ML20212R232

Public Svc Co of Colorado,1986 Annual Financial Rept

ML20212R232
Person / Time
Site:	Fort Saint Vrain
Issue date:	12/31/1986
From:	Brey H, Hock D, Walker R PUBLIC SERVICE CO. OF COLORADO
To:	NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM)
References
P-87148, NUDOCS 8704270003
Download: ML20212R232 (59)

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PUBLIC SERVICE COMPANY OF COLORADO ANNUAL REPORT 1986 MANAGING C H A N G E 9

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EXECUTIVE OVERVIEW While 1986 was a difficult year financially for the Company, we believe the tough decisions we made enabled us to put most of the problems behind us. = Examining our strengths, we believe we can return to the strong financial performance our shareholders expect. Those strengths include our gas and electric supply situation, our service territory and the commitment of our management and employees. We have the needed resources and have already begun to address the basic changes occurring in our industry. = Our first challenge in 1986 was to assess the risk from litigation pertaining to the Fort St. Vrain Nuclear Generating Station and the continuing financial impact of the penalties imposed by the Colorado Public Utilities Commission. Given all the options, we concluded that a settlement was the best course of action. We then negotiated an agreement which addressed the interests of all parties, settled alllitigation and reduced the possibility of substantial additional financial exposure for the company. Agreement details are discussed later in this report. = In conjunction with those decisions, we also had to adjust the asset values of Fort St. Vrain and recognize current and future costs which could not be recovered through the revenues provided by the agreement. We believe we are 1 \

now in position to minimize the financial impact of any future plant decisions. = With the recent completion of equipment j;

j and electrical retrofit work at the plant, as required by the Nuclear Regulatory Commission, we anticipate that the NRC will authorize us to return the plant to operation in the second quarter of 1987. Our objective is to resume operations and produce electricity until the existing fuel is consumed, which we estimate will be 3 to 4 years. = Meanwhile, two more i

options are being studied. We are pursuing the interest of outside parties in making the necessary investment in nuclear fuel to operate beyond the 3-4 year period. The technical and financial feasibility of decommissioning the reactor and con-verting the plant to fossil fuel is also under study. = In other company operations, we have implemented several cost con-tainment programs. The work force was reduced by about 550 employees with a one-time early retirement program. We restructured some operating divisions to reduce our personnel requirements further without compromising the level

of service. = We have increased efficiency in materials handling with the completion of the new Materials Distribution i

Center which will save us $18 million over the next 25 years. New coal and freight contracts will save some $140 l million over the next ten years. = We have diversified our natural gas supply to take advantage of competitive forces.

We have moved into gas transportation as a major new line of business and have expanded our gas system by adding two more towns. = With a surplus of electric capacity in our region, we have taken advantage of some relatively low-cost supplies. We are also continuing to evaluate various options available for meeting future electric capacity needs.

e We are pursuing greater leadership roles in public matters such as air quality and economic development, because we know the economic success of the Company is directly related to the economic health of the communities we serve.

o We made major corimitments to air quality improvement through increased investments in our Denver area power plants. We have also agreed to burn natural gas instead of coal on high pollution days. We are reviewing our experience with vehicles powered by compressed natural gas to show how non-industry sources of pollution might be reduced. =

Our efforts in bringing quality, reasonably priced service to our customers were rewarded when voters in Denver and several important suburban communities granted us new franchises to serve their energy needs. = We implemented  ;

several equal opportunity initiatives, which are outlined later in this report. = None of the challenges of 1986 could have been met without our employees. Despite having to reduce budgets and make do with fewer resources, they performed admirably. We thank them for their commitment and dedication. = These then, were the changes in our business which we began to address in 1986. Accordingly, our theme for this year and beyond is " managing change." With the continued support of our shareholders, employees and customers, we can manage these changes to the benefit of all.

h Wlbt/~ 0 R. F. Walker D. D. Ihxk Chairman of the Board and President and Chief Executive Officer Chier Operating Omccr l February 10,1987 2

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PERFORMANCE AND EVALUATION BRIEFS EARNINGSfor 198G tvere S0.13 per share on net income of S22.4 million, after an extraordinary after-tax loss of S101.4 million, or $1.93 per share.

This compares tvith $1.81 per share for 1985, tchen net income tras S110.7 million. The extra-ordinary loss tras related to the teritedoten of investment and recognition of unrecoverable costs associated trith Fort St. Vrain. = FOR THE FUTURE, the Company espects to see its financial perfonnance improve as operating efficiencies take effect, and the negative ef]L> cts of the extra-ordinary loss are absorbed. Electric sales groteth is expected to continue in the area of 2 %. Gas sales, tchich n'ere offin 1986 due tofuel stritching and tvanner than nonnal n'eather, should register some hnprovement in 1987 as a result ofincreased marketing efforts. = A NEW PRESIDENT u as elected in '

1986 trith duties as the Company's chief operating officer. He is Delttin D. Hock, 51, fonnerly senior vicepresident. Richard F. Walker, 62, remains as chainnan of the board and chief executive officer. e THE ANNUAL DIVIDEND remains at $2 per share of common stock. Hou'ever, the Board of Directors trill continue to make a careful evaluation of allfinancial conditions affecting the payment of dividends on a quarter-to-quarter basis, as the Company does everything it can to enhance earnings through cost containment and business improvement. Continuedpayment of the dividend at current levels depends on lx>th short-tenn and long-tenn hnprovement infinancial results. = A STIPULA TION AND SETTLEMENT AGREEMENT tras initiated by the Company and approved in 1986 by state agencies and other parties n'ho had been challenging various rate decisions pertaining to Fort St.

Vrain. Details are provided in the section tchich follou's. = FORT ST. VRAIN IS SCHEDULED TO CONTINUE its nuclear operations until about 1990 u ben it is estimated the nuclearfuel nour on hand 4

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REGULATORY & FINANCIAL ISSUES While regulatory decisions can change a utility's operations and influence its financial results, it's how the results of those decisions are managed that makes the differ-ence for the future. For Public Service Company of Colorado,1986 was that kind of year. = Since 1980, when the Fort St. Vrain Nuclear Generating Station was placed into customer rate base, several regulatory i decisions, both favorable and unfavorable to the Company, had been appealed through the courts to the f Colorado Supreme Court. Because the outcome of these was protracted and financially uncertain, the future l

was uncertain. = In the meantime, state regulatory penalties for non-operation of the plant reached a maximum of $3.8 million a month, equal to the authorized customer revenues for the plant. Concurrently, i

the plant remained inoperative while retrofitting work proceeded to comply with the latest federal standards. i o Following more than two years of shutdown for refueling, repairs and mandated retrofitting, punctuated by a brief successful restart in early 1986, the Company concluded it had a technically operational plant that would not be economic unless future costs were reduced. e And so, in the third quarter, the Ccmpany entered into an agreement which settled all current litigation involving state regulatory treatment of Fort St.

Vrain and removed the possibility of substantial additional financial exposure from these cases. In a separate action, the Company also took an extraordinary loss totaling $101.4 million after tax in recognition of assets and costs judged to be unrecoverable. = Terms of this settlement agreement include: = Removal of Fort St.

Vrain costs from customer rates, with a corresponding annual reduction in electric rates of about $29 million, and a refund of previously accrued penalties totaling $73 million. e The contribution of $2 million to the Energy Assistance Foundation, an existing Company-founded charitable organization that helps needy people pay their energy bills. m No new rate increases that would be effective before July 1,1988, except for 8

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GAS & ELECTRIC SERVICES While outside factors are creating change in the gas and electric business, Company management also is making change happen. The Company is conducting marketing research in an effort to determine what is necessary to strengthen itself in the market and deal with economic stagnation in its service territory. Company executives are holding discussions with major gas and electric customers about their energy needs and proolems in an effort to enhance service. They are also discussing the changing nature of the business with employees. = To remain competitive, the Ocmpany adopted a new gas supply strategy: That of lowering gas costs through increased competition among suppliers by aggressively diversifying gas supply sources to meet both long-term and short-term needs. That process moved forward in 1986 with a series of agreements. = The Company struck a long-term purchase agreement to buy 5.1 billion cubic feet of gas per year from K-N Energy, Inc., at favorable prices. This is about 3% of our annual volume. Under a separate agreement, the Company's major supplier, Colorado Interstate Gas Co., (CIG), will transport through its system up to 22.5 billion cubic feet of gas per year from any source. At the same time, ClG agreed in principle to reduce its minimum purchase requirements, expanding our options to buy from other sources. = By continuing this process, we expect to enjoy a more competitive market for natural gas, reinforcing the Company's ability to retain customers. = Overall, gas customers increased by about 3% to 819,700, as a result of special marketing efforts as well as through the acquisition of the gas systems in the towns of Sterling and Atwood, Colorado, with about 5,000 customers.

l Nevertheless, gas volumes -including gas transported for delivery to end users - were down about 7.9% for the year, from 191.4 billion cubic feet in 1985 to 176.3 billion cubic feet. = Most of this decline was caused by a warm winter in 1986, with temperatures 22% warmer than normal. In addition, fuel switching by major industrial users continued to be a problem, as the depressed world oil market made heat'ng oil an attractive alternate. Adjusta ents in oil prices have brought that problem, for now, under control. = At the same time, transportation of gas for large users who buy directly from the u i

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5-a ' FISCAL & SUPPORTOPERATIONS To manage changefor maximumfinancialgain, the effort must

. extend all the way doten to the nuts-and-bolts level. That's exactly what the Materials Distribution Center (MDC), just opened in metropolitan Denver, provides. e its computers catalog everything, doten to each matchbox-sized bin of nuts and bolts. Upon command, a rail-mounted crane canfetch b the storage pan containing those nuts and bolts, keep track of how many are left, and remind its masters of the need to reorder. All this is tccomplished in a warehouse bigger than afootballfield. In f

l Jact, its dense storage racks enabled thefaclHty to absorb the operations of six warehouses andfive shops. Thefacility is espected to generate savings of about $18 million over tlx next 25 years.

• While it represents the most advanced and efficient techniques in materials handling, the MDC is much more. It is indicative of the changes stirring in the way the Company does business, ways that make it more cost-efficient, more responsive to thejob to be done. e This includes management of human resources. During the year the Company offered a one-time early retirement program which was accepted by approximately 550 employees. This was a major step in tlx Company's efforts to cut costs.

The Company is continuing to review how it might achievefurtixr reductions in personnel. e The Company is also in theprocess of knplementing some reorganization ofits operating divisions which will enable it to absorb the reduction in personnel and achieve budget goals without compromising service to its customers.

• Anotixr effort to knprove the Compcmy's bottom line is a non-fuel expense cuttingprogram. In 1986, such costs, eAclusive of Fort St. Vrain, u ere down $12 millionfrom 1985, a 3.6% reduction. These budget levels will be maintained in the comingyear.

• During 1986, uv also establisixd PS Colorado Credit Corp., a credit subsidiary that is expected to save about $10 million 16 i

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in interest costs annually. The permanent life insurance AFFIRAIATIVE ACTION l

Cornpany sells its stockpile of policies on certain employees, REPORT Affirmatite Action l coal andfuel oil, imrth the benefitsfmm which arv to is an on-going commitment, about $40-$50 million, and pmeidefuturefundingfor notjust a historical document its average accounts arceiv- the Company's post-retire- orlegalissue. The Company able, uvrth alx>ut $100-3130 ment hfe insurance liabilities remains committed to equal 1

million, to the credit subsi- and other corporate requirv- opportunity, a pluralistic \

l diary. The subsidiary then ments. The Company realized uvrkforce and a community finances the assets using a about $3 million in net in tchich eteryone enjoys z y, .

incomefmm this source in access to the quality of hfe t

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<h*'. resources to coalpiles - In 1985, the Company combination of short term indicatesjust how deeply the developed a number of new kxms, and up to 15% equity Company's program of initiatives aimed at fmm Public Service Company. managing change reaches, increasing emphasis on equal Theformation of PSR In- and with what promise it opportunity not only in testments, Inc., (PSRI) in late stretches toward thefuture. hiring, but in promotions. In 1985, is another case of 1986, it began to meet those l

l impmved asset management. initialites, which ranged PSRI owns and manages from college recruitment of ethnic minorities to solicita-tion of minority- andfemale-otened businesses.

While the Company has Business contracted with Through aggressite re-met some ofits self-imposed female-owned tentures cruiting, the Company began goals, it hasfallen short expandedfrom $2.9 million to hire minority student l on others, underscoring the to $4.9 million, an increase interns, and contacts with l

need to continue its efforts of 69%. The goal urts 50%. predominantly minority in this area. Aspart of Management openings unitersities such as Florida this report, thefollowing within the Company uere A&M uere increased.

table is provided. filledfrom minority and Ibe Company conducted a Percentage of Male, Female and Minority Employees at Year-End 1985 and 1986 Public Service Company of Colorado and Subsidiaries Asian / Pacific American Total Male % Female % Black % lihpinic % Islander % Indian % Minorities %

Year-End Year-End Year-End Year-End Year-End Year-End Year-End 1985 1986 1985 1986 1985 1986 1985 1986 1985 1986 1985 1986 1985 1986 Management 12.2 11.7 0.8 1.1 0.2 0.2 0.4 0.6 0.1 0.1 0.0 0.0 0.7 0.9 Non-Management 68.2 67.5 18.8 19.7 4.7 4.6 10.0 11.0 0.8 0.8 0.2 0.3 15.7 16.9 Total Company 80.4 79.2 19.6 20.8 4.9 5.0 10.4 11.6 0.9 0.9 0.2 0.3 16.4 17.8 Other results in minority 7 minorityfair as a means p

relationsfor 1986 include: ( of stimulating the minority Business contracted with I community's share in minority enterprises tendor business.

expandedfrom $1.9 million 3- ~ *,

in 1985 to more than $3.3 - .

million, an increase of 74%. female ranks in 30.1% of the The goal was 50%. cases. The goal was 30%.

Houeter, the oterall ethnic mix requires additional attention.

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COMMUNITY COMMITMENT Change has occurred in the skies above Denver. Nesticd against the a r: gal Rockies, the city for years has been called "the Queen City of the Plains." But the Queen City's crown is now tarnished by the blight of the " brown cloud." = There is no doubt that the Company's two coal-l burning power plants in the metropolitan area make some contribution to the problem, despite the use of $74

, million worth of existing pollution control equipment. Even though these investments have enabled us to l j substantially reduce emissions from the plants, there is still room for improvement. Therefore, the Company t t

is proceeding with a $50 million control system that will use baghouse filter technology to more effectively f

remove particulate matter from its stacks, and inject dry soda to maintain sulphur dioxide emissions at current levels which meet state emission standards. This technique represents an innovation in pollution l control technology. = In addition, the Company has been voluntarily burning natural gas under its boilers on high-pollution days to alleviate the community problem. = Involvement with Denver goes even deeper. With

the ratification by voters of a 20-year franchise last year, the Company was assured stability in its largest i single market. The franchise was approved by 70% of the voters. As part of the contract, the Company i agreed to join with Denver in a joint venture to study the feasibility of a trash-fueled power plant. The 4 objective is to ease Denver's trash disposal problem, and generate power for the area without adding to its pollution. Much of the Company's community interaction is highly visible. At the airport parking lots and in high-crime neighborhoods, safety has been improved through the installation of high-pressure sodium i

vapor lamps that increase illumination. This is part of a program to replace mercury vapor lights with the more cost-efficient sodium vapor type. = Other portions of the Company's work within the community l

l involve direct interaction with the public. = For example, the Company continues to help those on fixed i

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l incomes and the poor with under the Company's " Handy-l l their energy bills by supporting van" program. Two vehicles l a matching fund for the Energy were donated by the Company.

l l Assistance Foundation. Through I, its billing system, it encourages its customers to donate by matching their contributions.

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" Share-A-Book" drive under Trained senior citizens are on call to help elderly people on

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employees and the public to day care centers and nursing care facilities.

