ML20244D019
| ML20244D019 | |
| Person / Time | |
|---|---|
| Site: | Maine Yankee |
| Issue date: | 04/14/1989 |
| From: | Whittier G Maine Yankee |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| GDW-89-139, MN-89-58, NUDOCS 8904210102 | |
| Download: ML20244D019 (67) | |
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MaineYankee-RELIABLE ELECTRICITY FOR MAINE SINCE 1972 -
' EDISON DRIVE. AUGUSTA. MAINE 04330.(207) 622 4868 l
1.
-April 14, 1989 HN-89-58 GDH-89-139 UNITED STATES NUCLEAR REGULATORY COMMISSION Attention:
Document Control Desk Hashington, D. C. 20555 4
References:
'-(a) License No. DPR-36 (Docket No. 50-309)
Subject:
Annual' Financial Report
~Gentiemen:
Pursuant to 10 CFR 50.71(b), please find enclosed a copy of the 1988 Annual Financial Report (Form 10K) for Maine Yankee Atomic Power Company.
The original report is on file with the Securities and Exchange Commission.
Very truly yours, MAINE YANKEE bbNV G. B. Whittier, Manager Nuclear Engineering & Licensing GDH:DVG
Enclosure:
MYAPCo Form 10-K for the Fiscal Year Ended December 31, 1988 c: Mr. Richard H. Nessman Mr. Hilliam T. Russell Mr. Patrick H. Sears Mr. Cornelius F. Holden l
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' 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 Decemb u 31. 1988 1-6554 MAINE YANKEE ATOMIC POWER COMPANY (Exact name of registrant as specified in its charter) l 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: PJ2-623-3521 Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange Title of each class on which registered First Mortmane Bonds. Series A (Sinkina Fund) 9 l0% Due 2002 New York Stock Exchange. Inc.
u First Mortrane Bonds. Series B (Sinkina Fund) 8 1/2% Due 2002 New York Stock Exchange. Inc.
First Mortmane Bonds. Series C (Sinkina Fund) 7 5/8% Due 2002,_
New York Stock Exchange. Inc.
Indicate by check mark whether the registrant (1) has filed all re-ports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for auch shorter period that the registrant 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 registrant 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 Outstanding Class an of March 15. 1989 Common Stock, $100 par value 500,000 DOCUMENTS INCORPORATED BY REFERENCE 1
No documents are incorporated in this report by reference.
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.4 Maine Yankee Atomic Powar Company Form 10-K - 1988 Maine Yankee Atomic Power Comoany i
Form 10-K - 1988 f
I TABLE OF CONTENTS j
Page Item Number
- Item 1.
Business....
1 Item 2.
Properties..
6' Item 3.
Legal Proceedings......................
7 Item 4.
Submission of Matters to a Vote of Security Holders...
10 Part II Item 5.
Market for the Registrant's Common Equity and Related Stockholder Matters..
11 Item 6.
Selected Financial Data.....
12 Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
13 Item 8.
Financial Statements and Supplementary Data.
17 Item 9.
Changes in and Disagreements with Accountants on Accounting and financial Disclosure.
40 Part III Item 10. Directors and Executive Officers of the Registrant.
41 Item 11. Executive Compensation.................... 4Y Item 12. Security Ownership of Certain Beneficial Owners and Management 50 Item 13. Certain Relationships and Related Transactions.
51 Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
52 54 Signatures..
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4 Maina Yankaa Atomic Pswer CompIny Form 10-K - 1988 PART I-ITEM 1 - BUSINESS (a). General. ' Maine Yankee ' Atomic Power Company (the " Company" or ~ "Ma'ine Yankee"), incorporated under the laws of Maine on January 3, 1966, cwns 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.
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 i
capacity and output of the Plant and pay therefor, beginning on January i
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 invests.ent in the Plant and amounts estimated to be sufficient to decommission the Plant), interes?. on its debt and a return on its equity.
The Company and its Sponsor.: have also. executed the Additional Power Contract which extends the term of the Power Contract, as. amended, from 2002 to the end of the useful life and the completion of decommissioning of the Plant.
Each Sponsor has also agreed under a Ceyital Funds Agreement with the Company to provide a like percentage of the Company's capital requirements not obtained from other sources, subject to obtaining necessary 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) Problama Affectina the Industry and the Comoanv.
Substantial controversy exists concerning nuclear generating
- plants, which intensified when events in 1979 at the Three Mile Island Nuclear Unit No.
2 in Pennsylvania ("TMI") caused increased concern about the safety of such plants.
This. prompted a rigorous reexamination of safety related equipment and operating procedures in all nuclear facilities and caused-the United States. Nuclear - Regulatory Commission ("NRC") to promulgate numerous requirements in response' to TMI, including both near-term modifications to upgrade certain safety systems and instrumentation and l
lor.ser-term desi:;n changes, ranging from equipment changes to operational support..
The Company has made the modifications required by the NRC.
World-wide concern was increased by an accident in April 1986 resulting in the release of radioactivity from the Chernobyl nuclear generating facility in the Soviet Union, and concern in Maine was intensified in early 1986 by the identification of two locations in Maine as potential sites, later rejected, for high-level nuclear waste disposal facilities by the federal Department of Energy (" DOE").
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-4 Maina Ycnkes Atonic Pawsr Comp:ny Form 10-K - 1988 ITEM 1 - BUSINESS'(continued)
(b)(1) Probl=== Affectina'the Industry and'the Comoanv. (continued)
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-i pects of the disposal of nuclear wastes and the decommissioning of nuclear generating facilities have been regulated under federal and Maine law and further regulation is likely in this area.
Public concern about the operation of nuclear generating facilities and the disposal of nuclear wastes has sometimes resulted in public ' campaigns to close such facilities.
See Item 1(g),
- BUSINESS,
" Nuclear Referenda".
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 finan-cial condition of the Company.
(b) (ii) Seabrook.
Stockholders of the Company owning an aggregate of approximately 41% of the entitlement percentages 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 Company of New Hampshire ("PSNH"), which is entitled to.approximately 5%
of the output of the Plant, filed a petition for protection under Chapter 11 of the federal bankruptcy laws on January 28, 1988.
PSNH had paid in full the amount due under its Power Contract with the Company threugh January in advance of its filing on January 28, and has paid its post-filing obligations to the Company as they have become due.
The Company expects that PSNH will make future Power Contract payments when due, although there is no firm assurance as yet that it will do so.
Other Stockholders of the Company entitled in the aggregate to approximately 52% of the Plant's output (including Central Maine Power Company, whose entitlement is 38%) sold their interests in the Seabrook project in November 1986.
The Company cannot predict what effect the l~
bankruptcy filing may have on the Seabrook project.-
A default by a Stockholder of the Company in making payments under the Power Contract or Capital Funds Agreement 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 two other major credit agreements unless cured within applicable grace periods by the defaulting Stockholder or other Stockholders.
Although no assurances can be given, the Company believes that in light of the operating history of the Plant and the relatively low cost of power produced by the Plant, it is unlikely that there would be a default by a Stockholder that would materially and adversely affect the continued operation of the Plant. - _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ _ - _ _ _ _ _ _ _ _ _.
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c i-h Maine Yankee Atomic Power Company Form 10-K - 1988 ITEM 1 - BUSINESS (continued) l
' (c) Ra.tulation and Environmental Matters.
The Plant is subject to exten-sive' regulation by the NRC, which is empowered to authorize the siting, construction and operation of nuclear reactors after consideration of public health, safety, environmental and antitrust matters.
The United States Environmental Protection Agency
(" EPA") administers programs established under the Federal Water Pollution Control Act and the Clean Air Act which affect the Plant.
The former Act establishes a national objective of complete elimination of discharges of pollutants into the nation's water and creates a rigorous permit program designed to
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achieve this objective.
The latter Act empowers EPA to estabitsh 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 senaration, 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 devices.
The National Environmental Policy Act of 1969 ("NEPA") requires that de-tdled 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 generatien 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.
The Company is. alsr subject to regulation as to environmental ' matters and land use by varions state authorities in Maine.
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 j
of a unit be temporarily or permanently reduced.
See "ProbJems Affecting the Industry and the Company" above.
The Sponsors of the Company have agreed, subject to certain 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-l tal costs. - _ _ _ _ _ = -
- 2-Maine Yankee Atomic Power Company Form 10-K - 1988 i
ITEM 1 - BUSINESS (continued)
(d) Ruclear Fuel Discosal.
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 nucletr fuel produced in private nuclear reactors.
In addition, Maine Yankee is obligated to make a payment of $50,367;%J 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, but for which a reserve was not funded.
The Company has elected under terms of this contract to make a single payment of this obligation prior to the first delivery of spent fue) to DOE, scheduled to begin no earlier than 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 payment.
Current costs incurred by the Company under this contract are recoverable by it under the terms of its Power Contracts with its sponsoring utilities.
The Company has accrued and billed $27,185,000 of interest cost for the period April 7, 1983, through December 31, 1988.
Maine Yankee has formed a trust to provide for payment of its long-term spent fuel obligation, and is funding the trust with deposits of approximately $4,100,000 at least semiannually beginning December 1985 ar.d continuing through May 1995, which is expected to total approximately
$85,881,000. The estimated liability, including interest due at the time of disposal, is expected to be approximately $159,458,000.
The Company estimates that trust fund deposits plus estimated earnings will meet this total liability if operations continue without material changes.
The trust funds are included in Deferred Charges and Other Assets on the accompanying balance sheet.
Under the terms of a license amendment approved by the NRC in 1984, the present storage capacity of the spent fuel pool at the Plant will be reached in 1999 and after 1996 the available capacity of the pool would not accommodate a full core removal.
The Atomic Safety and Licensing Board has approved the Company's proposal to demonstrate a further modification which would, if implemented, permit storage capacity through the operating life of the Plant.
That implementation would require further approval from the NRC. A Maine statute 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 that shipments of spent nuclear fuel to the DOE will not commence until 1998 at the earliest. The Company cannot predict whether, or to what extent, the Maine statute and storage capacity limitations referred to above may be modified and whether, or to l
what extent, they will affect the operation of the Plant.
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-Maine Yankee Atomic Power. Company Form 10-K - 1988 ITEM 1 - BUSINESS (continued)
(e) Decommissioning.
The NRC currently recognizes three decommissioning rethods - 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 ' Federal Energy Regulatory Commission ("FERC") staff policy, the complete dismantling and removal method.
Through 1988 the Company had -
l collected $23,789,769 for decommissioning.
The total Decommissioning l
Fund balance as of December ' 31,1988, was $27,678,424 (including. interest L
earned)' and is included in Deferred Charges and Other Assets on the accompanying balance sheet.
The Company's most recent study, conducted in 1987. by an external engineering consultant, estimated decommissioning costs of $178,098,000 l
(in mid-1987. dollars).
The Company recognizes the relative uncertainty of decommissioning, the changing technology of decommissioning and.the possibility of new requirements of law, and therefore recognizes the need to monitor and adjust decommissioning collections through supplemental.
rate filings.
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 original decommissioning financing plan in l
1984. ' On March 24, 1989, Maine Yankee filed a motion to amend its original plan with updated information and requested that the plan, as amended,; be approved.
The PUC has not yet approved the plan and the Company is unable to predict whether the plan ' will - be approved.
The statute further provides that if the decommissioning trust fund =is insufficient to decommission the Plant the Company as licensee would.be responsible for the deficiency, 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 deposited in. trust by the Company pending their ultimate use.
For further information on decommissioning, see Note 1 of the Notes to Financial Statements.
(f) Low-level Waste Discosal.
In 1986 the federal Low-Level Radioactive Waste Policy Amendments Act (the "Act") was enacted.
The 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 increasing surcharges on waste disposal until 1992.
After 1992 the operating disposal sites would be permitted to refuse to accept wastes generated outside their states or compact regions.
In 1987 the Maine Legislature established the Maine Low-Level Radioactive Waste Authority, which was created to provide for a low-level radioactive i
vaste facility for Maine. Pursuant to the statute, the Authority is _ - _ _ _ _ - _ - _ _ _
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Maine Yankee Atomic Power Company Form 10-K - 1988 i
i ITEM 1 - BUSINESS (continued)
(f) Low-level Waste DisDosal. (continued)
I assessing Maine Yankee, as the only nuclear plant in Maine, for the current statutory assessment of $10,000,000 over a four-year period ending on March 1, 1992, to be used for the planning, siting, licensing and construction of such a facility.
Through December 31, 1988, the Company has been assessed $1,500,000.
In 1985 Maine voters approved an initiated proposal which requires voter approval prior to construction or operation of any facility 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 continue to ship its wastes to present off-site facilities for as long as possible in order to preserve that capacity.
The Company cannot predict, however, the long-term effects of the Maine legislation.
(g) FBLclear Referenda.
On November 3,
1987;.
the Maine electorate defeated in referendum by a margin of 59 percent to 41 percent an initiated bill which was intended to shut down the Company's nuclear gen-erating plant on July 4, 1988.
