ML20212R663
| ML20212R663 | |
| Person / Time | |
|---|---|
| Site: | Maine Yankee |
| Issue date: | 04/14/1987 |
| From: | Whittier G Maine Yankee |
| To: | NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM) |
| References | |
| 8628L-LMO, GDW-87-94, MN-87-46, NUDOCS 8704270308 | |
| Download: ML20212R663 (66) | |
Text
4' MAME HARHEE 'MOMloPOWER00MPARUe avaug,,%,?n"g%s (207) 623-3521 e
April 14, 1987 MN-87-46 GDH-87-94 United States Nuclear Regulatory Commission Attention: Document Control Desk Hashington, D. C.
20555
References:
(a)
License No. DPR-36 (Docket No. 50-309)
Subject:
Annual Financial Report Gentlemen:
Pursuant to 10 CFR 50.71(b), please find enclosed a copy of the 1986 Annual Financial Report (Form 10-K) for Maine Yankee Atomic Power Company.
The original report is on file with the Securities and Exchange Commission.
Very truly yours, MAINE YANKEE ATOMIC POWER COMPANY
~
G. D. Whittier, Manager Nuclear Engineering and Licensing GDH/bjp Enclosure MYAPCo Form 10-K for the Fiscal Year Ended December 31, 1986 cc: Dr. Thomas E. Murley Mr. Pat Sears Mr. Cornelius F. Holden 870427 f3 09 PDR A
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.4 SECURITIES AND~ EXCHANGE COMMISSION Washington, DC -20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of,the Securities Exchange Act of 1934 For the fiscal year ended Commission' file number December 31, 1986 1-6554 MAINE YANKEE ATOMIC POWER COMPANY (Exact name of registrant as specified in its charter)
Maine 01-0278125 (State or other jurisdiction of (I.R.S. Employer incorporation or organization)-
Identification No.)
Edison Drive, Augusta, Maine 04336 (Address of principal executive (Zip Code) offices)
Registrant's telephone number including area code: 207-623-3521 Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange Title of each class on which registered First Mortgage Bonds, Series A (Sinking Fund) 9.10% Due 2002 New York Stock Exchange, Inc.
First Mortgage Bonds, Series B (Sinking kund) 8 1/2% Due 2002 New York Stock Exchange, Inc.
First Mortgage Bonds, Series C (Sinking Fund) 7 5/8% Due 2002 New York Stock Exchange, Inc.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the reg-istrant was required to file such reports), and (2)'has been subject to such.
filing requirements for the past 90 days.
Yes x
.No The aggregate value of the voting stock held by non-affiliates of the reg-istrant is $50,000,000, based solely on the par value of the Common Stock.
There is no market in this security.
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Shares 0utstanding Class as of March 15, 1987 Common Stock, $100 par value 500,000 1011A/3262A-1
T v -.:
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Maine Yankee Atomic Power Company
. Form 10-K - 1986 Maine Yankee Atomic Power Company Form 10-K - 1986 TABLE OF CONTENTS P. age.
Part I Item Number Item 1.
Business.
3 10 Item 2.
Properties.
Item 3.
Legal Proceedings.
11
. Item 4.
Submission of Matters to a Vote of Security dolders....
13 Part II Item 5.
Market for the Registrant's Common Equity and Related Stockholder Matters..
14 Item 6.
Selected Financial Data.
15 Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations............
16 Item 8.
Financial Statements and Supplementary Data........
19 Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............
19 Part III Item 10. Directors and Executive Officers of the Registrant.....
20 Item 11. Executive Compensation..
..............26 Item 12. Security Ownership of Certain Beneficial Owners and Management.
......27 Item 13. Certain Relationships and Related Transactions.......
28 Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................
29 Signatures......
...................32
.... 1011A/3262A-2
o Maine Yankee Atomic Power Company Form 10-K - 1986 PART I ITEM 1 - BUSINESS (a) General.
Maine Yankee Atomic Power Company (the " Company" or " Maine Yankee"), incorporated under the laws of Maine on January 3,1966, owns and operates a pressurized water nuclear powered electric generating plant at Wiscasset, Maine, with a current net capability of approximately 855 megawatts, electric (the " Plant").
The Company sells its capacity and output to its ten sponsoring utilities.
The Company's principal office address is Edison Drive, Augusta, Maine 04336, and its telephone number is (207) 623-3521.
In 1986 the Plant produced 6.2 billion kilowatt-hours, a record for the Plant, at a cost of 1.98 cents per kilowatt-hour.
This accomplishment was aided by the fact that the Plant did not shut down for refueling during the year.
The Company is sponsored by ten investor-owned New England utilities (the
" Sponsors" or the " Stockholders"), each of which committed itself under a Power Contract with the Company to purchase a specified percentage of the capacity and output of the Plant and pay therefor, beginning on January 1, 1973, a like percentage of amounts sufficient to pay its fuel costs, operating expenses (including a depreciation accrual at a rate sufficient to fully amortize the investment in the Plant), interest on its debt and a composite return on its capital stock equity.
Under amendments to the Power Contracts, in effect as of January 15, 1985, upon approval of a rate case settlement agreement by the Federal Energy Regulatory Commis-sion ("FERC"), the Company increased the amount of collections for future decommissioning costs, its allowed rate of return on common equity was increased, and other ratemaking practices were changed.
The Company and its Sponsors have executed additional Power Contracts which will extend the term of the Power Contract from 2002 to the end of the useful life and the completion of decommissioning of the Plant.
For a further dis-cussion of the 1985 settlement with the FERC see Item 3
" Legal Proceed-ings".
Each Sponsor has also agreed under a Capital Funds Agreement with the Company to provide a like percentage of the Company's capital re-
]
quirements not obtained from other sources, subject to o'btaining neces-sary authorizations of regulatory bodies in,each instance.
All such obligations are subject to the continuing jurisdiction of various federal and state regulatory bodies.
(b) (i) Problems Affecting the Industry and the Company. Events in thrch 1979 at the Three Mile Island Nuclear Unit No. 2 in Pennsylvania ("TMI")
caused increased concern about the safety of nuclear generating plants.
This has prompted a rigorous reexamina t' ion of safety related equipment and opera ting procedures in all nuclear facilities and has caused the United States Nuclear Regulatory Commission ("NRC") to promulgate numer-I ous requirements in response to TMI, including both near-term modifica-tions to upgrade certain safety systems and instrumentations and longer-term design changes, ranging from equipment changes to operational sup-1011A/3262A-3
w Io Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 1 - BUSINESS (continued)
(b)(1) Problems Affecting the Industry and the Company. (continued) port.
The Company has made the near-term modifications required by the NRC and is continuing the process of completing the long-term modifica-tions.
World-wide concern was increased by an accident in April.1986 resulting in the release of radioactivity from the Chernobyl nuclear gen-erating facility in the Soviet Union, and concern in Maine was intensifi-ed by_ the identification of two locations in Maine as potential sites for high-level nuclear waste disposal facilities by the federal Department of Energy (" DOE").
A referendum in Maine calling for the closing of the Plant in July 1988 is expected to be held in November 1987.
For a more l
complete discussion, see Item 1, BUSINESS, "(g) Proposed Maine Yankee Referendum".
In addition, the NRC is continuing its safety reviews under both long-standing and new regulations and may at any time issue orders which could materially affect the Company's affairs and financial condition and the operation of the Plant.
Public and regulatory attention has also focused on the disposal of both low-and high-level nuclear wastes. Certain as-pects of the disposal of nuclear wastes and the decommissioning of nuclear generating facilities have been regulated under federal and Maine law and further regulation is likely in this area.
Public concern about 1
the operation of nuclear generating facilities and the disposal of nuclear wastes has sometimes resulted in public campaigns to close such facilities._ Although affecting various nuclear generating facilities in varying degrees, such events, as well as other problems of the industry, have had, and will continue to have, a direct effect on the affairs and -
financial condition of the Company.
I (b) (ii) Seabrook.
Stockholders of the Company owning an aggregate of approximately 41% of the entitlement percentage of the Plant's output are participants in the Seabrook nuclear project, located in Seabrook, New
~
Hampshire.
One of the stockholders of the Company, Public Service Com-pany of New Hampshire ("PSNH"), which is entitled to approximately 5% of i
the output of the Maine Yankee Plant, owns approximately 36% of the Sea-brook project.
Otner stockholders of the Company entitled in the aggre-gate to approximately 52% of the Maine Yankee Plant's output (including Central Maine Power Company, whose entitlement is 38%) sold their inter-eats in the Seabrook project in November 1986 af ter experiencing finan-cial and regulatory problems in varying degrees. PSNH has reported that, although construction of Seabrook Unit 1 is complete, it is encountering problems in achieving commercial operation of the unit and obtaining rate relief from the New Hampshire Public Utilities Commission.
PSNH's 'inde-3 pendent accountants have reported that commercial operation of Seabrook Unit 1 and adequate rate increases upon its completion are necessary for PSNH to continue in existence.
PSNH has further stated that if it should be unable to obtain such rate relief on a timely basis, and obtain ade-quate external financing in the interim, or if the rates needed to ser-vice its existing indebtedness and such further financings are so high as to cause the loss of a number of substantial customers, it could become very difficult for PSNH to meet its obligations as they come due. 1011A/3262A-4 j
1
f Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 1 - BUSINESS (continued)
(b) (ii) Seabrook. (continued)
A default by a Stockholder of the Company in making payments under the Power Contracts or Capital Funds Agreements could have a material adverse effect on the Company, depending on the magnitude of the default, and would constitute a default under the Company's First Mortgage Indenture and one or more other major credit agreements unless cured within applic-able grace periods.
Although no assurances can be given, management believes that in light of the operating history of the Plant and the rel-atively low c~ st of power produced by the Plant, it is unlikely there o
would be a default by a stockholder that would materially and adversely affect the continued operation of the Plant.
(c) Regulation and Environmental Matters. The Plant is subject to exten-4 sive regulation by the NRC, which is empowered to authorize the siting, construction and operation of nuclear reactors after consideration of public health, safety, environmental and antitrust matters.
The United States Environmental Protection Agency
(" EPA") administers programs established under the Federal Water Pollution Control Act and the Clean Air Act which affect the Plant.
The former Act establishes a national objective of complete elimination of discharges of pollutants into the nation's water and creates a rigorous permit program designed to achieve this objective.
The latter Act empowers EPA to establish clean air standards which are implemented and enforced by state agencies.
In addition, pursuant to the Federal Resource Conservation and Recovery Act of 1976, EPA regulates the generation, transportation, treatment, storage and disposal of hazardous wastes but not radioactive wastes.
The EPA has broad authority in administering these programs, including the ability to require installation of pollution control and mitigation de-vices.
The National Environmental Policy Act of 1969 ("NEPA") requires that de-tailed statements of the environmental effects of major federal actions be prepared by federal agencies.
Major federal actions can include licenses or permits issued to the Company by the NRC and other federal agencies for construction or operation of ' generation and transmission facilities.
NEPA requires that federal licensing agencies make an inde-pendent evaluation of the' environmental impact of, and alternatives to, the proposed action.
Future construction modifications or other activi-ties at the Plant could require federal licenses or approvals that in-volve NEPA requirements.
l The Company is also subject to regulation with regard to environmental matters and land use by various state authorities.
1011A/3262A-5 1
I Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 1 - BUSINESS (continued)
(c) Regulation and Environmental Matters. (continued)
Under their continuing jurisdiction, the NRC and one or more of the EPA and the state authorities having jurisdiction over the Company's facil-ities may modify permits or licenses which have already been issued, or impose new conditions on such permits or licenses, and may require ad-ditional capital expenditures or require that the level of the operation of a unit be temporarily or permanently reduced.
See " Problems Affecting the Industry and the Company" above.
The Sponsors of the Company have agreed, subje~ct to limited exceptions including regulatory approval, (i) to provide the required capital not otherwise available, (ii) to take the total output of the Plant, and (iii) to pay all costs including capi-tal costs.
(d) Nuclear Fuel. The Company has entered into a contract with the DOE for disposal of its spent nuclear fuel, as required by the Nuclear Waste Policy Act of 1982, pursuant to which a fee of $1.00 per megawatt-hour is currently assessed against net generation of electricity and paid to the DOE quarterly.
Under this Act, the DOE has assumed the responsibility for disposal of spent nuclear fuel produced in private nuclear reactors.
In addition, Maine Yankee is obligated to make a payment of $50,367,000 with respect to generation prior to April 7, 1983 (the date current DOE assessments began), all of which the Company has already collected from its customers.
The Company -has elected under terms of this ' contract to make a single payment of this obligation prior to the first delivery of spent fuel to DOE, scheduled to take place in 1998.
The payment will consist of the $50,367,000, which is the approximate one-time fee charge, plus interest accrued at the 13-week Treasury Bill rate compounded on a quarterly basis from April 7, 1983, through the date of the actual pay-ment.
Current costs incurred by the Company under this contract are re-coverable by it under the terms of its Power Contracts with its sponsor-ing utilities.
The Company has accrued and collected $17,964,000 of interest cost for the period April 7, 1983, through December 31, 1986.
Maine Yankee has formed a trust to provide for payment of this long-term fuel obligation.
Funding of the truct is being made by deposits of ap-proximately $4,100,000 at least semiannually beginning December 1985 and continuing through May 1997 totaling approximately $98,800,000.
The estimated liability, including interest due at the time of disposal, is estimated to be apprcximately $169,600,000.
The Company estimates that trust fund deposits plus estimated earnings will meet this total liabil-ity if operations continue without material changes.
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1011A/3262A-6 j
4 Maine Yankee Atomic Power Company i
Form 10-K - 1986 ITEM 1 - BUSINESS (continued)
J (d) Nuclear Fuel. (continued)
A U.S.