I l The resources of senior 1 I I I citizens have been put to work '

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Pubhc Service Company of Colorado and Subsdiaries SNARENOLDER INFORMATION obligation to make an optional cash payment each month. Op-tional cash payments must be received by the 20th day of the The Company's conunon stock ($5 par value) is listed for month. Such payments received after the 20th day of the trading on the New York, Midwest and Pacific Stock Ex- month will be deemed for reinvestment purposes to have been changes ur.Jer the ticker symbol "PSR." Quotes may be received in the next month.

obtained in daily newspapers where the common stock is listed The purchase price of shares acquired with optional cash as "PSvCol" in the New York Stock Exchange listing table, payments in the open market is the average cost ofsuchshares,

! Year Total Volume Average t>aily volume including brokerage commissions. The investment period I

iis6 53.820.300 213.573 generally begins on the 22nd day of the month and ends when 1985 29.822.800 118.344 sufficient shares have been purchased.

1984 33.670.400 133.085 A prospectus describing the DRP and enrollment information Comumn Sharn Shareholders can be obtained from the Shareholder Services Department by I

Year outstanding Comm m Prererred writing or by calling (303) 571-7514.

1986 52.399.168 w.916 5,062 72,834 Transfer Agents i 1985 52.332.617 5.M3 . .

1984 51.632.451 73.702 5.875 The Company is the pr.incipal transfer agent and registrar for its common and preferred stock.

Three series of cumulative preferred stock are actively traded For additional convenience in transferring stock, Morgan (see chart below). All other series are not actively traded and Shareholder Services Trust Company of New York is retained market prices are not published. as co-transfer agent and co-registrar.

Serin Where lhted 4u ($100 par value) American Stock Euhange How to Transfer Stock 7.154 ($1no par value) New York Stock Exchange A transfer of stock is required whenever the registration of a 8.40n%25 par salue) New York Stock Exchange stock certificate is changed. A change in registration generally

[hton Stock Exchange occurs when stock held in other than " nominee or street name" The Company's common and preferred stock may be pur- is sold. Changes of name, co-owners, tenancy, etc. also re-chased through a brokerage firm. A shareholder of record quire a transfer.

holding the Company's common stock in his/her name may A transfer can be accomplished by properly filling m, the purchase common stock through the Company's Automatic stock assignment form on the reverse side of the stock certifi-c te and endorsing the assignment form exactly as the registra-Disidend Reinvestment and Common Stock Purchase Plan tmn is shown on the face of the certificate. The signature (s) of (the "DRP") (see section entitled "Disidend Reinvestment the transferor must be guaranteed either by a commercial bank Plan" for details).

or a brokerage firm that is a member of one of the major stock Where to Sell Stock exchanges. The certificate with the properly completed assigr. -

The Company's common or preferred stock held in certificate ment can then be sent to the Company or to the co-agent for form may be sold through a brokerage firm. Shares held in the transfer, it is recommended that certificates be sent registered DRP by the Company for a participant may be ordered out in or cenified mail.

certi6cate form by the participant and sold through a brokerage firm or may be sold through the DRP by sending in the ap. Stock Registration The purchaser has the choice of having the stock delivered or propriate form. Shares held in the DRP for a participant will not be sold for that participant between the record date for a leaving it with the broker. Stock left with the broker is gener-1 dividend and the time when the records base been updated to ally held m the brokerage firm's name and referred to as

" street name" stock. The purchaser is generally referred to as reDeet the reinvestment of such dividend.

the beneficial owner.

Dividend Reinvestment Plan A purchaser who elects to take physical possession of the The Company's DRP prosides common shareholders with an stock receives a certificate (s) representing the number of economical and convenient method for purchasing additional shares purchased. The stock is registered on the Company's shares of the Company's common stock. books in the name of the purchaser who becomes a shareholder Dividends reinvested through the DRP are used to purchase of record.

shares of common stock in the open market, at the average cost of such shares, including brokerage commissions, incur- Safekeeping of Certificates ,,

When stock certificates are received, it is recommended that red in connection with the purchase of shares during the appli-cable investment period. Common shareholders whose shares the certificates be safeguarded by placing them in a secure pl ce such as a bank safety deposit box. A separate certificate are registered in names other than their own may participate in the DRP for the reinvestment of dividends, provided the record should be maintamed meluding each certificate number, purchase date, date of issue, amount paid and the ex-broker or fiduciary who holds such stock in nomince name is act registration. 7he Company does not safe Acep catificates willing to participate in the DRP.

Participants may also invest optional cash payments through for shauluddas.

the DRP in amounts ranging from a minimum of $25 per pay-ment to a maximum of $5,000 per month. The same amount of money need not be sent with each payment, and there is no n

Lost or Stolen Certificates cumularise if a stock certificate is lost or stolen, notification should be Preferred Sam k 4th 3rd 2nd ist_

sent immediately to the Company so a "stop"can be placed on 4%4 Series the missing certificate. The letter should contain as much tw6lbgh 46% 50 % 48% 44 In 42% 42 42 37%

information as possible describing the certificate; in parti-

% 3 cular, cenificate number, date issued, and registration. Once a 19x5]f "stop" has been placed on the missing certificate, an affidavit ,

will be sent which must be completed, signed, notarized and ['[3 83 M  % 85 returned before a replacement certificate can be issued. An ir- tm 77 % 76% 75 66%

revocable indemnity bond for the lost stock certificate is also 1985 thgh 68 70 66 62 required. The cost is about 2% of the market value of the miss- tow 63 M 58% 57%_

ing certificate, calculated at time the indemnity bond is issued. s.40% Series (52.9 Information regarding lost or stolen certificates should be 1986 ihgh 24 % 24 % 26 24's sent to Shareholder Services Department, (Room 16011). P.O. tw 22 % 21% 21% 2 Ilox 840, Denver. CO 80201. 1985thgh 21% 21% 21% 19 %

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Dividends Dividends on common stock, as declared by the lloard of Di- Dividend Heinsestment Plan Statistics rectors, are generally payable on the first day of February, Sharehnider  % of Shares kof N!ay, August and November of each year. The Company pays Year Participants Total Participating Total regular quarterly dividends on its preferred stock on the first 1986 25.633 39 5 7.114.248 13.6 of N! arch, June, September, and December of each year. 1985 32.994 45.3 11.589.596 22 1 Dividends paid on stock held in " street name" are paid to 19 4 35.092 48 0 18398.244 37.1 the holder of record, genera!!y a brokerage firm or bank I'unds Shares Ascrage nominee. The disidends are then redistributed to beneficial Year railected issued Price owners by the brokerage finn or bank in accordance with the 1986 OPEN MARKET PLAN beneficial ow ners' instructions. 1985 $14.270.on 700.166 $20 38 Shareholders of record receise dividends directly from the tvu mmo 2.45a2n 5th75 _

Company unless such shareholder has elected to reinsest disi-dends through the Company's DRP.

Dividends Not Recched Dividend checks are mailed so as to reach shareholders on the dividend pay ment date. Shareholders who do not receive their disidend check on the appropriate dividend payment date shouhl contact the Shareholder Services Department. However, it is suggested that such contact be delayed about 7 days after the dividend pay ment date to allow for any delay in mail delis ery.

The accompanying tables show the ranges of closing conunon and preferred stak prices as shown on the consohdated tape and dnidends paid on common stak by quarter for 1986 and 1985.

Omnman stock 4t h 3rd 2nd ht 19M6 lbgh 19 i 21% 22 ', 22N in 16'i 16 17 S 20 let Trade IN% 17 20 21 ',

Div Ikslated 50 .50 .50 .50 Da . Paid .50 50 s0 .50 19M5 thph 21's 24 % 24'. 20 %

tow 19 % 2n'i 20% 18'i tal l~rade 21% 20 % 23% 204 Dn. Ihlared .50 .50 .50 50 Dn . Paid _. _

.50 . -. __ _ 5_0____ _ _ .50 .4M

Pubhc Service Company of Colorade and Subsidiaries i FINANCIAL & STATISTICAL DATA i 1986 1985 1984 1983 '1982 1981 1976 i

Totrl Assets (millions) $2,918 2,995 2,867 2.716 2.607 2.422 $1,465 Common Equity (millions) $ 801 898 894 821 785 736 $ 411 Pref:rred Stock (millions):

Subject to mandatory redemption at par 67 79 87 88 89 89 64 Not subject to mandatory redemption 140 140 140 140 140 140 140 lamg-Term Debt (millions) 835 928 883 886 891 866 602 Short-Term Borrowings (milliom)* 191 13 21 44 54 M 48 Total Capitalization (millions) $2,034 2.058 2.025 1.979 1,959 1,895 $1,265 Capitalization Ratlos - Year-End:

Common equity 39.4 % 43.6 44.1 41.5 40.1 38.9 32.5 %

Preferred stock (Incl. due within l yr.) 10.5 % 11.0 11.3 11.6 11.7 12.1 16.1%

lxng-term debt (Incl. due within 1 yr.) 42.7 % 45.3 44.4 45.9 45.6 45.8 50.9 %

Notes payable and commercial paper 7.4% 0.1 0.2 1.0 2.6 3.2 0.5%

4 Gross Construction Expenditures (millions) $195.7 237.5 196.6 195.5 230.0 256.7 $132.6

% of Total capitalization 9.6% i 1.5 9.7 9.9 11.7 13.5 10.5 %

Funds Generated Internally (millions) $ 77.9 128.5 168.1 132.6 145.0 106.7 $ 59.5

% of Net construction expenditures 40.8 % 55.6 90.0 71.0 M.9 46.8 47.9 %

Rates of Return Farned:

Total capitalization (Oper. income) 11.7 % 9.0 10.4 9.2 9.9 7.8 6.9%

Avg. common equity before extra-ordinary item (Net to common) 12.7 % 10.5 15.0 11.2 13.1 12.1 10.8 %

Avg. common equity (Net to common) 0.8% 10.5 15.0 11.2 13.1 12.1 10.8 % i Pret.n Coverage of Interest Expense 2.53x 3.47 4.35 3.42 3.67 3.24 2.87x Effectise income Tax Rate 33%" 48 49 47 47 40 28%

Payout Ratio on Dividends Paid 1,538.5 % 109.4 74.5 97.8 80.2 84.3 70.9 %

Disidend YicId - Year-End 10.7 % 9.5 9.9 9.9 10.1 11.8 _ 7.7 %

Market Price Per Share:.

liigh $ 22% 24 % 19 % 19 17% 15 $ 19%

Low $ 16 18 % 16% 16% 13 % 12 % $ 14%

Year-end close $ 18% 21% 19 % 18S 17 % 14 % $ 19 Ilook Value Per Share $15.29 17.15 17.31 16.70 16.69 16.39 $17.63 Common Stock Volume:

! Daily average - (000) 213.6 118.3 133.1 130.0 84.4 52.1 15.9 Annual - (000) 53,820 29.823 33.670 32.910 21.198 13,204 4.022 Number of Emph9 ees - Year End 6,503 7.044 6.894 6.857 6.794 6.424 5.701

)

• Includes debt due within one year, notes payable and commercial paper.

J and preferred stock subject to mandatory redemption withm one year. I

" Ikfore estraordmary item financial & StatisticalIMia Operating Rnenues. Income and Earnings ikta The information contamed on the following pages is most Operating revenues are derived from four basic sources: (1) cus-frequently sought by insestors and members of the financial com- tomer growth. (2) customer consumption. (3) rate increases or mumty. A more comprehensive set of pertment historical. financial decreases authori/cd by Federal and Srate regulatory authorities, and

, and statistical information is contained in a supplemental pubhcation (4) fuel co4 adjustments. Ikcause increases or decreaws in the oests to the Annual Report. De publication is entitled Financial & for fuels used in electric generation, power purchased from other StatistNat Reuew (or Factbook) and is asailable upm request by utihties and gas purthased for resale to customers are automatically I completmg the card attached to the back of the Annual Report. passed on to customers em a dollar for dollar basis the increase or his section instudes information for the period 19%l981 and decrease in these unas are moluded in operating revenues. These the ) ear 1976. This enables investors and analysts to compute costs are subtutated below in energy (mts and can vary the growth comp,und growth rates for the last fhe-year and ten-year perials. rates of operating resenues from year to year.

1 I

. n

(

~-,--,,--------.-----,-,,,,,---g.- - - , - . , - - . ,-, ,- ,,,,,n_ . - - , , . , - . - - . , , . - - , - , , .

r-- , -

Pubik Service Company of Colorado and Subudenes OPERATING REVENUES, INCOME AND EARNINGS DATA Year Ended Dec. 31. runions of twnaro 1986 1985 1984 1983 1982 1981 1976 Operating Resenues:

Electric $1,045.6 1.022.3 999.6 853.7 843.4 742.1 $322.1

% Change 2.3 % 2.3 17.1 1.2 13.7 15.8 14.3 %

Gas 596.6 714.3 790.1 761.6 732.3 582.4 197.6

% Change (16.5)% (9.6) 3.7 4.0 25.7 15.8 13.2 % ,

Other 15.7 10.9 12.3 13.3 14.3 11.6 2.5 l Total Revenues 1,657.9 1.747.5 1,802.0 1,628.6 1.590.0 1.336.1 522.2

% Change (5.1)% (3.0) 10.6 2.4 19.0 15.6 13.5 %

Operating Expenses:

Fuel used in generation 176.3 171.4 188.9 172.8 184.4 170.1 86.7 Purchased power 211.6 203.1 161.9 99.0 101.7 113.2 4.4 Gas purchased for resale 423.3 532.6 606.6 611.3 587.2 462.3 127.8 Total Energy Costs 811.2 907.1 957.4 883.1 873.3 745.6 218.9

% Change (10.6)% (5.3) 8.4 1.1 17.1 12.5 17.4 %

% of Revenues 48.9 % 51.9 53.1 54.2 54.9 55.8 41.9 %

Payroli charged to operating expenses 202.7 196.8 183.1 174.4 153.3 125.7 72.2

% Change 3.0 % 7.5 5.0 13.8 22.0 5.5 9.9 %

% of Revenues 12.2 % 11.3 10.2 10.7 9.6 9.4 13.8 %

Other operating expenses (ex. payroll) 87.2 94.9 84.3 86.3 73.6 67.0 15.8 Maintenance 86.6 95.4 72.5 64.1 58.4 49.7 23.2 Depreciation 104.8 101.3 96.9 91.6 86.4 73.5 43.2 Taxes (other than income taxes) 66.8 M.8 60.0 $5.8 53.6 64.0 40.0 income taxes 59.9 101.3 137.5 93.8 103.2 67.9 21.2 Total Operating Expenses 1,419.2 1.561.6 1,591.7 1.449.1 1.401.8 1,193.4 434.5

% Change (9.1)% (1.9) 9.8 3.4 17.5 15.7 14.9 %

% of Revenues 85.6 % 89.4 88.3 89.0 88.2 89.3 83.2 %

Operating Income 238.7 185.9 210.3 179.5 188.2 142.7 87.7

% Change 28.4 % (11.6) 17.2 (4.6) 31.9 15.2 7.1 %

% of Revenues 14.4 % 10.6 11.7 11.0 11.8 10.7 16.8 %

other Income and Deductions 1.1 7.4 15.3 5.8 5.7 21.8 7.6 Interest Charges 116.0 82.6 80.3 78.9 77.4 63.7 40.6 Income llefore Extraordinary item 123.8 110.7 145.3 106.4 116.5 100.8 54.7 Extraordinary item (101.4) - - - - - -

Net Income 22.4 110.7 145.3 106.4 116.5 100.8 54.7

% Change (79.7)% (23.8) 36.5 (8.7) 15.6 18.6 (0.4)%

% of Revenues 1.4 % 6.3 8.1 6.5 7.3 7.5 10.5 %

Preferred Disidend Requirements 15.7 16.6 16.7 16.7 16.7 16.7 10.8 Earnings Available for 1

Common Stock $ 6.7 94.1 128.6 89.7 99.8 84.1 5 43.9

% Change (92.9)% (26.8) 43.4 (10.1) 18.7 20.1 (0.9)%

% of Revenues _ _ __ 0.4 %_ 5.4_ 7.1 5.5_ _ 6.3_ _6.3 _8.4 %

Ecrnings Per Share:

liefore Extraordinary item $ 2.06 1.81 2.55 1.86 2.17 1.97 $1.89 Extraordinary item $ (1.93) - - - - - -