This was the third attempt within an eight-year period to close the Company's nucle ar generating plant through the referendum process.
A similar measure was defeated in Massachusetts in 1988.-
(h) Emnlovees.
At December 31, 1988, the Company had 334 full-time employees.
ITEM 2 - PROPERTIES l
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
pressurized 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 original turbine generator was supplied by Westinghouse Electric Corporation.
Stone &
l Webster Engineering Corporation, as ent,ineer and constructor, designed I
and constructed the Plant.
The nuclear design and construction of the Plant were supervised by the Nuclear Services Division of Yankee Atomic Electric Company, which has supervised the design and construction of l
other nuclear generating plants in New England. Construction of the 1 l l
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i Maine Yankee Atomic Power Company Form 10-K - 1988 y
ITEM 2 --PROPERTIES (continued)
)
Plant, which -began in 1967, was completed in 1972 except for certain discharge temperature control facilities designed to meet the requirements of the Maine 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.
On August 13, 1988, one of the two main transformers at the Plant failed, resulting in a Plant outage and subsequent reduced level of operation.
On Aust t 27, a spare transformer installed in place of the failed transformer also failed, causing a continuation of reduced operation.
The second failed' transformer was repaired at the Plant and made ready for reenergization during the refueling shutdown from October 15, 1988 to December 16,- 1988.
Since the refueling shutdown the Plant has, with limited exceptions, operated at full output, but will be without a spare main transformer until the second quarter of 1989 when the first failed transformer is expected to be repaired and returned to the Plant.
In the interim, _ if either installed transformer should fail, the Plant would be incapable of operating at a level of more than approximately 65 percent of its anticipated output..However, in such event payments would continue under the Power Contracts.
ITEM 3 - LECAt PROCEEDINGS (a) General.
The operation of existing nuclear units and the construc-tion of nuclear units in the United States continue to be a subject of public controversy. Various groups have filed law suits and participated in administrative proceedings claiming that the present state of nuclear technology presents risks to public health and safety and to the environ-ment.
In addition, - certain of these groups have proposed restrictive legislation relating to nuclear power.
Some of the claims made by such
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_ groups, if they should prevail, or the existence of the controversy it-self, could cause substantial modifications to or extended shutdowns of plants presently in operation.
See Item 1, BUSINESS, " Problems Affecting the Industry and the Company" above.
The Maine Yankee Plant was declared commercial on December 28, 1972, 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, (n June 29, 1973.
In 1978 the NRC authorized an increase in the output rating of the Plant to approximately 855 megawatts electric (net). -
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Maine Yankee Atomic Power Company Form 10-K - 1988-ITEM 3'- LEGAL PROCEEDINGS (continued)
(a) General. (continued)
The original Power Contracts between Maine Yankee and its Sponsors re-quire the -Sponsors to continue to make monthly payments thereunder through 2002 whether or not.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 the useful life and the completion of decommissioning of the Plant, have also been executed by the Company and - its Sponsors.
Subject to certain exceptions including regulatory approval, the Sponsors are also obligated -
i under the Capital Funds Agreements with Maine Yankee to pay their respective shares of the capital requirements of Maine Yankee, not otherwise obtainable, which would include the cost of any modifications to the Plant that may be required pursuant to an NRC order.
The Price-Anderson' Act (the "Act") is a federal statute which provides, among other things, for the maximum liability for damages resulting from a nuclear incident.. In August 1988, Congress enacted a fifteen-year revision and extension of the Act, which provides for an increase in the limit of liability for a nuclear-related accident from $720 million to approximately $7.25 billion.
The primary layer of insurance for the liability increased from $160 million to $200 million of-coverage provided. by the coastercial insurance market.
The secondary coverage j
increased from $560 million to $7.05 billion, based on 112 licensed reactors.
The change in the secondary layer would be funded by an increase in the retrospect?ve premium assessment - from $5 million to $63 I
million per nuclear accident per licensed reactor, payable at a rate not exceeding $10 million per year per accident.
In
- addition, the retrospective premium is subject to inflation-based indexing at five-year intervals and, if the sum of all public liability claims and legal costs arising from any nuclear accident should exceed the maximum t nount of
- financial protection, each licensee could be assessed an additional 5%
($3.15 million) of the maximum retrospective assessment.
In addition to the insurance required by the Price-Anderson Act, the Company carries all-risk nuclear property damage insurance in the amount of $500 million plus additional excess nuclear property insurance in the i
amount of $1.225 billion effective January 15, 1989.
Of this additional insurance, $825 million is provided by a nuclear electric utility industry insurance company through a combination of current premiums and retrospective premium assessments.
If this company experiences losses in excess of its capacity to pay them, each participating utility may be assessed a retrospective premium assessment of up to 7.5 times its annual 1
premium with respect to industry losses in any policy year.
Based on 3
premium rates effective November 15, 1988, this adjustment could range up l
to.approximately $7.4 million for the Company.
The remaining excess nuclear property coverage of $400 million is obtained from the commercial insurance market and is not subject to retrospective premium l
assessments.
These excess coverage amounts as of January 15, 1989, were the maximum offered by both the industry company and the commercial market. i
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.T Maine Yankee Atomic Power Company-Form 10-K - 1988 ITEM 3 - LEGAL' PROCEEDINGS -(continued)
(b) ]tuga.
On January 29,' 1987, the Connecticut Division of Consumer Counsel (the " Division") filed a complaint -with FERC alleging that the allowed rates of return on equity of 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 then current conditions.
As a result of informal discussions with the FERC, the Company proposed a settlement agreement that provided for a reduction in the return on common equity ~ from 15.5% to 13.6% and an increase of $796,000 in the annual decommissioning collection effective June 1,
1987.
The modifications to the settlement agreement were approved by FERC on June 19, 1987, and the complaint filed by the Division was dismissed.
On January 15, 1988, the Company filed a request with the FERC to modify certain billing calculations and to increase its collection-for i
decommissioning effective March 15, 1988.
The request sought FERC approval to decrease the level of return on common equity from 13.6% to 13.5%, to provide for depreciation expense based on the recognition of shorter useful lives for certain classes of assets than had previously been assumed, to provide for the amortization of materials and supplies and the last fuel core and to increase the annual decommissioning collection from $4,796,000 to $14,466,467 based on full recovery by 1998, rather than over the NRC operating license life of the Plant, that is, to 2008.
After discussions among the Company, the FERC Staff, and interveners, and rejection by FERC of the shorter decommissioning collection period, a settlement agreement ' resolving all outstanding issues under this rate proceeding was certified to the FERC for approval as an uncontested settlement.
The FERC approved the settlement by order dated September 20, 1988, with rates effective August 16, 1988. The settlement agreement provided for the following:
(1) Rate of return on common equity at 12.9% per annum.
)
(2) Annual decommissioning collections of $9,073,943, exclusive of any income tax liability for the remaining licensed life.
(3) Depreciation expense based on the recognition of shorter useful lives for certain classes of assets.
(4) Amortization of materials and supplies and last core fuel.
(5) Agreement by the Company not to propose an increase and by other parties not to make a
filing to decrease the annual decommissioning charges to take effect prior to February 16, 1991. _ _ _ _ _. _ _ _ _
Maine Yankee Atomic Power Company Form 10-K - 1988 ITEM 3 - LEGAL PROCEEDINGS (continued)
(b) Rates. (continued)
.(6) Agreement that no party would oppose an anticipated FERC order (included in its September 20 order) requiring the Company to filc an equity reopener provision.
(7) Agreement that no party would oppose a FERC order requiring that the Company make certain filings in the event that the license term of the Plant is modified by the NRC.
The enactment by Congress of the Regulatory Fairness Act, effective j
October 6, 1988, which provides for customer rate refund relief under i
Section 206 of the Federal Power Act, has, by the terms of the FERC order i
of September 20, 1988, obviated the requirement referred to in paragraph (6) above that the Company file an equity reopener clause, j
ITEM 4'- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable.
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Maine Yankee Atomic Power Company Form 10-K - 1968 ~
LE PART II ITEM 5'-' MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCK-HOLDER MATTERS 1
I The Company's' Common Stock, owned by the Company's ten utility Spon-sors, is not' publicly. traded.
Transfer of the Common Stock is. re-stricted by the Company's' bylaws. The Company has paid cash dividends on its Common Stock to its ten utility Sponsors in each year of opera-tion, 1973 through 1988.. The following table shows cash dividends paid for years 1988 and 1987:
Shares 1988 1987' i
Outstanding Per Share Per Share January 500,000 4 1.50
$ 4.45 April 500,000 5.00 4.00 July 500,000 4.75 2.00 October 500,000 4.50 1.00
$1L21
$11d!i The Company's net income and earnings per share of common stock were at reduced levels in 1987 due to expenditures relating to the November
-1987 referendum which sought to close the Plant. Expenditures for the
. purpose of influencing public opinion with respect to referendum issues are not recoverable through the Company's cost of service and, therefore, lower the Company's return on equity.
The payment. of dividends on the Company's Common Stock is subject to the following restrictions:
I
'(1) The Company's First Mortgage Indenture provides that the Company shall not declare or pay any dividend on any class of its stock, ex-cept 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, redemption, acquisition or other retirement of any shares of its stock, unless, after giving effect to such declaration or payment, the Company's Equity shall be at least 35% of Plant Construction Financing, and the Company's Common Equity shall be at least 30% of i
Plant Construction Financing.
The Company was in compliance through December 31, 1988, with the dividend restriction of the First Mortgage Indenture.
(2) The Company's Articles of Incorporation provide that so long as any 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 distri-butions thereon is limited to 50% of Net Income Available for Divi-dends on Common Stock for the preceding twelve months if the Common Stock Equity (after such action) is less than 20% of Total Capitaliza-tion, and to 75% of. such Net Income if such Common Stock Equity (after such action) is 20% or more but less than 25% of Total Capitaliza-tion.
The Company was in compliance through December 31, 1988, with the dividend restriction of the Articles of Incorporation.._.
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-e y-l Maino YcnkO3 Atccic Pcwzr Comp ny Form 10-K - 1988 Maine Yankee Atomic Power Company ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONC 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 Sponsor 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.
l The following is management's analysis of certain significant factors which have affected the Company's operating results and financial condition for the period 1986 through 1988.
Operatina Results Fuel Amortization expense is based on the cost of nuclear fuel in the reactor core and is allocated to the accounting period based on the level of energy produced.
Fuel Amortization increased by $7.3 million l
over 1987 due to increased generation during 1988.
The 1987 decrease in fuel amortization reflects the impact of a 1987 non-scheduled outage for low-pressure turbine vibration analysis and repairs from l
June 19 to August 24, 1987.
Fuel Disposal expense results from a disposal fee of $1.00 per megawatt-hour of net gaeration which is assessed by the Department of Energy (" DOE") and is paid quarterly. Fuel Disposal expense therefore fluctuates with the level of production also.
Operation expense increased by $6.7 million in 1988.
This increase resulted from (1) contracted support services for the 1988 scheduled outage, (2) increased Nuclear Regulatory Commission support fees, (3)
State of Maine fees associated with the Maine Low-Level Radioactive 1
Waste Authority, which was created to provide for a low-level waste facility. for Maine and (4) the continuing coramitment to public awareness and communication on the operating activities of the Company.
Maintenance expense decreased by $3.6 million in 1988.
This decrease reflects the absence in 1988 of a non-scheduled outage of similar duration as that incurred in 1987 to repair the low-pressure turbine rotors.
1 The increase in Operation and Maintenance expense in 1987 of $30.2 million, compared to 1986, was associated with the scheduled 1987 maintenance and refueling outage and the subsequent non-scheduled outage to repair the low-pressure turbine rotors.
ij e
r M2ina Yankse Atenic Pawar Ccmptny Tore 10-K -.1988 Maine Yankee Atomic Power Company ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Depreciation expense increases for 1988 and 1987 result primarily from additional depreciable property placed in service.
The 1988. increase also reflects the. impact of the allowed increase in depreciation rates by. the Federal Energy Regulatory Commission ("FERC") effective August 16, 1988.
Decommissioning costs increased by $1.9 million in 1988 and $.5 million in 1987..
The 1988 increase resulted from the 1988 FERC Settlement Agreement-to increase the decommissioning collection to
$9,073,943 annually, effective August 16, 1988.
A modification to the 1985 Settlement Agreement to increase the decommissioning' collection by $796,000 annually, effective June 1, 1987, is reflected in the 1987
-increase.
See. Notes to Financial Statements, Note 3,
"Ratemaking l
Matters", with respect to certain decommissioning issues.
The increase in income tax expense for 1988 resulted primarily from the recapture of investment tax credits associated with prior period nuclear fuel reloads and the previously flowed-through credits freed i
up as a result of allowed decommissioning deductions for years 1984
- through 1986.
The increase in income tax expense in 1987 was due primarily to the reduct' ion in the flowback of investment tax credits t
on nuclear fuel.
While the Company's revenue requirements were reduced as a result of the lower corporate federal income tax rate, 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 and the slowing of the depreciation for newly acquired or constructed assets.
