NLS9100474, Forwards Iowa Power,Inc 1990 Annual Rept to Sec on Form 10-K & Iowa Power Analysts Info Sheet as Evidence of Guarantee of Payment of Deferred Premiums
| ML20077J849 | |
| Person / Time | |
|---|---|
| Site: | Cooper  |
| Issue date: | 07/29/1991 |
| From: | Horn G NEBRASKA PUBLIC POWER DISTRICT |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NLS9100474, NUDOCS 9108050186 | |
| Download: ML20077J849 (90) | |
Text
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4 f GENERAL OFFICE ,
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P.O BOX 4M. COLUMBUS. NEBRASKA 6860244M
_ Nebraska Public Power District
- Tai"eM**
'NLS9'100474-
-July 29, 1991 U.S. Nuclear Regulatory Commission ,
. Attn: Document Control Desk-Washington, DC 20555-f-
Subject:
Licensee Guarantees of Payment of Deferred Premiums ,
Cooper Nuclear Station NRC Docket No.20-298. DPR-46=
Gentlemen: '
In accordance with the requirements of 10 CFR Part 140.21, relative to deferred insurance premiums, - the' Nebraska Public Power District submits the following information which, we believe', demonstrates our ability to obtain funds in the amount of $10 million for payment.of.such premiums within the specified three month period.
The Nebraska ~ Public Power District has renewed a Credit Agreement, which is
' included as an enclosure,-with the American National Bank and Trust Company of Chicago which indicates that said bank will lend the District funds,-not to exceed $5 million as specifically required to pay public liability claims arising
. from nuclear incidents. This Credit' Agreement is valid through July 31, 1992,
-at which time the District will submit the appropriate documentation to verify
- the guarantee requirements for the following year.
Iowa Power, under the terms of a power purchase contract, has acknowledged its-responsibility to assume 50 percent of the retrospective. premium requirements in -
an amount not to exceed $5 million in one year. Iowa- Power has chosen to utilize -
j? the . type of guarantee defined in 10 CFR 140,21(e) . Therefore, as enciasures to l
this letter, we are submitting the following documents in support of 50 percent of-the required $10-million premium.
- 1. Iowa Power Inc. 1990 Annual Report to the Securities and Exchange Commission - Form 10-K
- 2. Iowa Power Analyst's Information Sheet dated May 6, 1991 We believe that the enclosed information is sufficient to demonstrate our ability
- , = to generate the necessary funds required by the deferred premium; however, should n you require-additional-information, please do not hesitate to contact me.
-Sin rel ,
A G -Horn.
k ear Power
- Group Manager
' 9108050186 910729 PDR ~ ADOCK 05000298 1 Ok i PDR I J
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. --July'29, 1991 Page 2 of 2
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Enclosure ec: - U.S. Nuclear Regulatory Cormnission w/o encl.
ReSi onal Office Region IV ;
- Arlington, TX-NRC Senior Resident' Inspector Cooper Nuclear. Station w/o encl.
. Ira Dinitz-Insurance Indemnity Analyst Office of State Programs e
U.S. Nuclear Regulatory Commission Washington, DC 20555 l
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CREDIT AGREEMENT CREDIT AGREEMENT, dated as of August 1, 1991, between NEBRASKA PUBLIC POWER DISTRICT (herein called the " District") and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO (herein called tha " Rank").
The DiFCrict desires to provide for future borrowings, and the Bank it. willing to commit to lend to the District, upon the terms and conditions herein set forth, the aggregate sum of up to
$5,000,000, in such installments and at such times as hereinafter provided, to be evidenced by notes of the District therefor.
In consideration of the foregoing and the covenants and conditions herein contained, the parties thereto agree as fol-lows:
- 1. Definitions. The following terms shall, for all purposes of this credit Agreement, have the following meanings:
"Act" shall mean the Public Power and Irrigation District Law, constituting Article 6 of Chapter 70 of the Revised Statutes of Nebraska, as amended and supplemented.
" Electric Resolution" shall mean the resolution enti-tied " Electric System Revenue Bond Resolution" adopted by the Board of Directors of the District on August 22, 1968, as sup-plemented or amended in accordance with the terms thereof.
" Electric System Bonds" shall mean Electric System Revenue Bonds of the District authorized to be issued under the Electric Resolution.
" Electric System General Reserve Fund" shall mean the Electric System General Reserve Fund established in Section 502 of the Electric Resolution.
" Loans" shall mean the loans provided for in this Credit Agreement.
" Note or Notes" shall mean any note or notes, as the case may be, issued pursuant to this Credit Agreement by the District to evidence any Loan.
" Note Resolution" shall mean the resolution of the District entitled " Resolution Authorizing $5,000,000 Bank Credit of 1991," adopted July 11, 1991 authorizing the issuance of the Notes _and authorizing.the execution and delivery of this Credit Agreement, a true and correct copy of which resolution is annexed hereto as Annex A.
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- 2. Commitment to Lend. The Bank hereby agrees, upon the: terms and conditions herein set forth, to make one or more Loans to the District, in accordance-with the provisions of this Credit Agreement, on or before July 31, 1992'in an aggregate principal up to, but_not exceeding $5,000,000, each Loan to be in the principal amount of not less than $250,000.
- 3. Borrowinas. The District shall give the Bank at least two (2) days prior notice of the date and amount of each borrowing hereunder. Each borrowing pursuant thereto shall take place at the principal office of the Bank at LaSalle and Washington Streets, Chicago, Illinois. Not later than 11:00 a.m.
on the date of each-borrowing, the Bank shall,-subject to the terms of this credit Agreement, make available to the District, Federal Reserve or other immediately available funds in the prin-cipal amount being borrowed, upon delivery to the Bank of a Note in such principal amount.
- 4. The Notes. Each Note shall be designated as
" Electric System Note, Series NRC of_1991," shall be payable to the order of American National Bank and Trust Company of Chicago, shall'be dated the date of its delivery, shall be payable one o year from its date of issue (subject to optional prepayment as provided in Section 8 hereof), and shall bear interest (payable on the first day of each January, April, July and October) on the unpaid principal amount thereof from its date fluctuating at the rate per annum equal to 87% of the rate of interest announced or published publicly from time to time by the Bank as its base rate or equivalent rate of interest. Such interest rate shall be com-puted on the basis of a 365/366-day year.
The. Notes shall be executed on behalf of the District by the manual signature of its Chairman, Vice Chairman, President, Treasurer or Assistant Treasurer and its corporate seal shall be affixed, imprinted, engraved or otherwise repro-L duced thereon and attested by the manual signature of its l Secretary or any Assistant Secretary and shall be otherwise in substantially-the form annexed hereto as Annex B.
- 5. Commitment Fee. The District shall pay to the Bank as a commitment fee contemporaneous 1y with-the execution of this Credit Agreement the sum of $5,000.
- 6. Tax Indemnification.
(i) The parties intend that the Bank shall receive j in respect of the Notes amounts equal to the principal thereof I and interest thereon as provided hereunder, when due, without deductions, penalties, charges, or withholdings as a result of the imposition'of any federal income or similar federal tax imposed on the Bank as a holder of any of the notes (collec-tively " Taxes").
4 Any such Taxes shall be paid by the District. The District will
- pay the Bank the amounts necessary such that the_ net amount-of the principal and interest received and retained by the Bank is
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not less than the amount payable under this Agreement had such Taxes not been imposed. !
If, notwithstanding the previous two sentences, the Bank pays any such Taxes, the Bank will furnish to the District official tax receipts or evidence of payment of all such Taxes and the District will promptly reimburse the Bank therefor.
(ii) If the Internal-Revenue Code of 1986, as amended, (the " Code"),'or any other federal _ income tax law, rule, regula-tion, or governmental interpretation thereof hereafter enacted,
- adopted or issued, other than any such change mentioned in (iii) below, when affecting the Bank as a holder of the Notes or com- ,
pliance by the Bank as a holder of the Notes with such, (a) subjects the Bank to any tax, duty, charge, or withholding due on the principal of or interest on the Notes or changes the basis of taxation of payments to the Bank in respect of the principal of or interest on the Notes, in-cluding, without limitation, the effect of any limitation on the deductibility-of-interest on-the funds obtained to purchase or carry the Notes; or (b) imposes any other condition or circumstance the result of which is to_ increase the cost to the Bank of pur-chasing, funding or carrying the Notes, or reduces any amount receivable by the Bank in connection with the prin-cipal of or interest on the Notes or requires the Bank to
> make any payment calculated by reference to the amount of the Notes or interest received by it in an amount deemed material by the Bank; then, within thirty days of demand by the Bank, the District shall pay the Bank an amount which will be equal, on an after-tax basis _to the Bank (taking into account any taxes payable by the Bank on such amount), to (a) that portion of such increased cost incurred or (b) the amount or reduction in an amount received which the Bank determines is attributable to purchasing, funding or carrying the Notes to the extent of the principal amount
- thereof outstanding from time to time. The effect of any such increased cost which is imposed on the Bank generally may be allocated to-the Notes on any reasonable basis in the discretion of the Bank.
(iii) If at any time or times while the Bank is the Holder of the Notes there is a change in the maximum marginal tax rate (the " Tax Rate") at which the Bank could be taxed for fed-eral income tax purposes, the interest rate on the Notes shall be I - . _ _ . - . _ _ - ,
decreased (in the case of a decrease in the Tax Rate) to an in-terest rate equal to the product of (i) the interest rate on the Notes in effect immediately prior to a change in the Tax Rate times (2) a fraction (expressed in decimals) the numerator of which is the number one (1) minus the applicable Tax Rate after-such change and the denominator of which is the number one (1) minus the Tax Rate which had been in effect prior to such change in the Tax Rate.
(iv) Notwithstanding any of the other provisions of this Agreement, if the District has paid the additional amount specified in (ii) and'(iii) above, the District shall not be obligated to pay or reimburse the Bank for any tax on the income of the Bank to the extent that such income tax is attributable to the inclusion in the gross income of the Bank for federal tax purposes of interest on the Notes as if such interest had been timely reported and timely paid.
- 7. Conditions Frecedent to Loans. The Bank shall not be obligated to make any loan unless at the date specified for the making thereof the District delivers to the Bank:
(a) The opinion of the General Counsel to the District, dated as of such date, to the effect that:
(i) There is ao litigation pending in any court, either State or Federal, questioning the creation, or-ganization or existence of the District or the validity of this Credit Agreement or the Note being issued to evidence such Loan; and (ii) The District has the power to borrow the amount being loanea; to execute and deliver this Credit Agreement; to evidence the Loans by its Notes to be made and delivered in accordance herewith, and to per-form and observe all of the terms and conditions of this Credit Agreement on its part to be performed and observed; and (b) A certificate of the Chairman, President, Treasurer or Assistant Treasurer of the District, dated as of such date, to the effect that the representations and warranties of the District contained in Section 14 of this Credit Agreement are true and correct as of such date; and (c) A certificate of the Chairman or President or Treasurer or Assistant Treasurer of the District, dated as of such date, setting forth the aggregate amount of bonds and notes of the District that will be outstanding immedi-ately after the issuance of the note then being issued and stating that no default has occurred in the payment of prin-cipal of or interest on any indebtedness for borrowed money
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of_the District which remains uncured; and (d) The opinion of Mudge Rose Guthrie Alexander &
Ferdon, Bond Counsel to the District, dated as of such date, substantially in the form annexed thereto as Annex C; (e) A certificate as to Arbitrage, dated as of such date, in accordance with the provisions of the Code; and (f) Such additional certificates, instruments and other documents as the Bank or its counsel-may deem necessary to effect good delivery of the Note being delivered on such date or evidence the due performance by the District of the conditions precedent hereunder.
- 8. Optiqnal Precavment. The District may prepay any Note as a whole or in part, at any time or from time to time, without penalty or premium, by paying to the Bank all or part of the principal amount of the Note to be prepaid, together with the unpaid _ interest accrued on the amount of principal so prepaid to the date of such prepayment. Each prepayment of a Note shall be made on such date and in such principal amount as shall be spec-ified by the District in a written notice delivered to the Bank not less than 10 days prior thereto. Notice having been given as aforesaid, the principal amount of the Note stated in such notice or the whole thereof, as the case may be, shall become due and payable on the prepayment date stated in such notice, together with interest accrued and unpaid to the prepayment date on the principal amount then being paid; and the amount of principal and interest then due and payable shall be paid (1) in case the entire unpaid balance of the principal of any Note is to be paid, upon presentation and surrender of such Note to the District or its representative at the principal office of the Bank, and (ii) in case only part of the unpaid balance of principal of any Note is to be paid, upon presentation of such Note at the principal office of the Bank for notation thereon by the Bank of the amount of principal and interest on such Note then paid. If on the prepayment date monejs for the payment of the principal amount to be prepaid on such Note together with interest to the prepayment date on such principal amount, shall have been paid to the Bank I
as above provided and if notice of prepayment shall have been given to the Bank as above provided, then from and after the prepayment date interest on such principal amount of such Note shall cease to accrue. If said moneys shall not have been so l paid on the prepayment date, such principal amount of such Note shall continue _to bear interest until payment thereof at the rate provided for in section 4 of this credit Agreement.
- 9. Aeolication of Note Procetd.s. The proceeds of the L Notes shall be used to pay amounts required to be paid by the District as a result of one or more nuclear incidents, as pro-vided in the Price-Anderson Act, as amended (Pub. L.94-197, as
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amended and as compiled in 42 U.S.C. Section 2210 and pertinent subsections of 42 U.S.C. Section 2014, as amended) and certain regulations of the Nuclear Regulatory Commission (1C C.F.R. Part 140, as amended in particular by 42 Fed. Reg. 46-54 (January 3, 1977)) or any act or regulation supplemental thereto or amenda-tory thereof.
- 10. Payment. The obligation to pay the principal of and interest on the Notes and the other amounts payable hereunder is a special obligation of the District payable solely from such amounts in the Electric System General Reserve Fund as may be available therefor under the District's bond resolutions then oatstanding; provided, however, that such obligation to pay the principal of and interest on the Notes and the other amounts payable hereunder from amounts in the Electric System General Reserve Fund shall be subject and subordinated in all respects to the pledge of the Revenues (as defined in the Electric Resolution), moneys, securities and funds created by the Electric Revolution and, provided, further, that the obligation to pay the principal of and interest on the Notts and the other amounts payable hereunder from amounts in the Electric System General Reserve Fund shall be subject and subordinated to any payments which shall at any time be required to be made from Electric Sysuem General Reserve Fund pursuant to Section 713 of the District's_ Power Supply System Revenue Bond Resolution, adopted by the Board of Directors of the District on September 29, 1972, as supplemented and amended in accordance with the terms thereof.
The District shall duly and punctually pay or cause to be paid from the Electric System General Reserve Fund, in Federal Reserve or other immediately available funds, the principal of the Notes, the interest thereon and the other amounts payabla hereunder at the dates and place and in the manner provided herein and in the Notes according to the true intent and meaning thereof. If the principal of the Notes becomes due and payable on a Saturday or Sunday or a day which is a Bank holiday, such payment shall be made on the next succeeding Bank business day and the extension l
of time for payment shall be included in computing interest in connection with such payment.
- 11. All of the Bank's rights and remedies under this Credit Agreement are cumulative and non-exclusive. The acceptance by the Bank of any partial payment made hereunder after the time when any of District's Loans become due and payable will not establish a custom, or waive any rights of the Bank to enforce prompt payment thereof. The Bank's failure to require strict performance by the District of any provision of this credit Agreement shall not waive, affect or diminish any right of the Bank thereafter to demand strict compliance and performance therewith. Any waiver of an event of default hereunder shall not suspend, waive or affect any other event of
. default hereunder.
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- 12. Rato Covenant. The District covenants and agrees with the Bank that no long as any credit shall be available hero-under or any Note or intorest thoroon is unpaid it aball comply for the bonofit of the Bank with requirements of Section 712 of the Electric Resolution.
- 13. Necativo Covenants oL_the Distr.igt. The District, if and so long as credit shall be available hereunder or any Noto or interest thereon is unpaid, will not alter, amend or repeal the Noto Resolution, or take any action impairing the authority thereby or hereby given with respect to the issuanco and payment of the Notos. l
- 14. Ipx covenant. .n order to maintain the exclusion from gross income for purposes of federal incomo taxation of interest on the Notus, the District shall comply with the pro-visions of the Code applicable to the Notes, including without limitation the provisions of the code which prescribe yield and other limits within which the proceeds of the Notes and other amounts are to be invested and require that certain investment earnings on the forogoing be rebated on a periodic basis to the Treasury Department of the United States of America. In further-ance of the foregoing, the District shall comply with the Tax Cortificato as to Arbitrage and Instructions as to compliance with the Provisions of 103(a) of the code, to be delivered by Mudge Rose Guthrio Alexander and Fordon, Bond Counsel to the District, at the time the NC n are issued, as such lottor may be amended from time to timo, as a sourco of guidanco for achieving compliance with the Code.
The District shall not take any action or fail to take any action, which would cause the Notes to ba " Arbitrage Bonds" within the meaning of Section 148(a) of the Codo.
- 15. Reoresentations and Warranti.ng. The District rep-rosents and vtrrants thatt (a) The District has the power to borrow the amount provided for in this credit Agrooment; to execute and do-liver this credit Agrooment; to evidence the Loans by its Notes to be made and delivered in accordance with the pro-visions hereof and to perform and observe all of the terms and conditions of this credit Agrooment on its part to be performed and observed; (b) The making and performance by the District of this Credit Agreement will not violato any provision of the Act, or any bond or note resolution of the District, or any regulation, order or decree of any court, and will not result in a breach of any of the terms of the petition for creation, as amended, of the District or any agreement or
4 instrument to which the District is a party or by which the District is bound; and (c) The District, by adoption of the Note Resolution has duly authorized the borrowing of the amount provided for ,
in this credit Agreement, the execution and delivery of this credit Agreement, and the making and delivery of the Notes to the Bank as herein provided; and to that end the District warranta that it will take all action and will do all things which it is authorized by law to take and to do in order to ,
fulfill all covenants on its part to be performed and to provide for and to assure payment of the Loans as herein provided.