Internal Revenue Service agent conducting a review of the Com-pany's income tax returns for 1982 and 1983 informed the Company he is taking exception to, among other things, a 1983 deduction for $50,367,000 of the Company's long-term permarant fuel disposal : obligation and ' as-sociated interest. After the Comp my had protested the IRS position, the IRS in February 1987 informed the Company that it, was re-opening the audit to add $4,800,000 to the challenged amount for the Company's. DOE obligation with respect to generation subsequent to April 7, 1983.
If the IRS were to prevail, these adjustments would significantly affect re-
. ported current and deferred income taxes and investment tax credits.
5 Management believes that the deductions taken are proper and intends to 7
contest any proposed disallowance.
1 i-Under the terms of a license amendment approved by the NRC in 1984, the present storage capacity of the spent fuel pool at the Company's Plant 1
will be reached in 1996 and after 1992 the available capacity of the pool would not accommodate a full core removal.
The Atomic Safety and Licens-I ing Board has approved the Company's proposal to test a further modifica-l tion which would, if implemented, permit storage capacity through the 4
operating life of the Plant.
That implementation would require further approval from the NRC.
}
A Maine statute provides that af ter July 1,1992, spent nuclear fuel may i
not be stored on-site for a period exceeding three years from the date of 1
removal of the fuel from the reactor.
The Company estimates that ship-I j
ments of spent nuclear fuel to the DOE will not commence before 1998.
i The Company cannot predict whether, or to what extent, the Maine statute and storage capacity limitations referred to above may be modified 'and whether, or to what extent, they will affect the operation of the Plant.
l (e) Decommissionina.
The NRC currently recognizes three decommissioning methods complete dismantling and removal, in-place encapsulation or
" entombment" and mothballing - or a combination of these methods.
The Company currently proposes to use, consistent with its understanding of NRC and FERC staff policy, the complete dismantling and removal method.
Through 1986 the Company had collected $13,303,324 for decommissioning i
costs in accordance with FERC orders approving. settlements issued in 1982 and 1985, the earlier order requiring the Company to collect annual de-commissioning charges of $1,826,100, and the later order increasing the
)
amount to $4,000,000.
The $4,000,000 is based on the approach of esca-lating, rather than level, collections over the operating life of the Plant.
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' 1011A/3262A-7 3
Q Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 1 - BUSINESS (continued)
(e) Decommissioning. (continued)
The Decommissioning Fund balance as of December 31, 1986, was $15,041,736 (including interest earned).
For a discussion of certain tax considera-tions with respect to decommissioning charge collections see Item 3-
" Legal Proceedings"
" Rates."
The State of Maine enacted a statute in 1982 which requires the Company to submit a detailed decommissioning financing plan to the Public Utili-ties Commission of the State of Maine ("PUC") for approval.
The Company completed the filing of its decommissioning financing plan on January 18, 1984, but the PUC has not yet accepted the plan and the Company is unable to predict whether the plan will be accepted.
The statute further pro-vides that if the decommissioning trust fund is insufficient to decommis-sion the Plant the Company as licensee would be responsible for the de-ficiency, but if the Company were unable to provide the full amount the statute provides that owners would be jointly and severally responsible for the balance.
Funds now being collected for decommissioning are de-posited in a trust account by the Company pending their ultimate use.
In January 1987, the Company filed with the IRS a request for an initial schedule of deductible " ruling amounts" pursuant to section 468A of the Internal Revenue Code of 1954, as amended, with respect to its payments to a " qualifying" decommissioning trust and the earnings of the qualify-ing trust fund for the tax years 1984 through 2008, based on certain as-sumptions.
The level of the ruling amounts is based on the Company's decommissioning collections for 1984 through 1987 under rates determined in its 1982 and 1985 FERC rate case settlements and $6.1 million per year thereafter.
The latter amount has been calculated pursuant to IRS tem-porary regulations, except that it is on the basis of an " estimated use-ful life" through the period the Plant has been licensed to operate by the NRC (through 2008).
Calculation on the basis of an " estimated useful life" through the original depreciable life of the Plant (through 2002) as proposed by the IRS in itis current temporary regulations would reduce the requested deduction and funding amount to the qualifying trust fund af ter 1987 by about 10%.
The Company cannot predict the results of its request. Maine Yankee intends to fund the balance of the collectio's for n
decommissioning, not funded in the qualifying trust fund, over the oper-ating life of the Plant through contributions to a second "non qualify-ing" trust, to which contributions under current tax law would not be deductible until actually paid as decommissioning costs.
For further information 'on decommissioning, see Note 1 of the Notes to Financial Statements. 1011A/3262A-8
e Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 1 - BUSINESS (continued)
(f) Low-level Waste Disposal. On January 15, 1986, the federal Low-Level Radioactive Waste Policy Amendments Act was enacted.
This Act requires the present disposal sites to accept low-level nuclear wastes from other states until December 31, 1992.
The Act also sets limits on the volume of waste each disposal facility must accept from each state, establishes milestones for the non-sited states to establish sites within their states or regions (pursuant to regional compacts) and authorizes increas-ing surcharges on waste disposal until 1992.
Af ter 1992 the operating disposal sites would be permitted to refuse to accept wastes generated outside their state or compact region.
On November 5, 1985, Maine voters approved an initiated proposal which requires voter approval prior to construction or operation of any facil-ity in Maine for the storage or disposal of low-level radioactive wastes.
The proposal also requires voter approval prior to Maine's entering into any compact or agreement with any state or the federal government concerning the disposal or storage of low-level radioactive wastes inside or outside of Maine.
The Company currently has the capacity to store approximately five years' production of low-level waste at its Plant site and intends to ship its wastes to present off-site facilities as long as possible in order to preserve that capacity.
The Company cannot predict, however, the long-term effects of the Maine legislation.
(g) Proposed Maine Yankee Referendum.
In January 1986, DOE identified two locations in Maine among 12 sites in seven eastern states under con-sideration as a high-level nuclear waste disposal facility on the basis of a computer analysis of geological characteristics.
Some opponents of the location of any such high-level nuclear waste disposal facility in Maine have linked the operation of a nuclear generating facility in Maine with the determination of an appropriate site for such a disposal facil-ity and have sought to close the Plant.
The DOE announced in bby 1986 that it had suspended consideration of such a site in the eastern United States; however, DOE has subsequently announced that it may be required to reconsider such a site in the eastern United States.
Public concern was further intensified by an accident in April 1986 resulting in the release of radioactivity from the Chernobyl nuclear generating facility in the Soviet Union.
As a result of such heightened public concern, an initiated petition calling for the closing of the Plant as of July 1988 is expected to be presented to Maine voters in November of 1987.
Because of this concern and other reasons, management cannot predict the outcome of the refer-endum.
If it pa sses, however, Maine Yankee would pursue the legal l
. 1011A/3262A-9
Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 1 - BUSINESS (continued)
(g) Proposed Maine Yankee Referendum. (continued) remedies available to it, including among others the doctrine tha t the pervasive federal regulation of the nuclear industry preempts any state-ordered shutdown, and that any such action by a state, if found valid, would invoke the protection of the Fif th Amendment to the United States Constitution requiring compensation to the owners for the taking of property.
In addition, Maine Yankee could pursue various ratemaking remedies. Management cannot predict the timing or outcome of these legal challenges.
If all legal remedies were unsuccessful, the Company as licensee would be required to provide the full amount needed for decom-missioning the Plant under the 1982 Maine decommissioning statute, but if the Company could not provide the funds, the statute provides tha t the Stockholders of Maine Yankee would be jointly and severally responsible for the balance. Under the terms of a contract with the DOE for the dis-posal of spent nuclear fuel, the Company is obligated to pay DOE $50.4 million plus interest to the expected date of payment in 1998 for the ultimate disposal of spent nuclear fuel generated prior to April 7,
1983. If the Plant were forced to shut down before the expected payment date and the Company had not accumulated or could not provide sufficient funds to make the payment to DOE, then DOE might make a claim against the Stockholders of Maine Yankee for such payment.
Management believes that the Plant is a safe and economical source of base-load electric power, and intends to take all reasonable steps to provide for its continued operation.
(h) Employees. At December 31, 1986, the Company had 334 employees.
ITEM 2 - PROPERTIES The Plant is located on tidewater on Bailey Point in Wiscasset, Maine, on a 740-acre site which is owned in fee by the Company and is adequate for the Plant and for the associated switchyard facilities (which are owned in part and operated by Central Maine Power Company).
It is a nuclear powered electric generating plant, utilizing a pressuriz-ed water reactor, fueled with slightly enriched uranium oxide.
The nuclear steam supply system and certain other equipment were designed and fabricated by Combustion Engineering, Inc.
The turbine generator was supplied by Westinghouse Electric Corporation.
Stone & Webster Engineer-ing Corporation, as engineer and constructor, designed and constructed the Plant. The nuclear design and construction of the Plant were super-vised by the Nuclear Services Division of Yankee Atomic Electric Company, which has supervised the design and construction of other nuclear gener-ating plants in New England.
Construction of the Plant, which began in 1967, was completed in 1972 except for certain discharge temperature con-trol facilities designed to meet the requirements of the haine Board of Environmental Protection, which were completed in 1975.
Under the terms of the Indenture securing the First Mortgage Bonds, substantially all electric plant of the Company is subject to a first mortgage lien. 1011A/3262A-10
Z Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 3 - LEGAL PROCEEDINGS (a) General.
The operation of existing nuclear units and the construc-tion of nuclear units presently planned in the United States continue to be a subject of public controversy.
Various groups have filed law suits and participated in administrative proceedings claiming that the present state of nuclear technology presents risks to public health and safety and to the environment.
In addition, certain of these groups have pro-posed restrictive legislation relating to nuclear power.
Some of the claims made by such groups, if they should prevail, or the existence of the controversy itself, could cause substantial modifications to or ex-tended shutdowns of plants presently in operation.
See Item 1, BUSINESS,
" Problems Affecting the Industry and the Company" above.
The Maine Yankee Plant was declared commercial on December 28, 1972, with regular operation at approximately 570 megawatts electric (net) starting on January 1,1973, in accordance with the Power Contracts.
Hearings on the Company's application for a forty-year license at full operation were completed in 1972 and the license for full operation at approximately 790 megawatts electric (net) was granted by the Atomic Energy Commission, the predecessor of the NRC, on June 29, 1973.
In 1978 the NRC authorized an increase in the output rating of the Plant to approximately 855 megawatts electric (net).
The original Power Contracts between Maine Yankee and its Sponsors re-quire the Sponsors to continue to 'make monthly payments thereunder through 2002 whether or not the Plant is in operation except under cir-cumstances not now applicable which would entitle the Sponsors to cancel the Power Contracts.
Additional Power Contracts, which have the effect of extending the terms of the Power Contracts from 2002 to the end of tne useful life and the completion of decommissioning of the Plant, have been executed by the Company and its Sponsors.
Subject to limited exception including regulatory approval, the Sponsors are also obligated under the Capital Funds Agreements with Maine Yankee to pay their respective shares of the capital requirements of Maine Yankee, not otherwise obtainable, which would include the cost of any modifications to the Plant tha t may be required pursuant to an NRC order.
The Price-Anderson Act is a federal statute providing, among other things, that the maximum liability for damages resulting from a nuclear incident would be the greater of the maximum amount of financial protection re-quired to be carried by a licensee or $700 million, based on the current number of licenses.
As required by the NRC regulations, prior to opera-tion of a nuclear reactor, the licensee of the reactor is requirad to insure against this exposure by purchasing the maximum available private insurance (presently $160 million), the balance to be covered by retro-spective premium insurance and by an indemnity agreement with the NRC.
Under amendments to that Act, owners of operating nuclear facilities may be assessed a retrospective premium of up to,$$ million for each reactor
, 1011A/3262A-11
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Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 3 - LEGAL PROCEEDINGS (continued)
(a) General. (continued) owned in the event of any one nuclear incident occurring at any reactor in the United States, with a maximum assessment of $10 million per year per reactor owned. The Price-Anderson Act will expire on August 1, 1987, for reactors coming into service af ter that date, unless it is extended by the Congress.
In 1986 the Congress considered several bills which would have modified the Act in various ways, but took no final action.
At least one such bill has been introduced in the current session and the Company anticipates that others will be, but cannot predict what action the Congress will take or what effect any such amendment or modification would have on the Company.
In addition to the Price-Anderson Act, the Company carries an all-risk nuclear property damage insurance in the amount of $500 million plus ad-ditional excess nuclear property insurance in the amount of $730 mill-ion.
Of this additional insurance, $610 million is provided by the nuclear electric utility industry's Bermuda-based insurance pool, which provides such coverage from commercial sources and from participating utilities through a combination of current premium and retrospective pre-mium adjustments.
If the insurance pool experiences losses in excess of its capacity to pay them a participating utility may be assessed a retro-spective premium adjustment of up to 7.5 times its annual premium with respect to losses in any policy year.
Based on current premium rates this adjustment could range up to approximately $9.6 million.
The re-maining coverage of $120 million is not subject to retrospective premium adjustments.
(b) Rates.
On April 10, 1985, the FERC approved a settlement agreement in the Company's most recent rate case regarding amendments to the Com-pany's Power Contracts.
Effective January 15, 1985, the settlement agreement provides for (1) an increase in the Company's rate of return on common equity from 10.0% to 15.5%, (2) an increase in annual decommis-sioning collections from $1,826,100 to $4,000,000 (exclusive of any in-come tax liability), (3) a current return on up to 50% of construction work in progress ("CWIP") and nuclear fuci in process ("NFIP") and (4) a change in the depreciation estimate to reflect a plant operating life equal to the NRC operating license life (that is, to the year 2008).
In addition, the settlement agreement further provides that the Company may not request a change in the rate of return on equity or the decoumission-ing collection amount, or an increase in its depreciation rates, to take effect prior to January 15, 1988.