Total $ 0.13 I.81 2.55 1.86 2.17 1.97 $1.89 Disidends Per Share:

, Paid $2.00 1.98 1.90 1.82 1,74 1.66 $1.34 Declared $2.00 2.00 1.92 1.M l.76 1.68 $1.38 Common Stock Shares Outstanding:

Aserage (000) 52,349 52,114 50,440 48,135 45.948 42,728 23.240 didM"NM .===== ==. == =52,399, 52,,333 51.632 49.182 47.020 44.896 2

__3,290

PUllLIC SliRVICE COMPANY OF COLORAIX) F / N A N C / A l. DATA /986 MANAGING C // A N G E i

l 1

1 l

l

.? '

Puhlte Sa'rshC Cemfhiny Of COtof Alo ar;J Subsiduocs MANAGEMENT'S DISCUSSION Electric and gas operating res enues reflect the elfects of rate AND ANALYSIS i"ereases and decreases and r?st adjustment clauses on prices of units sold. Operating resenues also reflect the solume Rnults of Operatiorn changes in unit sales. The foregoing factors contributed to Earnings per hare in 1986 were 50.i3 compared to $1.81 in annual changes in revenues f om resenues for the preceding 19S5. 'the 1986 results include an curaordmary loss of $1.93 year as indicated in the following table; m mg m 1986 1985 per share, which was recognized in conjunction with the settle- - - - - -

nlent of regulatory and legal iwues related to the Fort St. Vrain I l['['{ g g g gg Nuclear Generatmg Stanon (Fort St. Vrain). The estraordinary Hearie cost adjustment 5.7 117 low is comprised of the impaired portion of the Company's S. des solume and other changes 21.1 30 M insestment m Fort St. Vram, estimated future decommis- CPUC mandated refunds, woning espenses and other estimated unrecoserable emtw A e5clud(ng interest 01.0)

. _ 2.5 detailed espicoation of the estraordinary Ims and all related Net increase _ _ _ _ $ 23.3_  % 22.7 matters is presented in Note ! - Fort St. Vrain Nuclear Generating Station in the Notes to the Consolidated Financial das resenuet liase rate increases $ -

5 2.5 Statemenh. lhe ellett of the estraordinary low on earnings Gas cost adjustment 01.5) (4R M) per share was partially of fset by an accounting thange relating Saley glume and other changeq (N6.2) _ , _ 0 7 5) to the Company's accrual of pension espense which had a Net decrease $(117.7) 5475.M) poutne ef fect on 1986 earnings per share of 50.24 (see Note M

- Postrctirement Benetih in the Notes to the Consolidated The increases (decreases) in operating evenses from the pre-Financial Statements). ceding year were as follows:

The n'odest increase in 19S6 electrie operating resenues, 6tpongotDoiLo f _ im 19ss when compared to 1985, was primarily a result of nominal Fuel used m generanon $ 4.N $ (17.5) electric sales growth and the recosery of increased energy Purthased power M.6 41.1 cosh through the electrie cost adjustment (ECA). Customer Ud' P" hd'#d I"' '"I* II " 33 ")

prowth of 1.M's coninhuted to a 2.2'i increase in elet'tric sales [(',((d""##'P""'#' '

solume. Electrie resenues m 1986 (through September 30)and Deprecianon 3.4 3 @h)4.4 19M5 were adsersely impacted by (harges of $29.5 milhon and Tases (other than income taseq 2.0 4.8 92 nulhon, respettnely, f

• Pubhe Utihties Commiwion of Income tases (41.3) , p6 2) the State of Colorado (CPUC) mandated ref unds for the non-Net detrease _ $( t42.4) 500 t )

operational status of I ort St. Vram. In adJition. elettric resenues m 1986 (trom Ostoh e 1) renett a $6 mdlion redue-tion due to the adjustment of rates pursuant to the Stipulahon increased generation during 1986 was the pnmary factor and Settleme it Agreement. The nunimal increce in 1985 contnbuting to the increce in fuel used in generation egense.

electne resenues mer 1984 was pnmanly attributable to a Fuel prices remained relatisely stable in both 1986 and 1985.

3.l'; increase m elettne sales solume, due to customer I.ower 1985 fuel used m generation expense, when compared growth ot 2.4'1, and increased reemenes of energy cmb to 1984, was due pr manly to decreased generation and the ef-through the I CA. Iloweser, these factors were othet by the fett of monthly adjustmenh to f uel evense, which ase made to charges hir the (' PIT retunds dncowed ahne. more closely match certain fuel costs with the amounts re-Gas resenues decreased in bo,h 1986 and 1985, when com- (mered f rom customen through the ECA.

pared to the respettne precethng years, as a resuk of substan- In 1986 and 1985, purchased power expense increased due ual decreases in pas sales, pnmanly m the mdustrial category, to increces in the amount of energy purchased and higher per and dechmng g.n cmts hom supphen which are pawed on to umt (mts. The Company is continuing to take adsantage of the customen through the g.n cost adi ustment (GCAh Decrened asailabihty of relatively low cmt power.

yas sales solumes of 14Xi and 7 6'i in 1986 and 1985, re- Gas purchased for resale egense decreased in 1986 and ywinely. were auributable to warmer weather and a de-1985 primarily as a result of decreases in the solume of ga prewed economy in the senice territory. In addithm, pas purchased and lower per unit pas cosh from the Company's resenues conunue to reflett reduced sales to industrial cuv supphen of natural gat in addition, the decrease in 19M5, tomen due to ihrett purthases of ge from other supphers, when compared to 1984, was attnbutable to the ellett of I'he Company transpoi% sus h gas for a fee m er ik dninhunon monthly adjustmenn to gn purthased for resale egense system. Ihe redutuoq in resenues due to dirett purchecs which are made to more cimely match total ga (mh wah the largely refleth the correspondmg reduthon in the amount and amounh reemered from customen through the GCA.

cmt of gas purthacd for sesale, and the Company's earnings The pnmary f acton wninhuong to the detrene in 1986 from ga tranturanon senices are approximately the same a other operating and m.nntenance evenses were 1) the Com-cainmps hom mdminal ulet pany's election to implement the prosisions of Statement of Iinancial Accounting Standards No. M7, "Employen' Ac-counting for Penuons", which resulted in a reduttion in pen-uon cycine of apprmim.ucly %l2 nulhon bec Note M - Umt.

~s

retirement llenefits in the Notes to the Consolidated Financial pact on utility income tas espense resulting f rom the Tat Act Statements) and 2) the reflection of all egenses related to Fort wdl be reflected in the Company's utihty rates. To the estent St. Vrain incurred subsequent to September 30,19S6 as a that any impact is not adequately compensated for in rates, the component of the curaordinary low, wah the result that in- corresponding impact on cash flow may cause a change in the come before estraordmary item does not reflett such es- Compan)'s esternal financing requiremenh. Consequently, penses. Iloweser, total operating and mamtenance egenses there should be no significant impact on netincomeor internal awociated wah I ort St. Vrain, including those retlected in the cash generation. The impatt on the Company's non-regulated estraordmary low, were $84.8 million, $56.2 nullion and sutnidiaries is not e spected to be material.

$31.7 nullion for the >can 1986,1985 and 1984, respectisely. As a result of the reduction in the corporation income tas l The 1986 decreases in operating and mamtenance evenses rate, escess accumulated deterred income tas balances were were ottset, in part, by contmued increases in labor, materiah created. The Tax Act prinides that deferred tases related to I and services that result from normal system espandon and depreciation method and life on publie utility property which general intlation. were accrued at 46% must be resersed not faster than oser the Due to the settlement of a long-standmg tas dnpute with the remaining Ines of the related property. Resenah of accumu-Internal Resenue Senice (IRS), substanual interest cycnse lated deterred income tases related to timing ditterences, other was meurred in 1986. Iloweser, a prosision for the af ter-tas than thine presiously mentioned, and the ef fect of such reser-cent of such interest had been recogmied m presious yeart sak on net income and cash How w dl depend on the treatment Consequently ,19M6 income tas espense is low er due to the re- authorized in future ratemaking proceedmgt senal of the af ter-tas ettect of thn interest. Aho, decreased income before mcome tases and the recopmtion of prenous lu ty and L,up,tal i itesources At Daemba 31,192, dw b, mpany and its subudiaries esti-

>can' accruah for income tas espense which are no longer re-m.ned the cost of tb concudon program,inclu&ng AM quired, toninbuted to the lower 19X6 income tas expense bee Note 9 - Income Tas inpense in the Notes to the Consohdated and oma capnal mqunnwnh, in N, W and M to N d ' I"""" '

I inancial Statement a The 1985 decrease in income tas e spense resulted f rom the durease m income before mwme taset *"""d'"'"""

CompJns :

l'inancial Condition I let toe As a result of the settlement of hupanon surroundmg I; ort Si l'r oduc tion 5 28.Mi 5 82,n59 5 53,7m Vram and the rewpmoon of the estraordmary low, many I ' d n '"" "'"" 15 lM 22 M99 37 M83 thanges base occurred on the consohdated balance sheet. 'Ihe spainc ameunoeg t,umeni enne oneus och ei dm es. [',','",h""""

mm , ,s.,,, ,s m, f,), , , ,

traordmar) low n esplained in Note 1 - l'oit St. Vram gg 3 3yg gy gg N,utlear Generating Station in the Notes to the (onwhdated u s,4 ,ny, 33,43, yo,73 3 77,g3 g 1 mancial Statemenh. 162,962 Iotat ionsuutoon 251,101 239,3M9 Impact of Inflation and Changing l' rices Irw AHX' 3.250 5.MX7 12 M79 Capital intensne industnew sush as the utihty mdustry, are ^# N"h"9 '""d' ""d partliutail) atletted b) ugm0 cant long tenu milahon. Ver) umph, depreciation on utility propert), plant and equipment, I"'d! ' dPddI whhh n tharged againq c$mngs for assch acquired in the "4 " " # ' "# "" $## D"#D """ 7 p,nt, does not reflett the milated tost of acymnng sundar l he cornohdad cqual y mmm m thmba 31,19Sh con-awett ( onsequently, hightr prohh may be reported on a wn' 49ed o001 debt untluthng short termobligationu,1I S pre-tmuing bads wnh no accompanymg gam in real purchasmg tened M and 39% mmon ep. h mme M &M pilwer or ewnomic s ahN, ll owes er, the retent stabih/ation of mnanon at relatnely low lesch has Ininmo/ed thn unpast on de a hnx m dcN h h N W &h mwn h PS the current operatmg resulb of the C,ompany-ColorWo Cmdn Comenon (PSCCO in RmM Re Company espeth that the conmbdated capital strutture wdl Tas iteform Act of 1986 min nn approsunately the wnne oser the nest il ree >c,irt t he las Reform Ast ot 19S6 (the las Act)wntaun numerous At December 31, 1986, the Company and its subudianes pros niorn whhh will allett the follipan), lhe Coffipan) estHnated that then' 19h71989 capital requiremenh would be beheses the most ugmticant thanges relate to a redutnon in inct wnh lunds pnnided hom sourtes as set toita in the table the wiporate inwmc tas rate, the chnunation of the uneq. below .

ment tas creiht, and the mcluuon as mwme of su4omer wn. \"" C ' i l h""'d"d' "I h"lL" " 1947 19xM 19M9 tubutions m aid of wnstrustion and unbdled resenues beruce laternal 5 77,x91 $ 19.0n0 5 9M.925 deinered but not )ct billed to tustainen). I'ItHnately, the im- I k bd"E" I" shod tenn borromngs and mscsunents 91.M5 7 3,411 112,262)

Internal ( l ) 19.M I M 22M,267 161,4 4 loralsuutta %2n9.566 $2 50.67 M $2 4M.09 7 ll1 lia w csrunan s are bawd in p.ut olun tW anomphon that c!! operatmg tosi,ori no st s ram s Jbeolfwtt9 reunut s rescntd hom ust.m n for cos to ycort ahl hem ne plei pr

At December 31,1986, the Company and its subsidiaries had shareholder approval, unlew the gross income available for temporary cash investments of MO.I million. In addition, the the payment of interest charges for a recent twebe nwnth Company held other insestments totalling $88.8 million, of period is at least 1.5 times the total of (i) the annual interest which $68.7 million was held by PSR Insestments, Inc. requirements on all indebtednew to be outstanding for more PSCCC began operaticns on December 10,1986. By De- than one year and tii) the annual dividend requirements on all cember 31, 1986, PSCCC had borrowed $148.5 milhon in preferred stock to be outstanding. At I)ecember 31, 1986, short term debt for use primarily in the purchase of the Com- gmw income available under this requirement would permit pany's customer accounts receisable and fouil fuel insen- the Company to inue approsimately $1.2 billion of additional tories. The net cash infusion to the Company resulting from preferred stock at an awumed annual disidend rate of 8.53%.

PSCCC's purchase of the Company's assets was $147.9 million Coverage at December 31,1986 was 3.41.

at December 31,1986 which was utilized to redeem M8.5 mil- The CompanyN Restated Articl, ; of Incorporation prohibit, hon principal anmunt of First 5fortgage llonds,16% G Series without preferred shareholder appnnat, the iwuance or as-due 2911, and to meet ather general cash operating needt lhe sumption of unsecured indebtednew, other than for refunding lesel of financing of PSCCC is tied directly to daily changes in purposes, greater than 15% of the aggregate of (i) the total the lesel of the Company's outstanding customer accounts re- principal amount of all bonds or other securities representing cehable and monthly changes in fowil fuel inventones The secured indebtednew of the Company, then outstanding, and Company espects that the amount of financing associated with (ii) the total of the capital and surplus of the Company, as then PSCCC will sary minimally from year-to-year although recorded on its books. At December 31,1986, the Company seasonal fluctuations in the lesel of awets will cause corres- had outstanding unsecured indebtednew, induding subsidiary ponding nuctuanons in the lesel of awoeiated financing. indebtedneu with the credit support of the Company, in the The Company and its subsidiaries anticipate rahing external amount of $73.4 nullion. The maximum amount permitted funds in 1987 through the iwuance of $75 million in First under this limitation was approsimately $265 million at Mortgage llonds, $2.3 million in unsecured long-term subsi- December 31, 1986 dury debt, and $1.1 nulhon from the sale of common stock Arrangements for bank knes of eredit totaled $140 milhon in through the Company 's Fmploy ee Stock ()w nership Plan. The committed lines and $188 nullion in uncommined lines at De-financmg plans are subject to change depending on market and cember 31,1986, at which time $179.5 nullion was available buVnew tonduions and thanges, if any, in the construction to the Company and certain ofits subsiduries. 'lhe Company plans of the Company and its subsidianet Plans for sales of may generally borrow under uncomnutted preapprosed knes setunties beyond 1987 hase not been formali/ed at this time. of credit upon request, howeser, the banks have no firm com-

'lhe internal sources of funds in the abine table are net of mitment to make suth loans bec Note 6 - Ilank 1.ines of certain eshm.ited cash payments which the Company eyetts Credit and Compensating Ilank llalantes in the Notes to the to make durmg 1987. As a result of the Fort St. Vrain Stipula- Consolidated Financul Statement 4 tion and Settlement Agreement, the Company tuust refund 96.5 milhon to customers dunng the fourth quarter of 1987.

Additionally, the Company has a refund habihty which is cur-rently estimated to be $68 nullion due to the court dechion in regard to its elettoc hne extension pohey bee Note 12 -

Refundable CustomerY Adsances for Construction in the Notes to the Consol dated Iinancial Statement 4.