The Financial Acccunting Standards Board has enacted-a change in the accounting for 1
income taxes which will require adjusting deferred tax balances to reflect changes in tax rates.
For utilities, however, such immediate adjustments are currently restricted by income tax law.
Since income taxes are fully recoverable as a component of the Company's cost of service rate, these changes in the tax laws will not affect net income.
Other Income for 1988 primarily reflects earnings associated with the Company's prior fuel disposal trust fund. The primary impact on Other Income during 1987 was the expenditure of $5.6 million associated with the opposition to an initiated referendum bill defeated by the electorate on November 3,
1987, to shut down the Company's nuclear generating plant on July 4, 1988.
Expenditures for the purpose of influencing public opinion with respect to referendum issues are not recoverable through the Company's cost of service rate and therefore lower the Company's return on equity.,
__ _ _ _ - - _. _ - _ _ _ _ _ _ _ _ _ = _ _ _ _ _ _
y.'
]
Mains Yankaa Atccic'Pswar Comptny Form 10-K - 1988 Maine Yankee Atomic Power Comoany ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION I
AND RESULTS OF OPERATIONS (continued)
The Company is accruing interest on its obligation to 'the DOE for fuel burned prior to April' 7, 1983.
This interest expense is compounded
. quarterly on the original obligation of $50.4 million at ' the 13-week Treasury Bill-rate.
The interest expense associated with this liability is reflected as Interest Charges - Fuel Disposal Liability.
During 1988 the increase in expense reflects the. impact of increased average interest rates and the quarterly compounding of interest expense.
In 1987 the average interest rate, while ' lower than 1986, was offset by the quarterly compounding of the interest expense.
Fluctuations in. the amount of allowance for funds (equity and borrowed) normally occur as the result of changes.. in the. level of investments in construction and nuclear fuel in process, and/or the rate used for capitalization of these funds.
During 1987, Allowances for Funds Used During Construction ("AFC") were higher than in 1986 -
due to an increased level of investment in construction work in' i
progress while. Allowances for. Nuclear Fuel in Process ("AFN") were l
substantially lower due to lower levels of nuclear fuel in the process of construction.
The average level.of 'borrowings on fuel financing notes was lower in 1988 than in 1987.- This lower level of borrowings resulted in : lower
, interest expense ' in 1988.
Interest expense for these fuel financing notes was at similar levels in 1987 and 1986 as there was little change in the average interest rate or level of borrowings.
Liauidity and Caoital Resources
'Financinam and Capitalization Cash flow needs for 1988 were provided from Operating Activities in -
the amount.of $62.9 million and $1.8 million from Financing Activities.
The primary use of cash was for various corporate purchases such as:
(1)- nuclear fuel acquisitions of $24.6-million, which reflects primarily costs incurred for the 1988 reload of fuel assemblies,
.(2) construction of operating property which utilized $29.4 million primarily for two new low-pressure turbine rotors, (3) and trust fund investments of $17.8 million to meet future Spent Fuel Permanent
-Disposal and Plant Decommissioning costs.
l l
The Company's current 1989 budget for construction of electric
'~
property amounts to $13.3 million, and for procurement of nuclear fuel to $7.4 million, exclusive of AFC and AFN.
See Note 10, " Commitments and' Contingencies",
for additional information ' concerning the Company's 1989 construction program and the projected Acquisition of Nuclear Fuel requirements for 1990 through 1993. i
's
'b.
Maina Yenksa Atenic Pcwar Ccep:ny Form 10-K - 1988l Maine Yankee Atomic Power Company ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
The' Company currently has capital resources available from secured and unsecured lines) of credit - totaling $91,000,000, of-which 447,500,000 was utilized at year-end.: See Notes 4, 6 and 7 of Notes to Financial Statements for further discussion..
The ' Company expects.. to apply to various regulatory agencies. for an increase in its lines of credit of.$15,000,000 during 1989.
The Company, as well as the nuclear electric industry in general, has been challenged by comm<n problems in recent years including.those of increasing operating costs and expenditures for _ Plant modifications attributable to' greater regulatory requirements and uncertainties caused. by politica1L involvement in nuclear utility regulation.
It is-not possible at this time to predict what impact these uncertainties will have on the future financial operation of the Company.
Liauidity L
.In addition ' to funding its short-term needs, the Company must also fund the payment of-its spent fuel disposal liability of $50.4. million and accrual of interest from April 7,' 1983, to the time of payment,
- which through December 31, 1988, amounts to $27.2 million.
Maine Yankee has entered into an Indenture of Trust - with a trustee to
' provide for payments of this liability. Payment from the trust to the DOE is planned for - 1998. - Funding of the trust is being made by
- deposits of $4.1 million at least semiannually from December 1985 through May 1995. totaling' $85.9 million.
The estimated liability including interest due at time of payment is projected to be approximately $159.5 million. The trust fund deposits plus estimated earnings. are projected to meet this total liability if operations continue without material changes.
The Company must also provide for the eventual decommissioning of the Plant at the end of its operating life.
The Company's 1987 external engineering study estimated the cost of decommissioning, including a 257, contingency, to be $178,098,000 in mid-1987 dollars.
The Company is currently allowed to collect $9,074,000 annually in rates, based on the FERC-approved settlement amount of $167,000,000 (in mid-1987 dollars), and is funding two external trusts with the collections to provide for the funds necessary to meet this future obligation.
l:
+
i Maina Yank 22 Atc=ic Powar C rpiny Form 10-K - 1988 1
Maine Yankee Atomic Power Company ITEM 8 - FINANCIAL STATErim5 AND SUPPLEMENTARY DATA INDEX OF FINANCIAL STATEMENTS AND SCHEDULES The information required to be furnished in response to this Item is submitted on the following pages:
Ea&t Report of Independent Public Accountants 18 Financial Statements:
Statement of Income for each of the three years ended December 31, 1988 19 Balance Sheet at December 31, 1988 and 1987 20 Statement of Capitalization at December 31, 1988 and 1987 22 Statement of Changes in Common Stock Investment for each of the three years ended f
December 31, 1988 23 Statement of Cash Flows for each of the three years ended December 31, 1988 24 Notes to' Financial 3tatements 25 L l:
1
7.L'
-. [ L Maina Ycnkas Atcsic Pewar Cczptny _
Form 10-K'- 1988
-REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS i s1 TO THE BOARD OF DIRECTORS OF MAINE YANKEE ATOMIC POWER COMPANY:
'We.have audited the accompanying balance-sheet and ' statement of I
capitalization of MAINE YANKEE ATOMIC POWER COMPANY (a Maine corporation) as of December 31,1988 and 1987, and the related statements,of income, changes in cosmon-stock investment and cash flows for each of the three years :in the period ended December 31, 1988. These financial statements are the responsibility of. the Company's management.
Our responsibility is to express an opinion on these financial statements based on our.
audits.
We conducted our audits in accordance with generally accepted auditing standards.. Those standards require that we plan and perform the audit to
-obtain reasonable assurance about whether the financial statements are free of ~ material misstatement. ' An audit includes. examining, - on a test basis, evidence ' supporting the amounts and disclosures in the financial statements.
An audit also. includes assessing the accounting principles used and;significant. estimates made by management, as well as. evaluating the overall financ.a1 statement presentation.
We believe that our audits-provide a. reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MAINE _ YANKEE
. ATOMIC POWER COMPANY as of December 31, 1988 and 1987, and the results of-
' its - operations and its cash flows for each of the three. years in the period ended December 31, 1988, in conformity with generally accepted aci.ounting principles.
Our audits 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 the financial statement schedules are presented for purposes of-complying with the Securities and Exchange Commission's rules and are not a required part of the basic financial statements.
This information has been subjected to auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly' stated in all material respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Boston, Massachusetts, February 2, 1989. _ _ _ _ - _ _ - _ - _ - _ -
- ( *;.
- r..
.s Maiite Yankee Atomic Power Company 4
Form 10-K 1988 Maine Yankee Atomic Power Company STATEMENT OF INCOME-(Dollars in Thousands Except Per Share Amounts)
Year Ended December 31.
1181 1911 118.ft ELECTRIC OPERATING REVENUES
$157.097 $144 404 $122.965 1
OPERATING EXPENSES l
Fuel Amortization (Note,1) 29,229 21,893 33,203 Disposal. Cost (Note 1) 5,017 4,043 5,687 Operation-55,004 48,257-37,527
- Maintenance..
19,594 23,206 3,716 Depreciation (Note ~1).
10,427 9,465 9,305 Decommissioning (Note 1) 6,406 4,464 4,000.
Taxes Federal and State Income.(Note 2) 5,562 4,831 1,974 Local Property 6.956
'6.294 5.784 Total Operating Expenses 138.195-122.453 101.196 OPERATING INCOME -
18,902 21,951 21.769 i
OTHER INCOME (EXPENSE)
~ Allowance for Equity Funds Used During Construction (.fote 1) 145 188 74 For. Nuclear Fuel (Note 1) 4 16 234
'Other, Net 2.358 (4.667).
49 INCOME BEFORE INTERL?T CHARGES 21.409 17.488
_22E INTEREST CHARGES Long-Term Debt (Note 5) 5,181 5,839 6,060 Fuel Disposal Liability (Note 1) 4,930 4,291 4,159 Fuel Financing Notes (Not.es 6 and 7) 1,877 2,298 2,469' Other Interest Charges (Note 4) 415 433 111 Allowance for Borrowed Funds Used During Construction (Note 1)
(105)
(111)
(45)
For Nuclear Fuel (Note 1)
(4s2)
(392)
(1.153)
Total Interest Charges 11.816 12.358 11.601 NET INCOME
'9,593 5,130 10,525 Dividends on Preferred Stock 593 631 634 EARNINGS APPLICABLE TO C0fft0N STOCK
$ 9.000 $ 4.499 $ 9.891 SHARES-0F.C0ffl0N STOCK OUTSTANDING 122J22 2A2J22 102,a222 i
EARNINGS PER SHARE OF C0!990N STOCK
$ la.00 $
9.00 $ 19.7s
)-
DIVIDENDS DECLARED PER SPARE OF l
COMMON STOCK
$ 18.25 $
8.50 $
19.85 The accompanying notes are an integral part of these financial statements.
l'. _ _
__--_-_____a
L.;-
b; Maine Yankee Atomic Power Company Form 10-K
.1988; Maine Yankee Atomic Power ComoaDI BALANCE SHEET (Dollars in Thousands)
ASSETS
~ December 31.
1111 1212 ELECTRIC PROPERTY, at Original Cost (Note 5) (Sch. V)
$347,764-
$326,368 Less: Accumulated Depreciation and Amortization (Note 1) (Sch. VI) 121.850 120.444 225,914 205,924 Construction Work-in Progress 559 861 Net Electric Property 226.473 206.785
' NUCLEAR FUEL, at Original Coat (Note 1) (Sch. V)
Nuclear Fuel in Reactor 125,225 136,432 Nuclear Fuel-Spent 242,249 204,414 Nuclear Fuel-Stock 13.425 8.950 380,899 349,796 Less: Accumulated Amortization (Note 1)
(Sch. VI)-
306.156 276.928 74,743 72,868 Nuclear fuel in Process 8.916 15.457 Net Nuclear Fuel 83.659 88.325 Net Electric Property and Nuclear Fuel 310.132 295.110 CURRENT ASSETS Cash (Note 4) _
466 50 Accounts Receivable 24,093 14,008 Materials and Supplies, at Average Cost 8,529 8,542 Prepayments 3.543 3.434 Total' Current Assets 36.631 26.034 DEFERRED CHARGES AND OTHER ASSETS Trust Funds (Note 1)-
Fuel Disposal 37,073 26,559 Plant Decommissioning 27,678 20,361 Accumulated Prepaid Income Taxes (Note 2) 285 6,897 l
Other Deferred Charges and Other Assets 1.216 1.006 Total Deferred Charges and Other Assets 66.252 54.823
$413.015
$M The accompanying notes are an integral part of these financial statements. _
s e
Maine Yankee Atomic Power Company Form 10-K - 1988 l
Maine Yankee Atomic Power Comoany BALANCE SHEET (Dollars in Thousands)
STOCKHOLDERS' INVESTMENT AND LIABILITIES December 31.
12.6.1 1912.
CAPITALIZATION (See Separate Statement)
Common Stock Investment.