- 16. Acceleration of_Que Date Upon Default. If one or more of the following events of default shall occur and be continuing:
(a) Default shall occur and be continuing in the pay-ment when due of any principal or interest on any Note; (b) Any representation or warranty made herein or pur-suant hereto shall prove to be untrue in any material ,
respect; (c) Default shall occur in the performance of any of the other covenants or agreements of the Distrier contained herein, and the act or omission creating such default shall continue for a period of 30 days after written rotice there-of shall have been given to the District; or (d) Default shall be made in the payment of the prin-cipal of or interest on any Electric System Bond s when due, and as a result of such default, the maturity of such Bonds is accelerated; then, and in any such event, the Bank shall have the right to declare the principal of and all interest then accrued on all Notes to be due and payable immedictaly, and upon such. declara-tion the Notes and the interest accrued thereon sha.11 become due and payable, anything in this credit Agreement er in the Notes contained to the contrary notwithstanding.
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- 17. Defeasangs. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Bank the prin-cipal of and interest on the Notes at the times and in the manner i stipulated herein, then the covenants, agreements and other obligations of the District hereunder shall thereupon cease, terminato and become void and be discharged and satisfied. If moneys sufficient to pay tha principal amount of the Notes and interest thereon until matu ity or a date fixed for repayment shall have been paid to the Bank for application to such purpose, the Notes ano the interest thereon shall be deemed to have been paid within the meaning and with the effect expressed in this section. Amounts so set aside and held may be invested in obli-
gations of, or guaranteed by, the United States of America, provided, however, that said obligations sh d1 mature not later than the maturity date of the Notes. All earnings frs.m such '
investments shall be paid over to the District, ao received, free and clear of any trust, lien or pledge.
- 18. Notices. All notices under this credit Agreement i
shall be in writing and written notices shall be deemed to have been duly given if delivered or mailed by registered mail, in the case of the District, at Box 499, Columbus, Nebraska 68601, Attention President, and in the case of the Bank, at its prin-cipal office at LaSalle and Washington Streets, Chicago, Illinois 60690, Attention: Steven H. Abbey.
- 19. Counterparts. TMs Credit Agreement may be exe-cuted in any number of counterparts, and all such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the District and the Bank have caused this credit Agreement to be duly signed on their respec-tive behalf by their officers thereunto duly authorized, all as of the date and year first above written.
NEBRASKA PUBLIC POWER DISTRICT (SEAL)
By .
Treasurer ,
Attest:
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Assistant Secretary v, ,/
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO (SEAL]
By
=0d - mll-lL A "
Vice President NflOIAL NAL" Attesti. hm W Pdes,he of Ignale MremaisenEWess+M Vi .b !
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ANNEX A Resolution Authorizing _j5.000.000_ Bank Credit of 1991 Be it Resolved, by the Board of Directors of Nebraska Public Power District, as follows:
Section 1. Pursuant to the Public Power and Irrigation District Law, Article 6 of Chapter 70 of the Revised Statutes of Nebraska, as amended and supplemented (herein called the "Act"),
Nebraska Public Pow'er District (herein called the " District")
shall be authorized to enter into a credit agreement (herein called the " Credit Agreement") for one or more loans in an aggre-gate principal amount up to, but not exceeding, $5,000,000 from American National Bank and Trust Company of Chicago (herein called the " Bank") in substantially the form submitted at this meeting, to which shall be annexed, as Annex A, a copy of this resolution adopted by the District. Each loan shall be made in the principal amount of not less than $250,000 on any date on or before July 31, 1992; provided that the District shall give the Bank two (2) days prior notice of the date and amount of each borrowing and shall be evidenced by an Electric System Note, Series NRC of 1991 (herein called a " Note"; all Notes made under the Credit Agreement are herein collectively called the " Notes")
of the District in the aggregate principal amount of each loan, which Note shall be issued and delivered by the District to the Bank in the principal amount and on the date of the loan evi-donced thereby. Each Note shall be payable to the order of the Bank from the sources set out in Section 10 of the Credit Agreement, shall be dated the date of its delivery, shall be payable one year from its date of issue (subject to optional pre-payment as a whole or in part, at any time or from time to time, without penalty or premium, as provided in the credit Agreement) and shall bear interest (payable on the first day of each January, April, July and October and upon maturity) on the unpaid principal amount thereof from its date fluctuating at the rate per annum equal to 87% of the rate of interest announced or published publicly from. time to time by the Bank as its base rate or equivalent rate of interest. Interest is to be computed on the basis of a 365/366-day year. Each Note shall be in substantially the form set forth in Annex B to the Credit Agreement.
Section 2. The proceeds of the Notes shall be applied by the District to the purpose and in the manner provided in Section 9 of the Credit Agreement.
Section 3. The President, any Vice President, the Treasurer, and the Assistant Treasurer of the District are each hereby authorized to execute the Credit Agreement and the Secretary, or any Assistant Secretary, are each hereby authorized to affix the seal of the District on the Credit Agreement.
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Section 4. The Chairman, Vice Chairman, President, Treasurer or Assistant Treasurer of the District are each hereby authorized to execute the Notes by manual signature and the Secretary or any Assistant Secretary are each hereby authorized to cause the seal of the District to be affixed, imprinted, en-graved or otherwise reproduced on the Notes and to attest the r same. Any of the foregoing officers are hereby authorized to deliver the executed Notes in accordance with the provisions of the credit Agroomont.
Section 5. The Chairman, Vice Chairman, President, Treasurer or Assistant Treasurer of the District and the Secretary or any Assistant Secretary are, and each of them hereby is authorized to do and perform all things and to execute all papers in the namo of the District or othorviso, as they doom advisable, and to make all payments, necessary or convenient in their respectivo opinions, to the end that the District may carry out the objects of this-resolution and its obligations under the terms of the credit Agreement and of the Notes.
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1 ANNEX B (FORM OF NOTE)
NEBRASKA PUBLIC POWER DISTRICT ELECTRIC SYSTEM NOTE, SERIES NRC OF 199_
l No. $
FOR VALUE RECEIVED, the undersigned, NEBRASKA PUBLIC POWER DISTRICT (the " District"), a public corporation and polit-ical subdivision organized and existing under and by virtue of the laws of the State of Nebraska, hereby promises to pay to the order of American National Bank and Trust company of Chicago (the
" Bank") on , 19 upon presentation and sur-render of this Note at the principal office of the Bank, the principal sum of Dollars ($ ),
in lawful money of the United States of America, and to pay interest (payable on __, 19 and quarterly there-after on the first day of each January, AprII, July and October and upon maturity) on said principal sum at said office in like money from the date hereof fluctuating at the rate per annum equal to 87% of the rate of interest announced or published publicly from time to time by the Bank as its base rate or equivalent rate of interest. Such interest shall be computed on the basis of a 365/366-day year.
I This Note is a special obligation of the Di=Lrict and is one I
of a duly authorized issue of notes of the District (the " Notes")
issued and to be issued under and pursuant to the Public Power and Irrigation District Law of Nebraska, as amended and supple-mented (herein called the "Act"), and under and pursuant to a resolution of the District, adopted July 11, 1991, entitled Resolution Authorizing $5,000,000 Bank Credit of 1991 (the " Note Resolution"), and under and pursuant to a Credit Agreement (the
" Credit Agreement"), dated as of August 1, 1991 by and between the District and the Bank.
The obligation to pay the principal of and interest on this Note is a special obligation of the District payable solely from such amounts in the Electric System General Reserve Fund (as de-fined in the Credit Agreement) as may be available therefor under the District's Bond resolutions then outstanding; provided, hay-l ever, that such obligation to pay the principal of and interest on this Note from the Electric System General Reserve Fund is subject and subordinated in all respects to the pledge of the revenues, moneys, securities and funds created by the Electric
, Resolution (as defined in the Credit Agreement); and, provided, further, that the obligation to pay the principal of and interest on this Note from the Electric System General Reserve Fund is subject and subordinated to any payments which shall at any time be required to be made from the Electric System General Reserve Fund pursuant to Section 713 of the District's Power Supply B-1
System Revenue Bond Resolution, adopted by the Board of Directors of the District on September 29, 1972, as supplemented and amended in accordance with the terms thereof.
This Note is subject to the terms and conditions contained '
in the Note Resolution and the Credit Agreement, copies of which are on file at the principal office of the District, and refer-ence is made thereto for a complete statement of such terms and conditions.
The District shall have the right to prepay this Note as a whole or in part, at any time or from time to time, without pen-alty or premium, in accordance with the terms of the Credit Agreement. The prepayment date and the principal amount of the Note to be prepaid shall be specified by the District in a written notice to the Bank not less than 10 days prior to any prepayment. If on the prepayment date moneys for the payment of the principal amount of this Note to be prepaid, together with interest to the prepayment date on such principal amount, shall have been paid to the Bank as above provided, then from and after the prepayment date interest on such principal amount of this Note shall cease to accrue. If said moneys shall not have been so paid on the prepayment date, such principal amount of this Note shall continue to bear interent as provided above until payment thereof.
This Note is not an obligation of the State of Nebraska and the Act provides that the State of Nebraska shall never pledge its credit or fundo, or any part thereof, for the payment or settlement of any indebtedness whatsoever of the District.
IN WITNESS WHEREOF, Nebraska Public Power District has caused this Note to be signed in its name and on its behalf by its President or Treasurer or Assistant Treasurer, and its offi-cial seal to be hereunto affixed and attested by its Secretary or any Assistant Secretary, as of day of ,
19__.
NEBRASKA PUBLIC POWER DISTRICT By Treasurer (SEAL)
Attest:
l Assistant Secretary l
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ANNEX C
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i Hebraska Public Power District Columbus, Nebr6ska American National Bank and Trust Company of Chicago Chicago, Illinois Gentlemen:
We have examined the record of proceedings relating to the issuance of the $ Electric System Note, Series NRC of 1991, No. , dated _, 19_, (the " Note"),
of Nebraska Public Power District (the " District"), a body cor-porate and politic, constituting a public corporation and polit-ical subdivision of the State of Nebraska.
The Note is issued under und pursuant to Chapter 70, Article 6, of the Revised Statutes of the State of Nebraska, as amended (the "Act"), and under and pursuant to a Credit Agreement (the
" Credit Agreement"), between the District and American National Bank and Trust Company of Chicago (the " Bank"), dated as of August 1, 1991, authorized by a resolution (the " Note Resolution") of the District adopted on July 11, 1991 and entitled " Resolution Authorizing $5,000,000 Bank Credit of 1991."
The Note is payable to the order of the Bank, matures on
, 19__ (subject to prepayment in accordance with-the terms of the Credit Agreement), and bears interest (payable on
, 19__ and quarterly thereafter on the first day of January, April, July and-October and upon maturity) from its date fluctuating at the rate per annum equal to 87% of the rate of interest announced or published publicly from time to time by the Bank as its base rate or equivalent rate of interest. Such interest rate shall be computed on the basis of a 365/366-day year.
The obligation to pay the principal of and interest on the Note is a special obligation of the District payable solely from such amounts in the Electric System General Reserve Fund (as de-fined in the Credit Agreement) as may be available therefor under the District's bond resolutions then outstanding; provided, h2W-ever, that such obligation to pay the principal of and interest on the Note from the Electric System Reserve Fund is subject and subordinated in all respects to the-pledge of the revenues, moneys, securities and funds created by the Electric Resolution (as defined in the-Credit Agreement; and provided, further, that-the obligation to pay the principal of and interest on the Note from the Electric System General Reserve Fund is subject and l
subordinated to any payments which shall at any time be required 1
l C-1 i
L. . ~ .
to be made from the Electric System General Reserve Fund pursuant to Section 713 of the District's Power Supply System Revenue Bond Resolution, adopted by the Board of Directors of the District on September 9, 1972, as supplemented and amended in accordance with the terms thereof.
We are of the opinion that:
- 1. The District is duly created and validity existing under the provisions of the Act, with power to adopt the Note Resolution, to enter into the Credit Agreement, to issue the Note thereunder and to make and perform the covenants contained in the Credit Agreement.
- 2. The Note Resolution has been duly adopted by the District, is in full force and effect and is valid and binding on the District and enforceable in accordance with its terms, and the Credit Agreement has been duly authorized and executed by the District, is in full force and effect, is valid and binding upon the District and enforceable in accordance with its terms.
- 3. The Note has been duly authorized and issued by the District in accordance with law and in accordance with the Note Resolution and the Credit Agreement, and is a valid binding and direct obligation of the District enforceable in accordance with its terms and entitled to the benefit of the Act and of the Credit Agreement.
- 4. The Internal nevenud Code of 1986 as amended (the
" Code") eats forth certain requirements which must be met sub-t sequent to the issuance and delivery of the Note for interest thereon to be and remain excluded from gross income for purposes of federal income taxation. Noncompliance with such requirements may cause interent. i the Note to be included in gross income retroactive to the aate of issue of the Note. The District has covenanted to comply with such requirements.
In our opinion, under existing Inw, and assuming compliance with-the aforementioned covenant, interest on the Note is ex-cluded from gross income for federal and State of Nebraska income I tax purposes. The Note is not a "specified private activity bond" within the meaning of Section 57(a) (5) of the Code and, therefore, the interest of the Note will not be treated as a preference item for purposes of computing the federal alternative minimum tax imposed by Section 55 of the Code. However, we note a portion of the interest on the Note owned by corporations may be subject to the federal alternative minimum tax, which is based in part on adjusted current earnings.
C-2
_ . _ - , _ _ , _ ._ _ . . _ . .. _ _ _ _ . _ . _. _ _ _ ~ , _ _ . , . _ _ _ - _ _ _ . _
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Except as stated in the preceding two paragraphs, we express no opinion as to any federal or state tax consequences of the ,
ownership of, receipt of interest on, or disposition of the Note.
The opinions contained in paragraphs 2 and 3 above are qualified to the extent that the enforceability of the Note Resolution, the Credit Agreement and the Note, respectively, may be limited by any applicable bankruptcy, moratorium or similar laws relating to the enforcement of creditors' rights.
We have examined the Note, as executed, and, in our opinion, the form of said Note and its execution are regular and proper.
Very truly yours, C-3 l :-
.t ys a
$$ 55'5? .
in" tsp ~-
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%. am,c cm EUs" July 16,1991 i 1
Mr. T. E. Trouba Financial Planning Manager Nebraska Public Power District j P. O. Box 499 Columbus, Nebraska 68601-0499
Dear Mr. Trouba:
In accordance with the Price Anderson Amendments Act of 1988 and the Price Anderson Act (Public Law 94197) related to retrospective insurance premiums assessable against existing nuclear plants, and Section 14 of the Power Purchase Contract with Nebraska Public Power District, Iowa Power hereby acknowledges its responsibility to assume one-half of the retrospective premium requirements which the federal government may assess against the Cooper Nuclear Station in the event of a major nuclear liability.
It is our understanding that under present law each nuclear plant, having a rated capacity of 100 MWe or more, must show a financial responsibility to provide cash in an amount limited to $63 million per incident payable in annual installments'not to exceed $10 million per incident. lowa Power's responsibility with respect to the Cooper Nuclear Station would be $31.5 million per incident payable in annual installments of not more than $5 million per incident. We are aware that an additional 5 percent of this assessment may be payable if the public liability claims and legal costs arising from a nuclear incident at an indemnified facility exceeds the Price Anderson financial protection limit.
Iowa Power is submitting herewith three copies of both the 1990 audited financial statements, as contained in the Annual Report to the Secunties and Exchange Commission on Form 10-K, and the Iowa Power Analyst's information sheet dated May 6,1991 to demonstrate its financial integrity and responsibility. In connection therewith, Iowa Power states that, as shown in Note 7, Short Term Debt, of the Notes to Consolidated Financial Statements, the Company had established lines of credit with various banks totaling $53.4 million. The Iowa Power lines of credit were $86.2 million at June 30,1991. Iowa Power has authority under the Federal Power Act to issue up to $135 million of bank notes and commercial paper. Iowa Power also states that capital requirements for the 5 year penod ending with 1995, as shown on the Analysts Information sheet will total some $431 million and the Company forecasts that approximately $318 million of these cash requirements will be generated internally.
r, Mr. T. E. Trouba July 16,1991 ,
Page 2 .
Based on the above information, Iowa Power states that it can meet the requirements of an assessment of $5 million per incident from funds to be generated from current operations, or, in the alternative, from funds to be acquired through commercial paper issuance or bank borrowings.
Yours truly,
+
/ / <
N Enclosures Annual Report SEC Form 10 K (3)
Five Year Forecast (3)
, w,-,v.-m r-, - , ,- - , , , -
p I
j PORht 10 K ;
i SECURITIES AND EXCilANGE COhtMISSION Washington, D. C. 20549 (Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF Tile SECURITIES j EXCl!ANGE ACT OF 1934 IFEE REOtflREDI For the fiscal year ended December 31. 1000 OR lJ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF Tile SECURITIES INO FEE REOUIREDI EXCl!ANGE ACT OF 1934 For the transition period from to Commission file number 1 3567 IOWA POWFR INC.
(Exact name of registrant as specified in its charter)
IOWA 42-0334050 (State or other jurisdiction of (1.R.S. Employer incorporadon or organization) Identification No.)
666 Grand Ave.. P O.11ox 657. Des Moines. Iowa 50303 (Address of pnncipal executive offices) (Zip Code)
Registrant's telephone number, including area code 515-281-2900 Secunties registered pursuant to Section 12 (b) of the Act: NONE Securities registered pursuant to Section 12 (g) of the Act: NONE Indicate by check mark whether the registract (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such repons), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No The aggregate market value of voting stock held by non affiliates of the registrant was $0 as of February 25,1991, when 7,586.456 shares of common stock, $10 par value, were outstanding.