'Ihe Comp.in)'s Indenture pernuts the swuance of additional first mortgage hmth to the cuent of fd)1 of the salue of net additions to the Company N utihty property, pnnided net earn-mgs before deprecunon, tases on income and interest e pense for a recent twehe Inonth period are at least 2.5 times annual interest regtnrements on all hinds to be outstanding. At December 31,19S6. the amount of net additions wouhl pernut (and the nel earnings test wotilJ not prohibit) the iwuance of approsimately M85 million of additional bonds at an awumed annual interest rate of 9 69. Coserage at December 31,19M6 was 5 61.

ihe Compan> N Restated Arthles of intorporation prohibit the iwuante of additional preferred stock wnhout preferred II

1%Nie Sersite Compans of Color.ido ark! SubsiJi.iries CONSOLIDATED BALANCE SHEET thember .11,19x6 and 19MS (lhouunds of Ikillaru Assets 1986 1985 Property. Plant und l{yuipment, at cost:

lilectric $2,396,487 $2.315,225 Gas 632,709 (d)5,758 Steam and other 83,623 82.226 Conunon to all departments 257,882 203,502 Construction in progrew _ __ _ . _ _ _ . _ __ _ __

. . _ 68,499 66,333 3,439,200 3,273,(k14 1.ew accumulated prosision for depreciation _ _ _ _ _ _ . __ _ _ _,___._ _ _l,100,530 _

999,929

_ _ _ _ _ - . - 2,338,670.- -- 2,273,I I5 Nuslear property, plant and equipment 93,655 150,938 Nuclear fuel 45,634 73,676 1.ew accumulated provision for nuclear depreciation 26,586 23,681 1.cw reserse for nuclear impairment (Note 1) _ _ ___ _. _ _ . . __

__40,050 -

- _ . . ..72,653 -- 200,933 Total Property, Plant und ICquipment _ _ ,

2,411,323 _.

_ 2,474,(k18 Insestments, at cost 88,H29 21,184 Current Awets:

Casb 6,911 8,747 Temporary cash insestments 40,102 M3,874 Accounts receisable, lew prosision for uncollettible as counts ( 198645,168,1985 45,685) 144,263 184,494 Retoserable purshased gas and electric energy costs-net (Note 2) 19,649 33,315 l uci insentor), at aserage cost 47,38N 62,141 Staterials and supphes, at aserage cost 65.130 59,735 Gas in underground storage, at cost tl 11:0) 17,0$0 16,790 Prepai I eyrnses _ .

10,392 7,966 Total Current Awets 350,H85 457,062 lieferred Chargn:

1)ebt expense itwmg amortved) H,lH3 9,446 Recoserable nuslear plant and desonuniwioning (osts (Note 1) 31,825 -

()t her 27,363 33,I l 8 67,371 42,$M lotal A wels $2,918,408 $2,994,M 5 M we .n. a .m p n pn g n, e U

the nNr 31,1986 and 19M i Duiuunds of th llard Capital and 1. labilities _ _ _ _ _ ___ _ . _ _ _ . _

1986 1985 Common l'quity:

Common stock (Note 3) $ 70H,548 $ 707,429 14etamed earnings ._, ___

92,428 190,257 800,976 897,686 l'rrferred Stmk (Note 3):

Not subject to mandatory redemption 140,008 140.t K)S Subject to mandatory redemption at par 66,672 79,248 1.ong Term Debt (Note 4) 815,271 928,241

_ 1,842,927 2#15.I83 Noncurrent I.iabilities: _

Decommissioning liabdity (Note 1) 95,404 -

Accrued pension liability (Note Mt 20,254 -

115,658 -

Current 1. labilities:

Notes payable (Note 5)  !!0,757 1.M50 leng-term debt due wilhm one year 32,329 3,286 Preferred stotL subject to mandatory redemption within one year (Note 3) 7,576 7,576 Accounts payable 204,029 249,606 lbidends payable 29,950 30.2M I Customeri deposin 10,682 9,0X0 Accrued t.ncs !N,591 66,505 Act rued interest 19,515 18,735 Rate refund habihty (Note 1) 55,685 42,759 Accrued unrecoserable nuticar cosh (Note 1) 23,000 --

Refundable c ustomeri athances for construction (Note 12) 68,100 --

Other IN,210 34.259

' Intal Current 1.labilitin 678,625 463,937 lleferred Credih:

Customeri aJsances for construction 22,201 74,262 InsestlHeilt credit thcIng aniorti/cd user the pristustise ines of the related property) 160,973 173,561 Accumulated deferred income 1.nes (Note 9) 91,017 165,331 I unds f rom 1979 Settlement Agreement (Note 1) - 66,59N Other 7,047 5,986 2NI,19N 4MS,73M Commitments atul Contingenties (Notes 1 and 7) lotal Capital ami 1.labilitln $2,91H,40M $2,99 8,M 58 ei

tw,e senne c.,nn n, el criera,io mi sunuaarws CONSollDA TED STA TE3fENT OF INCO,\lE Yenn en,te,1 rweniber 31. Iw.. Ivxi at 194 rlhomands of IbHan 1%cpt l'er Sh.uc Datan

-- -- .--- - - . .- -- . - - - . .- -. - -_- _1986 . .-.1985-. .19 4 Ogwrating flestnues:

Electrie $1,045,590 $ 1,022,283 $ 999,628 Gas 596,584 714,252 790,068 Other _

_ _ _ 15,689 _ 10,948 12,328

- - - . _ - . . _ - -1,657,N63 . 1,747,483 .

1,802,024 Operating Espemes:

Fuel used in generation 176,254 171,407 188,8M9 Purdiased guwer 211,644 203,(M7 161,928 Gas purchased for resale 423,340 $32,621 606,55H Other operating espenses 289,H65 291,711 267,416 hiaintenance N6,610 95,386 72,475 Depreciation 104,740 101,302 96,883 Tases (other than income tasco tNote 10) 66,776 f>1,M02 60,05l Income tases (Note 9) _ _

59,927 . 101,277 137,5(4

~

~

1,419,156 1,561,553 1.591,7(4 Operating inonne Other Inonne and Dvduttlom:

_ [ _ _ _ _

238,707 _ 185,930 210,320 Allowance for equity funds used during construttion (Note 2) 1,0MM 3,621 6,(42 hliscellaneous income und dedustionenet 65 3,791 9,267 239,H60 193,342 225,629 Interest Charges; interest on long term debt 79,123 7N,193 78,9MM Annirtiration of slebt discount and espense lew premium 921 472 520 Other interest 39,455 6,fD) 4,513 Allowance for borrowed lunds used during construstion (Note 2) (3,460) (2,616) (3,639)

!!6,039 H2,f>49 MO,3H2 Inanne llefore 1:straordinar) llem 123,N21 110,693 145,247 Estraordinar) Item dew applioible Inonne tuses of $101,45N) (Note 1) (101,393) - -

Net income 22,428 110,693 145,247 Disidend itrquirements on l'rtferred Stock 15,762 16.592 16,661 1:arnings Asallable for Conunon Stock $ 6,666  % 94,101  % 12M,$M6 Shares of Common Simk Outstanding (thomands):

Year ent! $2,399 52,333 51,632 Ascrape 52,349 52,114 50,440 1:arnings l'er Ascrage Sh ire of Common Stosk Outstanding:

liefore estraorthn.ity item $ 2,06 $1.H1 $2.55 15traordmary item $(1,93) -- --

lotal $ 0,13 $1.N1 $2.55 Dhidends l'or Sharr of Common Stocks l'aiil $2,00 $ 1.98 51.90 Dedared $2,00 $2 00 $ 1.92 ve + o,nvinpng n,.ic, lI

I%biw Serske O'mpany of Galorentie arxl Sukutiaries CONSolllM TED STA TEhlENT OF RETAINED EA RNINGS

%, craka tweniner it. Iwri. lws mi tus ithends of IMlars) 19H6 _

1985 .

1984 Retaineal Earnings ut lleginning of Year $190,257 5200,573 5169.299 Not income ~

22.428 ._ __ 110,693 145,247

-. 212,685 .. 311,266 - _ -.314.546 Dis hlenils:

()n tumulatise preferrett stak:

$1(M) par 5alue:

4.201 senes 420 420 420 4 l/4% wries 744 744 744 41/29 series 293 293 293 4.t>44 series 742 742 742 4.90% wnes 735 735 735 4.903 2nd wries 735 735 735 7.15% series 1,7N7 1,787 1,7H7 7.50% woes 2.115 2,205 2,250 H.40Si series 2,716 2,M32 2,890 12.50% wnes 2,292 3,125 3.125

$25 par salue:

N.404 series 2,940 2,940 2,'40 15,519 16,55H 16,661

()n tommon stak:

$2.(N) per share in 1986, $2,00 per share in 19M5, and 51.92 per sh. ire in 1944 IIM,732 IIM,345 97,324 120,251 120,903 113,985

()ther Drilus tions t Ashlitione - Not 6 106 (12) 120,257 121.t o) 113,973 Httaintil 1:arnings at l{ml of Year $ 92.428 $190,257 5200,573

% e am mr 'in ine nde' It I

iwie senia c.,oran, et c. ima.. .na susiamnes CONSulJDA TED STA TE3fENT OF SOURCE OF FUNDS FOR PIANT CONSTRUCTION EXPENDITURES scan enant Onenu r ti, im im mi im nhousana, of Ionaro Source of Funds: 19tl6 19M5 1984 l'uruh from Opt ratiom:

Intome litfore Estraordinary itern $123.N21 5 110,693 5145,247 Non<mh Charges (Credito Agalmt income Not Imobing Morking Capital in the Current l'orlod:

Deprecianon tharged to operaung espen es 104,740 101,302 96,M83 Depreciation charged to dearing and other accounh 15 N96 13,112 10,M60 Allowante for funth used dunng conuruttion (4,$48) (6.237) (9,681)

ImeMment treth - net of amonvanon (1,8M9) 13,136 11.498 Deterred income tases 143 17,42 H 27,269 Fumb from Operatium litfore I:straordinary firm 238,163 249,444 2H2,076 Intraonhnary nem (101,393) - -

thtraorthnary nem (portmn not atletong working tapital) 61,425 - -

Fumh from Operatium After Estraordinary item 198,195 249,434 2M2,076 Dhidtenh:

On preferred vos k (15,519) (16,558) (16.661) on t'onunon umk (104,732) (Int 345) 197,324)

Fumb lietained in the Ilminew 77,944 12M,531 16M,091 1 umb from l'inandnu - Not l'rotruh:

Poseeds from ute of conunon Mosk I,Ill 14,1(>l 41,bli Proereth f rom sa'e of fint mortgage Ninds - 49,067 -

Prou'eth from ule of polluhon control Ninth 27,(NM) 6,105 l l,476 Proteeth from asue of long tenn notes 20,95N 46,549 M,12 4 l'unds from l'inaming 49,069 115,889 (d ),f>l l l'umh from 1979 Settlement Agreement INote 1) ' 3,$ kh itedutlion in I.ung It rm Dths (130,5NI) (SM,133) (22,lH3)

Other Soortes and Applicatium - Not (126,1N$) 128,156) 10.M54

'lotal IJunds Asailable (129,733) 165,127 240,9M9 Imrt nr (Detreme)in Morking Capital (320,H65) 166.144: 51,119 Not I'lant Comf ruition 1:sponditures 198,112 231,271 I M6,M 70 Allowant e for l'umh Ostd During Comtrut tion 4,$4N 6,237 9.6H 1 Grow I'lant Comtrm tion 1:spenditurrs $ 195,660 $ 237,508 5196,551 Im rrme (Det reet) in Components of Morking Capital:

Current Awtts:

Ceh $ (1,836) % (2,555)  % 1,06M lemporar) ech imeumenh (43,772) ( 11, l M 1) 68,51H Auonnb retenable (40,231) 14,12 H 20,245 ltcunerable pmthased ye anil eletine energy tous net (13,666) (1,170 t 12 Mw)

I uct imentor) (14,7$3) 9 72 6,921 N1.nenah and supphes 3,395 4,7 M 7 3,M 12

()ther 2,686 ti,926 (957)

(106,877) (21,295) 66,757 Curtont I labilitirs:

Notes payable 149,107 (l,025) t 16,915 )

I ony term debt due witlun one ) car 29,043 tl2,ti71) (6,2621 Auounh payable (4$,$77) So,I ul 4,970 Au t ual luNhhes (7,133) (4,tM2) $,10s it.uc telund haNht) 12,926 36,107 6,652 Au runi unnunerable nutle,it t osh 23,(HM)

I{cllHidahle t thh'nlers' .hh ant e s for (tilhtf ut 1101) 68,1(H) thher (14,77N) q 21, l M I ) 19,oMM 214,6MN l l,M 49 12.614 Im erme ilhttraw)in %orking Capital $(320,N65) % 166,144)  % 51,119

% ,,o . ... p.m y n, % ,

i>

ls %nf onlfally of obtrddo and bbudladK3 NOTES TO CONSOI.IIMTED HNANCIAL reduce the emnpanys current insesiment in I: ort St. Vrain.

STATE 3IENTS t these funds were tellected on the December 31.19M5 con-solidated balance sheet as a deferred credit of approsimately I . 1.ort St . \. rain Nuclear G,enerating Station 567 million anti a reduction to construction in progrew of approumately $o$5 million.)

Estraordinary item:

1)unng the quarter ended September 30,1986, the Company I)ccommlulohing:

recorded an estraordinary low whwh resulted hom writmg. 1he estimated cost of decommimomng i ort St. Vrain, which Llown J uthuantial {Mytion of the total ifuntmellt in the l' ort was bad im a My papanM h We Gunpany in W, k e St. Vr.un Nutlear Generatmg Statnin II ort St. Vrano, recog. prodntately W5.4 nulhon (in 1986 dollar 9. A primary av m/mg estimated future decomminioning espenses an i recog, suniption of the study was that detomnumoning would take m/mg estnnated unreonerable operatmg and upital espende place in 200N and that, at that time, f aahties would be asail.

turet 1)ctad of the estraordmary low, winch was imtially able for the Morage of spent nutlear f uel. There are no suth

$93.7 imlhon and sutwcquently mercased to $101.4 mdluin faahties asailable at thn time. In addition, to the Company's due to resised estimates, followu knowledge, no commertial nuticar plant of comparable sire m t annan.s or ton n, the Unded Statn h.n been deconuinwioned. h is, therciore, I daNnhment of a rewnc powdd hat the (ou of decornnunioning Ion R Vrani could for unpaired n.alear auen: uhunately eswed the cunent estnnate. Any such esaw ont progrrt) plant A equyiment $ XI, h9 would be recorded by the Cornpany en an esperbe m the petitkl Naslear tact - on see 4 3,r,1 t m which unh encu omld be reasonably eshmated. Poor to I-unds hom 1979 Ocncral the Supulation and Settlement Agreement hhwuwed below h Afonus Senlement Agreement On.9 73) $ 40 n50 the compmite depreciation rates induded a proshion for the Nudcar fuci - m pnscu 31.2s2 ont of dcoimnuuiomng the plant. Approumately $6.2 NoJear Regularon Comn.mion ""1"" "" lad ng interen had been anunmlated under dus mandated scnma p.pe and pros nion. the Supulation and Settlement Agreement prosida hanger uudy 17, M 7 for the inmer) of $11.5 nullion of thne detomnuwiomng I somated umcsowraNe (osh llulu tuquincts oser the ) cart All deuimnuuhuung deu nunnuonmgioq, funds oillested are held and managed by an independent t otal an onnnnuonmg s osn trustee. 'lhe unresmcrable decomnuwioning tosh of $77.7 dm douam 9s.4n4 nulhon are reflected m the curaortimary low wuh the total Cous u.ucacd poor to wme da n it.22ni equnated coq of W5.4 nullnin bemg rettetted as a noncurrent Com reiowlaNe through rewnuo til Anh 7 7,r>4 l habdny on lhe consolalated haland sheet.

I unneed funne umco wraNe u m 2 Uion InWuM in Fort St. Vraln:

Lounh cancr tour, opt unng uius 31.301 Reah/ anon of the Company 's remammg insntment in l' ort St.