$ 68,024 4 68,139 Redeemable Preferred S.:ock 7,475 8,380 Long-Term Debt 63.412 67.751 Total Capitalization 138.911 144.270 LONG-TERM FUEL DISPOSAL LIABILITY (Note 1) 77.552 72.622 NUCLEAR FUEL FINANCING NOTES (Notes 6 and 7) 42.000
.,J0.800 CURRENT LIABILITIES Notes Payable to' Banks (Note 4) (Sch. IX) 5,500-Current Sinking Fund Requirements (Note 5) 301 1,470 Accounts Payable 24,346 7,051 Fuel Disposal Cost Payable (Note 1) 265 1,763 Dividends Payable 2,140 907 Accrued Interest and Taxes 2,671 1,321 Other Current Liabilities 702 282 Total Current Liabilities 35.925 12.794 COMMITMENTS AND CONTINGENCIES (Note 10)
RESERVES AND DEFERRED CREDITS Plant Decommissioning Reserve (Note.1)
(Sch. VIII) 28,460 20,828 Deferred Credits Accumulated Deferred Income Taxes (Note 2) 72,815
'73,992 Unamortized Investmont Tax Credits (Note 2) 9,928 12,909 Unamortized Gains on Reacquired Debt (Note 1) 7,041 7,439 Other Deferred Credits 383 313 Total Reserves and Deferred Credits
^ 118.627 125.481
$413.015
$375.967 The accompanying notes are an integral part of these financial statements. _
't
-4, I
5' Maine Yankee Atomic Power Company.
Form 10-K.- 1988-Maine Yankee Atomic Power Comoany STATEMENT OF CAPITALIZATION (Dollars in Thousands)
December 31.
1911 1911 C0ftt0N STOCK INVESTMENT
- Common Stock, $100 Par Value,. 500,000 Shares Authorized and Outstanding
$50,000
$50,000
~0ther Paid-in Capital 16,754 16,764-Capital Stock Expense (122)
.(138)-
Gain on Redemption of Preferred Stock 1,089 1,073 Premiums on Preferred Stock 110 123 Retained Earnings 193 317 68.024 68.139 REDEEMABLE PREFERRED STOCK - 7.48% Series,
$100 Par Value, Authorized 170,000 Shares,
~
Outstanding 74,750'in 1988 and 83,800 in 1987 (Note 8) 7.475 8.380 LONG-TERM DEBT (Note 5)
First Mortgage Bonds Series A - 9.10 % due May 1,'2002 34,914 37,854 Series B - 8 1/2% due May 1, 2002 22,301 24,866 Series C - 7 5/8% due May.1, 2002.
1 514 6.569 63,769 69,289 Less: Current Sinking Fund Requirements 301 1,470 Unamortized Debt Discount, Net of Premium 56 68 63.412 67.751 Total Capitalization
$138.911
$144.270 The accompanying notes are an integral part of these financial statements. - - _ _ _ _ _ - _ - _ _ _ _ _ _
Maino Ycnkee Atenic Pcwcr Cc piny.
Form 10-K - 1988 Maine Yankee Atomic Power Comoany 1
STATEMENT OF CHANGES IN COMMON STOCK INVESTMENT for the Three Years Ended December 31, 1988.
(Dollars in Thousands)
Amount at Retained Shares Par Value Other. Net Earninas Total i
Balance-December 31, 1985 500,000
$50,000
$17,755 102
$67,857 Add (Deduct):.
l Net Income 10,525 10,525 Cash Dividends Declared on -
(9,925)
(9,925)
Common Stock (634)
(634)
Preferred Stock Redemption of Preferred Stock 68 68 Other (3)
(3)
Balance-December 31, 1986 500,000 50,000 17,820 68 67,888 Add (Deduct):
Net Income 5,130 5,130 Cash Dividenda Declared on -
(4,250)
(4,250)
Common Stock Preferred Stock (631)
(631)
Redemption of Preferred Stock 2
2 Balance-December 31, 1987 500,000 50,000 17,822 317 68,139 Add (Deduct):
Net Income-9,593 9,593 Cash Dividends Declared on -
(9,124)
(9,124)
Common Stock Preferred Stock (593)
(593)
Redemption of Preferred Stock 16 16 Other (7)
(7)
Balance-December 31, 1988 M
$1Q,dQ2
$1L,BJ1
$,,,,,,_12,2
$sL,Q]d i
The accompanying notes are an integral part of these financial statements. _ - _ - _ _ _ _ _ _
l
- j. ;,
Maine Yankee Atomic Power Company form 10-K 1988 blat Yankee Atomic Power C ap_AD.Y STATEMENT OF CASH FLOWS (Dollars in Thousands)
Year Ended December 31.
M M
M Operatina Activities Net Income
$ 9,593
$ 5,130
$10,525 Items Not Requiring (Not Providing) Cash Fuel Amortization 29,229 21,893 33,203 Depreciation and Decommissioning 16,833 13,929 13,305 Deferred Income Taxes and Investment Tax Credits, Net 2,454 3,232 98 Allowance for Equity Fi.nds Used for Nuclear Fuel and During Construction (149)
(204)
(308)
Long-Term Fuel Disposal Interest, Net of AFN Recovery 4,593 4,053 3,433 Other, Net (1,933) 1,060 1,510 Changes in Certain Assets and Liabilities Accounts Receivable (10,085) 310 2,516 Other Current Assets
(%)
(664)
(1,819)
Accounts Payable 11,158 613 (2,109)
Accrued Interest and Taxes 1.350 (1.438) 297 Net Cash Provided by Operating Activities 62.947 47.914' 50.651 Investina Activities Acquisition of Nuclear Fuel (24,558)
(15,199)
(19,962)
Construction of Electric Property (29,449)
(7,440)
(3,640)
Changes in Accounts Payable -
Investing Activities 6,292 (3,289) 2,986 Investment Income in Decommissioning Trust 1,225 924 593 Trust Fund Investments Fuel Disposal (10,514)
(9,468).(12,924)
Plant Deconsnissioning
( 7.317)
( 5.319)
($7.809) 4.862)
(
Net Cash Used by Investing Activities (64.321)
(39.791)
Financina Activities Issuances (Redemptions)
Fuel Financing Notes, Net 11,200 2,850 (9,900)
Bank Notes, Net 5,500 (775) 775 Long-Term Debt (5,520)
(3,755)
(4,045)
Preferred Stock (905)
(69)
(606)
Dividend Payments Conron Stock (7,875)
(5,725)
(10,300)
Preferred Stock (610)
(632)
(645)
Net Cash Provided (Used) by Financing Activities 1.790
( 8.106)
(24.721)
Net Increase (Decrease) in Cash and Cash Equivalents 416 17 (1,879)
Cash and Cash Equivalents at Beginning of Year 50 33 1.912 l
Cash and Cash Equivalents at End of Year
$,jss
$J 22 Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest (not of amounts capitalized) S7,175
$8,581
$8,532 Income taxes S3,140
$3,303
$2,432 Disclosure of accounting po11cy:
For purposes of the statement of cash flows, the Company considers cash investments acquired for the purpose of temporarily investing cash to be cash and cash equivalents.
l The accompanying notes are an integral part of these financial statements. i
)
i c.-
Maine Yankee Atomic Iover Company Form 10-K -~1983
)
Maine Yankee Atomic Power Comoany NOTES TO FINANCIAL STATEMENTS
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES The Comoanv:
The Company owns and operateo 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 Soonsor/ Participant Interest Central Maina Power Company 38%
New England Power Company 20 The Connecticut Light and Power Company 12 Bangor Hydro-Electric Company 7
Maine Public Service Company 5
Public Service Company of New Hampshire 5
Cambridge Electric Light Company 4
Montaup Electric Company 4
Western Massachusetts Electric Company 3
Central Vermont Public Service Corporation
__1 1Q2%
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 participant receives its entitlement percentage of Plant out-put and is obligated to pay its entitlement percentage of the Com-pany's total costs, including a return on invested capital, re-gardless of the level of operation of the Plant.
On January 28, 1988, Public Service Company of New Hampshire, a 5%
Stockholder of the Company, filed for protection from its creditors under Chapter 11 of the Federal Bankruptcy Code.
The Company believes that in light of the operating history of the Plant and the relatively low cost of power produced by the Plant, it is unlikely this event will materially and adversely affect the continued operation of the Plant. _ _ _ _ _ _ _ _ _ _ - - _
,i i
Maine Yankee Atomic Power Company Form 10-K - 1988 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 1. SUPMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Reaulation:
The Company is subject to the regulatory authority of the Federal Energy Regulatory Commission
("FERC"),
the Nuclear Regulatory Commission ("NRC") and the Public Utilities Commicsion of the State of Maine ("MPUC") and other federal and state agencies as to rates, accounting, operations and other matters.
Depreciation:
Depreciation is provided using a composite remaining life method designed to fully depreciate the original cost of electric plant over the Plant operating life._ Under the composite method, at the time depreciable property is retired, the original cost, plus cost of removal, less salvage, of such property is charged to accumulated depreciation.
Effective August 16, 1988, the FERC approva. an increase in allowed depreciation rates.
(See Note 3, "Ratemaking Matters".)
Decommissioning:
The Company accrues for estimated decommissioning costs in accordance with FERC rate orders.
The Company began collecting annual decommissioning charges of $1,826,10C in Prember 1981.
The FERC's tpril 1985 order permitted the collection of an annual decommissioning charge of $4,000,000, which was subsequently amended in June 198' to $4,796,000. The IERC approved an' uncontested settlement' by order dated September 20, 1988, for an annual decommissioning charge of
$9,073 943 based on estimated decommissioning costs of
$167,000,G)
(in mid-1987 dollars),
exclusive of any income tax liability, effective August 16, 1988.
(See Note 3, "Ratemaking Matters".)
The Company's most recent study, conducted in 1987 by an external engineering consultant, estimated decommissioning costs of
$178,098,000 (in mid-1987 dollars) including a 25% contingency.
The Company recognizes the relative uncertainty of decommissioning, the changing technology of decommissioning and the possibility of new requirements of law and therefore recognizes the neri to monitor and adjust decommissioning collections through supplemental rate filings.
Funds collected for decommissioning are deposited in external irrevocable trusts pending their ultimate ese. i l
.J 3
Maine Yankee Atomic Power Company Form 10-K - 1988 Maine'fankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS N
m.
- 1. SUMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Amortization of Nuclear Fuel:. The cost of nuclear fuel in the' reactor ; is. amortized to Fuel Expense bared on the ratio of energy produced during the period-to the estimated total core capability.
Effective August 16, 1988, the Company began amortizing to expense the estimated costs 'of the unburned nuclear fuel which is expected to be in the reactor core at the expiration of the Plant's NRC operating j
license -life in 2008.
These costs are being amortized over.the period ending October 2008. (See Note:3, "Ratemaking Matters".)
)
Amortization of Materials and Sucolies: Effective August 16, 1988, the' Company began amortization of materials and supplies inventory I
that is expected to remain unutilized at the end of the Plant's life.
This amortization is based on the current inventory. balance -
]
less the accumulated amortization. This cost is being amortized over
-]
the period ending October 2008 on a monthly basis using the prior month's ending balances.
(See Note 3, "Ratemaking Matters".)
j Fuel Discosal Cost: In 1983 the Company entered into a contract with the Department of _ Energy (" DOE") for disposal of-its spent nuclear fuel, pursuant to which a fee of $1.00 per megawatt-hour is assessed against current generation and is paid to the DOE. quarterly.
The Company also' has an obligation of $50,367,000 with respect-to generation prior to. April 7, 1983, all of which the Company has already collected from its customers, but for which a reserve was not i
funded.
The Company has elected under terms of this contract to make a tingle payment of this obligation prior to the first delivery of spent fuel to DOE, scheduled to begin no earlier than 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 j
of the actual payment and is billed under the terms of the Power Contract.
Interest accrued and billed through December 31,. 1988, amounted to $27,185,000. 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 ccntinuing through May 1995 l
totaling approximately- $85,881,000.
The trust funds are included in Deferred Charges and Other Assets on the accompanying balance sheet.
The trust fund deposits plus estimated earnings are projected to meet the total estimated future liability of $159,458,000.
Allevance for Funds Used Durina Construction ("AFC") and.AJ 1owance i
for Funds Used for Nslear Fuel (dAFN"):
Under the Company's April 1985. and. September 1988 rate case settlement agreements, the Company f
earns a current return on up to 50% of Construction Work in t.
n.-
Maine Yankee Atomic Power Company Form 10-K - 1988 Maing Yankee Atomic Power Comnany NOTES TO FINANCIAL STATEMENTS
- 1. SUI 9fARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Progress- ("CWIP") and 50% 'of-Nuclear. Fuel in Process. ("NFIP"),.
subject to'certain limitations.
The Company. records the net cost of borrowed funds and the - allowed rate of return on equity funds used to finance its remaining construction and nuclear fuel acquisition costs as AFC and AFN.~
The amount of the allowance recorded is 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.
The following table contains the rates used for the most recent three annual periods:
AFC AFN on CWIP on NFIP 1988 9.56%
9.17%
1987 10.28 8.74 1986 9.99 8.64 1 :
Unamortized Gain or Loss on Reacauf red Debt:
Gains and losses on bonds reacquired to satisfy sinking fund requirements of First Mort-gage Bonds are deferred and amortized to income over the remaining 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:
Year Ended December 31.