On January 29, 1987, the Connecticut Division of Consumer Counsel filed a complaint with FERC alleging that the allowed rates of return on equity of Maine Yankee, Yankee Atomic Electric Company, Connecticut Yankee Atomic Power Company and Vermont Yankee Nuclear Power Corporation were excessive and should be lowered to reflect current conditions. The Divi-sion further alleged that the Company, unlike other electric utilities, is " virtually risk free" and that its allowed rate of return on equity of 15.5% should therefore be reduced to a level of 100 basis points below 1011A/3262A-12
I r
Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 3 - LEGAL PROCEEDINGS (continued)
(b) Rates. (continued) the generic rate of approximately 11.2% established by FERC.
By letter dated February 5,1987, the FERC staff notified the Company that it had l
been conducting a review of rates of return and expressed a belief that l
the Company's return on common equity "may be excessive in light of pre-vailing market conditions", and subsequently held an informal conference with the Company and other interested parties.
Maine Yankee cannot pre-dict the results of these preliminary actions, but intends to take all reasonable steps necessary to maintain its rate of return on equity at an
~
adequate level.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable.
4 1011A/3262A-13 i
Maine Yankee Atomic Power Company Form 10-K - 1986 PART II ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCK-HOLDER MATTERS The Company's Common Stock, owned by the Company's ten utility Sponsors, is not publicly traded.
Transfer of the Common Stock is restricted by the Company's bylaws.
The Company has paid cash dividends on its Common Stock to its ten utility Sponsors in each year of operation,1973 through 1986.
The following table shows cash dividends paid for years 1986 and 1985:
Shares 1986 1985 Outstanding Per Share Per Share January 500,000
$ 5.20
$ 2.40 April 500,000 5.20 6.00 July 500,000 5.20 5.00 October 500,000 5.00 4.50
$298.
$17.d9.
The payment of dividends on the Company's Common Stock is subject to the following restrictions:
(1)
The Company's First Mortgage Indenture provides that the Company shall not declare or pay any dividend on any class of its stock, except out of earned surplus, and shall not declare or pay any such dividend or directly or indirectly make any payment on account of the purchase, re-demption, acquisition or other retirement of any shares of its stock, unless, af ter givin 8 effect to such declaration or payment, the Company's l
Equity shall be at least 35% of Plant Construction Financing, and the l
Company's Common Equity shall be at least 30% of Plant Construction Financing. The Company was in compliance through December 31, 1986, with the dividend restriction of the First Mortgage Indenture.
(2) The Company's Articles of Incorporation provide that so long as any I
shares of the Company's Cumulative Preferred Stock, 7.48% Series (Sinking Fund) are outstanding, the payment of dividends on the Common Stock (other than dividends in Common Stock) and the making of distributions thereon is limited to 50% of Net Income Available for Dividends on Common Stock for the preceding twelve months if the Common Stock Equity (af ter such action) is less than 20% of Total Capitalization, and to 75% of such Net Income if such Common Stock Equity (af ter such action) is 20% or more i
but less than 25% of Total capitalization. The Company was in compliance l
through December 31, 1986, with the dividend restriction of the Articles l
of Incorporation. 1011A/3262A-14
_._..___m
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Maine Yankee Atomic Power Company Form 10-K - 1986 Item 6 - Selected Financial Data (Dollars in Thousands Except Per Share Amounts) 1986 1985 1984 1983 1982 Selected Income Statement Data:
Electric Operating Revenues
$122,965
$134,785
$128,080
$120,471
$110,000 Earnings Applicable to Common Stock 9,891 9,879 6,730 6,437 6,477 Earnings Per Share of Common Stock 19.78 19.76 13.46 12.87 12.95 Ly Dividends Declared Per Share of Common Stock 19.85 20.70 12.45 12.75 13.00 Selected Balance Sheet Data:
Total Assets
$368,399
$370,427
$371,075
$388,105
$378,650 First Mortgage Bonds 72,970 76,750 81,924 86,294 91,825
(
Notes Payable to MYA yg Fuel Company 8,950 37,850 39,350 47,750 47,750 H s[
o Long-Ters Fuel Disposal Liability 68,331 64,171 59,076 53,656 45,565 g
io*5 Trust Fund to Satisfy Long-Tere Fuel Disposal Liability 17,091 4,167 Redeemable Preferred Stock 8,449 9,055 10,069 10,296 10,7 %
n 8
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Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For a period commencing January 1,
1973, extending for thirty years thereafter, and subsequently extended to 2008, in accordance with the Power Contracts as amended and subject to certain limitations, each Spon-sor receives its entitlement percentage of Plant output and is obligated to pay its entitlement percentage of the Company's total costs, including a return on invested capital, regardless of the level of operation of the Plant.
The following is management 's analysis of certain significant factors which have affected the Company's operating results and financial condi-tion.
Operating Results In 1986 the Plant produced 6.2 billion kilowatt-hours, a record for the Plant, at a cost of 1.98 cents per kilowatt-hour.
This accomplishment was aided by the fact that the Plant did not shut down for refueling dur-ing the year.
The Plant also set a new one-month production record in December 1986 of 622 million kilowatt-hours.
Fuel Amortization increased by $3.1 million from 1985 due to a 16.6% in-crease in generation.
Production levels as well as Fuel Amortization expense showed little change in 1985 from 1984.
Nuclear fuel disposal cost for 1986 of $5.7 million reflects the impact of a Department of Energy ("D0E") refund of $.6 million, resulting from the U.S.
Court of Appeals decision that held DOE improperly based the disposal fee on " gross" rather than " net" generation.
Operation and Maintenance Costs decreased for 1986 by $13.8 million from the $55.0 million incurred in 1985.
This decrease is primarily due to the absence of a refueling and maintenance shutdown in 1986.
On March 27, 1987, the Company shut down for a scheduled 10-week outage for re-fueling and maintenance work.
The last scheduled refueling and mainte-nance shutdown was incurred from August 17 through October 24, 1985.
Rising costs associated with mterials and services used in the Plant's i
continuing operation and maintenance and the cost of meeting additional and ongoing regulatory requirements resulted in the 1985 increase of $4.6
)
million over the 1984 level of $50.4 million.
Depreciation expense of $9.3 million for 1986 was an increase of $.9 million f rom 1985.
This increase reflected the impact of $24.9 million of property placed in service in 1985.
The reduction in Income Tax Expense for 1985 was due primarily to a Federal Energy Regulatory Commission ("FERC") compliance audit adjustment to reverse deferred taxes previously recorded on the equity component of allowance for funds used during construction ("AFC") and allowance for funds used for nucicar fuel ("AFN").
. 1011A/3262A-16
Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
The reduction in Income Tax Expense for 1986 was due primarily to in-creased amortization of investment tax credits associated with nuclear fuel, partially offset by the 1985 FERC compliance audit adjustment which did not recur in 1986.
While the Company's revenue requirements over the next two years will be reduced as a result of the lower corporate federal income tax rate, as provided by the Tax Reform Act of 1986, several aspects of the Act could result in a significant increase in capital requirements for the utility industry and the Company.
These potential increases depend heavily upon the level of future construction activities and relate primarily to the elimination of investment tax credits, the slowing of the depreciation for newly acquired or constructed assets, and, to a lesser extent, the capitalization of additional interest and other costs for tax purposes.
.The Financial Accounting Standards Board has proposed a change in the accounting for income taxes which would generally require adjusting de-ferred tax balances to reflect changes in tax rates.
For utilities, how-ever, such immediate adjustments are currently restricted by income tax law. Since income taxes are a component in the Company's cost of service formula the changes in the tax laws will not affect net income.
MYA Fuel Note Interest decreased by $1.6 million from the 1985 level of
$3.7 million. This decrease, as well as the 1985 decrease of $1.9 mill-ion from the 1984 level of $5.6 million, resulted from lower levels of borrowing coupled with lower interest rates.
Fuel Disposal Liability Interest of $4.2 million in 1986 was a decrease of $.9 million from 1985.
This decrease, as well as the 1985 decrease of
$.3 million, resulted from lower interest rates which were partially off-set by the increased liability from the quarterly compounding of the in-terest payable.
The increase in Other Interest charges for 1986 reflects the impact of higher borrowing levels during 1986, which were partially offset by lower average interest rates.
In 1985 Other Interest charges decreased from 1984 due to lower levels of borrowings for 1985.
Fluctuations in the amount of allowance for funds normally occur as the result of changes in the level of investments in construction and nuclear fuel in process, and/or the rate used for capitalization of these funds.
During 1986, allowancos for funds were substantially lower than in 1985 due to reduced average levels of investments in construction work in pro-gress and nuclear fuel in process, coupled witn lower interest rates.
In 1985 amounts recorded as allowances for funds reflect substantial reduc-tions due to implementation of the rate case settlement whereby up to 50%
of the carrying costs of funds used for construction and nuclear fuel are recovered currently through rates.
An increase in the allowed cost of equity funds mitigated the effect of this reduction in the case of equity AFC, and resulted in a net increase in equity AFN. 1011A/3262A-17
Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 7 - MANAGEMENI'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources Financing and Capitalization i
During 1986 the Company was able to rely on internally generated funds to meet its capital requirements for the Acquisition of Nuclear Fuel and Construction of Electric Property.
Capital requirements for the acquisition of nuclear fuel in 1986 were
$20.2 million.
Requirements for the construction of electric property were $3.7 million in 1986. The Company's current budget for construction of electric property and procurement of nuclear fuel for 1987 is $25.4 million excluding AFN.
See Note 10, " Commitments and Contingencies", for additional information concerning the Company's construction program and the projected Acquisition of Nuclear Fuel requirements for 1987 through 1991.
The Company currently has capital resources available from secured and unsecured lines of credit totaling $91,000,000, of which $28,725,000 was utilized at year-end. See Notes 4, 6 and 7 of Notes to Financial State-ments for further discussion.
The Company, as well as the nuclear electric industry in general, has been challenged by common problems in recent years including those of in-l creasing operating costs and expenditures for Plant modifications attrib-l utable to greater regulatory requirements and uncertainties caused by political involvement in nuclear utility regulation.
It is not possible at this time to predict what impact these uncertainties would have on the future financial operation of the Company.
Liquidity In addition to fundinh its short-term needs the Company must also fund the payment of its spent iuel disposal liability of $50.4 million and accrual of interest from April 7, 1983, through December 31, 1986, which amounts to $18.0 million.
Maine Yankee has entered into an Indenture of Trust with a trustee to provide for payments for future disposal services for spent nuclear fuel used prior to April 7, 1%.
Payment from the trust to the DOE is scheduled for 1998.
Funding r,f the trust is being made by deposits of $4.1 million at least semiannually from December 1985 through May 1997 ' otaling $98.8 million. The estimated liability includ-t ing interest due at time of disposal is approximately $169.6 millfon.
The trust fund deposits plus estimated earnings are projected to meet this total liability.
l l 1011A/3262A-18
9 Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to this Item is submitted as a separate section of this re-port. (See index on page 33 of this report.)
1 ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.
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_19 1011A/3262A-19
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o Maine Yankee Atoalc Power Company Form 10-K - 1986 PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT A.
Directors The directors of the Company and their principal occupations and all positions and offices with the Company are as follows:
Name, Age and Year First Elected Director Principal Occupation Charles E. Monty, 60, 1971, Executive Vice President and Chief President (Principal Execu--
Operating Officer, Central Maine tive Officer) and Director Power Company John B. Randazza, 59, 1975, Vice President, Nuclear Resources, Executive Vice President, Central Maine Power Company Chief Operating Officer and Director William F. Burt, 61, 1978, Assistant to the Chief Executive Director Officer, COM/ Energy Services Company Richard A. Crabtree, 40, Senior Vice President, Finance and 1985, Director Chief Financial Officer, Central Maine Power Company John F. G. Eichorn, Jr., 63, Chairman and Chief Executive 1971, Director Officer, Eastern Utilities Associates Bernard M. Fox, 44, 1986, Executive Vice President and Chief Director Financial and Administrative Officer, Northeast Utilities Frederic E. Greenman, 50, Vice President and General Counsel 1984, Director and Secretary, New England Electric System Thomas A. Greenquist, 58, Chairman and President, Bangor Hydro-1973, Director Electric Company Robert J. Harrison, 55, 1984, President and Chief Executive Director Officer, Public Service Company of New Hampshire e 1011A/3262A-20 l
l
Maine. Yankee Atomic Pvwer Company
.i 4
Form 10-K - 1986 j
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
A.
Directors (continued) i G. Melvin Hovey, 57, 1984, President and Chief Executive Offi-I Director cer, Maine Public Service Company -
i Matthew Hunter, 52, 1983,-
Senior Vice President, Customer Director Servicas'and Livision Operations, j
Central Maine Power Company.
Carroll R. Lee, 37, 1979, Vice President - Engineering and 1
Director Operations, Bangor Hydro-Electric I
Company i
John F. Opeka, 46, 1986, Executive Vice President of Director Engineering and Operations,
{
Northeast Utilities Service Company l
John W. Rowe, 41, 1984,-
President and Chief Executive Director Officer,, Central Maine Power Company i
l Jeffrey D. Tranen, 40, 1984,
'Vice President, New England Power l
Director Company I
Thomas C. Webb, 52, 1986, President _ and Chief Executive Officer, Director Central Vermont Public Service
~
I, Corporation Each of the directors, except John W. Rowe, has been for the _ past five years, and each of the directors is now, an officer or employee of one of the Sponsors or an associated company thereof. - Mr. Rowe was elected President, Chief. Executive Officer and a_ Director of Cen-tral Maine Power Company on December 15, 1983,z effective January 9, 4
1984, and on February 17, 1984, was elected a Director ~ of ' Maine Yankee Atomic Power Company.
Mr. Rowe previously ' served as Senior Vice President of Consolidated Rail Corporation (" Conrail") since 1982 and as Vice President - Law of Conrail since 1980. - Prior to 1980, Mr. Rowe was affiliated with the law fira - of Isham, Lincoln &
[
Beale, Chicago, Illinois.
Each of the Sponsors is represented on the Company's. Board of Direc-tors, but there is no formal arrangement with respect to such repre -
sentation. The directors are elected at the annual meeting of. stock-holders and hold office until their successors are elected and quali.-
fled.