Allowul uncannia tnoser) our Vram lapprouinately $72.7 nulhon al 1)esember 31,19%h Ine p an 122 M oi and the adequaq of prm hions for otunated future deuimnue I so aonhn us too htote t.n hnctas 2n2.451 unnmg esperno and unic(merable operanny and earnal Rcam oon IJr t.n k naas s tol.4sm o pe niht ur n, are depenitent on future nenh, mdudmg I tirai rdmar) tii n i

5tul.Nt at NLM.W4y (hunnuMm (bM HuMMons N attainment of operatmg Inch ugmficantly greater than m the t he .unount of the nn eument m l en St. Vr.on w otten down p,nt, aJneung and maintaming a unt ettetthe relahornlup w.n b,ned on the auumphon that the plant wdl rem un oper- between espenso and ro enun from I ort St, Vlam and tiin, aflottal until all esnlmg hiel in the le.hti r antlim ute n olil-i lagtory gcuilution el sarioth uhernilnes reganting Ioll St.

i/ed tapponunardy 3 4 yean) and that the tc.hior would then Vt.un af ter the on ute noticar fuel n utih/ed. Il n becomo be detonunnuoned and the plant unnened to a lomi luct probable that ,dl or a twoon of sush inscurnent udl not be bmmng plant flowner, unom other abernatan reganhng reun eted, or that the pon m un for su,h openscwr npendo the operahon of I ott St. VIam are bemg nploted. Ikne oiber turn are not adequate, the Company wonld be inpmed to alternatnn are dns uned below in the set hon enhiled reuipm/e a low m the amount of the portion of sush insot, "hnnunent m i ott St VI.n n ' ment that b not reunerable, or in an amount equal to the 1979 General Atomic Sttiletnent Altrotments n -ent to whnh such prouuons are inailequate, Icw any on June 27,19M the Comp.un and the prone sontrastor for anouaicd las Noda lottSt Yhnn, Gener,d Atonne Comp.my (U ACL enteted mto a Seulement Agreemcnt, a Sen u n Agrecon nt and a i uct and I abra anon Agrcement satnly mg and wulmg all umtra h and glauta belut en the ('ompany nnt (lA(' relatne to I ort St

\ t.un. l'nder the teinn of ihne Agreemenh UAC (ontuhuted to the Company, betwe6 n 1980 and 194 8. W7.1 mdhon for the (mt of repl. King the l to Mw rahhhon in t apAit) ill I of t St Vr.nn with future elesInc ycnerahon im ihhet 'l he Stipo-lanon and Setdctncnt Agreanent hinonu d below l pnn nin that approsonatel) SW nulhon of thn amount be apphed to e

mim I

i l The Colupany is progressing in its anal)sh of \arlotis aher- Compan) Ina) file for Julhority to place illto elle(t all Mali %e renlet!!Ji .hllofh repart!!!1g I ort bt. Vrain after the a !justment to tellett the resenue reymiements impact of nutlear fuelin the reactor and on site is utih/ed (appriotimatel) an) refund nude as a result of the det hion of the Supreme 3 to 4 ) cars) anil sush actions include, but are not limited to. Court of the State of Colorado (Coloratto Supreme Court) i contmuing nuclear ogwration of the plant with fmancial sup- regardmg electric Ime extenuon wnstruction payments (4)rt frolin third parties which stia) be initerested in prewr%ing (we Note 12). In addition, the Cornpany riia) seek rehef and furthermg the tethnolog) for high tem;vrature, gav from this moratorium in the esent it h laced with (mled reattors; tjecomminioning the reactor and conserting eniergency imanual circunhtanset (lic plJnt til a fowil luel burniflg plant; Jihl tiecolninsuloning the plant and selhng the usef ul auch. ~lhe Company h.h not Hale Rdutul MaMWther Regulator,5 & legd .Manen:

>ct deternnned the tethmeal or econonne f e.hibihty or the ulti. At the tune of the Supulation and Seulenhnt Agreenient, the mate financial unpatt on the Company of these abernatnes, hiHowing paiseethngs wcre penthng concermng Fort St.

\,raln; Stipulation umi Nttisment Agreennent: (a) 19M0 Itue Caw - In its dethion on the Compan> N 19M0 On Septemfvr 24,19M6, the Company entered into a Stipu. Rate Caw, the CPIT allowed l ort St. Vram to be lation atul Scttlement Agreement with the Publie Ctihties insluded in rate baw, subjest to sulwequent sathl,ntion of Comnuwion of the State of Colorado (CPCC), the Colorado a Capacity liktor lest, anti its operating eitpenws to be Of fise of Consumer Counwl tOCC) and other parties to the rellested in ctat of serme, lhh deternunanon, among 4artous ICgal and ithinnistratne ploseedHigs regarding i of t others, was uplYaled by illler%eriors to the 1)htrht Court St. VralH. Pursuant to sthh Agreelnellt, ainong other thingC ill and for the Cit)' alk! Count) of I)ein er (1)erher I)htrict (a) the Company rethhed its annual retail electric resenues Court), winsh allninetl the CPlTN deanin. 'Ilus deci.

miletted through rates b) $29 nulhon ef festne Ostober 1, sion had in turn twen appealed to the Colorado Supreme 1986 '!hh rethhtion telletts, among other things, N the Cou r t.

reino%al f roin rate b.he of the Comp.iny's haestinellt in th) 19NI-19N2 Cailthit) P.klof Iest - !ll . Nth clither 19M, l' ort St. Vram inet of certam amounts seten ed f rom UTC) the cpl'C, on appiharion by the Company, deterniined and the clinnnation of I of t St. Vrain ogvrating eitpenws that I of t St. Vraili hail satisfied the Cap.iat) l,htiir' I'est

~

froln the t'tht of wr% he, In) an ulcreaw in retail resenuM estahlbhed in the 19M0 Nate C,he t!ct hloll. Inter \ enors to restore uninhined elettrii inid gas e.ltrimgs to the liiost aplY,Iled thh det hion to the 1)ctner I)htrh t Court, whhIl retent authori/ed rate of return on equit), ,uhl tiil) the le%erwd the CP(l', tolposing the Coni l tin) to a jotential alntirtl/ation o%er a lne-)e Ir period ol $22 ilulhain of the refiithi liabiht) of $2 4 iiiilhon, riot un hiding interest, origin.Il plant un t'stinent whhh w;D reino% ed f roin rate whhh alnount was not reflettell m the Comp.m)N linan-thiw ath! $11 $ filllhort of detallumiehullng (Osts, clal statelltents. I he (*on1 pan) .nhl the ( T( Y had ap-th) the Coln[Lin) is to refund to Ontolliers a total of $73 lYalett the !)enier 1)ntrht Court's det hlon to the Colo-nulhon m penalties ms urred under the Replasement Power rado Supreme Court.

Pellall) albl the insentlic Ilan hh% usWd INiow ), the pa)- (c) Neplacernent Power Pcnah) Jrk! Insentne Ilall - In ment of one half ol'sush retmhi to be nunated m the fomth responw to I ott St. VrainN lustorh ally redused lesch of quarter of PMh and the other half m the lourth quatter of generation, the CPt T hail hsued dechions ungsning 19M7 lhe Company b aho to contribute $2 nulhon to a penahics when pencranon f rom I ott $1. Vr,un fell below foundanon to pros hle for the energy needs of low insome s;wufied les ch t he Repl.hement Power Penalty Ivc.une t ustomers lhew unounn, ulush ohlude interest, h.ne ellettne m January PAM I, !)espne the adophon of a more alread) twen refles teil as a redus tmn m net insome. At onerous insentne Plan Ivnah) m Nosember 19Ml, the 1)n emIYr 31,19%h, the Colnitiny had reluvuled $lM 3 rint. (TtT ointinued ti, lingsne the Repl.hement Pow er hon of the fint 5 th $ nulhon, and had m.nle the firsi 51 Penalt) m uew of the CompanyN appeal of the Intentne milhon contribution. Allunrefmnledamounts were re 'es ted Plan dahion. In responw to that appeal, the 1)enser sn a t urrent liablIlt) tin the torhallidated balathe sheet, 1)lslrht Coilf t wt ashle the Ilhentne Plan, whhh det hnin ItI all legal and adonnntraine pnwcohngs relatne to the h.nl been apivaled to the Color.nlo Supreme Court by the ratemaking treatment of Iort St. Vram were ternunated CPLT and intersenort At the tune of the Supulation and and all other llamn ag,unst the Company in teslws t there Settlement Agreement, ap[vah by the Company hom the of were w Hluttawn, cpl!C dn hions imposmg the Replasement Power Penuh) bli encry) generated by l' ort St. Vr un m the hiture wdi be wcre aho pendmg m the Colorado supleme Comt and the 4harged to the Compan) N untomer3 at the rate of 4 Ms per I)claer I)nttht Coult.

huh, of whh h I hV per huh h sub c61 i to anruial e%.i. hl) (100 Colnplamt t hi Nos em!Tr 7,19d, the t H '(' filed latton, and with the ( plt a (omplaint agamsl the ('ompan) allegmg, lei the Company wdi not Ide for un re.ned v.n ot da tra lhne ,unong other t'ungs, that I ott Ni Vt.nn was not "uwd and rates to iv clict ene prior to Jul) I,lHM lloweser, the owf ul" m tendermg unhiy seem - t he 000 mught a CPt T older icmoung i ett St. Vt.nn f rom the Company N rate h.nc and estabinhmv a rate whk h the Compans couhl t harge its uhtomers for power po>dus ed f rom l olt St.

Viain a

In accordance with the Stipulation and Settlement Agree- to imestigate scenarios which uiuld lead to rapid osidation ment, all of the ahne apivah, as well as the OCC compt.unt, tburmng) of the l' ort St. Vrain graphite wre. On the bash of were dnmined and the Company was released from any and these esahiatiom and other information, the NRC consluiled all habihty with respect to the 19M9 Rate Case and the Cap- that contmoed operaton of l' ort St. Vrain was justilied untd its aaty Factor lest and from any liabda) under either the wheduled shutdown on Ntay 31, 19x6 1he Company Heplat ement Power Penahy or the Intentne Plan after respinded sathf.htonly to all queuiom pacd by the NRC, September 30,19M6. Total charges agaimt income, awmiated howeser, the NRC may reesamine these inues prior to with the ahne penalnes, before income tases, were Sti.7 permatmg restart, milhon for the 12 months enited December 31, 1988 %36.1 'lhe turrent l'echmed S;veificanons and Final Safety milhon f ar the 12 months ended Decemtvr 31,19MS and $32 2 Anal)sh Repirt for I: ort M. Vram require the steam generator nulhon for the 9 months ended September 30, 19M6. No reheat matules to tv one of the methoth of ashicung ute charges were resorded after September 30, 1986, shutdown cix>hng of the plant folhwing tenam plant u[ wet UPCfUd""" condniom or design bam esenh. Ilased on an ongoing I ort St. Vrain diil not generate cleuriaty for most of.1944, reanalysk of the s>Mem b) the Company it agrears that the reheat naidules may be unable to gyrform this intenited func-19MS and 19M6 due to a wheduled retuehng olvration, engh tion unlew their emtmg mnfiguration h nhwhfied, lloweser, neenng mmhficanom ,nsl eruronmental qualdhation actnity in.indated by the NRL, lhe refuehng and engmeering nuxhh-Die Conmany k wcW be obtain NRC authoniation to canom hase tven completed. Durmg Aptd 1956,1 ort St. ramiu Om re@nanau f rom the Teshnwal S[vaticanom anil

\ ram began generatmg clestriaty and remained on ime unni linal Safety Analym Report. In anoiber related gudy, the Company b planmng ccrtain ucam pipmg nuxhfisanons to the Nta) 31,19M6, when it was shut down to mmplete the emitonmental quahtication wotk dnsuweil tvlow.1 ort St. emiuimm ewgang.syrb ,un moon of On- Me.un

\ rain wdi not resume operanon unni emironmental quahh' genang in ordn be qipin We emaiw n uiohng of I:on %

canon and testam other work has been mmpleted and Vom hoin HM pen ne Cornpany cannot predhi at thk apprmed by the NR( . Ile6tne generanon f rom 12 ort St. \ ram hme wM inTM On mmas wdl W on du opam of n anthlpated to begin in Ole Spring of 19M7. llo%eser, the lW R VNm.

Company cannot predht when the NRC wdi apprme the tom- Nintrar imitrancet pleted work and authorve pmcr lesch necewar) for gener. 'Ihe Prhe Anderson Att surrently hnnh the pubhe habihty of anon of cieunat) or when sus h lesch c,m be attamed by I ort a lhemee of a nusicar pmer plant to %95 mdhon for a ungle St. Vram. nuslear incident. Cmcrage of the first $lfo nulhon of tim po I nuronmental (Juahlianon: tennd habihty h prosided by girnare im 'ranse (the mathnom llegnunng m 1985, the Company was presented from resum. .unount auntable) woh the remamiler bemg prmided by my clettusal generanon at I on 'k Vram heume of an NRC indemnity agreemenh with the NRC. In the esent of a nuslear reymrement mnsernmg the emironmental quahthanon of inddent insohing any tonuneraal nuslear ladht) in the tat.un cleuthal eqmpment at the plant. lhe Compam pro- 4"untry that resuhs in damages in cucu of the praate imur-uceded w nh enuronmental quahlicanon work and,' esen ance, the Coinpany muld be aucwed reuospestne prennums though thn work was not mmpleted, m I chruary 19% the up to $$ nnthon per inodent, but not rnore than %l0 mdhon in NhC autholl/id the ('ofl1paM to operJte I ott St. Vrain at up any dnM )e.R kr muhlpk IHMnh to 354 of full guwer tapprotunately 110 Alw) untd hiay 31, the a,nhorny of the NRC under the Prhe. Anderum Att to 1%rt lhe Company has tomplcted the work etupt for a few enta nuo indenmay agrenneras unenng new nudear laab ranaHung open ilatn, and the NRC n in the prthen of I ' U'I U N Yd!I"U UI UU U d Dk U"U '

• UIE IU auihtmg sut h work. on August I,19M7. 'lhis espiranon, if not mothhed by Con-gress, would not af fekt etnting Indilonit) Jgreements for N,'dCI !HgIC f planh aheady m operatitin or under corntruktion. Iloweser, t he mgrew of water mto the ioit R Vram prnuar) syuem h the pondiday of espy dion has pnunpfed uingrennind poi-a ret mtmg problem that hu ou urred onder (ettam plant upset mndmom. the presente of monture m the pumary syvem pads N .nnend die Prue Andamn Ast by subuantially mac.ning bodi die DAiday for a unde nudea Audem and h.n two aiherse ef fettt t can tv detrunental to one internal inet hannlm antl it uintilhutes lo plant dow ntune betalne, gg, m,nnnum ktnvune pranium whh nu) be ,nsed untd mou of the monture h remmed, I ott k Vr.un unnot be in addinon to Hs habiht) ilnutarke, the C4 fnpan) numtams

%I 0' biHnin m nuden propeny unm,uu Cmaage of On*

ogvrated at pmn inch lugh enough to generate cleuthuy' Wu %W nnHion of P4and Md4 h proWed by ph.de 1.ngmeenne mo;hthanom h ne been made to nununve thn unmme wnh On temnung M U mdbin bang poiuded by a pn thleif t. ihe ( tm1 pan) 4,mlbit predht t I what ettent thn gp g ggg gg , gg g g . gg problem may tesor in the fut uc' l.inuled. Under thh smurashe pdh y, Ni 11. li, the Company other lunes b subi co to turmpeune premnon anewmenh if lowes In stew of the 19X6 Nmiet re.htor aublent at Chernobyl and chced the au utnulated tunih ,nadable to the irnuter. 'lhe queenim that wac raned about pauhle deugn inndannes of present in.nmmm aucument for ins hients twuntmg dunng a the I'mt St. Vr.un reat tor, the NRC rectananed the origmal pdh) > car h appmunutely % $ nulhon.

lhenung ben for iott St Vr.un and requeued the Company i,

2. ,Nutnnlary lif Nlgnllkallt Anottilllfig I'ollfiri Pro total) recorded inse',tment tas urdih h.ne been delertal

(,olisollIlatloll! and are being annutved to income user the produstn e ines of' the ( ompany rollow s the prasthe of oinsohdatmg the g , p g,p g, gg

.xuionn of in' urmthant i,ubsiihanet (laim an .h!Jitional t n c redit for coninbunons to the l'inployee scos k (la nenhip Plan. (.,ontribunorn, w hhh were Dt'prit lalloll lMlllc)! ha%'d of) llte .innu.il Gilll[Tln.itlof t ol chgtble einf lo)ces, w cre lhe Ciunpany and as sulnidunes, cucpt I uct Resouten nude m c.nh or the Company's common uosk anil, if onh.