~- . . , . .
.o IOWA POWER INC.
1990 Form 10 K Annual Repon TABLE OF CONTENTS Pata Pan.1 <
Item i Business The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Construction Expenditures and Financing . . . . . . . . . . . . 3 Gene ral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Rate hi atters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Electric Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . 7 R e gula tion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Emplo ye es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Item 2 Propenies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
' Item 3 Legal Proceedings ...... 4 ....................... 8 Item 4 Submission of Matters to a Vote of Security lloiders . . . . . . , . 8 PlILH ltem 5 Market for the Registrant's Common Stock and Related Security Matters ..................... 9 Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Item 7 Management's. Discussion and Analysis of Financial Condition and Results nf Operations . . . . . . . . . . . . . . . 9 Item 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . 9 Item 9 Disagreements on Accounting and Financial Disclosure . . . . . . . . 9 Pan til item 10 Directors and Executive Officers of the Registrant ........... 10 Item 11 Executive Compensation ........................... 13 Item 12 Security Ownership of Cenain Beneficial Owners and M ana gement . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Item 13 Cenain Relationships and Related Transactions ......,..,... 17 Pan IV Item 14 Exhibits. Financial Statement Schedules, and Reports on Form 8.K . . . . . . . . . . . . . . . . . . . . . . . . 18-Signatures ........................................... 23 Exhibits Index ................................. ......... SS 2
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'o 'o 9
FORM 10 K 1990 ANNUAL REPORT lOWA POWER INC.
PARTI Item 1 Business Ti!E COMPANY lowa Power Inc. (IPR or lowa Power), fomierly towa Power and Light Company, is an Iowa corporation which became a wholly owned subsidiary of Midwest Resourecs Inc. (Midwest Resources or MWR) on November 7,1990, pursuant to the merger of Iowa Resources Inc. (Iowa Resources or LOR), a holding company of which IPR had been a wholly owned subsidiary of since November 1, 1979, and Midwest Energy Ccmpany. IPR has been and is engaged in the generation, purchase, transmission, distribution and sale of electric energy, all within the State of Iowa. In January,1987 Redlands incorporated (Redlands), fonner subsidiary of Iowa Resources, became a wholly owned subsidiary of IPR. Redlands, an Iowa corporation, owns appmximately 3,700 acres of land near Des Moines. Iowa. The land is cunently being used for farming operations. CBEC Railway Inc., an Iowa corporation and a subsidiary of IPR was formed on July 19, 1990 for the purpose of owning and operating rail facilities for the transponation of coal to the Council Bluffs Energy Center which is operated and panly owned by IPR. CBEC Railway Inc. has not commenced operations.
CONSTRUCTION EXPENDITURES AND FINANCING IPR is engaged in a continuing construction program, the nature and extent of which is based upon cuntnt and anticipated requirements of its utility operations.
IPR's esthnated capital expenditures for 1991 are as follows:
Capital Exocnditures AFUDC Total
' Steam Production . . . . . . . $10 $1 $11 Transmission & Distribution 35 1 36 General Plant ......... 24 2 26 Removal and Salvage .... 6 - 6 Capital Improvements (Cooper Nuclear Station) . . . . . . . _H _], ,J1 E }d M IPR's projected capital expenditures for 1992 thmugh 1995 are $356 million.
The construction pmgram is subject to periodic review and actual construction costs to be incurred may vary fmm the above estimates because of changes in business conditions, rates of load gmwth, envimnmental requirements and equipment delivery schedules as well as increasing costs and L the availability of labor, equipment, materials and capital.
l l
IPR's consolidated capital expenditures, including Cooper Nuclear Station capital improvements and allowance for funds used during construction and accrued on advanas (AFUDC), for the five years ended December 31,1990, were $298 million. IPR's plant additions for those five years were $234 million, and retirements were $30 million. In addition, $14 million of Des hioines Power Station Utility Plant was tmnsferred to Unrecovend Plant and Regulatory Study Costs as required by the Iowa Utilities Board (IUB) order issued pursuant to Docket No. RPU 8810. The cifect of this activity was a net increase in utility plant of 18?c.
In addition to the above capital requirements for construction, a requircment of approximately
$6 million is projected for maturities of long.tenn debt and bond sinking fund requirements. Itis anticipated that approximately 677o of the capital requirements for 1991 through 1995 will be met by funds generated from intemal sources.
IPR's sources of capital are provided froin funds generated intemally and various extemal sources such as commerrial paper, bank lines of credit and other debt and equity securities.
Short tenn borrowings will be utilized as interim financing from time to time. IPR's Anicles of Incorporation and indentures under which its First hiongage Bonds are issued contain certain camings and capitalization tests and other conditions that must be satisfied prior to the issuance of additional preferred stock or cenain types of debt securities. At December 31,1990, about $162 million of prefe:Ted s'ock, $191 million of First hiongage Bonds and $106 million of unsecured short-term debt could have been issued in compliance with the most restrictive of such tests and conditions.
GENERAL IPR's service territosy includes some of the most fertile and prosperous fann land in the United States. Agricultural products include com, soybeans and other grains, livestock and dairy products.
Des hioines is the capital of Iowa and the largest city in the state, it is an insurance center, one of the largest printing and publishing centers in the middle west and the major retail and jobbing point in the state. Some of the more important goods produced in the Des bioines area are building materials, steel products, farm machinery, tires, livestock feeds, meats and food pmducts, Council Bluffs, which is located in southwest lowa, is the second largest city served by IPR.
Approximately 787c of IPR's 1990 operating revenues were derived from electric service fumished in the Council Bluffs and metropolitan Des Moines areas. As of December 31,1990, IPR had 252,000 customers, of which 86.57c were residential.13.l?c commercial and industrial and .47o other. IPR recognizes that conservation practices by some of its customers will restrict growth but has no reason to believe that the availability of other forms of energy will have a significant cifect on its business in the foreseeable future.
RATE hiA1TERS For irJonnation relating to IPR's Rate hiatters, reference is made to Note : of Notes to Consolidated Financial Statements.
ELECTRIC OPERATIONS The propeny owned by IPR is entirely within the State of Iowa. IPR's electric generation is supplied by plants which utilize fuel as set fonh below:
Unit Capacity Plant Unit f.ugl at 12/31/90 (MW)
Base Load Units:
Cooper Nuclear Station Power Purchase Contract ..,.. 1 Nuclear 389.0 (1)
Council Bluffs Energy Center 3 Coal 315.2 (2)
Neal Generating Station . . . 3 Coal 118.5 (3)
Ottumwa Generating Station 1 Coal 101.3 (4)
Louisa Generating Station . . 1 Coal _19R 2 (5) 1.122.2 Intermediate Load Units:
Council Bluffs Energy Center 1 Coal 46.0 Council Bluffs Energy Center 2 Coal 88 0 1340 Peak Load Units:
River liills Energy Center . 18 Gas / Oil 127.2 Sycamom Energy Center . 12 Gas / Oil 148.0 Pleasant 11111 Energy Cerater 12 Oil 70.0 345 2 Total . . . . . . . . . . . . . . . 1401.4 Temporarily Deactivated Units:
Des Moines Energy Center . 67 Coal 18R0 (6)
(1) Cooper Nuclear Station is owned by Nebraska Public Power District (NPPD) and the amount shown is IPR's entitlement (50%) of Cooper's accredited 778 MW capacity under a power purchase agreement extending to 2004 (2) IPR's portion (46.7%) of this jointly owned 675 MW facility.
(3) IPR's ponion (23%) of this jointly-owned 515 MW facility.
(4) IPR's portion (15%) of this jointly owned 675 MW facility.
(5) IPR's portion (30.5%) of this jointly-owned 650 MW facility.
(6) Units deactivated in 1985, with planned reactivation in the late 1990's.
IPR is interconnected with certain Iowa and neighboring utilities and since 1972 has been one of 45 utilities involved in an electric power pooling agreement known as Mid-Continent Area Power Pool (MAPP). The purpose of MAPP is to coordinate the planning, construction and operation of generation and tmnsmission facilities, including the purchase and sale of power and energy among members. IPR and four other lowa investor-owned utilities formed ENEREX, a general pannership.
ENEREX coordinates the purchaec and sale of electric energy among the panners and handles the daily unit commitment function.
Cooper Nocien Station. Reference is made to Note 3 of Notes to Consolidated Financial Statements for a discussion of IPR's long-term power purchase contmet with NPPD for one-half of the output of Cooper Nuclear Station.
5
Neal Station. Under a joint ownership agreement with lowa Public Service Company (IPS),
also a wholly oned subsidiary of MWR, Iowa Southem Utilities Company (ISU) and towa Illinois Gas and Electric Company (IA-ILL), IPR owns 23%, or 118.5 MW of the 515 MW coal. fueled Unit 3 at Neal Station near Sioux City, Iowa.
Council Bluffs Encrev Center. Under a joint ownership agreement with IA ILL, Cedar Falls Municipal Electne Utility, Central towa Power Cooperative (CIPCO), Com Belt Power Cooperative l and Atlantic Board of Water Works and Electric Light and Power Plant Trustees, IPR owns 46.7% or 315.2 MW of the 675 MW Unit 3 at the Council Bluffs Energy Center located near Council Bluffs, Iowa.
Ottumwa Unit 1. Under a joint ownership agreement with IPS, ISU, Iowa Electric Light and Power Company and 1A ILL, IPR owns 15%, or 101.3 MW of the 675 MW coal fueled Unit 1 at the Ottumwa Generating Station located near Ottumwa, Iowa.
Louisa Unit 1. Under a joint ownership agreement with IA ILL, Interstate Power Company, CIPCO, IPS and the cities of Eldridge, liarlan, Waverly, and Tipton, Iowa, IPR owns 30.5% or 198.2 MW of the 650 MW Louisa Unit 1, located near Muscatine along the Mississippi River in southeastem lowa.
Peak Load. The annual hourly peak load occurs during the summer period, pnncipally as a result of air conditioning. IPR's highest hourly peak load in 1990 was 1,390 megawatts,17 megawatts above the previous IPR record peak load of 1,373 set in 1988.
Enercy Reauirements. In 1990, IPR's system requirements, net of sales to other utilities, were supplied by purchases from Cooper Nuclear Station 40%, IPR's generation 53% and purchases from other sources 7%. For 1991, IPR estimates it will obtain approximately 41% of its electric requirements from Cooper Nuclear Station and the balance frem its own generation and other purchases.
Cooper Nuclear Station is unavailable periodically for refueling and maintenance during which times IPR is required to increase lis tise of fossil fuels and may be required to purchase energy. IPR has sufficient power capacity available fmm its own generation and MAPP to provide for the anticipated requirements of its customers.
Fuel Sources. In 1990 the fuel used to produce IPR's net kilowatt hour requirements was 43%
nuclear,57% coal and a minimal amount of gas and oil. Cooper Nuclear Station operated at about a 75% capacity factor during 1990. IPR expects that the fuel used to produce its net kilowatt hour requirements for 1991 will be approximately 44% nuclear,56% coal and a minimal amount of gas and oil, assuming that Cooper Nuclear Station operates at approximately a 74% capacity factor for 1991.
Coal. IPR's average delivered costs of coal bumed for the indicated periods were as follows:
l Year Ended December 31 l 1990 1989 1988 1987 1986 Cost per million btu . $ 0.98 5 1.15 5 1.19 $ 1.23 5 1.37
[ ..
Cost per ton . . . . . . . .. $16.23 519.06 $20.38 $21.02 523.33 IPR generally maintains at Council Bluffs Energy Center and at units in which it has a joint onership interest coal supplies sufficient for approximately 90 days of operation. IPR estimates that l
l coal supplies for its units and those in which it has joint interest will be adequate for its needs in the l
foreseeable future.
6 w
l l
. l G!ts. Natural gas is available for peak load electric generation at IPR's River liills and Sycamore.
O. IPR's use of middle distillate oil has been minirnal; however, if gas is unavailable for s.ectric generation, oil is essential for peaking and standby purposes. IPR has available storage capacity for 9.1 million gallons of oil. IPR's oil in storage at its peaking unit locations is sufficient to satisfy its needs. ! Nuclear. Approximately 25% of the fuel in the core at Cooper Nuclear Station must be replaced annually, ENVIRONMENTAL MA'ITERS IPR is subject to regulation with regard to air and water quality and other environmental matters by various federal, state and local authorities and is also subject to zoning and other regulations by local authorities. IPR is currently in compliance with all applicable environmental standards. IPR's coal fired electric generating units are affected by the provisions of the Cican Air Act Amendments of 1990 (CAA). These generating units currently meet the new CAA sulfur dioxide emission rate standards by buming low sulfur westem coal. Although installation of emission control equipment is not needed to comply with new sulfur dioxide emission rate standards, these units will not be allocated enough basic Phase 11 sulfur dioxide emission " allowances" to operate at their maximum attainable capacity factors, llowever, most generating units qualify for Phase 11 bonus allowance allocations because the units had low sulfur dioxide emission rates in the 1985 base year, By the year 2000, some of IPR's coal-fired generating units will be required to install controls to reduce emissions of Nitrogen Oxides. The cost of these controls is expected to be nominal. Essentially all utility generating units are subject to CAA provisions which address continuous emission monitors and monitonng, permit requirements, fees, and emission of toxic substances. The costs to achieve compliance with these pmvisions are expected to be nominal. REGULATION i The IUB regulates IPR's electric rates, service tenitory, accounting and services, in addition, Iowa law requires that a certificate of convenience and necessity be obtained from the IUD prior to construction of a proposed electric generation station with a total capacity of 100 or more megawatts. Need for the station must be established and approval of the proposed site obtained befort a certificate can be issued. IPR is subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC) under the Federal Power Act with respect to the issuance of securities and other matters. In Iowa, non-exclusive franchises which cover the use of streets and alleys for public utility facilities in incorporated communities are granted for a maximum of 25 years by city councils, subject to ratification by a majority vote of local qualified residents. The IUB has jurisdiction and grants franchises for the use of public highway right-of way for electric facilities, and the power of condemnation of right of way for transmission purposes, outside of incorporated communities. In the City of Des Moines, IPR obtained a 25 year franchise during 1987. Outside Des . Moines, electric operaticas are conducted under franchises (expiring in various years from 1991 to 2015), permits and licenses obtained from state and local authorities.
- d en ,,
MWR is exempt from the Public Utility lloiding Company Act of 1935. MWR's exemption is based upon its filing with the Securities and Exchange Commission (SEC) :n November 1990, an Initial Statement by lloiding Company Pursuant to Regulation 250.2 of the Public Utility lloiding Company Act of 1935. MWR maintains its exemption by filing a Fonn U 3A 2 with the SEC cach year. EMPLOYEES The number of employees of IPR at December 31,1990, was 1,236 full time and $7 pan time and temporary for a total of 1,303 employees. Of this total,480 are physical work force employees and 188 are clerical wort force employees represented by the International Bnnherhood of Electrical Workers, Local 499. The contract for the physical work force expires August 1,1992 and the contract for the clerical work force employees expires February 1,1993. Item 2 Pmnentes Reference is made to item I, " Business - Electric Operations" for a description of the facilities utilized by IPR to gerw. ate electricity, item 3 l.c. gal Proceedines IPR has no_ material legal proceedings (other than ordinary routine damage claims and similar
- items incidental to its business which are not deemed material and for which both an injuries and damages res;rve and insurance have been provided) except for the following:
a) In re: lowa Power and 1.icht Company, before the Iowa State Utilities Board, Docket No. RPU. 88 10. On August 5,1988, IPR made a rate filing with the IUB requesting a $33.0 mil!!on, or 10.7%, i annualized increase in electric rates. On July 19,1989, the IUB issued a final order which approved a total annualized rate increase of approximately $24.7 million. ' Die rates authorized include approximately 50.5 million annually related to the nonntdized trnatment of contributions 1,1 aid of construction (CIAC) which weru collected subject to refund pending an appeal by town Power to the Iowa District Court for Polk County. On September 18,1990, the Coun remanded the case to the IUB for consideration of new evidace: A Private Letter Ruling was issued to lowa Power by the Intemal Revenue Service supponive of ;owa Power's position on CIAC accounting. On October 9,1990, the IUB issued an order approvin.1 a stipulated settlement, signed by lowa- Power and the Office of Consu ner Advocate, resolvi ng all outstanding issues in the case, The settlement reached in the case will allow lowa Power to account for CIAC's in the manner which was originally requested by the Company. Ort November 2,1990, Iowa Power submitted a refund plan to the IUB designed to refund to customers approximately 50.5 million plus interest, arising out of a distinct but related state income tax issue penaining to CIAC's. The refund plan was approved by the IUB on Decemb:r 6,1990. Item 4-Subminion of Matters to a Vote of Security Holders No matters wen; submitted to a vote of IPR's security holders during the founh quaner of 1990. 8
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v. PART 11 Item 5 Market for the Recistmnt's Common Stock and Related Security Matters IPR's common stock is held entirely by its parent company. Midwest Resources, and is not publicly traded. Annual common stock dividends paid by IPR in 1990 and 1989 were $35,155,000 and $36,560,000, respectively, item 6-Selected Financial Data For a summary of selected financial data of IPR for each of the last five fiscal years, reference is made to Pan IV of this report. hem 7-Manacement's Discussion and Analysis of Financial Condition and Results of Onemtions , Reference is made to Pan IV of this report. f Item R Financial Statements and Sunnlementary Data For the financial statements of IPR, including (i) Consolidated Statement of income. (ii) Consolidated Balance Sheet (iii) Consolidated Statement of Retained Eamings (iv) Consolidated Statement of Long Term Debt. (v) Consolidated Statement of Cash Flows, (vi) Notes to Consolidated Financial Statements and (vil) Repon of Independent Public Accountants, reference is made to Pan IV of this repon. Item 9-Disacreements on Accountine and Financial Disclosure None, 9
PART 111 Item 10 Directors and Executive Offices of the Recistmnt Infomtation concerning the directors and executive officers of IPR is as follows: ) i (a) Identification j Age as of Present Served in Present Served as i Ig g 12/31/o0 Position Position Since Director Since Mark W. Putney* 61 Director - 1974 Russell E. Christiansen 55 - Chairman, Chief Executive 1990 1990 Officer and Director Ralph F. Schlenker" 62 Vice Otairman and Director 1989 1975 Richard C. Engle 56 Director - 1990 Lynn K. Vorbrich 51 President Chief Operating 1989 1986 Officer and Director James R. Bull 49 Senior Vice President 1990 - (Engineering and Power Production) Robert L. Lester 49 Senior Vice President 1990 - (Marketing and Customer Services) Philip O. Lindner 47 Senior Vice President 1990 1990 (Finance and Infonnation Systems) and Director Jack C. Osbome"* 63 Senior Vice President 1989 1986 l Director James B. Fleming"" 64 Vice President (Special 1986 - Projects) James W, llamilton 49 Contmiler 1983 - Keith D. Ilartje 40 General Cotmsel 1990 - Loyd R. Homback 60 Vice President 1985 - (Westem Division) Joe A. Judge 57 Vice President 1988 - l (Central Operations) Paul J. Leighton 37 Secretary 1990 - l l l .- . - -
J. Sue Rozema 38 Treasurer 1985 - Ralph C. Watts 46 Vice President (Power 1990 - Production) Each director and executive officer serves an annual tenn of office. There are no family relationships between the foregoing executive officers and directors of IPR.