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1011A/3262A-21
Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
B.
Executive Officers The following are the executive officers of the Company with. all positions and offices held:
Name -
Age Office and Year First Elected Charles E. Monty 60 President (Principal Executive Officer) - 1983 Director - 1971 John B. Randazza 59 Executive Vice President, Chief Operating Officer and Director
- 1975 Patrick S. Lydon 44 Vice President, Finance and Admin-istration (Principal Financial Officer) - 1985 Andrew C. Kadak 41 Vice President, Nuclear Services
- 1987 Charles D. Frizzle, Jr.
44 Vice President and Manager of Operations - 1983 Lee E. Maillet 37 Treasurer - 1985 Robert S. Howe 47 Comptroller and Chief Accounting Officer (Principal Accounting Officer) - 1980 William M. Finn 50 Secretary and Clerk --1984 Each of the executive officers has been for the past five years and is I
now an officer or employee of the Company or one of the Sponsors or an associated company thereof.
'The executive officers are elected annually by the Board of Directors and hold office until their successors are elected and qualified.
There are no family relationships between any directors or executive officers nor any arrangements or understandings pursuant to which any were selected as officers or directors.
i 1011A/3262A-22 t
Maine Yankee Atomic Po'wer Company Form 10-X - 1986 ITEM 10 - DIRECTORS AliD EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C.
Other Directorships The following directors of the registrant hold other directorships as follows:
Director Other Directorships Held D
William F.' Burt Vermont. Yankee Nuclear Power Corporation Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company COM/ Energy Services Company Richard A. Crabtree Central Securities Corporation Cumberland Securities Corporation The Union Water-Power Company John F. G. Eichorn, Jr.
Eastern Utilities Associates (Trustee)
Montaup Electric Company EUA Service Corporation EUA Power Corporation Blackstone Valley Electric Company Eastern Edison Company Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company Vermont Yankee Nuclear Power Corporation Bernard M. Fox Connecticut Yankee Atomic Power Company Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company The Institute of Living Connecticut Mutual Financial Services, Inc.
Duncaster, Inc.
Northeast Utilities (Trustee)
The Connecticut Light and Power Company Holyoke Power & Electric Company Holyoke Water Power Company Northeast Utilities Service Company Northeast Nuclear Energy Company Western Massachusetts Electric Company The Quinnehtuk Company The Rocky River Realty Company Research Park, Inc.
The Shelton Canal Company
. 1011A/3262A-23
Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C.
Other Directorships (continued)
Director Other Directorships Held Frederic E. Greenman New England Electric Transmission Corporation New England Hydro-Transmission Corporation New England Hydro-Transmission Electric Company, Inc.
New England Wholesale Electric Company New England Energy Incorporated New England Power Company New England Power Service Company Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company Granite State Electric Company Thomas A. Greenquist Bangor Hydro-Electric Company Merrill Bankshares Company Merrill Trust Company East Branch Improvement Company Fleet Financial Group, Inc.
Robert J. Harrison Vermont Yankee Nuclear. Power Corporation Yankee Atomic Electric Company Public Service Company of New Hampshire Atomic Industrial Forum Numerica Financial Corporation American Heart. Association, NH Affiliate Easter Seal Foundation of NH and VT Federated Arts (of Manchester, NH)
G. Melvin Hovey Maine & New Brunswick Electrical Power Company, Limited Maine Public Service Company Maine Electric Power. Company, Inc.
Matthew Hunter Central Securities Corporation Cumberland Securities Corporation Carroll R. Lee Maine Electric Power Company Charles E. Monty Central Maine Power Company Maine Electric Power Company, Inc.
The Union Water-Power Company Kennebec Water Power Company Central Securities Corporation 1011A/3262A-24
t l
Maine Yankee Atomic' Power Company Form 10-K - 1986 ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued).
4 C.
Other Directorships (continued)
Director Other Directorships Held Charles E. Monty Cumberland Securities Corporation (continued)
Q-M Enterprises, Inc.
Androscoggin deservoir Company Interim, Inc.
Kennebec Hydro Resources, Inc.
Maine Energy Resources,.Inc.
I John F. Opeka Connecticut Yankee Atomic Power Company Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Northeast Utilities Service Company The Connecticut Light and Power Company Western Massachusetts Electric Company The Quinnehtuk Company Holyoke Water Power Company Holyoke Power & Electric Company The Rocky River Realty Company Research Park, Inc.
The Shelton Canal Company Northeast Nuclear Energy Company Opportunities Industrialization Center of New London County John B. Randazza Vermont Yankee Nuclear Power Corporation 1
Connecticut Yankee Atomic Power Company Yankee Atomic Electric Company John W. Rowe Central Maine Power Company Maine Electric Power Company, Inc.
Central Securities Corporation
+
Cumberland Securities Corporation The Union Water-Power Company Key Bank of Central Maine MidSouth Rail Corporation Northcare, Inc.
Maine Chamber of Commerce and Industry _
Forum A MidSouth Corporation
. 10llA/3262A-25
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Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued).
C.
Other Directorships (continued)
Director Other Directorships Held Jeffrey D. Tranen Connecticut Yankee Atomic Power Company
~
Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Thomas C. Webb Central Vermont Public Service Corporation Connecticut Valley Electric. Company, Inc.
Central Vermont Public Service Corpora-tion-Bradford Hydroclectric, Inc.
Central Vermont Public Service Corpora-tion-East Barnet Hydroelectric, Inc.
C. V. Realty, Inc.
Vermont Yankee Nuclear Power Corporation Vermont Electric Power Company, Inc.
l Vermont Electric Transmission Company, Inc.
Yankee Atomic Electric Company.
Connecticut Yankee Atomic Power Company United Vermont Bancorporation Edison Electric Institute Electric Council of New England ITEM 11 - EXECUTIVE COMPENSATION Except for participation by some officers in incentive compensation and benefit plans, the Company's officers and directors are compensated by the Sponsor or other associated company by which they are principally employed.
In complying with regulatory requirements, the Company has reimbursed Central Maine Power Company for services rendered by its employees including Maine Yankee officers and directors.
See Item 13, CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 10llA/3262A-26
Maine Yankee Atomic Power Company.
Form 10-K - 1986 ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS'AND MANAGEMENT The following table shows the ownership of the. Company's 500,000 shares of $100 par value Common Stock, all of which is issued and outstanding and all' of which is held of record and. beneficially.
None. is ' held by management.
1 Amount Percentage Name Owned of Class-a Central Maine Power Company 190,000 shares 38%-
Edison Drive Augusta, Maine' 04336 New England Power Company 100,000 20 25 Research Drive Westborough, Massachusetts 01582 The Connecticut Light and Power Company 60,000 12 i
P.O. Box 270 Hartford, Connecticut 06141 Bangor Hydro-Electric Company 35,000 7
i 33 State Street
[
Bangor, Maine 04401 Maine Public Service Company 25,000 5
209 State Street Presque Isle, Maine 04769 h
Public Service Company of New Hampshire 25,000 5
j 1000 Elm Street Manchester, New Hampshire 03105 Cambridge Electric Light Company 20,000 4
One Main Street Cambridge, Massachusetts 02142-9150 Montaup Electric Company 20,000 1 4 P.O. Box 2333 Boston, Massachusetts 02107 Western Massachusetts Electric Company 15,000 3
P.O. Box'270 Hartford, Connecticut 06141 Central Vermont Public Service Corporation 10,000 2-77 Grove Street Rutland, Vermont 05701 M shares 1QQ%
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- 1011A/3262A-27
l Maine Yankee Atomic Power Company Form 10-K - 1986.
1:
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the construction period, no return was paid to Sponsors : on the money paid by them for Common. Stock, but a return (at the rate of 7% per annum through November 30, 1970, and at the rate'of 10% per annum there-after) was charged to plant in a manner similar to that now followed-by utility companies in ' recording plant. construction costs.
The amo tats so charged were recorded as paid-in capital. This practice terminateo as of December 31, 1972, the last day of ~ the last month of the construction period. These amounts are to be paid to the Sponsors on the redemption of Common Stock.; The Company,'s First Mortgage Indenture and the provi-sions of its Articles of Incorporation relating to its capital stock con-tain various limitations on redemption. -
3 During 1986 and 1985, the Company paid $6,629,675 and $7,612,550, re-spectively, to Yankee Atomic Electric Company, an' associate of several of the Sponsors, for services at cost for its engineering and nuclear ser-4 vices department.
Central Maine Power Company has furnished - the Company
. engineering, administrative and legal services, and furnished certain certain facilities at cost, and electric service at its filed. rates.
During 1986 and 1985, Central Maine Power Company was reimbursed in the amount of $4,562,868 and-$4,462,073, respectively for such services.
It is expected that Yankee Atomic Electric Company and Central Maine Power Company will continue to perform such services-for the Company in the future, for which-they will be reimbursed by.the Company.
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1011A/3262A-28 q
Maine Yankte Atomic. Pawar Corptny Form 10-K 1986 PART IV
-ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) (1) and (2): The response to this portion of Item 14 is submitted as a separate section of this report on page (3) ~ Articles of Incorporation and Bylaws ' Exhibit Docket at Page Incorporated herein by Teference:
3-1 Articles of Incorporation 3.1, 3.3 2-38547 3-2 Amendment to Exhibit 3-1 setting forth terms of Cumulative Preferred Stock 3.2 2-46226 I
3-3 Bylaws, as amended 3.2 2-38547 3-4 Amendment to Exhibit 3-3 3.5 2-46226
~
Incorporated Documents Filed SEC.
Herewith (4) Instruments defining the rights of Exhibit Docket
.at Page security holders Incorporated herein by reference:
4-1 First Mortgage Indenture from the Company _to Old Colony Trust j
Company, Trustee, dated as of November 1, 1970 3.2 1-6554 4
4-2 First Supplemental Indenture from the Company to The First National Bank of Boston, Trustee, dated as of March 1, 1971 4
70-4976 1
4-3 Second Supplemental Indenture from the Company to The First National Bank of Boston, Trustee, dated as of December 1, 1972 4.3 2-46226 r
4-4 Third Supplemental Indenture from the Company to the First National Bank of Boston, Trustee, dated as of February 15, 1984 4.4 Filed herewith:
4-5 Fourth Supplemental Indenture' 59 from the Company to the First National Bank of Boston, Trustee, date'as of April 1, 1986 i
1011A/3262A-29
A Maine Yankee Atomic Power Company Form 10-K - 1986 ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (continued)
(10) Material Contracts Incorporated herein by reference:
I 10 -1 Composite copy of Power Contract between the Company and Sponsors (Included in pro-dated as of May 20, 1968 spectus in 2-46226) 10 Composite copy of Capital Funds Agreement between the Company and Sponsors, dated as of (Included in pro-May 20,~ 1968 spectus in 2-46226) 10-3 Stockholders Agreement dated as of May 20, 1968 among the (Included in pro-Sponsors spectus in 2-46226) 10-4 Loan Agreement between the Company and MYA Fuel Company, B-1 70-5805 dated as of August 26, 1976 B-1 70-6765 as amended B-1 70-7117 10-5
' Eurodollar Revolving Credit Agreement between the Company and a group of international banks, with Union Bank of Switzerland as Agent Bank, dated as of September 30, 1985 B-1 70-7165 10-1.1 Amendment No. 1 to Exhibit 10-1, dated as of March 1,1984 10-1.1 10-1.2 Amendment No. 2 to Exhibit 10-1, dated as of January 1,1984 10-1.2 10-1.3 Amendment No. 3 to Exhibit 10-1, dated as of October 1, 1984 10-1.3 10-1.4 Additional Power Contract be-tween the Company and Sponsors, dated as of February 1,1984 10-1.4 10-2.1 Amendment No.1 to Exhibit 10-2, dated as of August 1,1985 10-2.1 10-6.
Indenture of Trust dated as of -
October 12, 1982 between the Com-pany and Maine National Bank re-
+
lating to decommissioning trust fund.
10-6
)
1011A/3262A-30
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Maine Yankee Atomic Power Company Form 1,0-K - 1986 ITEM 14'- EXHIBITS, FINANCIAL STATEMENT' SCHEDULES, AND REPORTS ON FORM.
8-K (continued)
(10) Material Contracts (continued) 10-7 Indenture of Trust dated as of Oc-tober 16, 1985 between the Company and Norstar Bank of Maine relating to the spent fuel disposal funds.
10-7 (11) Statements re computation of per share earnings.
Not applicable (12) Statements re computation of ratios Not applicable (13) Annual report to security holders Not applicable 4
(18) Letter re change in accounting principles Not applicable (19) Previously unfiled documents Not applicable (22) Subsidiaries of the registrant None (23) Published report concerning matters submitted to vote'of secur-ity holders Not Applicable (24) Consents of experts and counsel i
Not Applicable (25). Power of attorney Not Applicable (28) Additional exhibits None (b) Reports on Form 8-K None
-31~
MN
'Maina Yanken Atcric.Powar Corpsny.
Form 10-K - 1986 SIGNATURES Pursuant.to. the requirements of Section 13 or.15(d) of the Securi-ties Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MAINE YANKEE ATOMIC PCWER COMPANY By s/s Robert S. Howe, Comptroller and Chief Accounting Officer (Principal Accounting Officer)
March
, 1987 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By s/s By Charles E. Monty, President Thomas A. Greenquist, Director (Principal Executive Officer)
March
, 1987 and Director March
, 1987 By s/s Robert J. Harrison, Director By s/s March
, 1987 Patrick S. Lydon, Vice President, Finance and Administration By s/s (Principal Financial Officer)
G. Melvin Hovey, Director March
,.1987 March _
, 1987 By s/s By s/s John B. Randazza, Executive Matthew Hunter, Director Vice President, Chief Operating March
, 1987 Officer and Director March
, 1987 By s/s Carroll R. Lee, Director By s/s March
, 1987 William F. Burt, Director March
, 1987 By s/s John F. Opeka, Director By s/s March
, 1987 Richard A. Crabtree, Director March
, 1987 By s/s John W. Rowe, Director By s/s March
, 1987 John F. G. Eichorn, Jr., Director March
, 1987 By s/s Jeffrey D. Tranen, Director By s/s March.