19H 1161 193ft (Dollars in Thousands)
Federal Current 4 2,186
$ 1,251 541 Deferred 4,800 3,709 (2,104)
Investment tax credits, net (2.691)
(1,570) 2.562
'4,295 3,390 999 State Current 922 348 1,335 Deferred 345 1.093 (360) 1.267 1.441 975 Total federal and state income taxes
$M
$.b,821
$ lJ.ZA _ - _ - _ - -
Maine Yankee Atomic Power Company Form 10-K - 1988 Maine Ignhen Atomic Power Gompany NOTES TO FINANCIAL STATEMENTS
- 2. INCOME TAX EXPENSE (ccntinued)
The Company provides deferred taxes for the tax effecta of all timing differences, primarily accelerated depreciation of property and nuclear fuel, for tax purposes.
Excess deferrals were created as a result of the reduction in the federal income tax rate to 34 percent.
The excess deferral related to accelerated tr.x depreciation will be flowed back as a cost of service reduction over the period that the depreciation timing difference reverses (h, the period that straight-line depreciation exceeds accelerated depreciation).
The excess deferred tax reserve related to other book / tax timing differences is being flowed back on a straight-line basis over the remaining book life of the plant facilities.
Investment tax credits utilized to reduce federal income taxes currently payable are deferred and amortized over the lives of the related assets.
At December 31, 1988, the Company had available approximately $4,500,000 of additional investment tax credit.
The following table reconciles the statutory federal income tax rate to the rate determined by dividing the total federsi income tax expense by income before that expense.
Dollars in Thousands 1988 1987 1986 Amount Amount Amount
_X_
Statutory federal income tax rate
$4,722 34.0 $ 3,404 40.0
$ 5,301 46.0 Increase (reduction) in taxes resulting from:
Investment tax credits 1,145 8.2 (2,441) (28.7)
(4,896) (42.4)
Referendum expenses 2,202 25.9 Flowback of excess deferred income taxes (1,267) (9.1)
J Other (305) (M) 225
_M 594
_M
)
i Calculated rate
$.b23.1 M $ M 22 22.d 999 M ______-
l li K
Maine Yankee Atomic Power Company Form 10-K - 1988 Maine Yankee Atomic Power Company J
NOTES TO FINANCIAL STATEMENTS
- 2. INCOME TAX EXPENSE (continued)
In December 1987, the Financial Accounting. Standards Board ("FAS B)
issued a new standard on accounting for income taxes.
The Company.is required to adopt the new accounting and-disclosure rules no later than in its 1990 financial statements, although earlier implementation is permitted. The Company expects'to adopt the new standard effective January 1, 1990, and does not. plan to restate prior periods.
The standard requires the use of the liability method under which existing.
deferred taxes will be adjusted currently to reflect the effect of tax rates applicable to the years in which these taxes would become payable.
The Company has not completed its analysis of the impact.of this new accounting standard, but, based on current ratemaking and tax law, and since income taxes are. fully recoverable as a component ~ of the
. Company's cost- 'of service rate, there will not be an impact on earnings upon adoption of the new standard. There will be adjustments required to accumulated deferred taxes and.the recognition of a liability to customers for deferred taxes established in excess of the amount calculated using income tax rates applicable to 1990 and future years.
- 3. RATEMAKING MATTERS On January 29, 1987, the Connecticut Division of Consumer Counsel (the " Division") filed a complaint with FERC alleging that the allowed rates of return on equity of Maine Yankee, Yankee Atomic Electric Company, Connecticut Yankee Atomic Power Company and Vermone Yankee Nuclear Power Corporation were excessive and should be lowered to reflect then current conditions.
As a result of informal discussions with the FERC, the Company proposed a modification of an April 1985 settlement agreement that provided for a reduction in the return on common equity from 15.5% to 13.6% and an increase of $796,000 in the annual decommissioning collection effectise June 1,
1987.
The modifications to.
the settlement ~ agreement were approved by FERC on June 19, 1987, and the complaint filed by the Division was dismissed.
On January 15, 1988, the Company filed a request with the FERC to modify certain billing calculations and to increase its collection for decommissioning to be effective March 15, 1988.
The request-sought FERC approval to decrease the level of return on common equity = _ _ _ _ - _ - - _ - _
i Maine Yankee Atomic Power Company Form 10-K - 1988 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 3. RATEMAKING MATTERS (continued) l-from 13.6% to 13.5%, to provide for depreciation expense based on the recognition of shorter useful lives for certain classes of assets than had previously been assumed, to provide for the amortization of materials and supplies and the last fuel core and to increase the annual decommissioning collection from $4,796,000 to
$14,466,467 based on full recovery by 1998, rather than over the NRC operating license life of the Plant, that is, to 2008.
After discussions among the
- Company, the FERC
- Staff, and interveners, a Settlement Agreement resolving all outstanding issues under this rate proceeding was certified to the FERC for approval as an uncontested settlement.
The FERC approved the settlement by order dated September ' 20, 1988, with rates effective August 16, 1988. The Settlement Agreement provided for the following:
(1) Rate of return on common equity at 12.9% per annum.
(2) Annual decommissioning collections of $9,073,943, exclusive of any income tax liability for the remaining licensed life.
(3) Depreciation er. pense based on the recognition of shorter useful lives for certain classes of assets.
(4) Amortization of materials and supplies and last core fuel.
(5) Agreement by the Company not to propose an increase and by other parties not to make a filing to decrease the annual decommissioning charges to take effect prior to February 16, 1991.
(6) Agreement that no party would oppose an anticipated FERC order (included in its September 20 order) requiring the Company to file an equity reopener provision.
(7) Agreement that no party would oppose a FERC order requiring that the Company make certain filings in the event that the license term of the Plant is modified by the NRC.
The enactment by Congress of the Regulatory Fairness Act, effective October 6,
1988, which provides for customer rate refund relief under Sution 206 of the Federal Power Act, has, by the terms of the FERC order of September 20, 1988, obviated the requirement referred to in paragraph (6) above that the Company file an equity reopener clause.. _ _ - _ _____________
i=
O f* l Maine Yankee Atomic Power Company.
Form 10-K - 1988 Maine Iankan Atomic Power Comoany NOTES TO FINANCIAL STATEMENTS
- 4. NOTES PAYABLE TO BANKS Thej Company had bank lines of-credit - totaling - $21,000,000 as of December 31, 1988, of which $13,000,000 required an. annual fee of
-1/4 of 1% of the line and $7,000,000 required 3/8 of 1% of the line.
The - remaining $1,000,000 line requires a compensating bal-ance of 10% of the line and 10% of any ' outstanding balance.
As of December 31, 1988, $5,500,000 was. outstanding ~ under the _ lines of credit.
As of January 15, 1989, the $7,000,000 line of credit requires an annual fee' of 1/4 of 1% of the line.
- 5. FIRST MORTGACE BONDS The annual. sinking _ fund requirements of the First Mortgage -Bonds currently outstanding for _each of the years 1989 through 1993 amount to $4,775,000.-
Bonds repurchased in advance amounted to $4,606,000.
.at December 31, 1988, and $3,861,000 at December 31, 1987.
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.
6;^MYA FUEL COMPANY NOTES The Company has a Loan Agreement covering the issuance of up to
$50,000,000 principal amount of promissory-notes to MYA Fuel
- Company, a wholly-owned subsidiary of Broad Street Contract Services,.Inc.
Borrowings are secured by the Company's nuclear fuel investment and the Company pays a commitment fee at the annual rate of 1/8 of 1% of the line.
Certain other information relating to this loan arrangement is as follows:
Year Ended December 31.
12M 1181 116.ft (Dollars in Thousands)
Promissory noses outstanding
$27,000
$20,800
$ 8,950 Average daily outstanding borrowings 4 8,153
$ 8,882
$23,948 Highest level of borrowings
$27,000
$28,950 442,500 Annual interest rate at end of periods
- 10.69%
9.06%
7.68%
Effective average annual interest rate
- 9.48%
, 8.51%
8.49%
- Includes administrative fees. - - _ - - - _ _ -
(q/
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W Maine Yankee Atomic Power Company i
l a.,.
l Form 10-K - 1988 j
y-Maine Yankee Atomic Power Company pq NOTES TO FINANCIAL STATEMENTS
- 6. MYA FUEL COMPANY NOTES (continued)
In 1985 the Sponsors of-the Company agreed to.. guarantee A
unconditionally the payment obligations of the Company under a Loan Agreement with.MYA Fuel Company.. Each Sponsor's guarantee'is' limited to the': percentage of any, payment default corresponding.to its-l respective percentage under its Power Contract and Capital Funds 1
Agreement with the Company. The amended Loan Agreement also provides that the arrangement will automatically. extend until terminated upon notice of twelve months by the lender or ninety days by the Company.
7.' EURODOLLAR REVOLVING CREDIT AGREEMENT In 1985 the Company entered into a Eurodollar' Revolving Credit Agreement.with a group of major international banks under which the Company. nay ' borrow amounts up to $20,000,000 to meet its short-term requirements.
Each loan is due' and payable one year after 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 required on the unused portion of the line. The loans are secured by a second lien on.the Company's. nuclear fuel inventory (excluding re lear fuel inserted in the reactor) and on certain rights under ;ts Power Contracts-and. Capital Funds Agreements requiring payments.or financing - of, fuel-related costs.
The Agreement may bel terminated on one year's notice by the banks or five business days' notice by the Company.' Certain other information relating to this loan arrangement is as follows-
)
Year Ended December 31.
11El 1181 lilft (Dollars in Thousands)
Promissory notes outstanding
$15,000
$10,000
$19,000 Average. daily outstanding borrowings $11,874
$18,433
$ 5,419 Highest level of borrowings
$20,000
$20,000
$20,000 Annual interest rate at end of periods 9.76%
8.62%
7.25%
Effective average annual interest rate 8.66%
7.87%
6.96%.
__..____-._a
_____________-m_____-__
p>.p' A.
pf'.
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L Maine Yankee Atomic Power Company Form 10-K - 1988 Maine Yankee Atomic Power Comnany NOTES TO FINANCIAL STATEMENTS-7 8.'
REDEEMABLE PREFERRED STOCK The Company must redeem and cancel 6,000 shares annually of the 7.48%
Series Preferrec Stock at par value. : At the election of the Company, up to an additional 6,000 shares may be redeemed and cancelled at par
-on each redemption date.
The optional provision is not cumulative.-
The annual sinking fund requirements-through December 31, -1993, 'will be $600,000 annually.
The Company may redeem, in whole or in part, any additional shares of the. 7.48% Series Preferred Stoik upon' not less than thirty or more -
than fifty days' notice at $103.37 per share on or before December 31, 1992,. and at amounts decreasing annually theraaf ter, to
$100.00 per share in each caso plus accrued' dividends.
Preferred Stock repurchased in advance and not. cancelled amounted to 9,250: shares at December 31, 1988, 6,200 shares at December 31, 1987, and 11,510 shares at December 31, 1986.
- 9. PENSION PLANS The Company; has two separate non-contributory ~ defined benefit pen-sion plans.which cover substantially all' of its union and non-union employees.
The Company's funding policy is to contribute amounts to the separate. plana which are sufficient to' meet. the funding
. requirements set forth in the Employee Retirement Income Security Act
("ERISA"), plus such additional amounts as the Company may determine to be appropriate.
Total pension expense related to these plans amounted to $282,000 in 1988, $410,000 in 1987 and $647,000 in 1986.
The principal reasons for the decrease in pension expense in 1988 from-1987 were -the settlements -of two Group Annuity Contract liabilities through the purchase of non-participating insured annuities.
The settlement satisfied pension benefit obligations of
$338,000.
The settlement was accounted ' for in accordance with FASB Statement No.
88,
" Employers' Accounting for Settlements and Curtailments of Defined Benefits Pension Plans and for Termination Benefits".
This settlement resulted in a $118,000 gain recognized in 1988.
Plan - benefits under the union retirement plan are based on average career earnings and length of employee service.
Plan benefits under the non-union retirement plan are based on average final earnings, as defined within the plan, and length of employee service.
w.
Maine Yankee Atomic Power. Company Form 10-K - 1988-Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 9. PENSION PLANS (continued)
A summary : of the components of net periodic, pension cost-for the union and' non-union - defined benefit plans.- in 1988 'and 1987 and - the total contributions charged to pension expense are as follows:-
Union-Non-Union (Dollars in Thousands) 1RLB.
1%B1 1%81 1181.
Service Cost-Benefits Earned-During.the Period
$151 4144
$357.$361 Interest Cout on Projected Benefit Obligation 90 88 283 265-Estimated Return on Plan Assets Loss (Gain)
(214) 66 (520) 186' Net Amortization and Deferral
' 11-(111) 161 (191)
Net' Periodic Pension Cost 112 107.
288 303 Settlement Loss (Gain) 118) 18.Q)' $2Q1 Total Pension Cost 8,,,Zl,
$1Q1-
$2&& -'
Assumptions used 11.. the' accounting for the union 'and non-union defined benefit plans in 1988 and 1987 were as follows:
Weighted Avera8e Dir. count Rate 8.75%
Rate'of Increase in Future Compensation Levels 7.00%
Expected Long-Term Return on Assets 8.50%
e Maine Yankee Atomic Power Company Form 10-K - 1988 Maine Yankee Atomic Power Comoany NOTES TO FINANCIf.I. STATUMENTS
- 9. PENSION PLANS (continued)
The following table sets forth the actuarial present value of pension benefit obligations, the funded status of the plans and the liabilities recognized on the Company's balance sheet at December 31, 1988 and 1987:
Union Non-Union (Dollars in Thousands) 12.61 19_B1 1918.