- Served as Chainnan and Chief Executive Officer through November 7,1990
** Retired effective October 1,1990
*" Retired effective July 1,1990
"" Retired effective April 1,1990 '
(b) Business Emerience Durine the I..ast Five Years hiark W. Putney Chairman and Chief Executive Officer of htWR and hiidwest Capital Group since 1990. Chairman from 1987 to 1990 and President and Chief Executive Officer from 1984 to 1990 of IOR. Chainnan and Chief Executive Officer of IPR from 1984 to 1990. Russell E. Quistiansen Vice Chairman, President and Chief Operating Officer of htWR since 1990. Chairman and Chief Executive Officer of hildwest Energy Company from 1986 to 1990 and President from 1985 to 1990. Chairman and Chief Executive Officer of Iowa Public Service Company since 1986, and Chairman and Chief Executive Officer of Iowa Power inc, since 1990. President of hiidwest Capital Oroup Inc. since 1986 and Vice Chairman and Chief Operating Officer since 1990. Ralph F. Schlenker Retired in 1990. Senior Vice President of IOR and Vice Chairman of IPR from 1989 to 1990. Senior Vice President of IOR and IPR from 1987 to 1989. President industries Oroup from 1985 through 1986. Richard C. Engle President and Chief Operating Officer of Iowa Public Service Company since 1990, Senior Vice President and Chief Operating Officer from 1987 to 1990 and Senior Vice President from 1984 to 1987. Senior Vice President of hildwest Energy Company from 1988 to 1990. Lyrm K. Vorbrich President and Chief Operating Officer of IPR since 1989. Executive Vice President of IOR from 1987 to 1990, Executive Vice President of IPR from 1986 to 1989. James R. Bull Senior Vice President of IPR since 1990. Vice President of IPR from 1988 to 1990. Assistant Vice President of IPR,1983 to 1987. Robert L. Lester Senior Vice President of IPR since 1990. Vice President of IPR from 1986 to 1990. Assistant Vice President,1983 to 1986. Philip O. Lindner Senior Vice President of IPR since 1990. Vice President of IOR from 1989 to 1990. Vice President of IPR in 1989. Prior to joining IOR and IPR in 1989, hit. Lindner served as Vice Pres! dent and Chief Financial Officer for hiacNeal llospital from 1987 to 1989, and as a panner with Anhur Andersen & Co. from 1981 to 1987. 1 - + - , y e e ,
. . - , , , - - , , ~ - ,- e.-- --m-,, ,, _ ,. - - , - ,- --_ , - ,,,,---,,-n, s g---.- -- -+- ,~ e-
Jack C. Osbome Retired in 1990. Senior Vice President of IOR and IPR from 1989 to 1990. Senior Vlec President and General Counsel of IOR and IPR from 1988 to 1989. President of Industries Group from 1987 to 1990. Senior Vice President and General Counsel of IOR and IPR from 1986 to 1987. James IL Fleming Retired in 1990. Vice Pmsident from 1986 to 1990. James W. llamilton Controller since 1983, Keith D. llanje General Counsel of IPR since 1990. General Attorney of IPR fmm 1987 to 1989. Associate Counsel of IPR,1985 tiuough 1986. Secretary of IOR and IPR from 1985 to 1990. Secretary of Redlands incorporated, ENERCOR, Inc., IOR Capital, Inc., IOR Telecom Inc., Iowa Computer Resources Inc., hilddlewood. Inc., hilddlewood hiall, Inc., UNITRAIN, Inc. from 1984 to 1989. Loyd R. Ilomback Vice President since 1985. Joe A. Judge Vice President since 1988. Assistant Vlec President in 1987 hianager, Des hioines Electric System,1984 to 1986. Paul J. Leighton Secretary of hildwest Resources and IPR since 1990. Secretary of hildwest Energy Company from 1988 to 1990. Secretary of Iowa Pubhc Service Company and hiidwest Capital Group Inc. since 1988. Assistant Secretary of hildwest Energy Company, Iowa Public Service Company and Midwest Capital Group Inc. from 1985 to 1988. J. Sue Rozema Treasurer of MWR, Iowa Public Service Company and hiidwest Capital Group since 1990. Vice President and General Manager of ENERCOR, Inc., IOR Capital, Inc., bilddlewood Inc., and Middlewood Mall, Inc. frorn 1989 to 1990. Tirasurer of IOR from 1987 to 1990. Vice President, General Manager and Treasurer of IOR Capital, Inc. from 1987 to 1989. Treasurer of IPR since 1985. Ralph C. Watts Vice President of IPR since 1990. Assistant Vice President of IPR frorn 1984 to 1990. l l 12-l l
o- . Item 11 Executive Comrvntation The following table sets fonh all compensation paid by IPR during the year ended Decemter 31,1990, for services rendered during the year, to each of the five most highly compensated executive officers of IPR whose aggregate cash compensation exceeded $60.000 and to all executive ollicers as a group. Name of Individual Capacities in Which Cash or identity of Group Comtwntation was Received Comoensation(l) M. W. Putney Chairman, Chlef Execudve $ 364,634 Officer and Director L. K. Vorbrich President, Chief Operating 224,665 Offlect and Director R. F. Schlenker* Vice Chairman and Director 210,030 P. O. Lindner Senior Vlec President and Director 154,150 Scrtior Vlec President 133,992 J. R. Bull Execudvc Officers as a Group (17) 52,036.050
- Mr. Schlenker retired cffcctive October 1,1990.
(1) Amounts shown include all cash compensation distributed or accrued during 1990 in the form of salaries and fees for services rendered during the year. Amounts shown also include incentive compensation awarded on a 50 percent cash 50 percent Performance Share basis pursuant to an Executive Compensation Plan which was available to cenain individuals who were officers of IPR. The Plan was designed to provide total compertsation, subject to corporate performance, equivalent to the average compensation of executives in similarly sized companies in general industry. Distribution of Performance Shares, which are equivalent to shares of common stock, is condngent upon continued employment for a period of four years fmm the date the Shares were awarded or until employment is terminated due to n:tirement .after age 55, death or disability, incentive compensadon included in the foregoing table is the cash compensadon awanied in 1990 for performance during 1989. Executive Deferred Compensation Plan Executive officers, at their option, may defer up to 50% of their annual base salary pursuant = to the Midwest Resources Inc. Executive Ikferred Compensation Plan (Executive Deferred Compensation Plan), in which panicipation is limited to censin executive officers of MWR and its subsidiaries as determined by the MWR Board of Directors. Amounts deferred are convened into units equal in value to the per share book value of Midwest Resources Common Stock on December 31 of the preceding year. The value of such units will subsequently vary depending on the book value of the Common Stock, MWR credits additional units in an amount equal to dividends paid on Common Stock, based on the per share book value of the Common Stock on December 31 of the preceding year. The value, based on the closing market price or the book value of Common Stock as of December 31 of the year prior to distnbution, may be paid out in lump sum or annual installments upon retirement, death or permanent disability. Undistributed units under the annual installment payment method will continue to be credited with dividends and fluctuate in value unless convened 13-
into a fixed value based on either the clo' sing market price or took value of the Common Stock. The convened value will be credited with a fixed rate of interest equal to the annual dividend rute at the time of conversion. Payment may be in either cash or shares of common stock. 10R had a defened compensation plan in which censin executive officers, at their option, could defer a specified ponion of future compensation, in the fonn of Deferred Compensation Units, untu retirement, death or disability or upon approval of the 130ard of Directors. Each Unit was the equivalent of a $1,000 debenture paying such annual rate of interest and convenible into the equivalent of such number of shares of common stock as the Plan specifies at the time of crediting the Units. Amounts deferred under the IOR plan will be distributed in accordance with the plan's l pmvisions. All share values have been convened into hiidwest Resources Common Stock share values. Compensation deferred under the Plan during 1990 is included in the figures reported in the cash compensation table. No future deferrals will be made under thh Plan. Stock Purchase Plan and 401(L) Plan Prio to the merger with h11dwest Energy, Iowa Power offered its employees the opponunity to acquhr IOR common stock through the Employee Stock Purchase Plan (ESPP). The ESPP permitted each employee of Iowa Power who had completed at least one year of service to purchase, through paymil deduction, shares of LOR conunon stock at 85% of market pnce on the last business day of each month. Participants were entitled to designate a payroll deduction up to the lesser of ten percent of regular annual base pay, or 521.250 annually, for purchases under the ESPP. Directors were not eligible to participate in the ESPP unless they were also employees. hiWR has continued offering to its employees and the employees of its subsidiaries the opponunity to panicipate in the ESPP subject to the approval by the shatchc,hM4 at the 1991 Annual hiceting of Shareholders. Iowa Power has a Salary Deferral Plan (the 401(k) Plan) whereby panicipants may elect to reduce their salary by an amount from 1% to 15% of their base salary up to a present maximum of
$8,475 and to have Iowa Power contribute such amount to the plan. A panicipant's 401(k) contribution up to 6% of the panicipant's base salary will be matched by an Iowa Power contribution equal to one third of such amount up to a maximum contribution of $1,000 in a plan year, The Iowa Power contribution is made in htWR common stock. An employee must complete one year of service with lowa Power and be at least 21 years of age to be eligible to participate in the 401(k) Plan.
The following table sets forth the amounts accrued, paid or distributed to the individuals and gmup identified in the compensation table, pursuant to the ESPP and 401(k) Plan based upon: (a) the difference between the purchase and market prices of htWR common stock purchased in 1990 by such persons under the ESPP and (b) the ponion contnbuted by lowa Power in 1990 under the 401(k) Plan (the executive officers' salary deferral contributions under the 401(k) Plan ate not included below, but are shown in the compensation table). Name of Individual Amount Accrued, or identity of Group Paid or Distributed ht. W, Putney $1,574 R. F. Schlenker 2,588 L. K. Vorbrich 1,000 - P. O. Lindner 1,353 J. R. Bull 1,671 17 executive officers as a group, including those listed atove $20,682
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O Retirement Plans The Iowa Power Inc Salaried Employees' Retirement income Plan (Retirement Plan) provides for payment of fixed pension benefits to persons who retire after a specified age and number of years of service, based on average annual salary during the five highest paid consecutive years out of the last ten years prior to retirement. All of the officers named in the compensation table panicipate in the Retirement Plan. Under a plan established by lawa Resources, Midwest Resources maintains an unfunded Supplemental Retirement Plan (Supplemental Plan) to provide additional n'tirement benefits to cenain officers of Iowa Power as determined by the htWR Board of Directors. The Supplemental Plan covers all of the officers named in the compensation table. Pan A of the Supplemental Plan provides retin: ment benefits up to 65% of a panicipant's highest annual salary during the five years prior to retirement reduced by the panicipant's Retirement Plan benefit. The percentage applied is based on years of credited service. A panicipant who takes early retirement is entitled to reduced benefits under the Plan. Pan Il of the Supplemental Plan provides that an additional 150% of annual salary (the level of life insurance for an active employee) is to be paid out to participants at the rate of 10% per year over 15 years, except in the event of a panicipant's death, in which case the unpaid balance would be paid to the panicipant's beneficiary or estate. Benefits from the Supplemental Plan will be paid out of general corporate funds. Midwest Resources maintains life insurance on panicipants in amounts actuarially determined to be sufficient to fund all of the future liabilit!cs under the Supplemental Plan. Midwest Resources through a trust is both owner and beneficiary of all such life insurance. The Supplemental Plan has been designed so that if the assumptions made as to mortality experience, policy dividend, tax credits and other factors are realized, Midwest Resources will recover fully its premium and benetit payments over the life of the Supplemental Plan. Deferred compensation is considered part of the salary covered by the Supplemental Plan. The table below shows the estimated aggregate annual benefit payable (for the first 15 years of retirement) under the Supplemental Plan and the Retirement Plan. The amounts exclude Social Security and are based on a straight life annuity and retirrment at age 65. Amounts shown are calculated on the basis of credited service, All of the persons named in the compensation table will have at least 25 years of credited service at age 65, Cunent compensation covered by the Supplemental Plan (regular salary plus deferred compensanon) for individuals named in the compensation table is as follows: Mr. Putney $360,000; Mr. Vorbrich $212,000; Mr. Lindner $143,000; Dr. Ilull $143,000. Estimated Annual Benefit
- liighest Annual Salary Years of Service in Five Years Prior 25 or to Retirement 10 15 20 More
$150,000 $ 90,000 $ 97,500 $105,000 $112,500 175,000 105,000 113,750 122,500 131,250 200,000 120,000 130,000 140,000 150,000 225,000 135,000 146,250 157,500 168,750 250,000 150.000 162,500 175,000 187,500 275,000 165,000 178,750 192,500 206.250 300,000 180,000 195,000 210,000 225,000 325,000 195,000 211,250 227,500 243,750 350,000 210,000 227,500 245,000 262,500 375.000 225,000 243,750 262,500 281,250 400,000 240,000 260,000 280,000 300,000
' Federal law limits the amount of benefits payable to an individual through the Retirement Plan. Benefits which would exceed the limitation will be payable under the Supplemental Plan.
15
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C0h1PENSAT10N OF DIRECTORS During 1990, each director of IPR was entiti:d to an annual fee of $8,000, in addition, each director who was not also an officer of IPR, IOR, htWR, or one of its subsidiaries was entitled to a meeting fee of $600 for each board and committee meeting attended. Directors have the opponunity to make an election prior to the commencement of any year to defer a ponion or all of their compensation received for directors' services provided to IPR pursuant to the hiidwest Resources Inc. Board of Directors DeferTed Compensation Plan. Deferrals under this plan and distributions upon termination of service as a director are accomplished in the same manner as provided in the Executive i . Deferred Compensation plan. Iowa Resources had a deferred compnsation plan similar to the Directors Deferred Compensation Plan in which directors could panicipate. Amounts deferTed under that plan will be distributed in accordance with the plan's provisions upon a director's termination of service as a director. item 12-Security Ownership of Cestain Beneficial Oumers and Manacement h11dwest Resources Inc., the parent company of IPR, owns 100% of the 7.586.456 shares of IPR's common stock, par value $10, which were outstanding on February 25, 1991, hildwest . Resources had 50,010,821 shares of common stock outstanding on February 25, 1991. The following table sets fonh infonnation conceming each class of htWR's and IPR's equity secunties which were owned of record or beneficially held on February 25, 1991, by all of IPR's directors and nominees for election as directors, and by all directors and oincers as a group. The number of shares owned by any director or nominee, er by all directors and officers of IPR did not exceed one percent of htWR shares outstanding on February 25, 1991. Name of Director Number Title of Class or.,ldentity of Groun of Shares hiidwest Resources common Russell E. Christiansen 8.515 stock, without par value hiidwest Resources common Richard C. Engle 5,130 Stock, without par value hiidwest Resources common Philip G. Lindner 195 stock, without par value hildwest Resources common h1 ark W. Putney 17,505 stock, without par value hildwest Resources common Lynn K. Vorbrich 3.070 l stock, without par value
- hiidwest Resources common 17 directors and officers, 81,400 (1) stock, without par value as a group (1) Does not include 390.527 shares held for the Iowa Power Payroll-Based Employee Stock r Ownership Plan by his. Rozema as Trustee, i
*No officer or director of IPR owns, or may be deemed to own more than 1% of any class of equity '
securities of hiWR or any of its subsidiaries, nor do all 17 directors and officers as a group, 16
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- Item 13-Certain Relationshlos and Related Transactions
- Reference'.is made to Ncae-11 of Notes to Consolidated Financial Statements for a summary of affille.ted transactions. .
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PART IV Item 14. Exhibits. Financial Statement Schedules. and Recons on Fonn 8 K (a)l. Financial Statements (included herein): Document ^ Pgce Ng Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . 24 Consolidated Statement of Income for each of the three years in the period ended December 31, 1990 , . . . . . . . . . . . . . 25 Consolidated Balance Sheet - December 31,1990 and 1989 , . . , . , , 26 Consolidated Statement of Retained Eamings for each of the three years in the period ended December 31,1990 ........... 28 Consolidated Statement of Long Term Debt December 31, 1990 and 1989 .................................. 28 Consolidated Statement of Cash Flows for each of the three years in the period ended December 31, 1990 . . . . , , . . . . . . . . . 29 Notes to Consolidated Financial Statements . . . . . . . . . . , . . . . . . . 30 Repon of Independent Public Accountants .................. 39 Management's Discussion and Analysis of Operating Results and Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 (a)2. Financial Statement Schedules (incbd:d herein): The following schedules for the yeais ended December 31,1990,1989 and 1988 should be n:ad in conjunction with the aforementioned Gnancial statements (schedules not included have been omitted because they are not applicable or the required data is shown in the aforementioned financial statements): Schedule No. Document Pace No. V Consolidated Propeny, Plant and Equipment . . . . . . . . . . . . . 45 VI Consolidated Accumulated Depreciation and Amom. zation of Pmpeny, Plant and Equipment . . . . . . . . . . . . . . 48 VIII Consolidated Valuation and Qualifying Accounts , , . . . . . . . 51 IX Consolidated Shon-Temi Bormwings .......... ...... 54 X Supplementary Consolidated Income Statement Inform atio n . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . 57 (a)3. Exhibits Exhibits Filed Herewith (See Exhibits Index on pace 58)
' 22.1 Subsidiaries of IPR.