, 1987 Bernard M. Fox, Director March
, 1987 By s/s Thomas C. Webb, Director By s/s March
, 1987 l
Frederic E. Greenman, Director March
, 1987 1011A/3262A-32
Maine Yankee Atomic Power Company Form 10-K - 1986 Maine Yankee Atomic Power Company
' FORM 10-K - 1986 ITEM 8, 14(a) (1) AND (2)
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES
~
The following financial statements of the registrant required to be in-cluded in Item 8 are listed below:
yalLe Report of Independent Public Accountants 34 Financial Statements:
Statement of Income for each of the three years ended December 31, 1986 35 Balance Sheet at December 31, 1986 and 1985 36 Statement of Capitalization at December 31, 1986 and 1985 38 Statement of Changes in Coramon Stock Investment for each of the three years ended December 31, 1986 39 Statement of Sources of Funds for Acquisition of Nuclear Fuel and Construction of Electric Property for each of the three years ended December 31, 1986 40 Notes to Financial Statements 41 The following Financial Statement Schedules:
Pa ge V - Electric Property and Nuclear Fuel 53 VI - Accumulated Provision for Depreciation i
of Electric Plant and Amortization of Nuclear Fuel 56 VIII-Reserves Exclusive of Reserves for Depreciation 57 i
IX -'Short-Term Borrowings 58 l
All other schedules are omitted as the required information is not ap-plicable or the information is presented in the Financial Statements or 3
related notes.
i 1011A/3262A-33
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s Maine Yankee Atomic Power Company Form 10-K - 1986 i
REPORT OF INDEPENDENT'PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS OF MAINE YANKEE ATOMIC POWER COMPANY:
We.. have examined the. balance sheet and statement of capitalization of MAINE YANKEE. ATOMIC POWER COMPANY (a Maine corporation).as of Decem-ber.31, 1986 and 1985, and the related statements of income, changes in common stock investment and sources of funds for acquisition of nuclear fuel and construction of electric property for each of the three years in the period ended December 31, 1986.
Our examinations were made in ac-cordance with generally ' accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial position of MAINE YANKEE ATOMIC POWER COMPANY as of Decem-ber 31,1986 and 1985, and the results of its operations and its sources of funds for acquisition of nuclear fuel and construction of electric-property 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.
Our examinations were made for the purpose of forming an opinion on the basic financial statements taken as a whole.
The schedules listed in the index of financial statements and schedules are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements.. These schedules have been sub-jected to the auditing procedures applied in the examinations of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Boston, Massachusetts, February 18, 1987.
I.
1011A/3262A-34
Maina Yankas Ate,1c Pcwsr Company Fcrs 10-K - 1986 Maine Yankee Atomic ' Power Company STATEMENI 0F INCOME (Dollars in Thousands except Per Share Amounts)
)
Year Ended December 31, 1986 1985 1984 ELECTRIC OPERATING REVENUES
$122,965
$134,785 4128,080 OPERATING EXPENSES Fuel Amortization (Note.1) 33,203 30,128 29,759 Disposal Cost (Note 1) 5,687 5,567
-5,320 Operation.
37,527 39,809 36,895 Maintenance 3,716 15,240 13,534 Depreciation (Note 1) 9,305 8,379 10,357 Decommissioning (Note 1) 4,000 3,918 1,826 Taxes Federal and State' Income (Note 2) 1,974 3,200 3,851 4
Local Property 5,784 5,349 5,250 i
Total Operating Expenses 101,196 111,590 106,792 I
OPERATING I'NCOME 21,769 23,195 21,288 OTHER INCOME (EXPENSE)
Allowance for Equity Funds Used During Construction (Note 1) 74 431 410 For Nuclear Fuel (Note 1) 234 437 336 l
Other, Net.
49 (275) 131 i
INCOME BEFORE INTEREST CHARGES 22,126 23,788 22,165-INTEREST CHARGES Long-Term Debt (Note 5) 6,060 6,572 7,306 MYA Fuel Notes (Note 6) 2,092 3,677 5,614 Fuel Disposal Liability (Note 1)
Other Interest Cnarges (Notes 4 and 7).
4,159 5,095 5,420 488 137 840 Allowance for Borrowed Funds Used During Construction (Note 1)
(45)
(314)
(439)-
For Nuclear Fuel (Note 1)
(1,153)
(1,935)
(4,071)
Total Interest Charges 11,601 13,232 14,670 NET INCOME 10,525 10,556
=7,495 Dividends on Preferred Stock 634 677 765 i
EARNINGS APPLICABLE TO COMMON STOCK
$_J_d91
$ 9.879
$ 6.730 SHARES OF COMMON STOCK OUTSTANDING 1QQ2,QQQ 1QQ,i,Q9.Q
}QQa.SSS s
EARNINGS PER SHARE OF COMMON STOCK
$1hZg
- $1hZ),
$11dQ, DIVIDENDS DECLARED PER SHARE OF COMMON STOCK
$1L.D.1
$1Q 19,
$11t41 The accompanying notes are an integral part of these financial statements.
1 i 1011A/3262A-35 I
Maine Yankee Atomic Power Company Form 10-K - 1986 Maine Yankee Atomic Power Company
[
BALANCE SHEET (Dollars in Thousands)-
ASSETS December 31,
[
1986 1985 ELECTRIC PROPERTY, at Original Cost (Note 5) (Sch. V)
$316,167
$314,392 Less: Accumulated Depreciation (Note 1) (Sch. VI) 110,895 101,630 205,272-212,762 Construction Work in Progress 3,375 1,463 Net Electric Property 208,647 214,225 NUCLEAR FUEL, at Original Cost (Note 1)-(Sch.-V)
Nuclear Fuel in Reactor 131,720-131,720 Nuclear Fuel-Spent 166,032
-166,032 Nuclear Fuel-Stock' 37,280 4,407 335,032 302,159 Less: Accumulated Amortization (Note 1)
(Sch. V1) 255,035 221,832 79,997 80,327 Nuclear Fuel in Process 15,006 27,683 Net Nuclear Fuel 95,003
'108,010 Net Electric Property and Nuclear Fuel 303,650
-322,235 CURRENT ASSETS Cash (Note 4) 33 1,912 i
Accounts Receivable 14,318 16,834 Materials and Supplies, at Average Cost 7,798 6,429 t
Prepayments 3,514 3,064 i
Total Current Assets 25,663 28,239 DEFERRED CHARGES AND OTHER ASSETS (Note 1)
Plant Decommissioning and Fuel Disposal-Funds in Trust 4
32,133 14,347 Accumulated Prepaid Income Taxes 6,302 4,463 Other Deferred Charges and Other Assets 651 1,143 Total Deferred Charges and Other Assets 39,086 19,953
$M
$370.427 The accompanying notes are an integral part of these financial statements.
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1011A/3262A-36 1
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4 Maine Yankee Atomic. Power Company
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-Form 10-K - 1986
[-
Maine Yankee Atomic Power Company-BALANCE SHEET (Dollars in Thousands)
STOCKHOLDERS' INVESTMENT AND LIABILITIES ~
December 31,
{.
1986 1985 l
CAPITALIZATION (See Separate Statement)
Common Stock Investment
$ 67,888
$ 67,857.
Redeemable Preferred Stock 8,449
-9,055 Long-Term Debt 72,970 76,750 1
Total Capitalization 149,307 153,662 LONG-TERM FUEL DISPOSAL LIABILITY (Note 1) 68,331 64,171 NOTES PAYABLE TO MYA FUEL COMPANY (Note 6).
8,950 37,850 l
CURRENT LIABILITIES i
Notes Payable to Banks -(Notes 4 and 7) (Sch. IX) 19,775' j
Current Sinking Fund Requirements (Note 5) 258 Accounts Payable 8,254 7,569 Fuel-Disposal Cost Payable (Note 1) 1,805
~1,236-'
Dividends Payable 2,383 2,769 Accrued Interest and Taxes 2,759
-2,462~
Other current Liabilities 237 228 j.
Total Current Liabilities 35,213 14,522 i
COMMITMENTS AND CONTINGENCIES (Note 10) f RESERVES AND DEFERRED CREDITS l
Plant Decommissioning Reserve (Note 1)
(Sch. VIII) 15,440 10,846 Deferred Credits Accumulated Deferred Income Taxes (Note 2)
'68,595.
69,220 Unamortized Investment Tax Credits (Note 2) 14,479-11,916 1
. Unamortized Gains on Reacquired Debt (Note 1).
7,714 8,090 Other Deferred Credits 370 150 Total Reserves and Deferred Credits 106,598 100,222
$M
$3.ZD 4.2.7.
1
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The accompanying. notes are an integral part of these financf.a1' statements. -
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Maine Yankee Atomic Power Company Form 10-K - 1986 l
Maine Yankee Atomic Power Company STATEMENT OF CAPITALIZATION (Dollars in Thousands)
I Decemb'er 31, i-1986 1985
+
i COMMON STOCK INVESTMENT I-Common Stock, $100 Par Value, 500,000. Shares Authorized and Outstanding
$ 50,000
$ 50,000 j.
Other Paid-in Capital 16,774'
~16,783 Capital Stock Expense (149)
(164)
Gain on Redemption of Preferred Stock 1,071 1,003 Premiums on Preferred Stock 124 133 Retained Earnings '
68 102' 67,888 67,857-REDEEMABLE PREFERRED STOCK - 7.48% Series,
.4100 Par Value, Authorized 170,000 Shares, Outstanding 84,490 in 1986 and 90,545 j
in 1985 (Note 8) 8,449 9,055 1
LONG-TERM DEST (Note 5)
First and Genera 1' Mortgage Bonds Series A - 9.10 % due May 1, 2002 39,931 42,758 l
Series B - 8 1/2% due May 1, 2002 25,481-26,484 Series C - 7 5/8% due May 1, 2002
-7,632 7,847
.73,044 77,089 i
Less: Current Sinking Fund Requirements 258-Unamortized Debt Discount, Net of Premium 74 81
.~ 72,970 76,750 i
Total Capitalization
$jdjta1QJ.
$D.,Ljjl
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7 The accompanying notes are an integral part of these financial statements. -
1011A/3262A-38 i
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Maine Yankee Atomic Power Company Form 10-K - 1986 Maine Yankee Atomic Power Company STATEMENT OF CHANGES IN COMMON STOCK INVESTMENT for the Three Years Ended December 31, 1986 (Dollars in Thousands)
Amount at Retained-Shares Par Value Other, Net Earnings Total Balance-December 31, 1983 500,000
$50,000
$17,502 68
$67,570 Add (Deduct):
7,495 7,495 Net Income Cash Dividends Declared on -
Common Stock (6,225)
(6,225)
(765)
(765)
Preferred Stock Redemption of Preferred Stock 49 49 Capital Stock Expense 11 11 Balance-December 31, 1984 500,000 50,000 17,562 573 68,135 Add (Deduct):
Net Income 10,556 10,556 Cash Dividends Declared on -
Common Stock (10,350)
(10,350)
(677)
(677)
Preferred Stock Redemption of Preferred Stock 210 210 (17)
Capital Stock Expense (17)
Balance-December 31, 1985 500,000 50,000 17,755 102 67,857 Add (Deduct):
Net Income 10,525 10,525 Cash Dividends Declared on -
Common Stock (9,925)
(9,925)
Preferred Stock (634)
(634)
Redemption of Preferred Stock 68 68 (3)
(3)
Capital Stock Expense Balance-December 31, 1986 500.000
$50.000
$17.820 68
$67.888 The accompanying notes are an integral part of these financial statements. 1011A/3262A-39
n
-Maint Yankas'Atcaic Pawsr Cu pany Form 10-K -~1986 Maine Yankee Atomic Power Company i-STATEMENT OF SOURCES OF FUNDS'FOR ACQUISITION
[
OF NUCLEAR FUEL AND CONSTRUCTION OF ELECTRIC PROPERTY' j
Year Ended December 31, i
1986 1985 1984 FUNDS PROVIDED j'
Internal. Sources f
From Operations Net Income _
$10,525
$10,556
$ 7,495 j.
Fuel Amortization 33,203 30,128 29,759 Depreciation and-Decommissioning 13,305 12.,297 12,183 Amortization of Deferred Charges 625 6,081 781 Deferred Income Taxes and Investment Tax Credits, Net 98 (734)-
2,177 Allowance for Equity. Funds Used for i
Nuclear Fuel and During Construction (308)
(868)
(746) l Long-Term Fuel Disposal Interest, Net of AFN Recovery and laterest Income I
in' Trust 2,862 3,820 3,569 I
60,310 61,280 55,218 j
Less:
Sinking Fund and Early Redemption of Long-Term Debt 4,045 5,137 4,175 s
Preferred Stock 606 1,014 227 Dividends on Preferred Stock 634 677 765 Dividends on Common Stock 9,925 10,350
~6,225' Plant Decommissioning Fund Deposits 4,269 3,508 1,938 i
Fuel Disposal Trust Deposits 12,353 4,118 j.
Other, Net (499)
(1,678)
M 23) 31,333 23,126 10,202-i (Increase) Decrease in Working Capital, Exclusive of Notes Payable to Banks and Sinking Fund Requirements i
Cash and Receivables
_4,395 (253) 14,976 Other Current Assets (1,819)
(841)
(715)
Other Current Liabilities 1,174' (3,681)
(227) 3
]
3,750 (4,775) 14,034 Net Available from Internal Sources 32,727-33,379 59,050 External Sources (Uses) i Increase (Decrease) in Notes Payable to
'l MYA Fuel Company (28,900)
(1,500)
(8,400).