19.81 Actuarial Present Value of Benefit Obligations:
Vested Benefit Obligation
$ 169 $ 201 $ 708 $ 767 Accumulated Benefit Obligation
$ 380 $ 428 $1,075 $1.146 Projected Benefit Obligation
$1,056 $ 970 $3.314 $2.987 Plan Assets at Estimated Market Value (primarily, stocks, bonds and, in 1987, guaranteed annuity contracts) 1,367 1.248 4.108 3,511 Funded Status-Projected Benefit Obligation in Excess of (Less Than) Plan Assets (311) (278)
(794) (524)
Unrecognized Net Gain (Loss) 134 41 253 97 Unrecognized Net Asset (Net Obligation) 441 493 599 686 Net Pension Liability (Asset)
Recognized in the Balance Sheet
$,,,,,2,14 $,,,,,216 $J $E In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for substantially all of its retired employees.
These and similar benefits for
{
active employees are provided through insurance companies acting either as an insurer or plan administrator, and premiums are based on the benefits paid during the year.
The Company recognizes the cost of providing these benefits through charging expense in the current period.
The cost of health care and life insurance benefits, substantially all of which relates to active employees, aggregated approximately $768,000 in 1988, $573,000 in 1987 and
$456,000 in 1986.
j p'l
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.e Maine Yankee Atomic Power Company Form 10-K - 1988 Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS
- 10. COMMITMENTS AND CONTINGENCIES Construction:
The Company anticipates construction expenditures to amount to $13.3 million (exclusive of AFC) for 1989.
. Nuclear Fuel:
The Company anticipates nuclear fuel expenditures of
$7.4.million (exclusive of AFN). for 1989 and $84.6 million for the period 1990 through 1993 (exclusive of AFN).
Nuclear Fuel Storare:
Under the terms of a -license' amendment approved. by the NRC in 1984, the present storage capacity of the spent fuel pool at the Plant will be reached in 1999 and after 1996 the available capacity of the pool would not accommodate a full-core removal.
The Atomic Safety and Licensing Board has approved the Company's proposal to demonstrate a further modification which would, if implemented, -permit storage capacity through the operating life of the ' Plant.
That implementation-would require further approval from the NRC.. A Maine statute 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 that shipments of spent nuclear fuel to the DOE will not commence until 1998 at the earliest.
The Company cannot predict whether, ot-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 i
Nuclear Insurance:
In August 1988, Congress enacted a fif teen-year extension of the Price-Anderson Act. The revised Act provides for an increase in the limit of liability for a nuclear-related accident from $720 million to approximately $7.25. billion.
The primary layer of insurance for the liability increased from $160 million to $200 1
million of coverage provided by the commercial insurance market.
The secondary coverage increased from $560 million to $7.05 billion, based on 112 licensed reactors. The change in the secondary layer is accomplished by an increase in the retrospective premium assessment from $5 million to $63 million per nuclear accident per licensed reactor, payable at a rate not exceeding $10 million per year per accident.
In addition, the retrospective premium is subject to inflation-based indexing at five-year intervals and, if the sum of all public liability claims and legal costs arising from any nuclear accident exceeds the maximum amount of financial protection, each licensee can be assessed an additional 5% ($3.15 million) of the
' maximum retrospective assessment.
i l __ -
d s'
.g Maine Yankee Atomic Power Company Form 10-K - 1988
~
Maine Yankee Atomic Power comoany NOTES TO FINANCIAL STATEMENTS
- 10. C0fflITMENTS AND CONTINGENCIES (continued)
In addition-to the insurance required.by the Price-Anderson Act, the Company carries - all-risk nuclear property damage insurance in the amountof -$500 million plus additional excess nuclear property insurance in the amount of $1.225 billion effective January 15, 1989.
Of this - additional. insurance, $825 million is provided by a nuclear electric utility industry insurance company, which provides 1
(
this coverage-through a
combination of current premiums and retrospective. premium assessments'.
If _this company experiences losses - in - excess of its capacity to -pay them, each participating utility may be assessed a rmospective premium assessment of up to 7.5 times its annual premjun.with respect to. industry losses in any policy year.
Based on premium rates effective November -15,
- 1988, this adjustment could, range up to approximately $7.4 million for the.
Company.
The. remaining excess nuclear property coverage of $400 million is-obtained from the commercial insurance market and is not subject to. retrospective premium assessments..These excess coverage amounts as of January 15, 1989, were the maximum offered by both the industry company and the commercial market.
Low-Level-Waste Dianosal:
In 1986 the federal Low-Level Radioactive Waste : Policy Amendments Act (the "Act")
was. enacted.
The 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 dieposal 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 increasing surcharges wi waste disposal until 1992.
After 1992 the operating disposal sites would be permitted to refuse to accept wastes generated outside their states or compact regions.
In 1987 the Maine Legislature established the Maine Low-Level Radioactive Waste Authority, which was created to provice for a low-level radioactive waste facility for Maine.
Pursuant to the statute, the Authority is assessing Maine Yankee, as the only nuclear plant in Maine, for the current statutory assessment of $10,000,000 over a four-year period ending on March 1,1992, to be used for the planning, siting, licensing and construction of such a facility.
Through December 31, 1988, the Company has been assessed and charged to expense $1,500,000.
- p *
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- .-(
Maine Yankee Atomic Power Company Form 10-K'- 1988
(
Maine Yankee Atomic Power Company NOTES TO FINANCIAL STATEMENTS-
- 10. C099tITMENTS AND CONTINGENCIES:(continued)'
In ' 1985 -Maine voters approved an initiated proposal which requires voter approval prior to construction or-operation of any facility 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 'aite and intends to continue to ship its wastes to present - off-cite facilities for as long as possible in order.-~to presene that capacity.
-The Company cannot predict, however,.the long-term effects of the Maine legislation.
- 11. UNAUDITED QUARTERLY FINANCIAL DATA
'Unaudited quarterly financial data pertaining.to the results of operations are shown below.
Ouarter Ended March 31 June 30 1gotember 30 December 31 (D(11ars in Thousands, Except Per Share Amounts) 19.11 Electric Op2 rating Revenues.
435,102
$33,878 435,351 452,766 Operating Income-4,842 4,625 4,487 4,948 Net Income 2,450 2,509 2,377 2,257 Earnings Per Share of Common Stock 4.59 4.70 4.48 4.23 1162 Electric Operating Revenues
$31,373
$41,351
$36,050
$35,630 Operating Income 5,319 6,047 5,384 5,201 Net Income (Loss) 2,405 2,018 933 (226)
Earnings (Loss) Per Share of Common Stock 4.49 3.72 1.55
(.76) l l i
7.:
l l
Maine Yankee Atomic Power Company Form 10-K - 1988 Maine Yankee Atomic Power comoany NOTES TO FINANCIAL STATEMENTS
- 12. TRANSACTIONS WITH ASSOCIATED COMPANIES During 1988,1987 and 1986, the Company paid $8,788,289, $7,692,007, j
and $6,629,675, respectively, to Yankee Atomic Electric Company, an i
associate of several of the Sponsors, for services at cost for its engineering' and nuclear services department.
Central Maine Power Company has furnished the Company certain engineering, administrative and legal services, and furnished certain facilities at cost, and electric service at. its filed rates.
During 1988, 1987 and 1986, Central Maine Power Company was reimbursed in the' amount of
$4,064,111,
$6,231,498, and
$4,562,868, respectively, for such services.
It is expected that Yankee Atomic Electric Company. and Central Maine Power Company will continue to perform similar services for the Company in the future, for which they will be reimbursed by the Company.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable, i
i i
j. _.
_____________________a
- 1.
Maine Yankee Atomic Power Company Form 10-K - 1988 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, 62, 1971, Executive Vice President, Chairman of the Board of Central Maine Power Company
. Directors (Principal Execu-tive Officer) and Director Richard A. Crabtree, 42, Senior Vice President, Customer 1989, Director Services and Division Operations, Central Maine Power Company John C. Duffett, 61, 1988, President and Chief Executive Director Officer, Public Service Company of New Hampshire John F. G. Eichorn, Jr., 65, Chairman and Chief Executive Officer, 1971, Director Eastern Utilities Associates David T. Flanagan, 41, 1988, Senior Vice President, Finance and Director Law, Central Maine Power Company Bernard M. Fox, 46, 1986, President and Chief Operating and Director Financial Officer, Northeast Utilities Frederic E. Greenman, 52, Vice President and General Counsel, 1984, Director New England Power Company Thomas A. Greenquist, 60, Chairman and President, Bangor Hydro-1973, Director Electric Company G. Melvin Hovey, 59, 1984, President and Chief Executive Offi-Director cer, Maine Public Service Company Matthew Hunter, 54, 1983, Executive Vice President and Director Acting Chief Executive Officer, f
Central Maine Power Company Carroll R. Lee, 39, 1979, Vice President - Planning and Develop-1 Director ment, Bangor Hydro-Electric Company
( l l
r-i L,
e j
g Maine Yankee Atomic Power Company Form 10-K - 1988 l
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
A.
DirecijlIn (continued)
]
l John F. Opeka, 48, 1986, Executive Vice President of j
Director Engineering and Operations, l
l Northeast Utilities Service Company l
l Jeffrey D. Tranen, 42, 1984, Vice President, New England Power i
Director Company Thomas C. Webb, 54, 1986, President and Chief Executive Officer, j
Director Central Vermont Public Service Corporation Effective April 1,
1989, Mr. Monty will retire from Central Maine Power Company, but will continue to serve as Chairman of the Board of Maine Yankee.
On January 28, 1988, Public Service Company of New Hampshire, of which Mr.
Duffett is President and Chief Executive Officer, filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code.
Each of the directors has been for the past five years, and each of the directors is now, an officer or employee of the Company, one of the Sponsors or an associated company thereof.
Each of the Sponsors is represented on the Company's Board of Directors, but l
there is no formal arrangement with respect to such representation.
The l
directors are elected at the annual meeting of stockholders and hold office until their successors are elected and qualified.
B.
Executive Officers The following are the executive officers of the Company with all positions and offices held:
Hamt Agg Office and Year First Electgj Charles E. Monty 62 Prenident - 1983 to April 1, 1988 Director - 1971 Chairman of the Board, effective April 1, 1988 John B. Randazza 60 Executive Vice President and Chief Operating Officer 1975 to April 1, 1988 Director, 1975 to February 17, 1989 President, April 1, 1988 through December 31, 1988 Vice Chairman of the Board,
{
January 1, 1989 through April 1,1989 (Ret i red) !
l Maine Yankee Atomic Power Company h
Form 10-K - 1988
)
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
I B.
Execdtive Office n (continued)
Charles D. Frizzle, Jr.
46
.Vice President and Manager of j
Opcrations - 1983 Director - October 16,'1987 to June 17, 1988
'~
Vice President, Operations -
April 1, 1988 to January 1, 1989 President effective January 1, 1989 Patrick S. Lydon 46 Vice President, Finance and Admin-istration - 1985 Andrew C. Kadak 43 Vice President, Nuclear Services -
1987 John H. Garrity 40 Assistant Vice President, Engineer-ing - 1988 Vice President, Licensing and Engin-eering, effective January 1, 1989 E. Thomas Boulette 46 Vice President, Operations, and Plant Manager, effective January 1, 1989 James D. Firth 35 Vice President, Public and Governmental Affairs, effective January 1, 1989 Lee E. Maillet 39 Treasurer - 1985 Robert S. Howe 49 Comptroller and Chief Accounting Officer - 1980 William M. Finn 52 Secretary and Clerk - 1984 I
. Anne M. Pare 35 Assistant Secretary - 1988 l
Each of the executive officers except Mr. Firth and Ms. Pare has been for the past five years and is now an officer or employee of the Company or one of the Sponsors ' or an associated company thereof.
Mr. Firth has been employed by Maine Yankee since January 1988.
Prior to that time he served as Director of Special Projects for Central Maine Power Company (from 1985), and from 1982 to 1985 he was a partner in the energy consulting firm of Weil and Firth.
Ms.
J Pare has been employed as a lawyer by Central Maine Power Company since July 1
1987.
Prior to that time she was associated with the law firm of Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Portland, Maine since 1984. ___
. : ' a,l,,
1:
Maine Yankee Atomic P'ower Company Form 10-K - 1988-ITEM 10 - DIRECTORS AND RYRCUTIVE OFFICRDR OF THE REGISTRANT (continued)
B.