24 Consent of Independent Public Accountants. 28 lowa Power Inc. Payroll. Based Employee Stock Ownership Plan Annual Repon on Form Il-K.
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Exhibhs incomorated by Reference l 3.1 Restated 'Anicles of incorporation of Iowa Power Inc. (Filed as Exhibit 3.1 to IPR's Annual ! Repon on Form 10-K for the year ended December 31, 1989 Commission File No.13567.
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3.3 Amended and Restated Bylaws of IPR. (Filed as Exhibit 3.2 to IPR's Annual Repon on Fomi 10 K for the year ended December 31,1983, Commission File No.13567 ) 3.4 Amended and Restated Bylaws of IPR as of July 27,'1987. (Filed as Exhibit 3.4 to IPR's 4 Annual Repon on Form 10-K for the year ended December 31, 1987. Commission File No. 1 3567.) 4.1 Indentum of hiongage dated as of August 1,1943, between IPR and Harris Tmst and Savings Bank and liarold Eckhan, Tmstees. (Filed as Exhibit 8(a)(1) to IPR's Registration Statement, Registration No. 2-5138.)- 4.2 Instrument relative to appointment of W.11. Aillsted as Individual Trustee under Indenture of hiongage. (Filed as Exhibit 4-B 5 to IPR's Registration Statement, Registration No. 2 9619.) 4.4 ' Eighth Sapplemental indenture dated as of January 1,1961, between IPR and Harris Trust and Savings Bank and W. H. Milsted. Tmstees. (Filed as Exhibit 2 B 10 to IPR's Registration Statement. Registration No. 2 17274.) 4.5 ' Ninth Supplemental Indenture dated as of January 1,1968, between IPR and liarris Trust and Savings Bank and R.11.-Long, Trustees. (Filed as Exhibit 2-B-12 to IPR's Registration Statement, Registration No. 2 27681.) 4.6 Tenth Supplemental Indenture dated as of January 1,1970, between IPR and liarris Trust and Savtags Bank and R.11. Long, Trustees. (Filed as Exhibit 2 B 13 to IPR's Registration Statement, Registration No. 2-35624.) 4.7 Eleventh Supplemental Indenture dated as of December 1,1971, between IPR and Harris Tmst and Savings Bank and R.11. Long, Trustees. (Filed as Exhibit 2-B 14 to IPR's Registration Statement Registration No. 2-42191.) 4.8 Thineenth Supplemental Indenture dated as of March 1,1976, between IPR and Harris Trust and Savings Bank and R.11. Long, Tmstees (Filed as Exhibit 2-B 15 to IPR's Registration Statement, Registration No. 2 58163.) 4.9 Fourteenth Supplemental Indenture dated as of March 1,1977, between IPR and Harris Trust
.and Savings Bank and R. H. Long, Trustees (Filed as Exhibit 2-B-16 to IPR's Registration Statement, Registration No. 2-59339.)
4.10 Loan Agreement No. I between the City of Council Bluffs, Iowa, and IPR providing for the bormwing by IPR of the pmceeds of Pollution Control Revenue Bonds issued by the City. (Filed as Exhibit 2-B-17 to IPR's Registration Statement Registration No. 2 59339.) 4.11 Loan Agreement No. 2 between the City of Council Bluffs, Iowa and IPR pmviding for the borrowing by IPR of the proceeds of Pollution Contml Revenue Bonds issued by the City and the issuance by IPR of its Note due 2007, (Filed as Exhibit 2-B 18 to IPR's Registration Statement, Registation No. 2-59339.)
4.12 Instrument relative to tne tesignation of R.11. Long as individual trustee and appointment and acceptance of R. S. Stam as individual trustee under the Indenture of hiongage and Deed of Tmst between IPR and Harris Trust and Savings Bank, dated as of August 1,1943, as amended and supplemented. (Filed as Exhibit 2 B 19 to IPR's Registration Statement Registration No. 2 59339.) 4.13 Fifteenth Supplemental Indenture dated as of September 15, 1977, between IPR and liarris Trust and _ Savings Bank and R. S. Stam Trustees. (Filed as Exhibit 2 B 20 to IPR's Registration Statement, Registration No. 2 59752.) 4.16 Sixteenth Supplemental Indenture dated as of December 1,1978, between IPR and 11arris Trust and Savings Bank and R. S. Stam Trustees. (Filed as exhibit 2-B 21 to IPR's Registration Statement. Registration No. 2-63259.) 4.17 Seventeenth Supplemental Indenture dated as of January 15, 1979, between IPR and llarns Trust and Savings Bank and R. S, Stam. Trustees. (Filed as Exhibit 2-B-26 to IPR's Registration Statement, Registration No. 2 63259,) 4.24 Twentieth Supplemental Indenture dated as of May 1,1982, between IPR and 11arris Tmst and Savings Bank and R. S. Stam, Trustees. (Filed as Exhibit 4-B 20 to IPR's Registration Statement, Regulation No. 2 75121.) 4.25 Loan Agreement dated as of December 1,1985, between Louisa County, Iowa, and IPR providing for the borrowing by IPR of the proceeds of pollution control revenue bonds issued by the County, (Filed as Exhibit 4.31 to IPR's Annual Repon on Form 10-K for the year ended December 31,1985, Commission File No.1-3567.) 4.26 Twenty-First Supplemental Indenture dated as of July 1,1986, between IPR and 11arris Trust and Savings Bank and R. S. Stam, Tmstees. (Filed as Exhibit 4.26 to IPR's Annual Repon on Form 10-K for the year ended December 31, 1987, Commission File No.13567.) 4,27 Twenty Second Supplemental Indenture dated as of December 1,1986, between IPR and Harns Trust and Savings Bank and R. S. Stam, Trustees. (Filed as Exhibit 4.27 to IPR's Annual Repon on Form 10-K for the year ended December 31,1987, Commission File No.13567.) 4.28 Twenty-Third Supplemental Indenture dated July 15, 1988, between IPR and llanis Trust and Savings Bank and R. S. Stam, Trustees, (Filed as Exhibit 4.28 to IPR's Annual Report on Form 10-K for the year ended December 31 1988, Commission File No.1-3567.) 1 4.29 Instrument relative to the resignation of R. S. Stam as individual trustee and appointment and acceptance of J. Banolini as individual trustee under the Indenture of Mongage and Deed of Trust between IPR and liarris Trust and Savings Bank, dated as of August 1,1943, as amended and supplemented. (Filed as Exhibit 4.29 to IPR's Annual Repon on Form 10 K for the year ended December 31,1989. Commission File No.1-3567.) 10.1 Power Sales Contract between IPR and Nebraska Public Power District, dated September 22, 1967. (Filed as Exhibit 4-C-2 to IPR's Registration Statement, Registration No. 2-27681.)_ 10.2 Amendments No. I and 2 to Power Sales Contract between IPR and Nebraska Public Pov - District. (Filed as Exhibit 4-C-2-a to IPR's Registration Statement, Registration No. 2-3562e 10.3 Amendment No. 3 dated August 31, 1970, to the Power Sales Contract between IPR and Nebraska Public Power District, dated September 22, 1967. (Filed as Exhibit 5-C-2-b to IPR's Registration Statement, Registration No. 2-42191.)
A, ',. 10.4 Amendment No. 4 dated March 28, 1974, to the Power Sees Contract between IPR and Nebraska Public Power Distdct, dated September 22,1967. (Filed as Exhibit 5 C.2 c to IPR's Registration Statement, Registration No. 2 42191.) 10.5 Coal Supply Agnement between the Amax Coal Company Division of American Metal Climax, Inc., and IPR dated August 31,1973, and Amendment to Agreement between the same panies dated December 19,1973. (Filed as Exhibit 5-J 2 to IPR's Registration Statement, Registration No. 2-51540.) 10.6 Letter Agreement dated July 30,1974, between Amax Coal Company and IPR amending Coal Supply Agreenient. (Filed as Exhibit 5 J 2 a to IPR's Registration Statement, Registration No. 2 52835.) 10.7 Amendment No. 3 dated January 1,1979, to the Coal Supply Agreement between Amax Coal Company and IPR, dated August 31,1973, (Filed as Exhibit 10.7 to IPR's Annual Repon on Fonn 10-K for the year ended December 31,1987. Commission File No.13567.) 10.8 Amendment No,4 and supplemental letter dated July 1,1982, to the Coal Supply Agreement between Amax Coal Company and IPR, dated August 31, 1973. (Filed as Exhibit 10.8 to IPR's Annual Report on Form 10-K for the year ended December 31, 1987, Commission File No.1-3567.) 10.10 Revised and amended Supplemerwal Retirement income Plan for IOR and Subsidiades dated October 24,1984. (Filed as Exhibit 10.24 to IOR's Annual Repon on Fonn 10-K for the year ended December 31, 1984, Commission File No.17830.) 10.11 Revised and amended Executive Compensation Plan for IOR and Subsidiaries, dated July 24, 1985. (Filed as Exhibit 10.21 to IOR's Annual Repon on Form 10-K for the year ended December 31, 1985, Commission File No.17830.) 10.12 Revised and amended Extcutive Deferred Compensation Plan for IOR and Subsidiaries, dated July 24,1985. (Filed as Exhibit 10.22 to IOR's Annual Repon on Form 13-K for the year ended December 31, 1985. Commission File No.1-7830.) 10.13 Revised and amended Deferred Compensation Plan for Board of Directors of IOR and Subsidiaries, dated July 24,1985. (Filed as Exhibit 10.23 to IOR's Annual Repon on Form 10-K for the year ended December 31, 1985, Commission File No.1-7830.) 10.14 Revised and amended Executive Compensation Plan for IOR and Subsidiaries, dated December 18,1987. (Filed as Exhibit 10.14 to IPR's Annual Repon on Form 10-K for the year ended December 31,1987. Commission File No.1-3567,) , 10.15 Revised and amended Executive Deferred Compensation Plan for IOR and Subsidiaries, dated December 18,1987. (Filed as Exhibit 10.15 to IPR's Annual Repon on Form 10-K for the year ended December 31,1987, Commission File No.1-3567.) 10.16 Revised and amended Defermd Compensation Plan for Board of Directors- of IOR and Subsidiaries, dated December 18, 1987. (Filed as Exhibit 10.16 to IPR's Annual Repon on Form 10-K for the year ended December 31, 1987, Commission File No.1-3567.) 10.17 Amendment No. 5 (letter agreement) dated July 23, 1987, to the Coal Supply Agreement )- between Amax Coal Company and IPR, dated August 31, 1973. (Filed as Exhibit 10.17 to ! IPR's Annual Report on Form 10-K for the year ended December 31,1988, Commission File l No.1 3567.) i l l
10.18 Amendment No. 6 dated Deceniber 14, 1988, to the Coal Supply Agreement tetween Amax Coal Company and IPR, dated August 31,1973. (Edited to exclude confidential information.) An unedited version of this document has been filed with the SEC under separate cover, pursuant to an OBJECrlON TO DISCLOSURE OF INFORMATION AND APPLICATION FOR CONFIDENTIAL TREATMENT. (Filed as Exhibit 10.18 to IPR's Annual Report on Form 10-K for the year ended December 31,1988, Commission File No.13567.) (b) Renons on Fonn 8-K No repon on Form 8 K was filed during the last quaner of the year ended December 31,1990. MWR owns all of the common stock of IPR IPR, therefore, sends no annual repon or proxy material to the holders of its common stock. l l
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" SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly ,
authotired. IOWA POWER INC.
- Date: March 28,1991 By R. E. Christiansen (R. E. Christiansen)
Chairman, and Chief Executive Offlect 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 registmni and in the capacities and on the date indicated: Sicnature Titl.t Date Chairman and Chief Executive Officer March 28,1991 R. E. Christiansen (R. E. Christiansen) (Principal Executi' e Officer) Senior Vice President (Principal March 28,1991 P. G.1.indner (l'. G. Lindner) Accounting and Financial Officer) Controller March 28,1991 J. W. Hamilton (J. W. Hamilton) R. C, Encle Director March 28,1991 (R. C Engle) M. W Putnev Director Match 28,1991 (M. W. Pumey) Director March 28,1991 L K. Vorbtich (L. K. Vorbrich) I l l l l l
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' IOWA POWER INC.. ,
SELECTED CONSOLIDATED l'INANCIAL DATA (In Thousands). Yea r F.nded December 31 1990 1989 1988- 1987 1986 , Operating revenues $ 349,669 $ 350,269 $ '344,241 $ 338,368 $ 331,448 68,914 69,066 58,333 65,519 73,854
. Operating income 47,364 41,558 43,238 36,210 41,387 Net income Total assets 1,109,737 1,086,516 -1,081,073 1,058,702 1,060,360 331,916 341,475 342,383 278,252 302,685 Long-term debt...
Cumulative preferred stock without sinking 19,971 19,971 19,971- 19,971 19,971 fund-Cumulative preferred " stock with sinking
- - - - 2,452 fund 329,690 324,128 318,051 317,333 323,019 Common equity 681,577 685,574 680,405 615,556 645,675
. Total capitalization Power purchase contract 150,838 159,292 167,282 174,832 181,978 T
1 6 m i i I ew-. < e, +c y - g -,, yy - r- --- , w---+ m-- r - 7 ~
IOWA POWER INC. CONSOLIDATED STATEMENT OF INCOME (In Thousands) Year Ended December 31 1990 1989 1988 OPERATING REVENUES . . . . . . . . . . . 114o,669 S350,269 $344,241 OPERATING EXPENSES: Operation-Purchased power-nuclear. . . . . . . 73,300 72,990 72,299 Interchange power, net . . . . . . . (16,783) (12,834) 5,433 Fuel for electric generation . . . . 50,406 53,470 43,157
. . . . . . . . . . . . . . . 57,760 $6,310 55,304 Other.
Maintenance. . . . . . . . . . . . . . 23,998 19,890 20,690 Depreciation and amortization. . . . . 39,492 36,058 35,373 Federal income taxes - 19,053 Current. . . . . . . . . . . . . . . 17,964 20,306 Met with investment credit, net. . . (1,864) (1,648) (1,976) Deferred until future years, net . . 2,880 3,798 3,748 5,747 6,804 6,240 State income taxes . . . . . . . . . . 26,587
??,855 26,059 Property and other taxes . . . . . . .
280,';55 281,203 285,908 OPERATING INCOME , . . . . . . . . . . . 68_,914 64,066 58,33.1 OTHER INCOME (DEDUCTIONS): Allowance for equity funds - Used during construction . . . . . 1,169 921 115 Accrued on advances. . . . . . . . 587 836 570 508 1,084 2,616 Interest and dividend income . . . . . 419 Other, net . . . . . . . . . . . . . . (650) (531) 1, 614 2,310 3,720 70,528 71,376 62,053 INCOME BEFORE FIXED CHARGES. . . . . . . FIXED CHARGES: Interest on long-term debt . . . . . 29,005 29,203 25,340 657 2,005 Interest on short-term debt. . . . . . 3,322 Allowance for borrowed funds - Used during construction . . . . . . (2,069) (915) (199) (1, 2 R B ) (1,303) Accrued on advances. . . . . . . . . (AQ1) 28,139 25,843 28,970 41,558 43,238 36,210 NET INCOME . . . . . . . . . . . . . . . h,1 041 A41 Preferred stock dividends. . . . . . . S 40.717 S 42,397 S 35,369 NET INCOME AVAILABLE TO COMMON STOCK . . L The accompanying notes are an integral part of this statement. 1 l
Page 1 of 2 IOWA POWER INO. CONSOLIDATED BALANCE SHEET (In Thousands) PROPERTY AND OTHER ASSETS December 31 1490 1989 P ROPk'RTY, PLANT AND EQUIPMENT, at cost Electric utility plant . . . . . . . . . . . . . $1,132,601 $1,058,250 Construction work in progress. . . . . . . . . . 32,452 57,316 5,576 R,547 Non-utility plant. . . . . . . . . . . . . . . . 1,170,629 1,124,113 Less-accumulated provisions for 414,372 386,014 depreciation . . . . . . . . . . . . . . . . . 7;1,?S7 738,099 Preperty, plant and equipment, net . . . . . . POWER PURCHASE CONTRACT: Productive capacity . . . . . . . . . . . . . 159,293 167,282 Advances for nuclear fuel . . . . . . . . . . . 716 Advances for capital improvements . . . . . . 43,413 A6,795 252,706 254,793 CURRENT ASSETS: Cash and short-term investments. . . . . , . . . 2,359 2,257 Accounts receivable, less reserves of
$155 and $240, respectively. . . . . . . . . . 44,051 45,382 Accounts and notes receivable from
~
affiliated companies . . . . . . . . . . . . . 326 445 Electric production fuel, at average cost . . . . . . . . . . . . . . . . . . . . . 12,379 7,545 Materials and supplies, at average cost. . . . . 9,823 11,820 1,869 1,939 Prepayments and other . . . , . . . . . . . . . 69,388 70,807 34,967 24,236 DEFERRED CHARGES AND OTHER ASSETS. . . . . . . . . S1,109,737 St . 0 0 6, 516 The accompanying notes are an integral part of this statement.