1)csch5pnicht Co ll UCko), the MhHght hne slepletlalbin for weft Un nled 1:1tht.' Colilpan)'s coninion shis k. Ihese aihh-

.h uiunnng purpnes Compoute rato are used for the sarious tional tait uedih were b.ned on one hall pen.ent of the afmual (lano of depicuable auch compensation of employees oncred by the plan.

1)'T r cu ation rates mslude prm nions for ifnp aal and remm al untud propcth , pl.mt and opupmenh 'Iotal deprcu. Ainortisation of dcht preenluni,illsoiunt und espernet anon espense m Umri appiounutes an .mntul raic of .4 6gy Debt prenntun. dnuiunt and espense h being iunorund by oil the n erJye tint til ilCfrG.lable pri'jYrtlet I liclio uso l!h*

umt of produstion depresiahon incihod for auounong pur, apphcable inues cucpt as espl.nned in Note 4 lNnn. I or Irh of ne 1.4 % pulpines, tile ('olnpan) athl th udhltil- Ajlgggnyg. (pp [ygylg gppd glUrlng Colntrijstholl Ol'lICll

.n in use .u s cleratol dcprn unon .unl other clet horn po n hled All>C whhh don not reprnent untent 6.nh earmngs, n by the t.n law s dermed m the vicm of actounh prew nbed by the I l RC and Poor to I Atobcr 1.1986, the tompnite depresuhon rato the CPI'C .n the net unt dunng the pctnst of tonuruction of mJudol a prouuon for the unt of decommimomng the nudcar borrowed lunsh used for uinorusuon purpnn, and a rc.non-plant aner in scn h e hfe. <n prew ribed by an oriler of the able rate on funds derned from other wurtn in hconlanse (TlT As a rnuh of the utilement of I ott St Vr.nn suun m uHh whh mtcm of auounh, the Company 5apitalun Al DC the Nnpolanon .unt Scitlement Agreement bec Note l h the ,n a pan 'of gic o,4 of unhty plant. w nh a tinht to tenuunng nlututal dn ommnuomng unh were un hulal m ruinopeuhng Insome for the pillion of Al D(' atuibutable to the conmninury low amt are tailonger unluiled m depicu' e9nty imah md a rahation of micrnt durgo for the pirtion ainin uk ulanon, An unic;vndent trustee inihh .unt m.uu/O of Al DC ahnbouble bi bonowof lumh t he 6ajutahtahon of the f unds i nucstal bef ore I h tober 1.199 .n wcH .n winc- Al DC reudh m die indouon of Al1)C m rate hoe and the quent ih pouh Hude pm suani to the \npulation and Netdeinent scunet) therCol through luture bdhngs to tintomen. In an A c h e m cot order dated Nosethbcr 1977, the cpl'C thratal that the Hcplas eminu amt bruermenn tcprocntmg umb of gwp' Coinp.un a to t apa.due AI DC at in authon/nl rate of uty ,oc opiuh/ol henn Out acptocnt leu th.m umb of rchan, but not to cuent the amount allowol by the lonnula propeny are dur ved to opcranons .n mamten.un e lin tmt of umh of propcet rchroh torether u nh smt el tcmmal, Ic" prew nbed by die ii RC Anordmgly, the eate used by the Conens for the Ont lne months of 19MI w,n ht 7W 1 l or uhare, n Aorc i m luH ar.nna the auumulated prm nmn lhe 1.nl bcn mood., of UNI. lor aH of PMi and lhe hnt nine f or dcpin i in"" nunths of PMh, tf e rate inol w.n 10 211. t he rate usal for im omt i nn: 'h" h"' d"" *""U" "I U*h "d' "  ; E""' '" ' k '"h

ie ('ompany . uni in whwhant s hie sonsolutatol uate .md I"#', unv uto nTwntol the (.empany s audionud utes ot rconn .o dal not nwM We .onount aHowed h dw in!cral m< ome us returns los ome inn are altos atot to the subshhann hool on wrane t omp.nn uimputahons of no I""""U f '"'"h"I D U" I I W U## '""'"4 '" u '"h" U#b' ablein,ome oflou UN 'd'C "dak ulatolinug the I i RC fortnub and w.n below lln' ('idlipan) alul it s tcpulatal suhsaharin pfinide hit th' '

ictn d un ome ten to the c uent ahowu! by #cgulaf"') Hrun trable pun haned gen und elettric entrg) unts - not!

act th Irs, nu linlm/ <k h 1101 taso arNnf litun the inc id .h -

lhe (hunfm), I hescnne I ight, I utl . Uni Power (*ompul) icicuini deprn unon. .n i dcolol unt Cunery . quably mg iCheyenneh aml Wcuern Ii.n Nupply Compan) rconc

,u ci ci.ent .ononvanon and tunmv ibilcienso due to t en nn purt h.ned v.n and clan k encip uids, m c u cu of th Icnof rn .on) chiinc unh in adhnon, the Company pro .onounk reuncied doouyh kne uto, Inun their htad s n!n tot dc h nolI on on I ook i.n t unmg ihthacns o arnmg untomen duough s anous c.n .991 clednt viu nf usoncnt toon the lic St Vr am t i \t ' s ontf.h t scillement, lium th< l t.n d h Ihne sod .ninnhneM tanlb, whh h hh hnle a (no c or a,uihn.n y ,h m nu s utal w uh ! ott Nt Vt.un hec Note !L somn for the tollalion of deletrol punkont gn and clotuc hem t udonn r tclumh noi nn t ime the n ononus per fornuns e tot supurniin the 1.n Ih tonn Ai t of l'h l .unt for all hiok 4 vnue unh. ate to ncd pethwinaH) a prcunbcd h de appn,pruic ,cgobgory apen,in the detennt ioqs are gw f u imun/ ih!!a cru n on hnlal m i oferal l ncrp Regulator) ihHercm e bcouen .u tiul unn nu urred and the amounh s ur Conunnuon il i IW pu hdu hoiul uro in ,n t ord on e w oh rends in mcred foon s udoma s A wheantul ponmn of dus the topon on oh olihe I m un i d Au nuntm/ Ntamt.uds Hoani, dch irnt anmont rcptocnh the unh ou unal to pon ale gn l lwn Uhon. bh , l och o. it uun s k renh r forluratnin. PSR

.uul dn nh cncre w hn h untom n hue innt but lot whn h imishncoh,hn ,on t PN ('oior add 'n dd ('ot pur inon, po n ide Oc knc not p t h en NHed tot och ne 1 tan s arnme inon au book in innmg ihlicrern n Hornunt im cuna ni tn i n da s .uc no longer n,nlahle to the com t he ronpon rea.h s uuonicn' nut n on a t u le knn and p my a a icmh of the la lh fono At of 1946 nce Notc Vi h"A h hlh Ckh """dh Rcu nun ,ne usonhit wlu n the inuornen are bdlal e

3. Caplial Simk 1986 19M5 Shares Arnount Shares Amount

( I Muund, 4 l Muun,h of th,Ilam of I s ,ll.u o Ctunulathe preferred stin k, %I(M) par talue:

Aut honf ed 3,(HH),(MN) 'i,(W M U 4 0 Iwueti anil outstanding :

Not subl est to inanilatory reilernption:

4 204 series 100,(HM) $ 10,(WM) 1(xU M o 5 10,f k o 4 i 4 series (insludes $7,5(N) prennuin) 175,(MH) 17,50N 173,t n o 17,50M 4.tpi ,,enes 65,(MN) 6,500 6 3,(410 6,5( o 4 fWI series 160,(MH) 16,(HM) it 0,(M W) 16,(N O 4 901 series 150,(HN) 15,(MM) I SO,( M R ) l $,( N R) 4 909 2 nit series 150,(MM) 15,(HM) 130,(4 0 l $,( N o 7,151 series 250,(MH) 25,(MM) 230,14 0 2 5,( R M )

foial I,050,(MW) $105,00N 1,t150,( 4 0 5105,(oM hubi cst to inanilatory f ederuption' 7 SO'i series 276,(HM) $ 27.600 2 M M,(X O $ 2M,M00 M 40'i series 316,4H0 31f>4N 330,240 11,024 12.$0'! series 150,(HN) 15,(MN) 250,(h 10 2 $,I M W )

742,4NO 74,24N N6M,240 M6,M2 4 1 cu. Ih ferred stos k subjest to mandatory re6'cinption w ulnn onc year (75,760) (7,576) (75,7f40 (7,57f 0

'Iotal 666,720 $ 66,672 792,4 h0 $ 79,14M Curnulaihr pra fi-rttil sten k ($25), %25 par galue:

Authon/cd 4,(HH),(MN) 4,( M W ),( M k l luucil anit outst inihng:

Not subi es t to tiiandaiory redcinpiiori. M 401 sciics 1,4(H),(HM) $ 35,(HM) 1,4( o,(x n 5 35,(xM)

Conutiott stin k, $5 par talur!

Authonicd NO,(MM),(HMI 80,( X 0,( W O loucil ,unt outst.mding 52,399,16M $261.996 52,112,617 $261,fM l'senuuni on t utomon slos k

• e6,552 4 4 5,7f,6 Iofal %70N,54M $ 707,429 6I

Changes in comnum stock and premium on comnwn stock for the three years ended December 31.19N6 are as follows:

Premimn Price ranse Commem on comumm per share stock stock iIbuch or ibnari) llalance, January 1, 19144 $245,911 $406,2N 2,450,298 shares sold under Div6dend Reinvestment Plan $15.N5 to 18.44 J2,251 _2H,7M llalance, liecember 31,19184 258,162 434,998 700,166 shares wdd under Dnidend Reinvestment Plan $19.00 to 21.25 3 501 10,76H, llalance, December 31,19185 261,663 445,766 66,551 shares sold under limployee Stak Ownership Plan $16.NI _

333 7N6 Italance, December 31,19116 - . .- m e. - - - , - mm m-

. _ m r m

$261,996 mm $_446,552

.m During 1937, the Company must offer to repurchase 12,000 The preferred stosk may be redeemed at the option of the shares of the 7.50'4 cumulative preferred series and 13,760 Company urim at least 30, but not more than 60, days' imtice shares of the M.404 cumulathe preferred series subject to in accordance with the following whedule of prices plus an mandatory redemption at $100 per share plus accrued dai- anmunt equal to the accrued dividends to the date thed for dends to the date wt for repurchase. Additionally, 50,000 redemption:

shares of the 12.50'5 cumulathe preferred series were re-quired to be repurchased at $1(X) per share plus accrued dai.

dends to the date set for repurchase, Conwquently, thn pre-u t g t h phet 4.20% series: $101, 4 l/4% series: $101; 41/2% series:

ferred stak to be redeemed was damlied as preferred stock

$101; 4,M% scrics: $101; 4.90% series: $101; 4.90% 2nd subject to mandatory redemption within or'c year on the December 31,19N6 conwlidated balance sheet, in January ser es: $101; 7.15% wrics: $102.50 prior to March 1,1987, 19N7, all outstanshng shares of the 12.50% cumulathe prefer-and $101 on and after that date.

red wrics were repurchawd at $100 per share in accordance $shject in mandatory redempsket with the original purchase agreement. 7.50% series: $1N.25 on or prior to August 31,1987, redue.

During 19M6, the Company repurshased 12,(NM) shares of Ing each ) car thereafter by $,25 per share until August 31, the 7.50% cumulathe preferred series,13,7td) shares of the 2(NO, af ter whkh the redemption price b $100; N.40% wrics:

N.404 cumulaine preferred scrics and 1(U,(xx) shares of the $1N.50 on or prior to July 31,19M7, and reducing each year 12.50% cumulathe preferred series, of whkh 50,000 shares thereafter by $.25 per share until July 31,2txH, after which were subjett to mandatory redemption, at $1(N) per share. As the redemption price is $1(M).

part of the repurshase of the 12.50'i cumulathe preferred in 19H7 and in each ) car thereafter, the Company must offer series, the Company eserciwd its option to repurchase 50.(NM) to repurchase up to 12,(MN) shares of the 7.50% series at $1(X) shares in a&htlon to the uheduled repurchase of 50,(XN) per share, plus accrued dividends to the date set for repur-shares. During 19NS, the Company repurshased 12,(NMhhares chase, and up to 13,760 shares of the N.40% series at $1(U per of the 7.50% cumulaine preferred wrics and 13,7Nhhares of share, plus accrued dividends to the date set for repurchase. ,

the H.404 cumulathe preferred wries subject to mandatory redemption at $llN) per share. During 19N4, the Company of. $25 par ialuet fcred to repurshase 12,tNN) shares of the 7,50'4 cumulative Not subject to mandatory redempthmt preferred wrics subject t i m.ualatory redemption at $100 per NA0% serics: $25,75 prior to Deanber I, IW, and $25.25 share phn accrued dniderah to the date wt for repurch.nc, on or after that date.

however, the offer was tot acwpted and the shares of the preferred stosk were not icpurchawd. No other thanges in preferred stosk onurred in the three ) cars ended December 31,19N6,  ;

i U

4, tamg Term Dibt iIh.,usmh or lhell.no 1986 1985 Public Service Company of Colorado:

l'irst mortgage Ivnds:

4 3/M% series, due Ntay 1,1987 $ - $ 30,000 4 5/M4 series, due Afay 1,19M9 20,000 20,(XX) 4 l/2% series, due October 1,1991 30,000 30,000 4 5/M9 series, due Ntarth I,1992 H,M00 8,800 4-l/24 series, due June I,1994 35,000 35,(XX) 5 3/M4 series, due Ntay 1,1996 35,(MH) 35,(XX) 5 7/M% series, duc July 1,1997 35,(KH) 35,0lX) 6-3/4% series, due July 1,1998 25,000 25,(XX)

M-3/49 i.eries, due September I, 20tM) 35,000 35,000 7 l/4% series, due l'ebruary 1,20t)! 40,000 40,000 71/24 series, due August I,2002 50,(HN) 50,000 7-5/MT series, duc June I,2003 50,000 50,(XX) 9 3/M% series, due ( Atober 1,2tM)5 49,500 49,500 M l/44 series, due Nosember 1,2017 50,(HH) 50,(XX) 9-l/4% series, due October 1,200M So,(HN) 50,(XX)

Ifol/44 series, due December I,2011 - 48,500 134 series, due N1 arch I,2015 36,500 50,0tX)

Pollution Control Series A. 5 7/MG , due Starch I,2mu 24,000 24,0X)

Pollution Control Series 11:

7 l/M4, due December I,1990 2,(HH) 2,0tX) 7-SiM1, duc December 1.1995 2,500 2,500 M1, due I)ecember I,2tNH 35,000 35,aX)

Pollution Control St ries C:

7 l/44, due ( Atober 1,204 15,000 15,0(X) 7 3/MN , due ( Atober I,20)$ 1,960 1,960 71/M4, due ( Atober 1, 2(M)6 2,105 2,105 71 M4, due ( Atober 1, 2007 2,260 2,260 7-3/M9, due ( Atober I, 2u)M 2,425 2,425 7 3 M4, due ( Atober 1, 2WP) 26,250 26,250 l'ollution Control Series D, 13-3/41, due Nosember I, 2011 - 27,3MO l.ess amounts held in construstion lund -

(479)

Pollution Control Series li:

9 l/MG , due Stay 1,2013 42,000 42,000

1. css ,unounts held in construction f unil (13,367) (13,610) l'ollution Cortrol Series I;;

7 3/M4, due Nosen ber 1,207) 27,250 -

Unamorti/ed prenuum 928 1,010 Un.unotti/ed ihwount (12,251) (1,099)

Capital lease obligations,10.NM4 18.259, due in installmerts through April I,1995 _ ,

3,N12 _ _ 4,096 711,672 814,598 Cheyenne I aght,1 uel and Power Company:

1 Irst mortgage Ismds:

5 l/24 senes, due April I,19'M) I,203 1,22M 7 7/M1 series, due April l. 20)1 4,(H)0 4,0 )O 10 701 unset ured notes payable, due September 1,1995 H,000 N,0)0 ff

4. l.ong Tenn Debt (continued) smnawr tvu.no 1986 1985 Western Gas Supply Company:

Unsecured promiwiry notec 7-3:44, due December I,1997 20,000 20,000 10.359, due December 1,1999 7,333 8,666 11.60% , due Niay 1,2015 5,000 5JXX) 12.875% , due Ntay 1, 2025 10,000 10,000 Unamorti/ed discount (354) (367) 1480 Welton, Inc.