Rzecutive Officers (continued)
The executive officers are elected annually by the Board of Directore and' hold office until their successors are elected and qualified..All are employees of the Company except ' Mr. Kadak, who is employed by Yankee Atomic. Electric Company, Mr. Finn : and : Ms. Pare, who are employed by Central Maine Power Company, and Mr. Munty, who will remain Chairman of the Board of Directors of
' Maine Yankee upon' his retirement from Central Maine Power Company on April 1, 1989.
There _ are no family relationships between any directors or executive officers nor any formal arrangements or understandings pursuant-to which - any were
,p;
. selected as officers or directors.
C.
Other Directorshina The following directorn of the registrant hold other directorships as follows:
BirggigI Other Directorships Held Richard A. Crabtree
' Central Securitit.s Corporation Cumberland Securities Corporation Maine Educational Loan Authority Maine Educational Loan Marketing Corporation Student Educational Enhancement Deposit Plan Fleet Bank of Maine John C. Duffett Public Service Company of New Hampshire Yankee Atomic Electric Company Vermont Yankee Nuclear Power Corporation Connecticut Yankee Atomic Power Company New Hampshire Business Development Corporation Manchester Associates, Inc.
John F. G. Eichorn, Jr.
Eastern Utilities Associates (Trustee)
Montaup Electric Company EUA Service Corporation EUA Power Corporation EUA Cogenex Blackstone Valley Electric Company Eastern Edison Company Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company Vermont Yankee N telear Power Corporation Edison Electric Institute David T. Flanagan Central Securities Corporation Cumberland Securities Corporation l
University of Maine System j - _ - -
N.
j, _
r Msine Yankee Atomic Power. Company
' Form 10-K - 1988 IIIIL11_RIEGIQRS (continued)
~
C.
Other Directorshina (continued)
Bernard M.~ Fox Connecticut Yankee Atomic Power Company 1
Vermont. Yankee Nuclear Power Corporation Yankee Atomic-Electric Company The Institute of Living Connecticut National Bank The Connecticut Light and Power Company Group America (subsidiary of CM Alliance.Cos.)
Holyoke Power & Electric Company Holyoke Water Power Company Housatonic Corporation Northeast Utilities Northeast Utilities Service Company Northeast Nuclear Energy Company Western Massachusetts Electric Company The Quinnehtuk Company The Rocky River Realty Company Research Park, Inc.
Frederic E. Greenman New England Electric Transmission Corporation New England Hydro-Transmission Corporation New England Hydro-Transmission Electric Company, Inc.
New England Hydro Finance Company, Inc.
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 Narragansett Energy Resources Company Thomas A. Greenquist Bangor Hydro-Electric Company East Branch Improvement Company G. Melvin Hovey Maine & New Brunswick Electrical Power Company, Limited Maine Public Service Company Maine Electric Power Company, Inc.
I Matthew Hunter Central Securities Corporation Cumberland Securities Corporation L
Maine Electric Power Company, Inc.
Uplift, Inc. of Hallowell l
Pine Tree Society for Handicapped Children and Adults The Union Water-Power Company 1 1
(
i
Maine Yankee Atomic Power Company Form 10-K - 1988
)
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C.
Other Directorships (continued)
Director' Other Directorships Held Carroll R. Lee Maine Electric Power Company, Inc.
East Branch Improvement Company Penobscot Hydro Co., Inc.
Charles E. Monty Central Maine Power Company Q-r. Enterprises, Inc.
John F. Opeka Connecticut Yankee Atomic Power Company Vermont Yankee Nuclear Power Corporation Yankee Atomic Electric Company Northeast Utilities Service Company The Connecticut Light and Power Company Western Massachusetts Electric Company The Quinnehtuk Company Holyoke Water Power Company Holyoke Power & Electric Company The Rocky River Realty Company Reasearch Park, Inc.
The Shelton Canal Company Northeast Nuclear Energy Company Nuclear Utility Management and Resources Council Opportunities Industrialization Center of New London County Charter Oak Energy Thames New Science Center of London County 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.
C. V. Realty, Inc.
Vermont Yankee Nuclear Power Company Verment Electric Power Company, Inc.
Vermont Electric Transmission Company, Inc.
Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company United Vermont Bancorporation Comprehensive Health Resources, Inc. - - -
4 i
Maino Yank 22 Atenic Pcvsr Comp.ny It 1
Form 10-K - 1988 ITEM 11 - EXECUTIVE COMPENSATION Prior to April 1, 1988, except for participation by some officers in incentive compensation and benefit plans, the Company's officers and directors wore
]
compensated by the Sponsors - or other associated companies by which they were principally employed.
Commencing April 1,
1988, however, certain Company i
officers became employees of, and started being compensated by, the Company,
)
and were no longer employees of Central Maine Power Company.
In addition, I
certain other employees compensated by Maine Yankee have been promoted to officer positions. In complying with regulatory requirements, the Company has also reimbursed Central Maine Power Company for services rendered by its employees including Maine Yankee officers and directors.
See Item 13,.CJaIAIE RELATIONSHIPS AND RELATED TRANSACTIONS.
A.
Cash Compensation The following table shows the total cash and cash-equivalent compensation (including payments pursuant to Company plans) paid by the Company for services rendered during 1988 to the three most highly compensated executive officers whose compensation exceeded $60,000, and to all executive officers as a group:
Name of Individual Cash Compensation or Number of (Excluding Previously Persons in Group Previously Deferred and Capacities in Deferred Compensation Total Which Served Compensation)
Paid in 1988 Compensation John B. Randazza
$116,050
$ 30,673
$146,723 Executive Vice Pres-ident ar.d Chief Operating Officer (through March 31, 1988); President (April 1, 1988 through December 31, 1988) and Director Charles D. Frizzle, Jr.
$ 78,096
$ 20,678
$ 98,774 Vice President and Manager of Operations (through March 31, 1988); Vice President, Operations (April 1, 1988 through December 31, 1988)
Patrick S. Lydon
$ 60,800
$ 16,313
$ 77,113 Vice President, Finance and Administration (5) Executive Officers 4
as a Group
$382,994
$100,216
$483,210 I
y,7 Maine Yankee Atomic Power Company Form 10-K - 1988 L
ITEM 11 m CUTIVE COMPENSATION (continued)
Prior _to April 1, 1988, Mr. Randazza, Mr. Frizzle, Mr. Lydon and certain other executive officers were employed by, and compensated by Central.
Maine Power Company.
This table includes only compensation paid by Maine Yankee.
B.
C=am=== tion Pursuant to Plana
'(1) The Company has established an Officer and Manager Incentive Plan which relates incentive payments made to officers and managers of Maine Yankee to the proportion by which each year's performance goals for: Maine Yankee are exceeded.
In 1988, pursuant to this plan, ' the
'three officers listed above, Messrs. Randazza, Frizzle and Lydon, j
received 4 30,673, $=20,678 and $ 16,313, respectively, _ and all j
executive. officers as a group, $ 100,216, including cash compensation deferred from the ' prior year under the plan, which -amounts are included in the table above.
(2) The Company has also established an Employee Savings and Investment Plan.
This plan is open to all non-union employees of the. Company -
with one year of service and permits each participant to contribute between 2 percent and 15 percent of his or her annual compensation to the plan.
The Company makes a matching contribution equal to 50 percent of any contributions by a participant which do not exceed 6 percent of his or her annual compensation.
The amounts accrued purcuant to the plans which were. contributed by the Company during 1988 for the individuals and the group identified in the compensation table above who are participating in the plan are as follows:
J. B.
Randazza, $ 2,730; C. D. Frizzle, Jr., 4 2,238; P. S. Lydon, $ l',670; and all executive officers as a group, $ 10,450.
C.
Pension Plan
.The Company makes payments to retirement plans on behalf of virtually all full-time employees of the Company, including all eligible officers. Such payments are based on the salaries and wages of the participants.
Retirement benefits are equal to the highest of two values calculated on the basis of two different formulas taking into account a plan participant's length of service with the Company and his or her annual compensation.
One benefit formula is based on the average annual eligible earnings of the participant to January 1,1980.
The other benefit formula is based on the average ar.nual eligible earnings of the participant during the five consecutive years within his last ten years of employment with the Company in which such earnings were highest. The following table lists.. _ _. _ _ _ _ _ _ _... _ _ _ _ _ _ _ _ _ _ _ _. _ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Maine Yankee Atomic Power Company Form 10-K - 1988 ITEM 11 H1tCUTIVE C0rihhSAT'LQH (continued)
C.
Pension Plan (continued)
(:
'~
the estimated retirement benefits (assuming election of a straight ' life annuity) upon normal _ retirement at age 65 under the plan (which benefits reflect the offset for Social Security benefits payable upon attainment of age 65 in. accordance with the plan) covering the-Coutpany's officers and under the formula which now appears likely to provide the highest benefit to the personc named in the compensation table below (Messrs. Randazza, Frizzle, and Lydon have been credited with 35, 18, and 18 years of service, respectively, under the plan):
Final' Average Years of Service Compensation 10 20 30 40
$80,000..
12,095 24,230 36,230 39,573
$120,000.
14,895 37,820 56,730 61,974
$160,000.
25,695 51,420 77,130 84,374
$200,000..
32,495 65,020 97,530 106,774 In 1987 the Board of Directors approved a Supplementary Employee Retirement Program for key employees, which will supplement the Company's
)
pension plan.
Mr. Randazza is the only participant among the individuals-and - group. identified in the compensation table above.
The annual cash benefit to be paid ' to Mr. Randazza, which is pays.ble for fifteen years after retirement, is $ 29,6/6.
i 1,
__m...
.-__.______________s
Maine Yankee Atomic Power Company Form 10-K - 1988
)
1 ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGE-
]
nanz
{
The following table shows the ownership of the Company'n 500,000 shares of $100 par value Common Stock, all of which is issued and out-q standing and all of which is held of record and beneficially. 3one is j
held by management.
Amount Percentage Hamt Owned of Class j
Central Maine Power Company 190,000 shares 38%
]
Edison Drive j
Augusta, Maine 04336
]
i New England Power Company 300,000 20 25 Research Drive Westborough, Massachusetts 01582 The Connecticut Light and Power Company 60,000 12 P.O. Box 270 Hartford, Connecticut 06141 Bangor Hydro-Electric Company 35,000 7
33 State Street Bangor, Maine 04401 Maine Public Service Company 25,000 5
209 State Street Presque Isle, Maine 04769 Public. Service Company of New Hampshire 2b,000 5
l 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 4
P.O. Box 2333 Boston, Massachusetts 02107 Western Massachusetts Electric Company 15,000 3
P.O. Box 270 Hartford, Connecticut 06141 l
Central Vermont Public Service Corporation 10,000 2
77 Grove Street Rutland, Vermont 05701 M shares lQ,Q%
I _ - _ _ - _ _ - _
E..
Mains Ycnksa Atomic Pcwer Company Form 10-K - 1988 ITEM 13 - (*RDTATN DRt ATIONSHIPS AND DRf ATED T1dLNSACTIONS 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 l
thereafter) was charged to plant as an allowance for equity funds used l
- during construction. The amounts so charged were recorded as paid-in capital.
This practice-terminated as of December 31, 1972, the last day of the last month of the construction period.
These amounts are-to be paid to the Sponsors on the redemption of Common Stock.
The Company's First Mortgage Indenture and the provisions of its Articles j'
of Incorporation relating to its capital stock contain various l-limitations on redemption.
l During 198F and 1987, the Company paid $8,788,289 and $7,692,007, 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 Maine ' Power Company has furnished _ the Company certain engineering, administrative and legal services, and furnished certain facilities at cost, and electric service at its filed rates.
During 1988 and 1987, Central Maine Power Company ' was reimbursed _ in the amount of $4,064,111 and $6,231,498, respectively, for such sersices.
It is expected that Yankee Atomic Electric Company and Centra.' Maine' Power Company will continue to perform similar services for the Company in the future, for which they will be reimbursed by the Company. i m__________________-__
m x
..g g e m
[l M.ina Yenkze Atenii Pswar Cc piny Form 10-K - 1988-PART IV ITEM'14 FYNTBITS. FINANCIAL STATEMENT SCHRnULES. AND REPORT! ON FORM'8-K-l (a) l'.
The following financial statements. are filed ' as a part of this
)
report:
INDEX OF FINANCIAL INFORMATION IAEA Report of Independent Public Accountants 18 Financial 3tatecents:
1 Statement of Income for each of the three years l;
ended December 31, 1988 19 l
Balance Sheet at December 31, 1988 and 1987 20 Statement of Capitalization at December 31, 1988 j
and 1987 22 Statement of Changes in Conunon Stock Investment i.
for.each of the,'three years ended December 31, 1988 23 Statement.of Cash Flows for each of the three years ended December 31, 1988 24 Notes to Finencial Statements 25 i
(a) 2.
The following financial statement schedules of the Company are filed he ewith and included in response to Item 14(d):
INDEX OF FINANCIAL STATEMENI SCHEDULES EA&R Schedule V~- Electric Property and Nuclear Fuel F-1 Schedule VI - Accumulated Provision for Depreciation of Electric Plant and Amortization of Nuclear Fuel F-4 Schedule VIII - Reserves Exclusive of Reserves for Depreciation F-S Schedule IX - Short-Term Borrowings F-6 All other schedules are omitted as the required information is not applicable or the information is presented in the Financial' Statements or related notes.