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Page 2 of 2 IOWA POWER INC. CONSOLILATED BALANCE SHEET (In Thousands) CAPITALTZATION AND 1TABILITIES December 31 1940 1989 COMMON EQUITY: Common stock authorized 8,000,000 shares, par value $10, outstanding 7,586,456 chares . . . . S 75,865 S 75,865 Additional paid-in capital. . . . . . . . . . . . 82,163 82,163 Retained earnings (See accompanying statement). . 171,662 166.100 329,640 324,128 CUMULATIVE PREFERRED STOCK - authorized 800,000 shares, par value S100, without sinking fund: 49,850 shares, 3.30% . . . . . . . . . . . . . 4,925 4,985 50,000 shares, 4.40% . . . . . . . . . . . . . 5,000 5,000 49,950 shares, 4.35% . . . . . . . . . . . . . 4,995 4,995 49,908 shares, 4.80% . . . . . . . . . . . . . 4,491 4,991 19,97( 19,971 LONG-TERM DEBT (See accompanying statement) 331,916 341,475 Total capitalization. . . . . . . . . . . . . . . 6R1,577 685,574 POWER PURCHASE CONTRACT . . . . . . . . . . . . . . 150,838 159,292 CAPITALIZED LEASES. . . . . . . . . . . . . . . . . 6,339 6,A16 CURRENT LIABILITIES: Commercial paper outstanding. . . . . . . . . . . 45,200 11,400 Current naturity of long-term debt. . . . . . . . 9,232 626 Current portien of power purchase contract. . . . 8,455 7,990 Accounts payable. . . . . . . . . . . . . . . . 19,017 23,779 Accounts payable to affiliated companies. . . . . 685 403 Taxes accrued . . . . . . . . . . . . . . . . . . 26,518 30,248 Interest accrued. . . . . . . . . . . . . . . . . 9,744 9,832 Energy cost adjustment accrual. . . . . . . . . . 5,526 6,429 2,720 2,696 Other . . . . . . . . . . . . . . . . . . . . . . 127,097 93,403 RESERVES AND DEFERRED CREDITS: Accumulated deferred income taxes . . . . . . . . 101,561 97,799 Unamortized investment tax credit . . . . . . . . 36,547 38,411 5,778 5,221 Other . . . . . . . . . . . . . . . . . . . . . . 143,886 141,431 SI.109,737 S1,086,516 The accompanying notes are an integral part of this statement. e IOWA POWER INC. CONSOLIDATED STATEMENT OF RETAINED EARNINGS (In Thousands) Year Ended December 31 1940 1989 1988 BALANCE, beginning of year. . . . . . . . . S166,100 $160,023 S159,305 NET INCOME. . . . . . . . . . . . . . . . . 41,558 43,238 _,36,210 207,658 203,261 195,515 DEDUCTIONS: Cash dividends declared - Preferred stock . . . . . . . . . . . . 841 841 841 Common stock. . . . . . . . . . . . . 35,155 36,320 34,651 BALANCE, end of year. . . . . . . . . . . . $171,662 _S_166,100 $160,023 IOWA POWER INC. CONSOLIDATED STATEMENT OF LONG-TEPR DEBT (In Thousands) Long-term debt, exclusive of (a) issues due within one year, (b) current sinking fund requirements of S1,594,000 at December 31, 1990 and $1,694,000 at December 31, 1989 met substantially by reacquired long-term debt and (c) reacquired long-term debt in excess of these sinking fund requirements, is as follows: December 31 1990 1489 First Mortgage Bonds - 4 5/8% Series due 1991. . . . . . . . . . . . . . . S S 8,550 8 1/4% Series due 1996. . . . . . . . . . . . . . . 50,000 50,000 8 3/8% Series due 1997. . . . . . . . . . . . . . 50,000 50,000 6 5/8% Series due 1998. . . . . . . . . . . . . . . 13,174 13,324 9% Series due 2000. . . . . . . . . . . . . . 12,964 13,125 7 5/8% Series due 2001. . . . . . . . . . . . . . 13,490 13,575 6 1/2% Series due 2003 (Chillicothe, Council Bluffs and Pleasant Hill, IA)*, . . . . . . . . . 9,900 9,900 8 3/4% Series due 2006. . . . . . . , , . . . . . 29,203 29,203 5 9/10% Series due 2007 (Council Bluffs, IA)* . . . 18,000 18,000 8 1/4% Series due 2007. . . . . . . . . . . . 29,400 29,400 10 1/2% Series due 2018. . . . . . . . . . . . . . . 70,000 70,000 Notes due serially to 2009 at 9 1/2%. . . . . . . . . 991 1,011 Notes, maturing 2003 and 2007, average rate 6 4/10% . . 2,000 2,000 Pollution control revenue bonds, Louisa County, IA floating 30 day municipal bond rate due 2015. . . . . 23,900 23,900 Pollution control revenue bonds, guaranteed due serially to 2003, average rate 5 4/10% . . . . . . . . . . . . 8,948 9,492 Unamortized debt discount / premium, net. . . . . . . . (305) (326) Total utility long-term debt. . . . . . . . . . 331,665 341,154 Redlands, Inc. - notes, due serially to 1996, at rates varying from 7% to 15%. . . . . . . . . . . . . . . . 251 321 3331.916 S341,475 Total long-term debt. . . . . . . . . . . . , . l
= These bonds are Iowa Power Inc. cbligations for pollution control revenue bonds issued by the named governmental units.
1 The accompanying notes are an integral part of these statements. l l l
S '. IOWA POWER INC. CONSOLIDATED STATEhENT OF CASH FLOWS (In Thousands) Yea r Ended December 31 1990 1989 1988 CASH FLOWS FROM OPERATING AC11VITIES: Net income. . . . . . . . . . . . . . . . . S 41,558 $ 43,238 $ 36,210 Adjustments to reconcile net income to net cash - Depreciation and amortization . . . . . . 39,492 37,665 37,942 Amortization of advances for nuclear fuel and capital improvements. . . . . . . . 10,118 12,799 14,098 Deferred income taxes, net. . . . . . . . 2,737 3,771 3,713 Amortization of investment tax credit . (1,864) (1,648) (1,976) Allowance for equity funds - credit . . . (1,756) (1,757) (685) Total . . . . . . . . . . . . . . . . 90,285 94,068 89,302 Cash flows impacted by changes in - Receivables . . . . . . . . . . . . . . 1,450 (16,083) 6,456 Materials, supplies and electric production fuel . . . . . . . . . . . (2,837) 6,298 (4,592) Reserve for rate refunds. . . . . . . . (376) 361 (14,111) Accounts payable. . . . . . . . . . . . (4,104) (1,149) 7,512 Taxes accrued . . . . . . . . . . . (3,730) 566 1,384 Interest accrued. . . . . . . . . . . . (88) 45 3,244 Energy cost adjustment accruals . . . . (903) (60) 584 Other, net. . . . . . . . . . . . . . , . (2,878) ?,270 1,0R4 Net cash provided by operating activities . . . . . . . . . . . . . 76,819 86,316 42,868 CASH FLOWS FROM INVESTING ACTIVITIES: Property additions. . . . . . . . . . . . . (55,143) (73,287) (53,730) Cooper Nuclear Station capital improvement advances. . . . . . . . . . . . . . . (14,146) (10,194) (10,963) (5,113) (3,479) (2,187) Allowance for funds . . . . . . . . . . . . Total capital expenditures. . . . . . . . (74,402) (86,960) (66,880) Allowance for equity funds - credit . . . . 1,756 1,757 685 Net cash used in investing activities . . (72,646) (85,203) (66,195) CASH FLOWS FROM FINANCING ACTIVITIES: Net activities of short-term debt . . . . . 33,800 11,400 (29,900) Issuance of long-teon debt. . . . . . . .
- - 70,000 Reacquired long-term debt . . . . . . . . (1,117) (6,993) (9,241)
Dividends paid. . . . . . . . . . . . . . . (35,996) (37,401) (35,751) Other financing activities. . . . . . . . (7iA) (934) (1,451) Net cash used in financing activities . . (4,071) (33,929) (6,343) NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS. . . . . . . . . . . . 102 (32,815) 20,330 CASH AND SHORT-TERM INVESTMENTS AT 14,742-2,257 35,072 BEGINNING OF PERIOD . . . . . . . . . , . . CASH AND SHORT-TERM INVESTMENTS AT Elm OF PERIOD . . . . . . . . . . . . . . . S 2,359 S 2.257 $ 35.072 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for - Interest (net of amount capitalized) . S 28,170 $ 27,195 S 22,267 Income taxes. . . . . . . . . . . . . 29,117 25,963 21,679 The accompanying notes are an integral part of this statement. 4 lOWA POWER INC. , I NOTES TO CONSOLIDATED FINANCIAL STATEhiENTS (1) Summary of Significant Accounting Policies: (a) Corporate Organization and Principles of Consolidation Iowa Power Inc. (IPR), formerly towa Power and Light Company, is a wholly-owned subsidiary of hildwest Resources Inc. (hiidwest Resources or hiWR), a holding company. IPR was previously a wholly-owned subsidiary of Iowa Resources Inc. (IOR), a holding company. On November 7,1990.
- IOR and hiidwest Energy Company merged into hiidwest Resources Inc., a newly created holding company. The accounting records of IPR are maintained in accordance with the uniform system of accounts prescribed by the Federal Energy Regulatory Commission (FERC) which has also been adopted by the Iowa Utilities Board (1U8). IPR is a utility operating company engaged in the generation, transmission and distribution of electric energy. The consolidated statements include the accounts of IPR and its non-utility subsidiaries after elimination of significant intercompany accounts and transactions. IPR provides electric service to 252,000 customers in 125 communities in central and southwest lowa.
(b) Electric Utility Plant Electric utility plant is stated at original cost, which includes payroll taxes, pensions, insurance and other payroll benefits, administrative and general costs and the allowance for funds used during constmetion. (c) Joint Plant Ownership Under joint plant ownership agreements with other lowa utilities, IPR had undivided inteststs at December 31,1990 in four electric generation units, as shown below: Council Neal Bluffs Ottumwa Louisa Unit No.3 Unit No.3 Unit No.1 Unit No.1 ($ - millions except capital cost per KW3
- Utility plant in service . . . . .... $35.5 $161.6 $58.2 $184.5 Year placed in service . . .. 1975 1978 1981 1983 Accumulated depreciation . .. .. $16.5 $60.9 $17.1 $43.7 Unit capacity - htW . . . . . ... 515 675 675 650 IPR share . ........ .. ... 23.0 % 46.7% 15.0 % 30.5 %
Capital cost per KW ...,. ... $300 $513 $575 $931 The dollar amounts above represent IPR's share in each jointly owned unit. Each participant has provided financing for its share of each unit. Operating expenses on the Consolidated Statement of Income include IPR's share of the expenses of these units. (d) Depreciation The provision for depreciation as an annual percentage of the average depreciable utility plant in service, determined generally by the application of straight line rates, was 3.7% for 1990 and 1989 and 3.8% for 1988.
4 (e) Revenue and Cost Recoghition IPR recognizes revenues based upon services rendered to the end of the month. Accrued unbilled revenunes are $15,595,000 and $16,486.000 at December 31,1990 and 1989, respectively, and are included in Receivables on the Consolidated Balance Sheet. All of IPR's electric sales are subject to an Energy Cost Adjustment Clause (ECA). The ECA allows IPR to adjust the amount charged for electric service as the cost of Fuel for generauon changes. The costs recovered through the ECA are charged to expense in the same period. (f) Allowance for Funds Used During Construction and Accrued on Advances (AFUDC) The AFUDC includes the cost of borrowed funds used for construction purposes and a return on equity funds during the construction period. The allowance for bormwed funds represents an allocation of interest costs to construction, while the allowance for equity funds is a non cash item of income. AFUDC is capitalized as a cost of construction. When a construction project is placed in service, the related AFUDC becomes a pan of the original cost of the completed plant which is used to establish rates for utility charges under established regulatory rate practices. The rates used to compute AFUDC were approximately 10% for the years ended December 31,1989 and 1990 and appmximately 9% for the year ended December 31, 1988, (g) Federal and State income Taxes The items comprising income tax expense are as follows: . Year Ended Decemner 31 1990 1989 1988 (In Thousands) Federal income taxes - Taxes currently payable . ......... . .
$17,622 $20,256 $18,320 Provision for defe:Ted taxes, net .. . .... 3,208 3,782 3,757 Investment tax credit - amortization . . ... (1.8 M ) (1.648) (1.976)
Total utility operations .. ........ . . 18,966 22,390 20,101 Non-utility operations ,.. ...... .... 14 66 724 Total Federal income taxes . . . .. . ... $18.980 $22A56 $20.825 State income taxes - Taxes currently payable .. . . . . $ 5,776 $ 6.815 5 6.031 Deferred taxes flowback per IUB order (32) (32) (32) Total utility operations . . . 5.744 6,783 5,999 Non-utility operations .. . . 3 21 241 Total State income taxes ,, .. . S 5.747 s 6.8 m S 6.240 Total Federal and State income taxes - Utility operations . . . ... .. . ... . . $24,710 $29,173 $26,100 I Non-utility operations . . . . . 17 87 965 Total ..... . . ... . .. . . . $24.727 $29.260 $27.065 The sources of timing differences resulting in deferred income taxes and the tax effect of each for the years ended December 31 are as follows: I Year Ended December 31 l 1990 1989 1988 (in Thorsands) ! Accelerated depreciation . .. 5 2,788 $ 3,750 $ 3,725 Other, net . . . (51) 21 (12) Total deferred income taxes . . 5 2.737 5 3.771 $ 3.713 1 l i
Midwest Resources files consolidated tax retums which include IPR. Under a tax sharing agreement with Midwest Resources, IPR calculates and pays its income tax liability to Midwest Resources as if IPR had filed a sephrate retum. Deferred Federal income taxes are provided by IPR for all differences in the timing of income and expense except where such deferred income taxes are not allowed by regulatory agencies as an expense for rate purposes. Income tax expense related to these inutsactions is included in the period in which the taxes become payable, i.e., " flow.through" income tax accounting. The estimated cumulative net amount of deferred taxes which has not been provided as of December 31,1990 is $54.0 million. As directed by the IUB, deferred state income taxes are not provided and amounts previously provided are being retumed to income over the 15 years ending in 1993. Investment tax credits have been deferred and are being amonized over the life of the related pmperty which gave rise to the credits. The following table is a reconciliation between the effective income tax rate, before dividends on preferred stock, indicated by the Consolidated Statement of Income and the statutory Federal income - tax rate for the years ended December 31: Year Fnded December 31 1990 1989 1988 Effective income tax rate as reported .... . 37 % 40% 43% State income taxes, net of Federal income tax benefits . . . . . . . . .................. (6) (6) (6) Allowance for funds . . . . . . . . . . . ...... . 2 - (2) Interest capitalized ........,...,........ (1) (1) - Amonization of investment tax credits . . . . . . . . 3 3 3 Difference between book and tax depreciation for which deferred taxes have not been provided ... (2) (3) (3) Other items, net . . . . . . . . . . . . . . ....... 1 1 .1]l.) Statutory Federal income tax rate . .. . .... 34 % 34 % 34 % (h) Statement of Financial Accounting Standards No. 96 In December 1987, We Financial Accounting Standards Board (FASB) issued a new standard on accounting for income taxes (FAS 96). which IPR currently is required to adopt no later than the first quaner of 1992. The announced effective date (which is being reviewed by FASB) is for fiscal years ending after De.: ember 15. 1991. IPR anticipates adoption during the first quaner of the fiscal year following the effective date cn a restatement basis. Because of rate regulation, the new standard will have a significant impact on the balance sheet but no material impact on net income.
- (i) Consolidated Statement of Cash Flows IPR uses the " indirect method" of presentation and considers all cash and highly liquid deb.
instruments purchased with a maturity of three months or less to be cash and cash equivalents for purposes of the Consolidated Statement of Cash Flows. (2) Rate Matters: On June 25, 1987, the Office of Consumer Advocate (OCA) filed a petition with the IUB seeking a $52.1 million annual reduction in IPR's electric rates. On August 13. 1987, IPR voluntarily _
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.. 1 reduced its revenues by $8.7 million annually, ne IUB's final decision, issued on June 30, 1988, resulted in an additional $18.8 million annual reduction in electdc revenues The effect of the revenue refund, interest on such refund and taxes was a decrease in 1988 net income of $14.9 million. The lower rates were placed in effect on September 15, 1988 and a refund of $30.6 million was made by IPR to its customers in October 1988.
On August 5,1988, IPR filed a $33.0 million, or 10.7%, annualized electhe rate increase request. On October 7,1988, the IUB approved an annualized interim rate increase of approximately
$17.8 million, based primarily on a rerum on equity of 13 percent. The increased interim rates were collected on sales from October 7,1988 through August 31,1989. On July 19,1989, the IUB issued a final order which approved a total annualized rate increase of appmximately $24.7 million based on a retum on equity of 13.2%. Iowa Power implemented the new rates on September 1,1989. The rates authodzed included approximately $0.5 million annually related to the normalized treaunent of contnbutions in aid of construction (CIAC) which were collected subject to refund pending an appeal by IPR to the Iowa District Coun for Polk County, On September 18,1990 the Coun remanded the case to the IUB for consideration of new evidence: A Private Letter Ruling issued to IPR by the Internal Revenue Service supponative of IPR's position en CIAC accounting. On October 9,1990, the IUB issued an order appmving a stipulated settlement, signed by IPR and the Office of Consumer Advocate, resolving all outstanding issues in the case.