Un ,ecured note payable, due December 31, 1986, interest rate ductuates with the New York Federal Funds rate - 17,680 4-3/4% secured notes, payable in equal quarterly installments of

$168,388 to June I,1992 cosering principal and interest 2,714 3,243 12.509 secured promissory note, due N1 arch I,1998 11,876 12,415 13 25% secured promiwory note, due in installments through October 1,2016 33,237 -

7-l/24 104 mortgage notes, due in installments through 1987 -

146 10% unsecured promissory notes, due in annual installments through October 3,1988 -

484 Fuel itesources Desclopment Co.:

Unsecured note payable, due June 30,1988, interest rate 11uttuates with the New York Federal Funds rate 3,000 2,300 llome Light and Power Company:

First mortgage twmde 5-l/29 series, due September 1,1989 -

305 61 series, due April I,1997 -

657 7 7/81 series, due December 1,2002 - 2,013 10-3/8% series, due January 1, 2(X)3 - 3,340 Ilannock Center Corporation:

Un ,ecured note payable, due June 30, 1988, interest rate ductuates with the New York Federal Funds rate 16,925 12,850 809149 mortgage notes, due in installments through July 1,1992 665 1,683

- $835,271 $928,241

= =_. - - -

_

In August 1986, the Company repurchased $l3,500,OIX)of the The Company registered $150,000,(MX) in First htortgage 134 I irst Stortgage lionds, pay ing a premium of $2,986.875. Ilonds with the Securities and Exchange Commission in In December 1986, the Company redeemed M8,500,(XX) of Nosember 1986. The Company intends to issue such tunds the 16'W First N1ongage lionds paying a redemption pre- from time to time prior to December 31, 1987, based on mium of $6,158,400. Also in December 1986, $27,250,000 of market conditions and other factors, At December 31, 1986, 7%9 pollution control refunding bonds, secured by the Com- no bonds had been issued under this registration.

pan > N First Stortgage Ilonds, Pollution Control Series F, Substantially all properties of the Company and its subsi-were used to redeem $27,380,(NX)of the 13 % % pollution con- diaries, other than expressly escepted property, are subje :t to trol bond % secured by the Company's Iirst N1ortgage lionds, the liens securing the Company's First N1ortgage !!onds or the Pollution Control Series D and a redemption premium of mortgage bonds and notes of subsidiaries.

$547,NX) was paid. The CPUC has authori/ed the Company The aggregate annual maturities and sinking fund require-to allocate the premiums and related costs to other debt issues ments during the the years subsequent to December 31,198f-and record them as additional discount to be amorti/ed oser are: $35,921,(XX) (1987), $5,961,000 (1988), $25,806JXX) the remaining lises of these inues. (1989), $7,8M,0tx) (1990) and $35,631JXX) (1991) for the in Nosember 1986, llome 1.ight and Power Company was Company; and 9 ,809,00() (1987), $22,310AXX) (1988),

merged into Public Sersice Company of Colorado. All out- $2,241,(NX)(1989), $3,513,000 (1990) and $2,520,0(X)( 1991) stanthng long-term debt of Ilome 1.ight and Power Company for its subsidiaries. The Company may satisfy its sinking fund was redeemed prior to this merger, obligations through the application of property additions, and Cheyenne may satir,fy $60JMX)of its sinking fund obligations annually through the application of property additions.

n

5. Notes Payable information regarding notes payable for the years ended December 31,1986 and 1985, is as follows; nwusanas or tunaru 1986 1985 Notes payable to banks (weighted average interest rate 6.81 % at December 31,1986 and 11.59% at December 31, 1985) _ $150,957 $1,850 N1atimum amount outstanding at any month-end during the period _

$150,957 $6,990 Weighted average amount (based on the daily outstanding balance) outstanding for the period (weighted average interest rate 6.72% for the year ended December 31,1986 atyd 8.85% for the year ended December 31, l985) $ 42,303 $3,211

6. Ilank Lines of Credit and 1984. The Company's policy is to fund pension cost accrued, Compensating ihnk llalances subject to the IRS funding limitations rule. The net pension Arrangements for bank lines of c, edit totaled $140,000,000 at credit in 1986 was comprised of:

December 31,1986 and $65,000,000 at December 31, 1985, ahousana, or tbruo and were maintained entirely by fee payments in lieu of com- Ser ice cost pensatmg balances. The unused committed lines of credit at 5 8.068 Interest cost on projected benefit obligation 25.877 December 31, 1986 and 1985 were $74.500,000 and Return on plan assets (46,122)

$M,100,(XX), respectisely. These bank lines of credit are aho Amortitation of net transition asset at used to support the issuance of commercial paper by the Com- adoption of SFAS 87 (3.674) pany and its subsidiaries. At December 31,1986.theCompany Other items 12.381 and its subsidiaries had arrangements for $188,000,000 in un- . _ . Net pension credit _ 5 (3,470) commined bank lines of credit of which $105,000JXX) were ~-__ ,_ ~~

~ ~ ' - ~ ~ ~

unused. The Company and its subsidiaries had no uncommit. During 1985, the Company changed the actuarial cost ted lines of credit outstandmg at L)ecember 31,1985.The Com. method (from the Aggregate Cost Niethod to the Projected pany and its subsidiaries generally may borrow under uncom-Unit Credit hiethod) and certain actuarial awumptions used in mitted preapprosed lines of credit upon request. however, the computing pension expense. The Projected Unit Credit banks have no firm commitment to make such loans. Niethod, which is required by SFAS 87, results in an annual pension opense that more appropriately matches the costs of

7. Commitments and Contingencies projected retirement benefits to the year in which such benefits Commitments made for the purchase of sarious items of plant are earned. The effect of these changes was to reduce 1985 and equipment aggr. gated approximately $89 million at pension expense by $10.4 million and increase net meome by December 31, 1986. $4.3 million (8 cents per share).

The Company resobed a long-standine dispute with the in. A comparison of the actuarially computed benefit obliga-ternal Resenue Sersice (IRS) oser payments made by GAC to Oons and plan net asset, as of December 31,1986 and January the Company regardmg seseral Fort St. Vrain items. A de- 1,1986, the cifective date of the adoption of SFAS 87, is pre-tailed discuwion of this tentatise settlement is presented in sented below. Plan assets are stated at fair value and are com-Note 9 prised primarily of corporate debt and equity secunties, a real See Note I for certa n contingencies relating to Fort St. estate fund and government securities held either directly or in Vra m. tammingled funds.

(Thousands or Ibilaru 12/31/H6 1/1/H6 fl. Postretirement Ilenefits Actuarial present salue of The Company maintains a noncontributory defined benefit ben it obhgationt pension plan coscring substantially all employees. The bene-Non ested 19.415 15.H54 tits are based on the employees' years of sers ice, up to a maxi-mum of 35 years, and average final compensation. During the

m. t of projected future third quarter of 1986, the company implemented, retroactne salary increases to January 1,1986, the requirements of Statement of hnancial - ' -- - - - -

- - ~ -73,013 77,7(o Accounting S.tandards No. 87 Projected benefit obligation "l,:mployers, Accounting for for service rendered to date 319.9M 247,774 Penuons,, (SFAS 87). T he ellect of this accounting change Plan assets at fair value (339.320) (301,628) was to reduce 1986 pension expense and increase net income by $12.3 million (24 cents per share). """""'

Pension expense (credit) meluded in net income was $(3.5)

)['

benefit obbgation 19,356 53.854 million in 1986, $M.6 million in 1985 and $19.1 million in Unrecognized net low 19,170 -

Unrecognized net transition asset at January 1,1986, W"PC"$D5f Cd_"lCIS)NL . _ . (58,789_ jh2,454)

Accrued pension habihty 5 (20.254) 5 ( 8.f 00)

M

Significant assumptions used in determining net periodic Pension Plans and for Termination Benefits", is approxi-pension cost and the projected benefit obligation were: mately $25.2 million. This cost is being amortized to pension 12/31/86 1/1/86 expense over 4.3 years in accordance with Statement of Finan-Uiscount rate 8%9 log cial Accounting Standards No. 71 " Accounting for the Ef-Expected long-term ins rease in fects of Certain Types of Regulation" compensation lesel 5%9 74 In addition to providing pension benefits, the Company and Expected weighted asenge its subsidiaries provide certain health care and life insurance long-term rate of return on assets 11 9 11 9 benefits for retired employecs. Substantially all of the Com-Variances between actual experience and assumptions for pany's employees become eligible for these benefits if they costs and returns on assets are amortized over the average re- reach either early or normal retirement age while working for maining strsice lives of employees in the plan. the Company. The cost of providing health care and life insur-Also during 1986, the Company offered to employees, age ance benefits to active, retired and disabled employees, which 55 and older with 20 years or more of sersice, a special incen- is expensed as either claims or insurance premiums are paid, tive for early retirement in the form of increased pension bene- amounted to 521.8 million,521.4 million, and 517 million in fits, to be paid from the Company's pension trust fund, and a 1986,1985 and 1984, respectively. The cost of providing one-time cash bonus. Approximately 550 employees elected to these benefits for the retired employees (2,238 in 1986,1,M4 retire under this program. The cost of this program, deter- in 1985 and 1,539 in 1984) is not separable from the cost of

. mined in accordance with the provisions of Statement of Fi- providing benefits for the active and disabled employees I

nancial Accounting Standards No. 88 " Employers' Ac- (6,582 in 1986, 7,171 in 1985 and 7,013 in 1984).

counting for Settlements and Curtailments of Defined Benefit

9. Income Tax Expense Income tax expense consists of the following:

(Thouwnsh of [Mlaro 1986 1985 1984 Income before extraordinary item:

Current income taxes:

Federal $ 57,186 5 63.806 5 89,869 State 4,487 6,907 8,868 61,673 70,713 98,737 Deferred income taxes:

GAC capacity replacement payments - IRS settlement (32,744) - -

Accelera:ed depreciation 33,173 31,346 29,716 Other book-tax timing differences (968) 2,431 149 Fort St. Vnin customer refunds 682 (16.349) (2,596) 143 17,428 27,269 Charge equivalent to reduction in income taxes due to deferred insestment tax credit, net of amortization (1,889) 13,136 11,498 Total income taxes on income before extraordinary item 59,927 101,277 137,5N Extraordinary item:

Current income taxes:

Federal (14,M3) - -

State (1.675) - -

(16,318) - -

Deferred income taxes (85,140) - -

Total income tax benefit from extraordinary item (101,458) - -

Total income taxes (benefit) $ (41,531) 5101,277 5137,5N Deferred tax prosisions are not recorded on certain book-tax to customers when the timing differences reverse and the tax timing differences. As of December 31,1986. the cumulative effects are paid.

net amount of such timing differences was $452,414,000. The The Company has state investment tax credit carryovers of tax effect of this amount is not recorded currently as regulatory $2,367,000 expiring in 1991,1992 and 1993, available to off-commission procedures will result in such costs being charged set future state income taxes.

A reconciliation of the statutory U.S. income tax rate and the effective tax rates is as follows:

thusana of tuurs) 1986 1985 1984 Tax computed at statutory rate on pre-tax accounting income before extraordinary item $ 84,524 46.0 % 5 97,506 46.0 % S130,0M 46.0 %

Increase (decrease) in tax from:

Difference between tax and book depreciation 8,842 4.8 8,496 4.0 7,425 2.6 Allowance for funds used during construction (2,085) (1.1) (2,834) (1.3) (4,439) (1.6)

Amonization of investment credit (7,113) (3.9) (6,776) (3.2) (6,233) (2.2)

State income taxes, net of federal income tax benent 3,068 1.7 4,949 2.3 6,383 2.3 Customer contributions in aid of construction 4,809 2.6 4,625 2.2 4,749 1.7 Amortization of b(md call premium (5,287) (2.9) - - - -

Income tax accrual adjustments - IRS settlement (21,431) (11.7) - - - -

Other - net (5,400) (2.9) (4,689) (2.2) (445) (0.2)

Income taxes on income before extraordinary item 59,927 32.6 101,277 47.8 137,5N 48.6 Income tax bene 6t from extraordinary item (101,458) (50.0) - - - -

Total income taxes (bene 0t) $ (41,531) N/A 5101,277 47.8 % $137,5N 48.6 %

in December 1986, the Company reached tentatise settle- reduced as a result of these settlements due to the net effect of ments with the IRS and the Colorado Department of Revenue reversing estimated tax liability amounts accrued in previous on the tax liabilities for the calendar years 1970 through 1979 years and recording the tentative settlement amounts.

and partial settlements for the calendar years 1980 through On October 22,1986, the Tax Reform Act of 1986 was signed 1984. Based on these settlements, the Company has paid addi- into law. The provisions of the Act generally were elfective tional taxes of approximately $24,354.000 and interest of ap- January 1,1987, whereas the insestment tax credit provisions proximately $30,800,000. The additional taxes are due princi- of the Act were effective January 1,1986. Because the Com-pally to the inclusion in taxable income of a portion of the pany is fully normalized with respect to investment tax credit, GAC contract refunds on Fort St. Vrain which were pre- ihere will be no significant effect on total income tax expense viously recorded as a reduction of plant cost, and part of the or earnings, but cash flow will be reduced in the current and amounts received from GAC as a result of the 1979 contract future years. The Company's income tax payments for the settlement for this plant. Total 1986 income tax expense was year 1986 increased by approximately 513.000,000.

10. Taxes (Other Than income Taxes)

(muuna or rubru 1986 1985 1984 Real estate and personal property taxes $41,609 $38,598 S36,460 Franchise taxes 1,619 2,628 1,062 Social security taxes 16,650 15,698 14,7M City and state use taxes 5,367 5,478 5,631 Miscellaneous taxes 6,057 5,981 5,699

$71,302 568,383 563,616 Charged:

Directly to income:

Operating expenses $66,776 $64,802 $60,051 Other 1,504 495 542 To property, plant rind equipment and various clearing accounts 3,022 3,086 3,023

$71,302 568,383 563,616 r

11. Segments of Business Segment information for the y car ended December 31,1986 is as follows:

Ghusands of IbHarsi _

Electric Gas Other Total Operating revenues 51,N5,590 5596,584 5 15,689 51,657,863 Operating expenses, excluding depreciation 718,342 534,056 2,091 1,254,489 Depreciation 81,095 20,999 2,f46 IN ,740 Total operating expenses 799,437 555,055 4,737 1,359,229 Operating income

• S 246,153 5 41,529 5 10,952 5 298,634 Plant construction expenditures **

S 138.761 - - 40,550

- - _ - -$ 16,349 5 195,660

dentifiable assets, December 31,1986:

Utility plant ** 51,855,351 9 43,485 5112,487 52,411,323 Materials and supplies S 56,219 5 8,485 5 426 65,130 Fuel inventors S 47,193 5 -

S 195 47,388 Gas in underground storage 5 -

5 17,050 $ -

17,050 Other corporate assets 377,517

$2,918,408 Segment information for the year ended December 31,1985 is as fobows:

awuanas of Ibuaru Electric Gas Other Total Operating revenues $ 1,022,283 5714,252 510,948 51,747,483 Operating expenses, excluding depreciation 715,117 639,445 4.412 1,358,974 Depreciation 79.265 20.071 1,966 101,302 l Total operating expenses 794,382 659,516 6,378 1,460,276 l

Operating income

• 5 227,901 5 54,736 5 4,570 5 287,207 Plant construction expenditures ** $ 166,500 5 46,372 524.636 5 237,508 Identitiable asscts, December 31,1985:

Utility plant ** $1,941,328 $433,169 599.551 52,474,N8 Materials and supplies S 51,818 5 7,891 5 26 59,735 Fuel ins entory 5 61,946 5 -

S 195 62,141 Gas in underground storage 5 -

S 16,790 5 -

16,790 Othe

. ___ .r corporate assets- - - - - - _ - - _ .

