA'IT Prnate Phpician Chainnan of the lioard Executive Vice ItesJent Retired Chairman and jutes.\t.G\lN Jung Reahy Company. Inc. of the Company Chief Entutive Officer thsident of the Company JOSE 111J KREBS JR Entutive Vice Prtsident inuisiana Pmver ihsident Chairman and inmsiana lbwer & Eight Company & l.ight Company louisiana Ibwer & l.ight Company Chief Executne Officer JollN 11. SNL\LifAGEa REY. J.utES C CARTER. SP J J Krebs & Sons,Inc. Chairman and Secretary
- Elected effective 11-174 Pnsident ElmlN 1.1 Pl;ERGER' Donovan .\tarine, Inc. s.\lembers of Audit Committee in>ola l niversity Chairman and President CIL\RI.ES C. TF. uter. SR." ' Retired effective 5-124
, liROOKE 11 Dl'NC\Nk sliddle South I'tilities. Inc. Vice Pasident for FEktted effectiw Flin I
thsident fiscal Affairs >Ektted effective 5-124 The Ioster Company. Inc. Ddlant l'nnersity 0FFICERS jutes \1 C\lN Nt. II, 51ciffCillE RICll\RD C GlTilRIE W 11. TAlliOT
! lhsident Senior Vice lhsident - Vice President - Vice lhsident -
10NAl.D lli NTERI Accountmg & Finance. Public Affairs Aristant to the lhsident, i
Eututise Vice lh3ident and Treasurer W J. lANNES,111 and Secretary R.1)R\KE kEITil RICllARD L Ntl'REO4 SKI Vice Pnsident - RollERTJ AllADIE l Senior Vice Pnsident - Sptem Engineering Controller Evrutne \ ice Pnsident l
- GF.R\l.Il D. \lcl.EN! ONi 1! ministration & Planning Tilost\S 0. I.lND JulES C AIACK l Eututise Vice lwsident J J. SA\CKS' Vice President - A3sistant Controller D L AS\\El!. Croup Vice lhsident - Regidatory Counsel. I W 110ATRIGilT l
Setuor Vice lhsident - Dnision Ol trations and Assntant Secretary Assistant Controller l
l Energy Suppl) lowl G. E del.ERY.111 1 EE V. .\tAl RIN R. N. GARRf'IT,JR.
JollN J CORDARO \ ice lhsident - Vice lhsident - Assistant Controller demor \ ice President - \larketing fowil Operations S. E Olli.stEYER External Aff.tirs Rol'ERT J.1)l'NN l.EE W R\NDAEl. Aristant 'Ihmurer S. G Cl NNINGilut.JR. Vice Proident - \ ice Pasident - N. J liRil1Y Senior \ite lhwlept - Adnunistratne Senicn Accounting & T casury. Assistant Secretary
\larketmg & Kato ll1ROJ EIMARDS,JR. and Asshtant Tnasurer C\RYJ Dl'DENilEFER
\tAltol.\l I 111 RSTEEl \ ice Preident - Aristant Secniary
( Semor \ ice ITnident - linhion stanager Inerg) 14lner)
If.httnl elfittise 126 S' 21.httal ef firthe .41 S7 vib ntire dfectne F1-S'
'Rnignni dkttise 2-1 S?
l l
l l
l l
4 dli.tm II. Talbot Vice lhsident Asshtant to the Prnident, and Secretar) of the Comp.ni) since 19S5. p.tws! away on $lan h 12.19S' The Company b grateful for his man) lears of senice and h iktply saddenal in hh death
F E SE EuS
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