The settlement reached in the case will allow IPR to account for CIAC's in the manner deemed appropriate by the Company. On November 2,1990, IPR submitted a refund plan to the IUB designed to refund to customers approximately 50.5 million plus interest, ansing out of a distinct but related state income tax issue pennining to CIAC's. The refund plan was approved by the IUB on December 6, 1990. In addition, pursuant to the Iowa Supreme Court decision of February 17, 1988, IPR reversed the 1983 rate case refund reserve. The effect of this adjustment increased 1988 net income by $5.8 million. (3) Long Term Power Purchase Contract: Under a long-term power purchase contract with the Nebraska Public Power District (NPPD), expiring in 2004, IPR buys. one-half of the output of the 778 megawatt Cooper Nuclear Station (Cooper). The Consolidated Balance Sheet includes a liability for IPR's fixed obligation to pay 50% of NPPD's Nuclear Facility Revenue Bonds. A like amount representing IPR's right to purchase Cooper power is shown as an assc: Monthly- payments to NPPD cover one-half of the fixed and operating costs of the plant (excluding depreciation but including debt service) and IPR's share of nuclear fuel costs (including nuclear fuel disposal) based on energy delivered, ne debt service ponion on a monthly basis approximates $1.5 million and is not contingent upon the plant being in operation. Payments also include amounts to maintain various funds and reserves which are anticipated to be available for plant decommissioning costs. In respcase to Nuclear Regulatory Commission (NRC) regulations, NPPD has filed a decommissioning plan with the NRC and established an extemal trust for nuclear decommissioning funds. " Purchased power nuclear" in the Consolidated Statement of Income, reflects such charges. The debt amortization component of IPR's payments to NPPD was $7,990,000,
$7,550,000 and $7,242,000 and the net interest component was $6,811,000,56,929,000 and $7,897,000 each for the years 1990,1989 and 1988, respectively. Current maturities of the power purchase contract obligations are $8,455,000, 58,N8,000, 59,470,000, $10.038,000 and $10,638.000 for 1991, 1992,1993,1994 and 1995, respectively.
IPR's payments to NPPD representing advances for the delivery of uranium concentrates, together with related carrying costs, are being amortized and recovered in rates in accordan e with the refueling schedule. Cenain capital improvement costs, including carrying costs, are being deferred, l
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amortized and recovered in rates over tfle tenn of the NPPD contract. The equity component of carrying costs was $587,000, $S36,000 and $570,000 for the years 1990,1989 and 1988, respectively. The debt component of carrying costs was $1,288,000, $807,000 and $1,303,000 for the years 1990, 1989 and 1988, respectively. NPPD has primary and excess propeny insurance for Cooper in the amount of $1.2 billion, and IPR purchases $562.5 million of excess propeny coverage directly from a mutualinsurance company. The combination of insurance programs provide IPR coverage for its 50% share of losses up to $2.3 billion. CutTently, this is the maximum available coverage. Under NRC mies, the required excess propeny insurance must be used to pay the costs of any obligation to decontaminate the facility and remove debris before any other claims for propeny damage. in the event of an accident at any of the mutual company members insured nuclear plants, IPR would be subject to a retrospective maximum additional premium of approximately $2.9 million. IPR also purchases insurance coverage from the mutual insurance company for increased costs of generation and purchased power resulting from an accidental outage at Cooper. NPPD purchases nuclear liability insurance in the amount of $200 million. In accordance with the Price Anderson Amendments Act of 1988, excess liability coverage is provided by a mandatory industry wide program under which the owners of nuclear generating facilities could be assessed for liability incurred due to a serious nuclear incident at any commercial nuclear reactor in the United States. IPR's 50% share of the maximum amount of such an assessment would be $31.5 million per incident, payab!c in annual installments of not more than $5 million. Ilowever, an additional assessment of no more than 5% of this amount may be payable if the public liability claims and legal costs arising from a nuclear incident at an indemnified facility exceeds the Price-Anderson financial protection. An industry wide policy with an aggregate limit of $200 million for the nuclear industry as a whole is in effect to cover ton claims of workers as a result of mdiation exposure on or after January 1,1988. IPR's share of a maximum retrospective pmmium adjustment would be approximately $1.6 million. (4) Common Stock: l Effective with the merger of Iowa Resources Inc. (IOR) and Midwest Energy Company (MWE) on November 7,1990. Midwest Resources Inc. (MWR) became the sole owner of IPR common stock. IPR has no shares reserved for sale under any stock plans, nor has any additional stock been issued. The balance of common stock issued at December 31,1990 was $75,864,560 representing 7,586,456 l shares. See note 12 for a discussion of the merger. l l (5) Cumulative Preferred Stock Without Sinking Fund: l -IPR's Cumulative Preferred Stock Without Sinking Fund may be redeemed, at fixed or progressively decreasing prices, in whole or in part, on not more than 60 nor 1 css than 30 days notice, at the option of the Board of Directors. In all cases, the redemption price is in addition to dividends accrued and unpaid at the date of redemption. In the case of a default in the dividend payment for four consecutive quaners of any preferred stock issue, the holders of this class of securities (total Cumulative Preferred Stock) shall be entitled to elect the minimum number necessary to constitute a majority of the members of IPR's Board of Directors.
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(6) Long Term Debt:
-(a) Assets Subject to Lien IPR's First Mongage Bonds are secured by a lien on substantially all of the pmpeny owned by IPR.
(b) Debt Maturities Debt maturitics and bond sinking fund requirements for 1991,1992,1993,1994 and 1995, net of bonds reacquired and on hand at December 31,1990, are $9,272,190, $1,040.598, $1,687.127,
$1,455,613 and $1,645,668, respectively. In addition IPR may reduce the sinking fund requirements for the First Mongage Bonds to the extent of 50% by cenifying propeny additions in accordance with tenns of the Indenture and its supplements: except that for those issues due in 2006 and 2007, the sinking fund requirements may be reduced to the extent of 100% by certifying property additions or, in the altemate, the sinking fund retirement may be doubled.
(7) Short Term Debt: Interim financing of working capital needs and the construction program may be obtained from the sale of commercial paper or shon-term borrowing from banks. As of December 31,1990, lines of credit with various banks totaled $53.4 million. The balance of $45.2 million of shon-term debt is supponed by these lines of credit (8) Capital Expenditures: Capital expenditures for 1990 were $74 million and are planned at $94 million in 1991.
-(9) Employees' Pension Plans:
IPR maintains defined benefit pension plans covering substantially all of its employees. The plans provide pension benefits that are based panially upon years of service and panially upon the employees' compensation during the last ten years of service. IPR's funding policy for these plans is to contribute annually at a rate' that is intended to remain a level percentage of compensation for covered employees (presently 3.3 percent) and make the annual contributions required, or allowed, by applicable IRS regulations. In 1987, the IUB approved a stipulation which allows IPR to recover its funding contnbutions in rates. IPR's net periodic pension cost for 1990,1989 and 1988 includes the following components (in thousands); Year Ended theember 31 1990 _],989 1988 i ! Service cost benefit camed during the period . . ............... $ 2,203 $ 1,967 $ 1,967 Interest cost on projected benefit obligation . . . . . . . . . . . . . . . . . . 2,247 2,247 2,247 Actual retum on assets . . ........ 1,647 (6.348) (1,788) Net amonization and deferral . . . . . . (6.766) 2.594 (1.269) Net periodic pension cost . ... (669) 460 1,157 Regulatory recognition of incurred cost . 2,223 1.951 1.192 Total pension cost . ...
$ 1.554 5 2,411 5 2.349
) l l
-,,. g The following schedule sets forth the plans' funding status at the measurement date and amounts recognized in IPR's Consolidated Balance Sheet at December 31 (in thousands): 1990 1989 Actuarial present value of benent obligations: Vested. benefit obligation .............. $ 1R.057 $ 14.734 Accumulated benefit obligation ...... ... $ 1R,213 $ 14.812 Pmjected benefit obligation . . . . . . . . . ... $ 29,321 $ 24,789 Plan assets at fair value ................ 44.637 46.468 Excess of plan assets over the projected benefit obligation . . . . . . . . . . . . . . . . . . . 15,316 21,679 Unmcognized net gain ...... .......... (9,894) (16.328) Regulatory recognition of incurred cost . . . . . . . (2,223) (1,951) Unrecognized net asset . . . . . . . . . . . . . . . . . n.144) (3.400) Net pension asset recognized in the Consolidated Balance Sheet . . . , . . . . . . . . . $ - $ - Discount rates . .................. 8.50% 9.25 % Rates of increase in compensation le"els . . . . . . 5.00 % 5.50% Expected long-term rate of return on assets . . . . 9.00% 9.25 % Approximately 63% of the plan assets are invested in fixed-income securities guaranteed through annuity contracts. The balance is invested in equity securities. IPR made supplemental life and health insurance payments to retired employees in 1990,1989 and 1988 of $1,856,000, $1,040,000 and $1,148.000, respectively. In December 1990, the. FASB issued a new standard (FAS 106) on accotmting for post-
- retirement benefits other than pensions. This new standard requires that the expected cost of these benefits be charged to expense during the years that the employees render service. This is a significant change from the Company's current policy of recognizing these costs on the claims or premiums paid basis. The Company is required to adopt the new accounting and disclosure mies no later than 1993, although earlier implementation is permitted. The Company may adopt the new standard prospectively or use a cumulative catch-up adjustment.
IPR has previously been allowed rate recovery on these post-rctirement benefits on a claims or premiums paid basis, and anticipates similar rate recovery in the future. The Company expects to adopt the new standard January 1,1993. If rate treatment remains unchanged, the impact of adopting FAS 106 will have a signiGeant impact on the balance sheet but an immaterial impact on camings in the year of adoption. (10) Temporary Denetivation of Des Moines Power Station: The Des Moines Power Station (DPS), with 188 MW of generating capacity, was deactivated in the third quarter of 1985, with planned reactivation in the late 1990's. The capital investment in this plant was transferred to Plant Held for Future Use in 1985. The capital investment and accumulated depreciation on DPS classified as Plant Held For Future Use amounts to $23.2 million and
$17.6 million, respectively, as of December 31, 1990.
-(11) Transactions with Affiliates: ~
IPR's parent companies incurred certain expenses on behalf of all of their subsidiaires. These expenses are billed monthly to each of the subsidiaries based on service agreements between IPR and LOR, and IPR and hildwest Resources. IPR's share of such expenses, which it.clude legal, financial, shareholder and accounting fees, amounted to $4,213,000, $2,302,000 and $2,106.000 in 1990,1989 and 1988, respectively, included in the 1990 amount was $2,061,000 of costs related to the merger. In the opinion of management, the charges between companies is reasonable. IPR made payments to an afftliated company, hiiddlewood, Inc., for rent on office space and other properties. These expenses amounted to $219,000, $224,000 and $357,000 for 1990,1989 and 1988, respectively, and are included in othcr operating expenses. IPR made payments to an affiliated company, Iowa Public Service Company (IPS) for energy interchange received. These expenses amounted to $233.000, $397,000 and $9,000 for 1990,1989 and 1988, respectively. IPR also made payments to IPS's gas operating division, hiidwest Gas Company, for the purchase of natural gas. These expenses amounted to $1,272,000, $466,000 and $1,542,000 for 1990,1989 and 1988, respectively. Under a joint ownership agreement with other utilities IPS is the managing parmer of the Neal Generating Station Unit #3 (Nealt Each panicipant has provided financing for its share of the unit. IPR's share of the Other Operation and hiaintenance expense for Neal was $1,948,000, $2,078,000 and $1,512,000 for 1990,1989 and 1988, respectively. IPR made lease payments to an affiliated company, UNITRAIN, Inc., for the use of transportation equipment. These expenses amounted to $855,000, $894,000 and $846,000 for 1990, 1989 and 1988, respectively. IPR had a service agreement in 1988 with an affiliated company, IOR Telecom Inc. (IOR Telecom), whereby IOR Telecom agreed to service communication equipment and provide ma".agement, engineering, marketing and auditing expenise related to communications. These expenses amounted to $385,000 for 1988. 13eginning in 1989, IPR has a joint ownership agreement concerning various fiber optic lines with IOR Telecom. In 1989, IOR Telecom sold $600,000 of fiber optic lines to IPR at Cost. IPR made lease payments to IOR Capital, Inc. for the use of an airplane in 1988. These expenses amounted to $169,0(X). The above companies are wholly-owned subsidiaries of htWR. (12) Merger: On November 7,1990, IOR and htWE merged into MWR, a newly created holding company. MWR issued its own stock to IOR and MWE shareholders. IOR shareholders received 1.235 shares of common stock for each share of IOR common stock held. For MWE, the exchange ratio was 1.080 shares of common stock for each share of MWE common stock held. (13) Environmental Matters:
-The Company's coal-fired generating units are affected by the provisions of the Clean Air Act Amendments of 1990 (CAA). These generating units currently meet the new CAA sulfur dioxide emissiori rate standards by buming low-sulfur Wyoming coal. Although installation of emission control equipment is not needed to comply with new sulfur dioxide emission rate standards, these units will not be allocated enough basic Phase 11 sulfur dioxide emission " allowances" to operate at their maximum attainable capacity factors. However, most Company generating units qualify for Phase II bonus allowance allocations because the units had low sulfur dioxide emission rates in the 1985 base
.37-
~
year By the year 2000, some Company coal-fired generating units will be required to install controls to reduce emissions of Nitrogen Oxides. The cost of these contmls is expected to be nominal. Essentially all utility generating units are subject to CAA provisions which addresc continuous emission monitoring, permit requirements and fees, and emission of toxic substances. The costs to achieve. compliance with these pmvisions are expected to be nominal. (14) Quarterly Financial Data (Unaudited): Ouwer Ended (000) March 31 Jur,e 30 Sent. 30 Dec. 31 1990 Operating Revenues S 77,004 $ 84,(M6 $ 108,203 $ 80,416 Operating income 12,422 14,772 28,210 13,510 Net income Available to Common Stock 5,733 7.752 20,170 7,062 1989 Operating Revenues S 81,554 $ 77,712 $ 106,752 $ 84,251 Operating income 14.921 14,299 25,962 13,884 Net income Available to Common Stock 8,311 6,976 19,347 7,763 _- -. - -~ . ---- . _- - - - . . . - ___ - - - e , , REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To lowa Power Inc.: , I We have audited the accompanying consolidated balance sheets and consolidated statements of long tenn debt of Iowa Power Inc. (an Iowa corporation and wholly-owned subsidiary of Midwest Resources Inc.) and subsidiaries as of December 31,1990 and 1989, and the related consolidated statements of income, retained eamings and cash flows for each of the three years in the period ended December 31, 1990. These financial statements and the schedules refened to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules 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 finaneial 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 financial 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 Iowa Power Inc. and subsidiaries as of December 31,1990 and 1989, and the results of their operations and their cash flows for each of the three years in the period ended December 31,1990, in confonnity with generally accepted accounting 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 financial statement schedules (Itcm 14 (a) 2) are presented for purposes of complying with the Securities and Exchange Commission's rules and are not pan of the _ basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all-material respects the financial data required to be set forth therrin in relation to the basic financial statements taken as a whole. Chicago, Illinois, January 31. 1991 ARTI!UR ANDERSEN & CO.
. . ,4 u, hlANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Iowa Power Inc. is n:sponsible for the preparation and presentation of the accompanying financial statements. The Anancial statements have been prepared in conformity with general!y accepted accounting principles and include amounts that are based on informed estimates and judgments of management, hlanagement maintains a system of intemal accounting controls which it believes is adequate -
to pmvide reasonable assurance that assets are safeguarded, transactions are executed in accordance with management authorization and the financial records are reliable for preparing the financial statements. The system of intemal accounting controls is supponed by written policies and procedures, by a staff of intemal auditors who conduct comprehensive intemal audits and by the selection and training of qualified personnel. The Midwest Resources Inc. Board of Directors, thmugh its Audit Committee comprised entirely of outside directors, meets periodically with management,intemal auditors and the Company's independent auditors to discuss auditing, intemal control and financial reporting matters. To _ ensure their independence, both the intemal auditors and ind: pendent auditors have full and free access to the Audit Committee. The independent public act.ountants, Arthur Andersen & Co., were- engaged to audit the Company's financial statements in accordance with generally accepted auditing standards. Russell E. Christiansen Chairman and Chief Executive Officer i l l
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION Corporate Structure Iowa Power Inc. (IPR or Company) is a wholly-owned subsidiary of Midwest Resources Inc. (MWR), a holding company. IPR was previously a wholly-owned subsidiary of Iowa Resources Inc. (IOR), a holding company, On November 7,1990, IOR and Midwest Energy Company merged into Midwest Resource:; inc., a newly created holding company. Liquidity and Capital Resources Capital reso wees of the Company are derived primarily fmm funds generated from cunent operations, shor* t.1 borrowings, long-term bormwings and equity financing. These capital resources provide the fun . cauired for current operations, debt interest and retirement, dividends, construction expenditures and other capital requirements. At December 31,1990, the material sources of liquidity of IPR included current assets of $71 million and bank lines of credit of $53 million. IPR also has unpledged bondable property of $318 million which can be used to' support long-term borrowings. IPR has a shetf registration for the issuance of $30 million on file with the Securities and Exchange Commission. Though no nc , tenior securities were issued in 1990, it is anticipated that the Company will issue amounts from time to time, when market conditions are appropriate, to refinance its higher cost debt and replace shon-term borrowings. IPR's financial ratio objectives are to keep long term debt between 50% and 55% and to keep preferred and common equity between 45% and 50%. o The Company's common equity rutio was 48.4%,47.3% and 46.7% at December 31, 1990, 1989 and 1988, respectively. The Company's access to extemal capital and its cost of capital are influenced by the credit ratings of its securities. The Company continues to enjoy high credit ratings from various credit rating agencies. The Company's latest credit ratings are as follows: Moody's Fitch Investors Standard Investors Service & Poor's Service Firrt Mongage Bonds A2 A A [ '. a3 A A-Preferred Stocks Commercial Paper Pl - F1 Consolidated capital expenditures were $74 million for 1990 compared to $87 million in 1989 and
$67 million in 1988. The utility plant expenditures include the addition of two service centers, system expansion due to growth in the Company's service territorf and beginning in late 1988, the construction of two combustion turbines, which were put into service in June 1990. The Company's management annually reviews long range capital expenditures needs and based upon such a review has planned capital expenditures, including Cooper Nuclear Station (Cooper) capital improvements and allowance for funds used during construction of $94 million for 1991 and $356 million for 1992 through 1995.