(16,175)
Banks 19,775 Net Decrease in Funds from External i
Sources (9,125)
(1,500)
(24,575) l
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$21,i&Z1
$M nh.Z1 i
FUNDS USED FOR ACQUISITION OF NUCLEAR FUEL AND CONSTRUCTION OF ELECTRIC PROPERTY Acquisition of Nuclear Fuel
$20,196
$17,291
$18,935 i
Allowance for Equity Funds Used for I
Nuclear Fuel (234)
(437)
(336)'
1 Construction of Electric Property 3,714 15,456 16,286 Allowance for Equity Funds Used During Construction (74)
(431)
(410)
$M 8M
$M_
)
The accompanying notes are an integral part of these' financial ~ statements.
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i Maine Yankee Atomic Power Company Form 10-K - 1986 i
Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES The Company:
The Company owns and operates a pressurized-water nuclear powered electric generating plant with a current rated net capacity ; of approximately 855 megawatts (the " Plant").
The Plant commenced commercial operation on January 1, 1973.
The following New England electric utilities own all of the Company's common stock:
Ownership Sponsor / Participant Interest Central Maine Power Company 38%
New England Power Company 20 The Connecticut Light and Power Company 12 Bangor Hydro-Electric Company 7
Maine Public Service Compaay 5
Public Service Company of New Hampshire 5
Cambridge Electric Light Company 4
Montaup Electric Company 4
Western Massachusetts Electric Company 3
Central Vermont Public Service Corporation 2
Aqq%
For a period commencing January 1, 1973, extending for thirty years thereafter, and subsequently extended to 2008, in accordance with the Power Contracts as amended and subject to certain limita-tions, each participant receives its entitlement percentage of Plant output and is obligated to pay its entitlement percentage of the Company's total costs, including a return on invested capital, regardless of the level of operation of the Plant.
Under amendments to the Power-Contracts es approved by the Federal Energy Regulatory Commission ("FERC") order issued. April 10, 1985, the Company increased the amount of collections for future decom-missioning costs, its rate of return on common equity was increas-ed, and other ratemaking practices were changed, as of January 15, 1985. See Note 3, Ratemaking Matters.
Regulation: The Company is -subject - to the regulatory authority of the FERC, the Nuclear Regulatory Commission ("NRC") and the Public
-Utilities Commission of the State of Maine as to rates, account-ing, operations and other matters. 1114A/5429A -
i
. Maine Yankee Atomic Power Company Form 10-K - 19d6~
Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 1..
SUMMARY
OF SIGNIFICANT' ACCOUNTING POLICIES (continued)
Depreciation: Depreciation is provided using. a' composite remaining life method designed to fully depreciate the original cost of elec-tric Plant. over the Plant operating -life.
The FERC's most recent order extended the ' depreciation recovery period effective January 15, 1985, to correspond to the NRC operating license life,-that is, j
through October 2008.
Previously the depreciation recovery period extended through May 2002.- Under the composite method,' at the time
]
depreciable property is retired, the original cost, ; plus cost of j
removal, less salvage, of such property is charged to accumulated j
depreciation.
Decommissioning:
The Company has accounted for decommissioning costs in accordance with FERC orders. The Company began collecting 2
annual decommissioning charges of $1,826,100 beginning December 7, 1981.
The FERC's most recent order increased the allowed decommis-sioning charge to an annual level of $4,000,000 (exclusive of any income tax liability), effective January 15,.1985.
In addition, the settlement agreement provided that the Company ma'y - not request a change in the decommissioning collection amount to take effect prior to January 15, 1988.
r The Company's most recent study done in 1983 and adjusted in 1984 i
estimated decommissioning costs of $115,467,000 (in 1983 dollars).
4 The Company intends to update its decommissioning study and reevalu-1 ate the adequacy of the annual charge.in the second half of 1987.
Funds being collected for decommissioning are deposited in a trust account by the Company pending their ultiuate usa, and are included l
in Deferred Charges and Other Assets on the accompanying balance sheet.
Deferred Charges:
In response to events and NRC orders requiring the Company to undertake significant analyses of specified operating j.
design procedures and equipment, the Company adopted a policy of j
deferring and amortizing over future periods the costs of unusual i
and irregularly occurring studies and inspections.
The Company amortizes these costs over three years, starting on the completion 1
date of the project.
Such costs -are recoverable under the terms of the Power Contracts.
At December-31, 1986, all such costs were i
fully amortized.
I Amortization of Nuclear Fuel: The cost of nuclear fuel in the reac-tor' is amortized to Fuel Expense based on the ratio of energy pro' duced during the period to the estimated total core capability. 1114A/5429A-42
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Form 10-K - 1986 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS.
1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4 Fuel Disposal Cost:
In 1983 the Company entered into a. contract with the Department of Energy (" DOE") for disposal of its spent nuc-lear fuel, pursuant to which a fee of $1.00 per megawatt-hour is assessed against current generation and is paid to the DOE quarter-ly.
The Company also has an obligation of $50,367,000 with respect l
to. generation prior to April 7,1983, all of which the Company has already collected from its customers. -The Company has elected under terms of this contract to make a single payment of this obligation prior to the first delivery of spent fuel to DOE, scheduled to begin in 1998. Interest on the obligation accrues at the 13-week Treasury.
Bill rate compounded on a quarterly basis from April 7, 1983,-through the date of the actual payment.. Interest accrued through Decem-ber 31, 1986, amounted to $17,964,000.
The Company has formed a trust to provide for payment of this long-term fuel obligation.
Funding of the trust is being made by deposits 'of approximately
$4,100,000 at least semiannually beginning December 1985 and. contin-
]
uing through May 1997 totaling approximately $98,800,000. The trust j
fund deposits plus estimated earnings are proje'eted to meet the -
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total estimated liability of $169,600,000.
Allowance for Funds Used During Construction ("AFC") and Allowance for. Funds Used for Nuclear Fuel ("AFN"):
Under the Company's rate case settlement agreement, the Company earns a current return on up to 50% of Construction Work in Progress ("CWIP") and 50% of Nuclear l
Fuel in Process ("NFIP"), subject.to certain limitations.
(See Note i
3, Ratemaking Matters). The Company records the. net. cost of borrow-i ed funds and the. allowed rate of return on equity funds used to finance its remaining construction and nuclear fuel. acquisition
}
costs as AFC and AFN.
The - amount of. the ' allowance recorded is i
determined by multiplying the applicable average monthly balance. of CWIP and NFIP by the weighted average cost rate of the capital used to finance the respective additions.
i i
The following table contains the ' rates used for the most recent three annual periods:
e 1
AFC AFN on CWIP on NFIP 1986 9.99%-
8.64%
i 1985 9.91
.10.74 1
1984 6.17 10.56
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Form 10-X - 1986 1
Maine Yankee Atomic Power Company i
NOTES TO FINANCIAL STATEMENTS 1
1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Unamortized Gain or Loss on Reacquired Debt:
Gains and losses on bonds. reacquired to satisfy sinking fund, requirements of First Mortgage Bonds are deferred and amortized to income over the re-maining original terms of the applicable series as prescribed by the
{'
Uniform System of Accounts of the FERC.
2.' INCOME TAX EXPENSE The components of federal and state income ' taxes reflected in the Statement of Income are as follows:
i Year Ended December 31, 1986 1985 1984
~
(Dollars in Thousands)
Federal 1
Current 541
$ 2,386 956 j
Deferred (2,104)
(1,862)
(1,043).
1 Investment tax credits, net 2,562 1,868 2,640 999 2,392 2,553 i
State Current 1,335 1,548 718 l
Deferred (360)
(740)-
580 l
975 808 1,298 i
Total federal and state i
income taxes
$ 1.974
$M
$M The Company provides deferred taxes for the tax effects of all tim-ing differences, primarily accelerated depreciation of property and i
nuclear fuel for tax purposes.
Investment tax credits utilized to reduce federal. incom,e taxes cur-rently payable are deferred and amortized over the lives of the re-j lated assets.
At December 31, 1986, the Company bid approximately
$1,525,000 of additional investment tax credit, net of the 17.5%
reduction required by the Tax Reform Act of 1986, available and ex-pected to reduce federal income taxes otherwise payable in 1987.
A U.S. Internal Revenue Service (" IRS") agent conducting a review of d
the Company's income tax returns for 1982.and 1983 has -informed the 1
3 Company he is taking exception to, among other things, a 1983 deduction for $50,367,000 of its 'long-term permanent fuel disposal.
j obligation and associated interest thereon, and $4,800,000 of cur-rent DOE spent fuel obligations for generation subsequent-to April 7,
. l 1114A/5429A-44
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Maine Yankee Atomic Power Company Form 10-K.- 1986 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS 2.
INCOME TAX EXPENSE (continued) 1983.
If the IRS were to prevail, this adjustment would signifi-cantly affect reported current, and deferred income taxes and. invest-ment tax credits. Management believes that the deductions taken are proper and intends to contest any proposed disallowance.
i i
The following table reconciles the statutory federr.1 income tax rate to the rate determined by dividing the total federal income tax ex-pense by income before that expense.
i Dollars in Thousands 1986 1985
-1984 1
Amount 1
Amount Amount Statutory federal income tax rate
$ 5,301 46.0 4 5,956 46.0 $ 4,622 46.0 l
Increase (reduction) in taxes resulting from:
i Amortization of invest-
[
ment tax credits (4,896) (42.4)
(2,167) (16.7) (2,669) (26.6)
AFC/AFN equity adjustment per FERC compliance audit (1,736). (13.4)
Other 594 5.1 339 2.6 600 6.0 i
Calculated rate
$ _Jjj, jd 4 @
M$M 21,1 3.
RATEMAKING MATTERS k.
On April 10, 1985, the FERC approved a settlement agreement.in the l
Company's rate case regarding amendments to the Company's Power Con-i tracts.
Effective January 15, 1985, the settlement agreement pro-j' vided for (1) an increase in the Company's - rate of return on common i
equity from 10.0% to 15.5%, (2) an increase in annual decommission- -
i ing' collections from $1,826,100 to-$4,000,000 (exclusive of any i
income tax liability), (3) a current return on up to 50% of CWIP and.
I NFIP and (4) a change in the depreciation recovery period to reflect a Plant operating life equal to the NRC operating license life (that is, to the year 2008).
In addition, the settlement agreement pro-vides that the Company may not request a change in the rate of i
return on equity or the decommissioning collection amount, or an 1
increase in its depreciation rates, to take effect prior to Janu-ary 15, 1988.
On January 29, 1987, the Connecticut Division - of Consumer Counsel l
filed a complaint with FERC alleging that the allowed rates of re-j turn on equity of Maine Yankee, Yankee Atomic Electric Company,- Con-necticut Yankee Atomic Power Company and Vermont Yankee Nuclear Pow-j er Corporation were excessive and should be lowered to reflect cur-111 A a / t Agi)a ~ A E r.
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l Maine Yankee Atomic Power Company Form 10-K - 1986 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS i
j 3.
RATEMAKING MATTERS (continued) rent conditions.
The Division further alleged. that. the Company, unlike other electric utilities, is " virtually risk free" and that i
its allowed rate of return ^ on equity of 15 5% should therefore be reduced i:o a level of 100 basis points below the generic rate of approximately 11.2% established by FERC.
By letter dated February 2
I 5, 1987, the FERC staff notified the. Company that it had been con-
-ducting a review of, rates of return and expressed a belief that the i
Company's return on common equity "may be excessive in light. of pre-valling market conditions", and subsequently. held an informal - con-I ference with the Company and other interested parties. Maine Yankee cannot predict the results of these preliminary actions, but intends j
to. take all reasonable steps necessary to maintain its rate of re-turn on equity at an adequate level.
j 4.
NOTES PAYABLE TO BANKS i
The Company had bank lines of credit totaling. $21,000,000 as of i
December 31, 1986, of which $13,000,000 required an annual fee - of 3/8 of 1% of the'line, which changed to 1/4 of 1% as of January 1, 1987; and $7,000,000 required 1/2 of 1% of the line until June 11, 1986, and 3/8 of 1% thereafter.
The remaining $1,000,000 line re-2 quires a compensating balance of 10% of - the. line.
As.. of Decem-l ber 31, 1986, $775,000 was outstanding on these lines of credit.
5.
FIRST HORTGAGE BONDS The annual sinking fund requirements of the First Mortgage Bonds currently outstanding for each of the years 1987 through 1991 amount to $4,775,000.
Bonds repurchased in advance amounced to $4,881,000 at December 31,1986, and $5,611,000 at December 31, 1985.
'I l
Under the terms of the Indenture securing the First Mortgage Bonds, 2
substantially all electric plant of the Company is subject to a j
first mortgage lien.
6.
MYA FUEL COMPANY NOTES j
The Company has a Loan Agreement covering the issuance of up to j
$50,000,000 principal amount of promissory notes to MYA Fuel Com-l pany, a wholly-owned subsidiary of Broad Street Contract Services,
?
Inc.
Borrowings are secured by the Company's nuclear fuel invest-ment and the Coupany pays a commitment fee at the annual rate of 1/d of 1% of the line.
Certain other information relating to this loan arrangement is as follows:
! -1114A/5429A-46
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Maine Yankee Atomic Power Company Form 10-K - 1986 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS 6.
MYA FUEL COMPANY NOTES (continued)
Year Ended December 31, 1986 1985 1984 (Dollars in Thousands)
Promissory notes outstanding
$ 8,950
$37,850
$39,350 Average daily outstanding borrowings
$23,948
$37,560
$46,575 Highest level of borrowings
$42,500
$46,350
$47,750 Annual interest rate at end of periods
- 8.22%
10.12%
10.38%
Effective average annual interest rate
- 8.74%
9.79%
12.05%
- Includes administrative and commitment fees.
In September 1985 the Sponsors of the Company agreed to guarantee unconditionally the payment obligations of the Company under a Loan Agreement with MYA Fuel Company. Each Sponsor's guarantee is limit-ed to the percentage of any payment default corresponding to its respective percentage under its Power Contract and Capital Funds Agreement with Maine Yankee.