382.144 b2

---_ =_ - = ---- = = ==--= = z_ =.; ===== __~_._.=1._  ; = == =- =_ _ 994

• 85 8 Segment infonnation for the ycar ended December 31,1984 is as follows:

owusands of Ibnaro Electric Gas Other Total Operating revenues S 999,628 5790,068 512.328 $1.802,024 Operating expenses, excluding depreciation M4.025 708,467 4,825 1,357,317 Depreciation 76,368 18,898 1,617 96,883 Total operating expenses 720,393 727,365 6.442 1,454,200 Operating income

• 5 279,225 5 62,703 5 5,886 5 347.824 Plant construction expenditures **

$ 142, W5 5 45,152 589N= . $ _196,55___1

=_ = - -_ _ _ = _

__ . _=__

Identifiable assets, December 31, 1984:

Utility p' ant *

• S1,863,856 S414,346 576,962 52,355,lM Materials and supplies S 47,402 5 7,511 S 35 54,948 Fuel ins entory 5 60,897 5 -

S 272 61,169 Gas in underground storage 5 -

5 14,980 5 -

14,980 Other corporate assets 381,087 52,867,348

=- - -_ - =. _= =:==- _

thr( lNO M N leISC\

• lHdudC% JSElthm of utmmem Utillfy pR'pCTIy 4

12. Refundable Customers' Advances for Construction 10, 1986, as to the manner and timing of the refunds. An in December 1981, after receising CPUC approval, the Com- esti te for the refund according to the plan submitted to the pany put into effect a new electric line extension policy which CPUC is approximately $68 million. The Company commit-required prospective customers to make greater construction ted to complete all refunds within 60daysof a CPUC orderap-payments for new distribution and related facJitics than pre- proving the proposed plan or incur interest on any refunds viously required. As a result of an appeal by the liome Builders made after the 60 days expire, The CPUC has reviewed and Association o: M,tropolitan Denver and a subsequent Colo- approved the plan. As contributions toward the extension of electric service were not included in income, but mstead were rado Supreme Court decision disallowing the CPUC approval of the new electric line extension policy, the Company is obli- offset against property, plant and equipment or recorded as gated to refund the excess amounts collected. The Company deferred credits, this refunding wdl have no material effect on submitted a proposed refund plan to the CPUC on Decembe'r the carnings of the Company.

13. Quarterly Fmancial Data (Unaudited)

Summarized quanerly data (dollars in thousands except for per share amounts) for 1986 and 1985 are as follows:

1986 Three Months Ended March 31 June 30 Sept. 30 Dec. 31 Operating revenues $510.993 5376,676 5344,522 $425,672 Operating income:

Before adoption of SFAS 87 5 54,329 5 40,347 5 40,253 -

After adoption of SFAS 87 (1) $ 56,333 5 42,351 5 40,440 $ 99,583 Income before extraordinary item:

Before adoption of SFAS 87 $ 34,948 5 17,630 S 19,869 -

After adoption of SFAS 87 (1) S 36,952 S 19.634 5 20.056 5 47,179 Net income (loss):

Before adoption of SFAS 87 5 34,948 $ 17,630 S (73,809) -

After adoption of SFAS 87 (1) S 36,952 $ 19,634 S (73,622) $ 39,4M Earnings (loss) available for common stock:

Before adoption of SFAS 87 5 30,834 5 13,516 5 (77,593) -

After adoption of SFAS 87 (1) S 32,838 5 15,520 5 (77,406) $ 35,714 Average common shares outstanding (thousands) 52,333 52,333 52,333 52,399 Earnings per aserage common share before extraordinary item:

Before adoption of SFAS 87 50.59 50.26 , 50.31 -

After adoption of SFAS 87 (1) (2) $013 50.30 $0.31 50.83 Earnings (loss) per average common share:

Before adoption of SFAS 87 50.59 $0.26 5(1.48) -

After adoption of SFAS 87 (1) 50.63 50.30 S(1.48) 50.68 1985 Three Months Ended March 31 June 30 Sept. 30 Dec. 31 Operating revenues 5573,517 $382 065 5335,854 5456,(M7 Operating income 5 67,958 5 44,538 5 35,190 5 38,244 Net income S 51.316 S 24,598 $ 16,262 5 18,517 Earnings available for common stock 5 47,151 5 20,433 5 12,114 5 14,403 Average common shares outstanding (thousands) 51,808 52,051 52,265 52,333 Earnings per average common share 50.91 S0.39 50.23 50.28 (1) In 19% the Company adopted the prmeiples of Statement of Fmancial Accountmg Standards No. 87 pertaining to accountmg for pension com bec Note 8) requirmg restatement of reponed operatmg results for the first three quarters of 1986.

(2) Due to round ng, quarterly figures do not add to annual total.

n

REPORT OFMANAGEMENT The accompanying financial statements of Public Service Company of Colorado and subsidiaries have been prepared by Company personnel in conformity with generally accepted ac-counting principles consistent with the Uniform System of Ac-counts of the Federal Energy Regulatory Commission. The in-tegrity and objectivity of the data in these financial statements are the responsibility of management. Financial information contained elsewhere in this Annual Report is consistent with that in the financial statements.

The Company maintains and enforces a system of internal accounting controls, which is designed to provide reasonable assurance, on a cost effective basis, as to the integrity, objec-tivity and reliability of the financial records. This system in-cludes a program of internal audits to assure management that proper procedures and methods of operation are used to imple-ment the plans, policies and directives of management.

The accounting and internal control procedures of the Com-pany are reviewed by the Audit Committee of the Board of Directors. The Committee, which is composed of directors who are not employees of the Company, meets regularly with the Company's management, the internal audit staff and the in-dependent accountants.

The accompanying fmancial statements have been examined by Arthur Young & Company, certified public accountants, whose report follows.

a

• / 6/

R. R. Midwinter Vice President and Principal Accounting Officer R. F. Walker Chairman of the Board and Chief Executive Officer February 10, 1987 w

REPORT OF CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors and Shareholders Public Service Company of Colorado We have examined the accompanying censolidated balance sheets of Public Service Company of Colorado and subsi-diaries at December 31,1986 and 1985, and the related con-solidated statements of income, retained earnings and source of funds for plant construction expenditures for each of the three years in the period ended December 31,1986. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing pro-cedures as we considered necessary in the circumstances.

As discussed in Note I to the financial statements, realiz-ation of the Company's investment in its Fort St. Vrain Nuclear Generating Station (approximately $72.7 million at December 31,1986), and the adequacy of pmvisions for esti-mated future decommissioning expenses and unrecoverable operating and capital expenditures are dependent upon future events, including Nuclear Regulatory Commission authoriza-tions, the attainment of operating levels significantly greater than in the past, achieving and maintaining a cost-effective relationship between expenses and revenues from Fort St.

Vrain and satisfactory resolution of various alternatives regarding Fort St. Vrain after the on-site nuclear fuel is util-ized. The eventual outcome of these matters cannot be detennined at this time.

In our opinion, subject to the effects on the 1986 and 1985 financial statements of such adjustment, if any, as might have been required had the outcome of the uncertainties referred to in the preceding paragraph been known, the statements men-tioned above present fairly the consolidated financial position of Public Service Company of Colorado and subsidiaries at December 31,1986 and 1985, and the consolidated results of operations and source of funds for plant construction expendi-tures for each of the three years in the period ended December 31,1986, in conformity with generally accepted accounting principles applied on a consistent basis during the period, except for the changes in 1986 and 1985, with which we concur, in the method of determining pension costs as described in Note 8 to the financial statements.

4, 7 L- - .

f d Arthur Young & Company Denver, Colorado February 10, 1987 e

5/

PuNic Sersiee Comtuny of Colorado mxt Subsidiaries BOARD OF DIRECTORS BOARD OF DIRECTORS J. Mkhael 1% wen EXECLTIVE OFHCERS Rotwrt J. \ idk k Earl E. WI.aughlin Cheynne. W Y t1978) Yke Preudent. Metr pihtan IbulJer Rkhard F. Walker Preudent Rkhard F. M alker Customer Operainms Manager. hiottulk Repm Demer CO Il9?fo Powers Budderi Nupply (harman of the BoarJ. Age 59 (31) Age 46 C6)

Omrman of the boarJ. Age 44 Chef I tecutne Ottker Chief Esnutne O!!ker Ap 62 07) Robert O. Milliams l'hillip I Noll Ap 62 'Ibnm E. Rodrigues" Yke Preudent. Nuslear Operalam Mwntam (kmer. CO t 19%) Delwin D. Ilotk Age 60 i6 nmW Age 47 CO ikiwin D. Ilock' Preudent. Thomas L. Rodriguez & Preudem aml Demer CO t19s5 Awuates. P C Chief Operaimg Ottker OTiiER OtTICERS lawrence F. Petrini Preudent & CNef Operatmg Ottier Age 42 Age 51 t24 North Meinpihtan A 51 Anthemy J. DeNostith Age 56 OI)

• l b trJ Preodna Bryant O'th nnell Awwant Saretary & Auditor ketth L. Itrown & C%f O f yrarrniK rr Esecutae Vke Preudent Age 38 (16: llanild L. Rust Dem er. CO I1944i eforne Ane24 19M and General Coumel l%Ite Valle)

Preudent Age 61 Oca Nesen R. lueshelle Age SI 01)

Brown lmestmeni Corp " #"U'"" Amstant Snrttan and g the biurd May 1.19M James N. Humpus Amstant Treasurer George A. Senkus

"/In trJ e dwn tor rfntne Semor Vue Preudent. Emance Age 37 (5) San Lua V4 hey Collh P. Chandler, Jr. Mav 1.19M Ap 52 C2 Ap 90 819)

Demer. CO (19x5 8 r J hwr cln reJin riv 3"" A' N'I"*

Preu&nt /L urd of Dan tur, Clark B. Enaid Awniant Secretary leuis %. Supatwie Chandler & Awuaret bw. Senor VAe President. Customer Age 46 t 19; Southwnt Metrphtan Age ft) Ars as of fb rmber 31.19% Age 52127) Age M OSI Glenn M. Steepleton Ibrh M. Drury. I't.D EXECLTIVE COMMITTEE C. Keith Millen Amstant Saretars PRESIDENTS Demer. CO 0975) &mor %ce Preudent. Operanim Age 63 (12) SUBSIDIARY COMPANIES Unneruty of Demer Rkhard F. Malker Age M 140)

Protewor of Ewnoimes Delwin D. Ilotk Rk hard L. Ilunt jamn N. Humpus Preudent. Center for Huunew and George it. % kinley Ramaid E. Ibninan Awstant Treasurer PS CokiraJo Credit Corp and E mnomic I orecetmg Hill F. %hihm. Jr. \ ne Preu&nt. Dntnbuten & Age 44 CO) P.S R Invesments Inc.

Age tal %holas R. Petry Regonal Operarmm Age 52122)

Age 59 (12) Susan G. Pollak thne T. Farky AUDIT COMMTITEE Auntant Treasurer Clark H. Ewald Pueblo. CO t IW3) Ible V. Fett henhier Age 42 (15; Ban:ksk Center Corp.

Attervy at Law lbrh M. Ihury Vwe PreuJeni, and 1480 % citon Petersen & Fothia Proh swmal Corp. Thomm T. Iarley in!ormaten Management Ibugle S. Rolwrtson Ap 52127)

Age $2 J. Mwhael Powen & Auditmg aml Snretary Amstant Treasurer Ap53C9 Age 44 to Iktwin D. Ilockm Gayle t.. Greer"  % estern G.n Supply Company Demer. CO (19Wo J. hemwth Fulkr llomer R. Sewiems Age 51 C4)

Yhe Prcudent. %ce Preudent. Amstant Treasurer Amencan Teleuuon & E Intrw I ngmeermg Age 61 (9) James t liigday Communnatum Corp & 1%nnmg Cheyenne Light. Fuel Age 45 Age 6100 MANAGERS aiki PeScr Company GEOGRAPillC D VISIONS Manapt. Nonhern Regen Gmrge IL W hinley Rkhard C. Kelly Age M 06)

LA mer. CO a 19'ru Trecurer & Awntant Secretary N. Keith Coombe Pr mdent Age 40 t191 Rgh I%ms Robert F. Jone hrst %Km:cy Corp Age 54 (14) I uct Resourtes Development Co.

Age 59 Patrick %. McCarter Age 63 s 39i

%cc Preudent. Ronald L. Fremh C. heith %Ilen Electne Operanom Pueblo "*Va ed Iolui M llanoMr who dv.

Dem er. CO (19W . Age 49 C7p Manager. Southern Regen I / Nr.m scan of he or Senor V Ac Preudent. Hi eranom Age 59 04p """' 'd** '* d ihr Comfwy #Armth Age N James R. McCotter Dn em/vr.1v%

pare General Counael Mk hael J. Geile Ages as of f)n rmber 31.19%

M ill F. Nk holum, Jr. g A c 41 t II) Home Light Demu. CO t lWI) (

Chairman of the P urJ & g eolent y Age 44 (221 LEGAL COUNSEL

.Qid E. Middenh Colorado Naional B.inksha%.1 w \ e e Preudent. Gm Operatiom Bruce %. llamford helly Namfield & O'Ihmnell Age 57 A*.48 Ce9 i ront I ange Demer. Colorado Age 45 (14 Bryant O'Ibrmell IN M6ellis ACDITORS Ikmer. CO I 1972 Vu Preudem. Canernmental Kenneth L. lleadrkk I snuine %. e Preskicnt & Linmsnmental Attain Nonhern Arthur noung & Company and General Coumel Age 58 t147 Age 47 C6) 70717th M sorte 3*U Age 61 Ikmer. Colorado Rkhard R. Midwinter Frank O. IIellwig Wholm R. Petry Yke Preudent and Contronet South Metapihtan TRANSFER AGENTS AND Dcmer. CO 41%I: g Age 61117) Age 6106) REGISTRARS FOR ALL ISSUES Of PicW mt Perry Company .

CAPITAL STOCK ManJng Partnce of Robert T. Perum. Jr. Rms C. King. Jr.

' ^

N G Pctry C minunen CompaDy VKe Preudent. Ikmer Metropolaan Prmcipal Tran fer Agent. Diudend Age #E Pubhc Attain Age 45 Cl) Paymg Agent, Dnklend Remscument Age 441151 lbn Agent Regatrar Ibugle C. lotkhart Public Senwe Company of Colorado James 11. Ranniger  % cstern Demer Colorado N ke Preudert. Ag 44 C2)

Rates and Regulanons Co Tramfer Agent and Cu-Registrar Ag %) CN rgan Guaranty Trust Company of New York New York New York U ,

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tive as possible. The bottom card discusses how to get additional SIIAREIIOLDER COMMUNICATIONS SURVEY 1986 ANNUAL REPORT _Q UARTERLY REPORTS

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8 "

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1. Permnal research 4. Gift / inheritance

2. Stockbroker 5. Financial publicalion Street and Number

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NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES BUSINESS REPLY MAIL FIRST CLASS PERMIT NO 265 DENVER COLORADO POSTAGE WtLL BE PAID BY ADDRESSEE INhlic Senice Company of Colorado insestor Relations. Room 850 P.O. Ikn MO Iknser, CO 80201-9958

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0 PublicServices autx RxTE U.S. POSTAGE PAID PERMIT NO.14 Public Senice DENVER, CO Company ofColorado PO. Box 840 Denwr,Cokvado 80201-0840 (303)571 7511

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2420 W. 26th Avenue, Suite 1000, Denver, Colorado 80211 April 15, 1987 Fort St. Vrain Unit No. 1 P-87148 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D.C. 20555 Docket No. 50-267

SUBJECT:

Annual Financial Report Gentlemen:

Enclosed are ten (10) copies of the 1986 Annual Report for Public Service Company of Colorado, including the certified financial statement for 1986. This document is submitted for your information and use in accordance with Title 10, Code of Federal Regulations, Part 72.55(b) and Regulatory Guide 10.1.

Very truly yours, LWm &

H. L. Brey, Manager Nuclear Licensing and 9

Fuels Division HLB /JW:jmt Enclosures i @