(b) Reports on Form 8-K.
The Company filed the following reports on Form 8-K during the last quarter of 1988 and thereafter to date:
Date of Reoort Items Reported
' January 1, 1989 Effective January 1, 1989, the Company implemented several changes in executive officers. L___ _
- o. l. '
. ;* ~
Haina Yr.nkaa Atcric Pcwsr Corpiny e
Form 10-K - 1988 ITEM 14 - EXHIBITS. FINANCIAL STATEMENT SCHEDULES. AND REPORTS ON FORM 8-K
/ continued)
,e) The exhibite which are filed with this Form 10-K or are incorporated herein by reference are set forth in the Exhibit Index, which immediately precedes the exhibits to this report.
-(d) The financial statement schedules required to be filed under this paragraph are listed under paragraph (a) 2. of this Item.
i
-53' I
[
M. 7
'c
-Maine Yankee Atomic Power' Company L
Form 10-K - 1988 SIGNATURES
' Pursuant - to the requirements' of ' Section 13 or 15(d) of the Securi-L' ties Exchange Act ; of 1934, - the registrant has duly caused this: report to
.be signed ~on its behalf by.the' undersigned, thereunto duly authorized.
MAINE YANKEE ATOMIC POWER COMPANY By Patrick S. Lydon s/s Patrick S. Lydon, Vice President, Finance and Administration March 29, 1989 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 t'harles ' E. Monty s/s By Bernard M. F C s/s Charles E. Monty,' Chairmen of
-Bernard M. Fox, Director
.the Board (Principal Executive March 29, 1989
' Officer).and Director March 29,21989 By Frederic E. Green==n s/s-Frederic E. Greenman,-Director By Patrick S'.
Lydon s/s March 29, 1989 Fatrick S. Lydon,.Vice President, Finance and Administration By Thomas A. Greenauist' s/s (Principal Financial Officer)
Thomas'A. Greenquist,. Director March 29, 1989 March 29,.989 l
.By Lee E. Maillet s/s By G. Melvin Hovev s/s
. Lee E. Maillet, Treasurer.
G. Melvin Hovey, Director (Principal Accounting Officer)
March 29, 1989 March 29,'1989 By Matthew Hunter s/s By Riehard A. Crabtree s/s Matthew Hunter, Director Richard A. Crabtree, Director March 29, 1989
-March 29, 1989 1
By Carroll R. Lee s/s By -John C. Duffet s/s Carroll R. Lee, Director John C. Duffett, Director March 29, 1989 March 29', 1989 By John F. Oneka s/s By~ John F. G. Eichorn Jr.
s/s John F. Opeka, Director John F. G. Eichorn,. Jr., Direc'..n March 29, 1989 l'
March 29, 1989 By Jeffrev D. Tranen s/s j
' By David T. F1=naman s/s Jeffrey D. Tranen, Director David T. Flanagan, Director March 29, 1989 March 29, 1989 By The=== C. Webb s/s Thomas C. Webb, Director l.
March 29, 1989 l
L y L
I
m t[
Maina Y;nk:a Atenic Pcwer Comptny Form 10-K.- 1988
' Schedule V (1988)
Maine Innkes Atomic Power Company ELECTRIC PROPERTY AND NUCLEAR FUEL For The Year Ended December 31, 1988 (Dollars in Thousands)
Balance at Retire-Balance
't Beginning Additions ments
' Transfers &
at End' of Period at Cost or Sales Other Charges of Period Elggtric Property Organization 7
4 7
Miscellaneous Intangible Plant 510 510 Land and Land Rights 478 478 Structures and i
( 6)
(26,661) 40,004 Improvements 66,671 Reactor Plant squipment 142,194 (975) 31,004 172,223 Turbogenerator Units 83,325 (7,519) 23,387 99,193 Accessory Electric Equipment 17,394 1,172 18,566 Miscellaneous Power Plant Equip.
10,929 994 11,923 Subntation Equip.
4,786 4,786 Miscellaneous Electric Property 74 74 Unfinished Construction 863 29.883 (30.185) 559
. Total Electric Property
$21Ze222
$M $(A4102)
$(__ 212) $348 323 i
Nuclear Fuel Nuclear Fuel in Reactor
$136,432
$(11,207) $125,225 Nuclear Fuel in Process 15,457 24,562 (31,103) 8,916 Nuclear Fuel -
Spent 204,414 37,835 242,249 Nuclear Fuel -
Stock 8.950 t.475 13.425 Total Nuclear Fuel
$1f15.253
$214512 $
$389.815 F-1
_,0h
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^
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e L.['
Maina Yankaa Atomic Pewar Camp:ny b
Form 10-K - 1988 Schedule V (1988)
Maine Yankee Atomic Power Comoany
- ELECTRIC PROPERTY.AND NUCLEAR FUEL For The Year Ended December 31, 1987 (Dollars fri Thousands)
Balance at Retire-Balance Beginning Additions ments Transfers &
at End of Period at Cost or Sales Other Charaes 2f Period Electric Property Organization 7
7 Miscellaneous Intangible Plant 510 510 Land and Land Rights 478 47,9
. Structures and.
Improvements 65,965 706 66,671 Reactor Plant EquipmentL' 134,581 (232) 7,845 142,194 Turbogenerator 340 548 83,325 s
82,437 Unit.s Accessory Electric Equipment 17,452 (49)
(9) 17,394 Miscellaneous Power" Plant Equip.
9,877
'1,052 10,929 4,786 Substation Equip.
4,786 Miscellaneous
. Electric Property 74 74 Unfinished Construction-3.375 7.623 (10,142) 861 Total Electric
$327 229 Property 4,USM 8 2,Ji21
$__22 Nuclear Puel Nuclear Fuel in Reactor
$131,720 18
$ 4,694 4136,432 Nuclear Fuel in (14,746) 15,457
' Process 15,006 15,197 Nuclear Fuel -
38,382 204,414 Spent 166,032 Nuclear Fuel -
Stock 37.280 (28.330) 8.950 Total Nuclear Fuel
$350.038
$15.215
- f. __
$21i14212 F-2 i
i b
- y g f,-
4.
i
. Form 10-K - 1988 Maine' Yankee Atomic Power Comp any i
Schedule.V (1988) b Maine Yankee Atopic Power Company ELECTRIC PROPERTY AND NUCLEAR FUEL For The Year Ended December 31, 1986 T.- -
.7, (Dollars in Thousands) 3 Balance.at-Retire-Balance Beginning Additions ments Transfers &
at End
-of Period at Cost Ar_ Sales Other Charges of Period Electric Pronerty Organization 4
7 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 Accessory. Electric Equipment 16,993 459 17,452 Miscellaneous Power Plant Equip.
9,643 (27) 261 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-
$3152115
$ _L21.4 $( J ) $
$M 4-Nuclear Fuel
.l Nuclear Fuel in Reactor
$131,720
$131,720 Nuclear Fuel in Process 27,683 20,196 (32,873) 15,006 3
Nuclear Fuel -
i Spent 166,032 166,032 (l?
Nuclear Fuel -
)
Stock 4.407 32.873 37.28Q y*
Total Nuclear Fuel
$22JLd62
$29.d11 $.. -
$219,111 i(}
F-3
.u il;
_e; Maine Yankee Atomic Power Company l
I Form 10-K - 1988 l
l Schedule VI t
l:
1 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 diannes of Period'.
l l
Electric Property
$M
$M
$M)
$(12,1)
$121.850 Nuclear Fuel
$276.928
$2L128
$306.156 193 1 "lectric Property
$M
$M
$J
$J
$120.444 Nuclear Fuel
$255.035
$21493
$215 9.2d 191ft Electric Property
$101.630 fM
$J)
$3)
$110.895
)
Nuclear Fuel
$M
$,12Ja
$255.035
- Excludes amounts collected through depreciation rates for Decommissioning and i
d Permanent Disposal Cost.- See Note 1 of Notes to Financial Statements for the i
Company's depreciation and fuel amortization policies.
.j l
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Maine Yankee Atomic Power Company Form 10-K - 1988
' Schedule VIII Maine Yankee Atomic Power Comoany RESERVES EXCLUSIVE OF RESEP*,ES 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 1161 ii-Decommissioning Reserve
$2L121
$LAQ&
$L22fi
$2LAQ,Q l
1181 Decommissioning Reserve
$1LA&Q
$b161
$2
$2L121 1%Bil Decommissioning Reserve
$1L&Ah
$b,QQQ
$2
$1LA&Q o
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4 Mains Yankse Atomic Pcwar Comprny Form 10-K - 1988-EXHIBIT INDEX The following designated exhibits, as indicated below, are either filed -
herewith or have heretofore; been filed with the Securities and Exchange Commission'under the-Securities Act of 1933, the Securities Exchange Act of 1934 or -the Public Utility Holding Company Act of 1935 and are incorporated herein by reference to such filings.
Reference is made to Item 8 of-this Form K for a listing of certain financial information. and statements incorporated by. reference herein.
-Filed Prior SEC Herewith
' Rvhibit N'=her And Description Of Doc 1=ent Rrhibit No.
Docket at Pane (3) Articles of Incorporation and Bylaws Incorporated herein.by reference:
3-1 Articles of Incorporation.
3.,1, 3.3 2-38547
'3-2 Amendment to Exhibit 3-1 betting forth terms of Cumulative Preferred Stock 3.2 2-46226 3-3' Bylaws,-as amended 3.2 2-38547 3-4 Amendment to Exhibit 3-3 3.5 2-46226 5 Amendment.to Exhibit 3-3 1-6554
'(4) Instr===nts definina the rimhts of security holders
' Incorporated herein by reference:
!4-1 First Mortgage Indenture from the Company to Old Colony Trust Company, Trustee, dated as of November 1, 1970 3.2 1-6554
'4-2 First' Supplemental Indenture from the Company to The First National Bank of Boston, Trustee, l
dated as of March 1, 1971 4
70-4976 E-1 t
l.
>ge -
+
Maine Yankee Atomic Power Company
' Form 10-K - 1988 Filed
-Prior SEC Herewith" Rvhibit Number And Description Of Document Rvhibit No.
Docket at Pane (4) Instruments definina the riahts of security holders (continued) 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 4-4 Third Supplemental-Indenture from the Company to the First National Bank of Boston, Trustee,
' dated as of February 15, 1984
-4.4 1-6554 4-5 Fourth Supplemental Indenture from the Company to the First National Bank of Boston, Trustee, date.as of April 1, 1986 4.5 1-6554 76 (10) Material-Contracts Incorporated herein by reference:
10-1 Composite copy of Power Con-tract between the Company and Sponsors dated as of May 20, (Included in pro-1968 spectus in 2-46226) 10-2 Composite copy of Capital Funds Agreement between the Company and Sponsors, dated (Included in pro-as of 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 E-2
m --T y q-jq y
- .;an 6
f le 2ic Pawar Compcny Mains Yanksa Atc:
s
. ~ ' ' '
Form 10-K - 1988 Filed Prior SEC Herewith Exhibit Nanher And Description Of Document-Rwhibit No.
Docket at Pane NO)MaterialContracts(continued).
L 10-1.1 Amendment No'. 1 to Exhibit 10-1, dated as of March 1, 1984 10-1.1 1-6554 1.2 Amendment No. 2 to Exhibit 10-1,
- dated as of January 1,1984 10-1.2 1-6554 10-1.3 Amendment No. 3 to Exhibit 10-1, dated as of October 1,'1984 10-1.3 1-6554-10-1.4 Additional Power Contract be-tween the Company and Sponsors, dated as of February l',
1984 10-1.4 1-6554 10-2.1 Amendment No. 1 to Exhibit 10-2,-
dated as of August.1,1985 10-2.1 1-6554 10-3' ' Indenture of Trust dated as of March 14, 1988 between.the Com-pany and Maine National Bank re-10-6 1-6554-lating to decommissioning trust (Form 10-K-fund.
for 1987) 10-4 Indenture of Trust dated as of Oc-tober 16, 1985 between the Company 10-7 1-6554 and Norstar Bank of Maine relating (Form 10-K to the spent fuel disposal funds.
for 1985)
(11) Stat===ts re computation of ner share earninna Not applicable (12) Statements re computation of ratios Not applicable (13) Annual recort to security holders Not applicable (18) Letter re channe in accountina orinciples t
.Not applicable (19) Previousiv unfiled documents Not applicable E-3
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j E
l c e' o
Maina Yr.nkte Atenic Pcvar Comp:ny Form 10-K - 1988 Filed Prior SEC Herewith Exhibit Number And Description Of Document Exhibit No.
Docket at Page (22) Subsidiaries of the registrant None (23) Published reoort concerning matters submitted to vote of security holdern Not applicable (24) Consents of experts and counqgi Not applicable (25) Power of attorney Not applicable (28) Additional exhibits None E-4 i
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