The amended Loan Agreement also provides that, in the absence of an Event of Default (as defined) or a Terminating Event (as defined),
the arrangement will require not less than one year's notice of termination after September 23, 1987. After that date, the arrange-ment will automatically extend for additional six-month periods un-til terminated by either party.
7.
EURODOLLAR REVOLVING CREDIT AGREEMENT Effective September 30, 1985, ti.
Company entered into a Eurodollar Revolving Credit Agreement with a group of major. international banks under which the Company may borrow amounts up to $20,000,000 to meet its short-term requirements.
Each loan is due and payable one year af ter the date of the loan (unless an earlier agreement termination date applies), and bears interest based on the LIBOR rate plus 3/4 percent.
A quarterly commitment fee of 3/8 of 1% per annum is re-quired on the unused portion of the line.
The loans are secured by a second lien on the Company's nuclear fuel inventory (excluding nuclear fuel inserted in the reactor) and on certain rights under its Power Contracts and Capital Funds Agreements requiring payments or financing of fuel-related costs. The Agreement may be terminated on one year's notice by either the banks or the Company.
As of December 31, 1986, $19,000,000 was outstanding under this agreement, i
leaving an unused amount of $1,000,000, 1 1114A/5429A-47
)
. ~
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i.;.
Maine Yankee, Atomic Power Company Form 10-K - 1986 I
Maine' Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS 8.
REDEEMABLE PREFERRED STOCK i:
l The Company must redeem and cancel 6,000 shares annually of the 7.43% Series Preferred ' Stock at par value.
At the election of the Company, an additional 6,000 shares may be redeemed and cancelled at par on each redemption date.
The optional provision is not cumula-tive.
The Company may. redeem, in whole or in part, any. additional shares of _ the 7.48% Series Preferred Stock upon not less than thirty or more than fifty days' notice at $105.24 per. share on or - before l
December 31, 1987, and at amounts decreasing to $100.00 per share thereaf ter, in each case plus accrued dividends.
4 Preferred Stock repurchased in advance and not cancelled amounted to-i 11,510 shares at December 31, 1986, 11,455 shares at December 31, 1
1985, and 7,310 shares at December 31, 1984.
1 9.
PENSION PLANS The Company has two noncontributory pension plans which cover sub-I stantially all full-time employees.
The Company's policy.is to fund pension expense on an annual basis, including amounts sufficient to amortize unfunded prior service costs over 30 years.
Pension ex-
]
pense approximated $647,000 for 1986, $557,000 for 1985 and $569,000 l
for 1984.
January 1, 1986 1985 i
i Actuarial present value of accumulated plan benefits:
1 Vested
$ 823,579
$ 717,277 Nonvested 502,645 355,552 3
81aaMdLad/d
$1ald.da$d2 4
Net assets available.for benefits
$3.ajjy2
$3.004.541 ja
(*
j The assumed rate of return used to calculate the actuarial present value of accumulated plan benefits was 7.25%.
The Financial Ac-counting Standards Board has enacted new standards on pension ac-counting and disclosure which must be implemented in 1987. The Com-j pany does not anticipate that the adoption of these new standards will have a material effect on the 1987 financial statements.
a lil4A/5429A-48
. -. - ~ -
3 Maine Yankee Atomic Power Company Form 10-K - 1986 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS 9.
PENSION PLANS (continued)
In addition-to providing pension benefits, the Company provides cer-tain health care and life insurance benefits for substantially all of its retired ' employees.
These and similar benefits for active employees are provided.through insurance companies acting either as an insurer or plan administrator, and premiums are based 'on the bene-fits paid during the year.
The-Company recognizes the cost of pro '
viding these benefits through charging expense in the current per-
)
iod. Health care and life insurance benefits, substantially all of i
l which relates to active employees, aggregated approximately $456,000 in 1986 and $481,000 in 1985.
10.
COMMITIIENTS AND CONTINGENCIES Construction:
The Company anticipates construction expenditures to amount to $11.0 million for 1987.
Nuclear Fuel: The Company anticipates nuclear fuel expenditures of
$14.4 million for 1987 (exclusive of AFN) and $89.5 million for the l
period 1988 through 1991 (exclusive of AFN).
)
I l
l Proposed - Maine Yankee Referendum: - In January 1986, the DOE identi-l fled two locations in Maine among ' 12 sites in seven eastern states -
under consideration as a high-level nuclear waste - disposal facility on the basis of a computer analysis of geological characteristics.
Some opponents of the location of any such high-level ' nuclear waste disposal facility in Maine have linked the operation of a nuclear-generating facility'in Maine with the determination of an appropriate site for ' such a disposal facility and have ' sought to close the Plant. The DOE announced in May 1986 that it-had suspended consider-ation of such a site in the eastern United States; however, DOE has subsequently announced that it _ may be required 'to reconsider such a site in the eastern United States.
Public concern was further in-tensified by an accident in -April 1986 resulting in. the release of radioactivity from the Chernobyl nuclear generating facility -in the Soviet Union.
As a ' result of such heightened public concern, an initiated petition calling for the closing of the Plant as of July 1988 is expected to be presented to Maine voters in November of 1987.
Because of this concern and other reasons, management cannot predict the outcome of-the referendum. If it passes, however, Maine Yankee would pursue the legal remedies available to it, including among others the. doctrine tha t the pervasive federal regulation of the nuclear industry pre-empts any state-ordered shutdown, and that any suen action by. a 1114A/5429A-49
w Maine Yankee Atomic Power Company Form 10-K - 1986' Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 10. COMMITMENTS AND CONTINGENCIES (continued) 2
. state,. if found valid, would invoke the protection of the Fifth Amendment to the United States Constitution requiring compensation to the owners for the taking of. property.
In addition, Maine Yankee could pursde various ratemaking remedies.
Management 1 cannot predict the timing or outcome of these legal challenges.
If all legal 3[
remedies were unsuccessful, the Company as licensee would be required to provide the full amount needed for decommissioning the Plant under the 1982 Maine decommissioning statute, but if the Company could not provide. the funds, the statute provides. that the stockholders of Maine Yankee would be jointly. and severally responsible for the balance. Under the terms of a contract with the DOE for the disposal of spent nuclear fuel, the Company is obligated to pay DOE - $50.4 -
million plus interest to the expected date of payment in 1998 for the l
ultimate disposal of spent nuclear fuel generated prior to April. 7, i
1983.
If the Plant were fo: eed to shut down before. the expected l,
payment date and the Company had not accumulated -or could not provide sufficient funds to make the payment to DOE, then DOE might make a claim against the stockholders of Maine Yankee for such payment.
1 Management believes that the Plant is a safe and economical source of base-load electric power, and intends to take all reasonable steps to provide for its continued operation.
Nuclear Fuel Storage:
Under the terms of a license amendment approv-
[
ed by the NRC in 1984, the present storage capacity of the spent fuel pool at the Company's Plant will be reached in.1996 and af ter 1992 the available capacity of the pool would not accommodate a full core removal. The Atomic Safety and Licensing Board has approved the Com-pany's proposal to test a further modification which would, if imple-mented, permit storage capacity through the operating life of the Plant.
That implementation would require further approval from the i
NRC.
j A Maine statute provides that after July 1,1992, spent nuclear fuel may not be stored on-site for a period exceeding three years from the date of removal of the fuel from the reactor.
The Company estimates i
that shipments of spent nuclear fuel to the DOE will not commence until 1998.
The Company cannot predict whether, or to what extent, the Maine statute and storage capacity limitations referred to above may be modified and whether, or to what extent, they will affect the operation of the Plant.
Nuclear Insurance: The Price-Anderson Act is a federal statute pro-viding, among other things, that the maximum liability for damages resulting from a nuclear incident would be the greater of the maximum
- 1114A/5429A-50
b..
4 1
i f.
Maine Yankee Atomic Power Company Form 10-K - 1986 3
Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 10. COMMITMENTS AND CONTINGENCIES (continued).
amount of financial protection required to be carried by a -licensee or $700 million, based on the current number of licenses. - As requir-ed by the NRC regulations, prior to operation of a nuclear reactor, the licensee of the reactor is required ~ to insure against ' this ex-posure by purchasing - the maximum available private insurance (pre-sently $160 million), the balance to be covered by retrospective pre-alue insurance and by - an indemnity agreement with the NRC.
Under.
amendments to that Act, owners of operating nuclear facilities may be assessed a retrospective premium of up to $5 million for each reactor
- owned in the -event of any one nuclear incident occurring _ at any reactor in the United States, with a maximum assessment of $10- mill-ion per year per reactor owned.
The Price-Anderson Act will expire on August 1, 1987, for reactors coming into service after that date, unless it is extended by the Congress.
In 1986 the: Congress consid-ered several bills which would have modified the Act in various ways, but took no final action. At least one such bill has been introduced in the current session and the Company anticipates that others will
- be, but cannot predict what. action the Congress will take or what effect any such amendment or modification would have on the Company.
In addition to the Price-Anderson Act, ' the Company carries l an all-risk nuclear property damage insurance in the amount of $500 million 4
plus additional excess nuclear property insurance in the amount of
$730 million.
Of this additional insurance, $610 million is provided j
by the nuclear electric utility industry's. Bermuda-based insurance j
pool,. which provides such coverage from commercial sources and from participating utilities through a combination of. current premium and retrospective premium adjustments. If the insurance pool experiences losses in excess of its. capacity to pay them a participating. utility may be assessed a retrospective premium adjustment of up to 7.5 times its annual premium with respect to losses in any policy year.
Based 1
on current premium rates this adjustment could range up to approxi-mately $9.6 million.
The remaining coverage of $120 million is not subject to retrospective premium adjustments.
J 4
Y 1 1114A/5429A-51 3
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s Maine Yankee Atomic Power Company Form 10-K - 1986 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 11. UNAUDITED QUARTERLY FINANCIAL DATA Unaudited quarterly financial data pertaining to the results of oper-ations are shown below.
Quarter Ended March 31 June 30 September 30 December 31 (Dollars in Thousands, Except Per Share Amounts) 1986 Electric Operating Revenues
$30,292
$30,691
$28,211
$33,771 Operating Income 5,904 5,689 5,334 4,842 Net Income 2,777 2,732 2,757 2,259 Earnings Per Share of Common Stock 5.24 5.14 5.20 4.20 1985 Electric Operating Revenues
$32,347
$33,789
$30,847
$37,802 Operating Income 5,668 6,128 5,315 6,084 Net Income 2,622 2,797 2,668 2,469 Earnings Per Share of Common Stock 4.90 5.26 5.00 4.60 12.
TRANSACTIONS WITH ASSOCIATED COMPANIES During 1986 and 1985. the Company paid $6,629,675 and $7,612,550, respectively, to Yankee Atomic Electric Company, an associate of several of the Sponsors, for, services at cost for its engineering and nuclear services department.
Central Mina Power Company has furnished the Company certain engineering, administrative and legal services, and furnished certain facilities at cost, and electric service at its filed rates.
During 1986 and 1985, Central Maine Power Company was reimbursed in the amount of $4,562,868 and
$4,462,073, respectively, for such services.
It is expected that Yankee Atomic Electric Company and Central Maine Power Company will continue to perform such services for the Company in the future, for which they will be reimbursed by the Company. 1114A/5429A-52
s Maine Yankee Atomic Power Company
-Form 10-K - 1986 Schedule V (1986)
Maine Yankee Atomic Power Company ELECTRIC PROPERTY AND NUCLEAR FUEL For The Year Ended December 31, 1986 (Dollars in Thousands)
Balance at Retire Balance Beginning Additions ments Transfers &
at End of Period at Cost or Sales Other Charges of Period Electric Property Organization 7
8'-
7 Miscellaneous Intangible Plant 510 510 Land and Land Rights 478 478 Structures and Improvements 65,940 25 65,965-Reactor Plant Equipment 133,940 641 134,581 Turbogenerator Units 82,021 416 82,437 Ac'cessory Electric Equipment 16,993 459 17,452 Miscellaneous Power Plant Equip.
9,643 261-(27) 9,877 Substation Equip.
4,786 4,786 Miscellaneous Electric Property 74 74 Unfinished Construction 1,463 3,714 (1,802) 3,375 Total Electric Property
$315.855
$ 5.516
$1g[)
$ (1.802) $319.542 I
Nuclear Fuel Nuclear Fuel in Reactor
$131,720' 4'-
$131,720 Nuclear Fuel in
+
(32,873) 15,006 Process 27,683 20,196 Nuclear Fuel -
Spent 166,032
- 166,032 Nuclear Fuel -
Stock 4,407 32,873 37,280 Total Nuclear Fuel
$329.842
$20.196
$350.038 r
i l L 1011A/3262A-53 i
e
Maine Yankee Atomic Power Company Form 10-K.- 1986 Schedule V (1985)
Maine ' Yankee Atomic Power Company.
ELECTRIC PROPERTY AND NUCLEAR FUEL For The Year Ended December 31, 1985 (Dollars in Thousands)
Balance at Retire
' Balance Beginning Additions ments Transfers-&
at End of Period at Cost or Sales Other Charges of Period Electric Property Organization 7
7 Miscellaneous Intangible Plant 510 510 Land and Land Rights 485 (7) 478 L
Structures and Improvements 63,907 2,036 (3) 65,940 Reactor Plant Equipment 129,285 5,922 (1,267) 133,940 Turbogenerator Units 70,608 16,097 (4,684) 82,021 Accessory Electric Equipment 16,578 415 16,993 l
Miscellaneous Power Plant Equip.
9,246 397 9,643 Substation Equip.
4,786 4,786 Miscellaneous 4
Electric Property 74 74 i
Unfinished l
Construction 10,867 15,'456 (24,860) 1,463
+
Total Electric Property
$306.353
$40.316 $( M ) $( M ) $315.855 Nuclear Fuel Nuclear Fuel in
^
Reactor
$125,031
$ 6,689
$131,720 Nuclear Fuel in Process 56,588 17,290 (46,195) 27,683 Nuclear Fuel -
Spent 126,404 39,628 166,032 Nuclear Fuel -
Stock 4,529 (122) 4,407 Total Nuclear Fuel
$312.552
$17.290 $
$329.842 l
1 1011A/3262A-54
e Maine Yankee Atomic Power Company Form 10-K - 1986 Schedule V (1984)
Maine Yankee Atomic Power Company 4
ELECTRIC PROPERTY AND NUCLEAR FUEL For The Year Ended December 31, 1984 (Dollars in Thousands)
Balance at Retire Balance Beginning Additions ments Transfers &
at End of Period at Cost or Sales Other Charges of Period Electric Property Organization 7
7 Miscellaneous Intangible Plant 510 510 Land and Land Rights 487 (2) 485 Structures and Improvements 63,249 658 63,907 Reactor Plant Equipment 116,954 12,364 (33) 129,285 Turbogenerator Units 66,869 3,739 70,608 Accessory Electric
~
Equipment 15,684 894 16,578 Miscellaneous Power Plant Equip.
7,168 2,081 (3) 9,246 Substation Equip.
4,786 4,786 Miscellaneous Electric Property 74 74 Unfinished Construction 14,316 16,571 (20,020) 10,867 Total Electric Property
$290.104
$36.305
$(g) $(20.020) $306.353 Nuclear Fuel Nuclear Fuel in Reactor
$113,691
$ 11,340
$125,031 Nuclear Fuel in Process 37,802 18,935 (149) 56,588 Nuclear Fuel -
Spent 95,365 31,039 126,404 Nuclear Fuel -
Stock 46,759 (42,230) 4,529 Total Nuclear Fuel
$293.617
$18.935
$312.552
, 1011A/3262A-55
s Maine Yankee Atomic Power Company Form 10-K - 1986 Schedule VI Maine Yankee-Atomic Power Company ACCUMULATED PROVISION FOR DEPRECIATION OF ELECTRIC PLANT AND AMORTIZATION OF NUCLEAR FUEL For The Years Ended December 31, (Dollars in' Thousands)
Balance Balance Beginning Charged Other at End of Period to Income
- Retirements Changes of Period 1986 Electric Property
$101.630
$ 9.305 (27)
$E)
$110.895 Nuclear Fuel
$221.832
$33.203
$255.035 1985 Electric Property
$ 99.306
$ 8.379
$(5.954)
$M)
$101.630 Nuclear Fuel
$191.705
$30.127
$221.832 1984 Electric Property
$ 89.037
$10.357 (36)
$3)
$_99.306 Nuclear Fuel
$161.946
$29.759
$g
$191.705
- Excludes amounts collected through depreciation rates for Decommissioning and Permanent Disposal Cost. See Note 1 of Notes to Financial Statements for the Company's depreciation and fuel amortization policies.
. 1011A/3262A-56
9 Maine Yankee Atomic Power Company Form 10-K.- 1986 Schedule VIII Maine Yankee Atomic Power Company RESERVES EXCLUSIVE OF RESERVES FOR DEPRECIATION ~
For the Years Ended December 31, (Dollars in Thousands)-
Balance at Charged Charged Deductions Balance Beginning to to Other From~
at Close of Period Income Accounts Reserves of Period 1986 Decommissioning Reserve
$10.846
$1dQQ
$15.440-1985 Decommissioning Reserve
$ 6.446
$Ljtla
$g
$10.846 1984 Decommissioning Reserve
$ 4.220
$1QA
$ 6.446
. 1011A/3262A-57
l:
l m-i Maine Yankee Atomic Power Company l
Form 10-K - 1986 l
Schedule IX SHORT-TERM BORROWINGS (Dollars in Thousands) t l
l Column C Weighted Column F Column A Column B Average Column D Column E Weighted Daily Category of Balance at Interest Maximum Amount Average Amount Average Short-Term End of Rate Outstanding Outstanding Interest Rate l
f, Borrowings Year at End of Period During the Year ' During the Year During the Year i'
l Year Ended l'
December 31, 1986 Banks (1)
$19,775 6.74%
$20,100
$ 5,515 6.99%
y e
Yea'r Ended
- f December 31, 1985 Banks (1)
$ 6,825 620 9.70%
y R.
ui E E Year Ended o
- r - >
December 31, 1984 Banks (1)
$18,500
$ 6,241 11.75% g, j) g f M %-
oen
$ G 8' 8:5 (1) See Notes 4 and 7 of Notes to Financial Statements oo 4
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6 t
MAINE YANKEE ATOMIC POWER COMPANY TO THE FIRST NATIONAL BANK OF BOSTON, Trustee FOURTH SUPPLEMENTAL INDENTURE Dated as of April 1, 1986 a
e 6
4 RELATING TO MODIFICATION OF THE INDENTURE
. ~ -
s a
a THIS FOURTH. SUPPLEMENTAL INDENTURE, dated as of April 1, i
1986 between MAINE YANKEE ATOMIC POWER COMPANY, a Maine
~
corporation, with its principal office in Augusta, Maine (hereinafter generally referred to as the Company), and THE FIRST= NATIONAL BANK OF BOSTON, a national banking association with its principal office at 100 Federal Street, Boston,_ Massachusetts 02110, as Trustee under the First Mortgage Indenture, as supplemented, referred to in the first recital hereof (the Trustee from time to time under the First Mortgage Indenture being hereinafter generally referred to as the Trustee).
Whereas, the Company heretofore duly executed and delivered to Old Colony Trust Company, as Trustee *, its First Mortgage Indenture dated as of November 1, 1970 (hereinafter generally referred to as the Original Indenture, and sometimes ref, erred to, with each and every other instrument, including this Supplemental Indenture, which the Company, 4
pursuant to the provisions thereof, may execute with the Trustee and which is therein stated to be supplemental to the Original Indenture, as the Indenture), recorded in the t
Office of the Secretary of State of Maine, File No. 146534, Lincoln County Registry of Deeds, Book 678, Page 1, and Sagadahoc County Registry of Deeds, Book 373, Page 777, to which this instrument is supplemental and the Company heretofore duly executed and delivered to The First National 1
Bank of Boston,.as successor Trustee, an indenture supplemental, dated as of March 1,~1971, to and in confirmation of the Original Indenture, recorded in the Office of the Secretary of State of Maine, File No. 152116, Lincoln County Registry of Deeds, Book 686, Page 48, and Sagadahoc County Registry of Deeds, Book 374, Page 1003, a second indenture, dated as of January 1, 1973, supplemental to and in confirmation of the Original Indenture, recorded in the Office of the Secretary of State of Maine, File No.
207526, Lincoln County Registry of Deeds, Book 757, Page 247, and Sagadahoc County Registry of Deeds, Book 388, Page 1
380 and a third indenture dated as of February 15, 1984, supplemental to'and in confirmation of the original Indenture, recorded in the Office of the Secretary of State of Maine, File No. 588974, Lincoln County Registry of Deeds, Book 1179, Page 207, and Sagadahoc County Registry of Deeds, Book 658, Page 33, whereby all the properties of the Company 1
whether then owned or thereafter acquired, with certain reservations,_ exceptions and exclusions fully _ set forth in the Original Indenture, were given granted, bargained, sold, i
transferred, assigned, pledged, mortgaged, warranted, conveyed and confirmed to the Trustee, its successors and l
assigns, in trust upon the terms and conditions set forth therein to secure bonds of the Company issued and to be issued thereunder, and for other purposes more particularly j
specified therein; and e
i 1
I
s i
Whereas, Section 16.01 of the Original Indenture.
provides that the Company, when authorized by a resolution of the Board of Directors of the Company, and the Trustee may from time'to time enter into an indenture or indentures supplemental to the Original Indenture for the purpose of amplifying the description of property intended to be pledged thereby and of modifying any of the conditions of the Original Indenture, provided, however, that such changes do not adversely affect or diminish the rights of the holders of any bonds; and 4
Whereas the Board of Directors of the Company has authorized the execution of this Fourth Supplemental Indenture and'the delivery hereof to the Trustee for the purpose of modifying the Original Indenture; and Whereas, in all other respects the terms, conditions and provisions of Section 16.01(i) have been complied with; and Whereas, all acts and things necessary to make this Fourth Supplemental Indenture the valid, binding and legal obligation of the Company in~accordance with its terms have been done; Now, therefore, in consideration of the premimes, and of the sum of one Dollar duly paid by the Trustee to the Company, and of other good and valuable consideration, the receipt whereof is hereby acknowledged, it is hereby j
covenanted, declared and agreed by the Company and the Trustee as follows:
Section 1.
Modifications.
(a) Section 6.13 of the original Indenture as amended by the Third Supplemental Indenture dated as of February 15, 1984 is hereby further amended by inserting at the end thereof a new clause which reads ", and except that the Capital Funds Agreements may be amended to provide that the funding of spent fuel disposal costs is a capital requirement of the Unit," so that said subsection (c)(ii) shall read as follows:
"(ii) none of the Capital Funds Agreements or Power Contracts will be cancelled or terminated, whether or not pursuant to their terms, or. voluntarily amended except as hereinafter provided and except that the Power Contracts may be amended (x) to provide for the collection of decommissioning costs in addition to the operating expenses otherwise collectible pursuant to Section 7 thereof and to permit subsequent adjustments in the amount of
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l such decommissioning costs collectible thereunder from time to time, (y) to change the percentage set forth in the definition of " composite percentage" in Section 7 thereof to an amount not less than nine and eight-tenths percent (9-8/10%), and (z) to conform the references to the Uniform dystem of Accounts prescribed by the Federal. Power Commission for Class A and Class B Public Utilities and Licensees to the definition cf " Uniform System" in Article I of this Indenture, and except that the Capital Fundi Agreements may be amended to provide that the funding of spent fuel e
disposal costs is a capital requirement of the Unit."
(b) Part II(2) of Schedule A to the Original Indenture is hereby amended by deleting the period at the end thereof and adding the clause "and the Company's rights to receive and collect funds to provide moneys for funding the Maine Yankee Spent Fuel Trust dated as of October 16, 1985."
Section 2.
No Liability for Recitals.
The recitals contained herein shall be taken as the statements of the Company and the Trustee assumes no responsibility for the correctness of the same.
The Trustee makes no representations as to the value of the mortgaged and pledged property or any part thereof, or as to the title of the Company thereto; or as to the validity or adequacy of the security afforded thereby and by the Indenture, or as to the.
validity of the Indenture or of the bonds or coupons issued thereunder.
The Trustee shall not be responsible for the effect, authorization, execution, delivery or recording of this Fourth Supplemental Indenture, except as expressly set forth in the original Indenture.
The Trustee shall not be taken impliedly to waive by this Fourth Supplemental Indenture any right it would otherwise have.
Section 3.
The Original Indenture.
This Fourth Supplemental Indenture is expressly made supplemental to, and shall form a part of, the Original Indenture, as heretofore supplemented, and is subject to all of the,
)
conditions, covenants and warranties in the Original Indenture, as heretofore supplemented, contained, and the use of terms and expressions herein is in accordance with the definitions and constructions contained in the Original Indenture, as heretofore supplemented.
This Fourth' Supplemental Indenture shall become void.when the Original Indenture shall be void.
e,,se-r-i.-w-v.v---eve +5*--w+%ww
e s i
e Section 4.
Effect of Headings.
The headings of the different Sections of this Fourth Supplemental Indenture are inserted for convenience of reference, and are not to be taken to be any part of those provisions, or to control or affect the meaning, construction or effect of the same.
Section 5.
Counterparts.
This Fourth Supplemental Indenture is being simultaneously executed in several counterparts, all of which are identical, and all said counterparts are to be deemed to constitute but one and the same instrument.
b t.
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IN WITNESS WHEREOF, Maine Yankee Atomic Power Company has caused this Fourth Supplemental Indenture to be executed on its behalf by its President or one of its Vic'e Presidents and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary; and The First National Bank of Boston, as Trustee, has caused this Fourth Supplemental Indenture to be executed on its behalf by one of its Vice Presidents and its corporate seal to be hereunto affixed and attested by one of its Assistant Secretaries; all as of the day and year first above written.
MAINE Y E ATOMIC POWER COMPANY By M'
Patrick S.
L$on, Vice President, Finance and administration
[Corporat al]
C Attest:
/-
Secret %ry N
Signed, sealed and delivered on behalf of Maine Yankee Atomic Power Company in the presence of:
THE FIRST NATIONAL BANK OF BOSTON N bas $
e By x
< cZYG/d Paul D.
- Allen, Vice President
[ Corporate Seal) i Attest:
2 s %
-m4 Assistant Secretary -
Assistant Cr';ior Signed, sealed and delivered on behalf of The First National Bank of Boston in the presence of:
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County of Kennebec on this 8th day of April, 1986, before me appeared Patrick S.
Lydon, Vice President, Finance and Administration of Maine Yankee Atomic Power Company, to me personally known, who executed the foregoing instrument on behalf of said corporation and acknowledged the same to be his free act and deed in said capacity and the free act and deed of Maine Yankee Atomic Power Company.
WITNESS my hand and offici,rT heak the day and year first above written.
}j
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^
W11Mam M. Finn Notary Public My Commission Expires:
9/15/91 (Notarial Seal)
Commonwealth of Massachusetts SS.
County of Suffolk on this the isov day of April, 1986, before me appeared Paul D. Allen, a Vice President of The First National Bank of Boston, to me personally known, who executed the foregoing instrument on behalf of said corporation and acknowledged the same to be his free'act.and deed in said capacity and the free act and deed of The First National Bank of Boston.
WITNESS my hand and official seal the day and year first above written.
3,, AMbh "
Douglas P. Adams Notary Public My Commission Expires:
10/28/88 (Notarial Seal).
A-A