l There are no material commitments that would prevent scaling back of these capital expenditures, if needed. It is anticipated that approximately 67% of the capital requirements for 1991 through 1995 will be met by funds generated from internal resources. IPR believes its capital resources and liquidity are sufficient, assuming adequate rate relief, to meet its current and projected requirements. l
~
Trends IPR's business is primarily dependent on the use of electricity by customers in its service area. This usage may vary with the weather, general business conditions, the state of the economy and the cost of services. General economic conditions in the Company's service territory improved during 1989 and 1990. Percentage changes in electric sales to retail customers over the prior year for the last three years were: 1990 up 2.7%,1989 up 0.1% and 1988 up 8.2%, The fluctuations between the years are in pan due to summer temperatures being 2% warmer-than-nonnal in 1990,4% coolcr than normal in 1989 and 39% warmer-than-normal in 1988. IPR is forecasting a live-year compound growth rate of 2.0% in electric kWh sales. IPR's customers will realize savings as a result of a renegotiated rail transponation contract. The rail contract reduces the cost of transponing coal from Wyoming to the Company's generating units in Iowa through 1997. Lower freight costs will reduce operating revenues and expenses. Through the next five years, the Company has adequate reserves, including capacity under contract, to meet its energy demands. Legislation enacted in Iowa in 1990 requires electric utilities to spend 2 percent of their annual revenues on demand side management activities and permits periodic recovery of these costs. The goal of Demand Side Management (DSM) is to encourage efficiency and reduce demand during peak hours. IPR has developed and implemented a number of DSM programs designed to encourage efficient use of energy, reduce peak demand and delay construction of new generation facilities. Effect of Inflation IPR's electric business operates under n:gulatory provisions which allow increases in the cost of fuel used for electric generation and energy purchases / sales to be passed on automatically to retail and wholesale customers by means of the electric energy cost adjustment (ECA). Increases in the cost of electric service, not recovered via the ECA, must be recovered thmugh timely filings for rate relief with the appropriate regulatory body. Results of Operations The Company's 1990 net income available to common stock of $40.7 million was $1.7 million or 4.0% under 1989. The factors having the greatest influence on the comparison of carnings were maintenance of generating facilities and merger costs. Significant changes are discussed below. Electric Revenues increase (Decrease) from Prior Year (millions) 1900 1989 Sales volume $ 7.5 $ (2.9) Rates 5.4 16.4 Cost of energy (13.8) (3.6) Other 0.3 (3 9) Total 5 (0 6) $ 6.0 1990 compared with 1989 - Revenues of $349.7 million decreased 50.6 million or 0.2% compared to 1989 due primarily to reduced energy costs ($13.8 million) which were panially offset by increased revenue related to increased rates ($5.4 million) and sales volume ($7.5 million). Sales of electricity for 1990 exceeded 5.3 billion kWh, en increase of approximately 2.7% over last year. Increases due to the 1.1% customer growth and warmer summer temperatures were panially offset by the effect of mild weather condillons in the first and founh quaner. m , The net cost of energy generated, interchanged and purchased of $106.9 million decreased $6.7 million or 5.9% compared to the same period last year. Interchange power, net reflects a 30.8% increase in net deliveries which decreased total costs by $3.9 million. In addition, decreased fuel costs of $3.1 million for electric genemtion occurred due to lower coal and transponation costs. Other operation expense incmased $1.5 million or 2.6% due primarily to allocated costs of $2,061,000 related to the merger, Maintenance expense increased 20.7% due to overhauls of base and peak load generating stations and to amonization of the cost to repair power lines damaged by the March,1990 ice stonn. Depreciation and amonization increased $3.4 million due to an incmase in depreciable plant in service. Allowance for funds used during construction (AFUDC) of $3.2 million increased $1.4 million due partially to AFUDC related to two peak generation units which were completed and placed into service in June,1990. Allowance for funds accrued on advances increased $0.3 million due to an increase in constructions levels at Cooper. (Refer to Notes to Consolidated Financial Statements No.1). Interest and dividend income of $0.5 million was 53.19 lower mainly due to a reduction in investment balances. 'Ihe Company's excess cash funds from the 1988 sale of first mongage bonds were used to finance the construction program. Interest on shon-term debt increased $2.7 million due to higher shon term '.ebt balances. The Company issued shon-term debt rather than higher cost long-term debt. The $4.5 million- decrease (15.5%) in income taxes is atuibutable to the decrease of pre-tax income of 8.6% Propeny and other tax increased $1.8 million or 6.9% due primarily to an incmase in the propeny assessment value and in the average tax rate. 1989 compared with 1988 - Net income available to common stock of $42.4 million for 1989 was $7.0 million or 19.8% over 1988. Revenues of $350.3 million increased $6,0 million or 1.8% over 1988 due primarily to increased rates ($16.4 million). This increase was partially offset by reduced generation services agreement revenue ($3.5 million), cost of energy ($3.6 million), and sales volume ($2.9 million). See Notes to Consolidated Financial State nents No. 2 for discussion of rate activities. Retail kWh sales of electricity were essentially unchanged from a year ago despite a decrease in cooling degree days of 30.5%. The reduced air conditioning load was offset by customer gmwth and the elecuic heating requirements of the 1989 weather which was 2.5% colder than normal and 6.9% colder than last year, i The net cost of energy generated, interchanged and purchased of $113.6 million decreased $7.3 million or 6.0% compared to the same period last year. Interchange power, net reflects a 1,025 gWh increase in net deliveries which decreased those costs $17.6 million. This was panially offset by an increase in fuel costs of $10.3 million for electric generation due to production at IPR generating l facilities being 29.8% greater than the same period last yeir. l Allowance for funds used during constmetion of $1.8 million increased $1.5 million due primarily to an increase in construction expenditures. Interest and dividend income of $1.1 million was 58.6% lower mainly due to a reduction in ! investment balances. The Company's excess cash from the 1988 issuance of first mongage bonds was (- used to finance the construction program. Interest on long-term debt increased $3.9 million, or 15.2%, due to the issuance of the $70.0 million of 30-year 101/2% First Mortgage Bonds in July 1988. Short-term interest expense decreased
$1.3 million primarily due to lower commercial paper balances after the July 1988 long-term financing.
l
The $2.2 million increase (8.1%) in1ncome taxes is attributable to the increase in pre-tax income of 14.8%. Lines of Business Approximately 99.9% of the Company's revenues, operating income before income taxes, and net income were provided by IPR for the years 1990,1989 and 1988. e SCRII"JLE V TEAR ENDED DECEMBER 31, 1990 . ,. IONA POWER INC. CONSOLIDATED PROPERTT, PLANT AND EQUIPMENT (In Thousands) Column E Column F Column B Column C Column D Column A Additions Retirements Other Chances at at Original Transfers and Balance Cost Reclassifi- Other n slance original (Note 2) Dac. 31, 1990 Dec 31, 1989 Cost (Note 1) cations Classification STATED AT ORIGINAL COST: 979 Utility plant - $ 34 $ - $ S 846 $ -
$ (1)
Intangibles 5,552 - 471,710 Production- 466,315 - (157) - 24,094 Steam 24,094 - 4,124 - 138,003 Other 134,565 - (686) 323,998 Transmission 306,532 (4) (2,286) 19,756 - 72,491 Distribution (1,009) 4,721 68,779 -
- 71,223 General 23,544 81,866 - (34,187)
In service, not unitized -
-- (519) 6,984 7,503 -
1,109,382 Property under capital lease 1,032,178 81,862 (4,139) - (519) 23,219 Total utility plant in service - - (2,930)
$- 26,072 77 y Held for future use 1,132,601 (4,139) - (3,449) 1,058,250 81,939 Total utility plant
-- - 32,452 57,316 (24,a64)
Construction work in progress Total utility property, plant and equipment, including - (3,449) 1,165,053 1,115,566 57,075 (4,139) 5,576 intangibles 397 -
- (3,358)
Non-utility property 8.547 Total property, plant and equipment, $(4,139) $ - S (6,817) $1,170, 629
$1,124,113 $57,472 including intangiblas
( ) Denotes deduction NOTES: (1) The reserve for depreciation has been charged with the amount indicated on Schedule VI for the year ended December 31, 1990. M1ity (2) The $2,930 deduction to Utility Plant Held For Future Use and the $3,368 deduction to Non-u Property represent a transfer of portions of the Des Moines Power Station and the deferred costa from the reduction of Land values to deferred debits.
l S w ULE V l TEAR ENDED ' De.CF. - 31, 1989 .- IOWA PCWER INC. CONSOLIDATED PFCPERTT, PLANT A!O EQUIFMENT (In Thousands) Colue:n E Column F Colu=n B Column C Column D Colu=n A Other Changes Additions Fetirements at at Original Transfers and Balance Original Cost Reclassifi- Other Balance Cost (Note Il cations (Note 2) Dec. 31, 1989 Dec. 31, 1988 classification STATED AT CRIGINAL COST: Utility plant - $ 44 $ -
$ 846 S 766 $ 46 $ (10)
Intangibles Production- 217 - 466,315 466,130 - (32) - 24,094 Steam 24,094 - Other 3,697 - 134,565 131,701 8 (841) 306,532 - Transmission 284,630 6,753 (1,406) 16,555 - 19,657 - 68,779 Distribution 50,614 483 (1,975) General (40,170) - 23,544 30,250 33,464 - 7,503 In service, not unitized 8,436 - (933) Property under capital lease 996,621 40,754 (4,264) - (933) 1,032,178 Total utility plant in service (3,927) - (13,505) 26.072 i 43,445 59 1 Held for future use (14 438) 1,058,250 1,040,066 40,813 (8,191) - Total utility plant
- - 57,316 24,254 33,062 -
Construction work in progress Total utility property, plant and equipment, including 1,064,320 73,575 (8,191) - (14,438) 1,115,566 intangibles (12,639) 8,547 21,242 - (56) - Non-utility property Total property, plant and equipment, $1,085.562 $73,875 $(8,247) $ - $f27,077) $1,124.113 including intangibles () Denotes deduction (1) 7he reserve for depreciation has been charged with the amount indicated en Schedule VI for the year ended December 31, 1989. The difference of $120 represents the sale of land. NOTES: (2) The $13,505 deduction to Utility Plant Held For Future Use and the $12,639 deduction to Non-utility Property represent a transfer of porcions of the Des Moines Power Station to Unreccvered Plant.
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SCEEDUIE V TEAR ENDED
- DECEMBER 31, 1988 .-
ICWA POWER INC. CONSOLIDATED PPLWEICI, PLANT A.T EQUIPMENT (In Thousands) l Column B Column C Column D Column E Column F Column A Additions Retirements other Chances at at Original Transfers and Balance Original Cost Reclassifi- Balance Dec. 31. 1987 Cost (Note Il cations Other D e. 31. 1988 Classification STATED AT CRIGINAL COST: Utility plant - 766
$ 697 $ 14 $ (17) $ 72 $ -
Intangibles Production- 466,130 463,891 46 (161) 2,354 - Steam 24,094 Other 23,653 .
- 441 -
130,935 3 (296) 1,059 - 131,701 Transmission 284,630 273,035 9,073 (1,736) 4,258 - , Distribution 50,614 45,896 2,935 (5,118) 6,901 - General 30,250 In service, not unitized 9,986 34,885 - (14,621) - 12.234 - - - (3,798) 8.436
, Property under capital lease 996,621 Total utility plant in service 960,327 46,956 (7,328) 464 (3,798) 3 a 3 eld for future use 43,833 53 (18) (423) - 43,445 1,004,160 47,009 (7.346) 41 (3.798) 1.040,066 Total utility plant 24,254 Construction work in progress 15,649 8.605 - - -
Total utility property, plant and evalpment, including 1,064,320 intangibles 1,019,809 55,614 (7,346) 41 (3,798) 21,277 17 (II) (41) - 21,242 Non-utility property Total property, plant and equipment, S(3,798) $1.085.562 including intangibles $1,0$1,086 $55.631 $(7,357) $ -
*) Denotes deduction NOTE: (1) The reserve for depreciation has been charged with the amount indicated on Schedule VI for the year ended December 31, 1988. The difference of $142 represents land sales of $140 and $2 undgreciated value of non-utility property sold.
ei Suu.uuLE VI TEAR DCED
- DECEMBER 31, 1990 ,-
IONA POWER INC. CONSOLIDATED ACCOMUIATED DEPPrr*T& TION AND AMORTIZATION CF PROPERTY, PIANT AND EQUIPMENT (In Thousands) Column B Column C Column D Column E Coltre F j Column A Fetir - nts Other t Additions " Charged to At Cost of Additions Transfers Costs and Original Removal or Charged to and Balance Expenses Cost Salvage, Clearing Beclassi- Other Balance fications (Note 4) Duiic. 31,1993 Description Dec. 31, 1989 (Notes 1&3) (Note 2) Net Accounts
$ 356,563 $ 37,372 $(3,315) $ (1,079) $ 414 $ - $ - $ 389,955 Utility plant 8,437 Specific equipnent 7,561 218 (822) 171 1,317 -
(8) 3,276 (2) - - - Intangibles 2,998_ 280 - e Total depreciation and amortization electric 401,668 plant in service 367,122 37,870 (4,139) (90E) 1,731 - (8) Depreciation on plant held 17,606 18,798 - - - - (1,192) for future use _ Total utility depreciation 419,274 385,920 37,870 (4,139) (908) 1,731 - (1,200) and amortization Depreciation on non-utility - - - 98 property 94 4 - - Total depreciation and amortization $ 386,014 $ 37,874 $(4,139) $ (908) $ 1,731 $ - $(1,200) $ 419.372 () Denotes Deduction NOTES: (1) See Note 1 of Notes to Consolidated Financial Stateronts for the basis of the provision for depreciation. (2) See Note 1 to Schedule V for the year ended December 31, 1990. (3) Depreciation and amortiration on electric plant in service as shown on the Consolidated Statement of Income and the Consolidated Statanant of Cash Flows includes $1,618 of amortization of deferred charges. (4) The $1,192 deduction to depreciation on Plant Held For Future use represents a transfer of portions of Des Moines Power Station to deferred debits.
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SCHEDUIJr, VI TEAR ENDED DECEMBER 31, 1989 ~ ,- ICWA POWER INC. CONSOLIDATED ACCOMUI.ATED DEPRECIATION AND AMCRTIIATION OF PROPERI'T, PIANT AND EQUIPMENT (In Thousands) Column B Column C Column D Column E Column F Column A Retirements Other Additions Charged to At Cost cf Additions Transfers Costs and Original Removal or Charged to and Balance Expenses Cost Salvage, Clearing Reclassi- Other Balance Description Dec. 31, 1988 (Notes 1&3) (Note 2) Net Accounts fications (Note 4) Dec. 31, 1989
$ 32.5,823 $ 34,810 $ (2,896) $ (1,566) $ 404 $ (18) $ 6 S 356,563 Utility plant 7,561 Specific equipment 7,358 199 (1,304) 234 1,056 18 2,746 252 - - - - - 2,998 Intangibles ,
- Total depreciation and amortization electric 335,927 35,261 (4,200) (1,332) 1,460 - 6 367,122 plant in service Depreciation os plant held 18,798 33,559 (3,927) - - (IC,834) for future use Total utility depreciation 385,920 369,486 35,261 (8,127) (1,332) 1,460 -
(10,828) and amortization Depreciation on non-utility 9,908 11 - -
- - - (9,825) 94 property Total depreciatica and $ 386,014
$ 379,394 $ 35,272 $ { B ,127) $ (1,332) $ 1,460 $ - $(20,653) amortization
() Denotes Deduction NOIT.S : (1) See Note 1 of Notes to Consolidated Finans-lal Statements for the basis of the provision for depreciation. (2) See Note 1 to Schedule V for the year ended December 31, 1989. (3) Depreciation and amortization on electric plant ir servica > shown en the Consolidated Statemsmt cf Income includes $786 of amortization of deferred chargea rgreciation and amortization as shown on the Consolidated Statement of Cash Flows includes $1,460 of skpreclation charged to clearing accounts. (4) The $10,834 deduction to depreciation on Plant Eeld Yor Futur i use and the $9,825 deduction to depreciation on Non-utility Property represent a transfer of portions of res Moines Power Station to hovered Plant.
SuiwdA.E VI TEAR ENDED
- DECEMBER 31, 1988 IOWA POWER INC.
CONSOLIDATED ACCUWJIATED DEPRECIATION AND AMORTIZATION CF PRCFERTT, PLANT AND EQUIPMENT (In thousands) Column E Column F Column B Column C Column D Column A Retirements Other Additions Transfers At Cost of Additiens Charged to and Removal or Charged to Costs and Original Clearing Reclassi- Acquired Balance Cost Salvage, Balance Expenses Net Accounts _ fications Peservr*s Dec.31,1968 Description Dec. 31, 1987 (Notes 1&3) (Note 2) 182 $ 151 3325,823
$ 34,709 $ (6,316) $ (1,159) $ 431 $
$ 297,825 1,056 - 387 7,358 Utility plant 31 (862) 108 6,638 2,746 Specific equipment 252 (16) (1) - - -
In*.angibles 2.511 Total depreciation and 335,927 amortization electric 306,974 34,992 (7,194) (1,052) 1,487 182 538
- plant in service 33,559
$ Dapreciation on plant held 33,731 -
(18) 28 - (182}_ -
' for future use Total utility depreciation 538 369,486 l (1,024) 1,487 -
f and amortization 340,705 34,992 (7,212) l 9,903 Depreciation on non-utility 9,S9? 12 {3) - property (Note 4) $379,394 Total depreciation $ (7,215) $(1,024) $1,487 $ -
$ 538
$ 350,604 $35,004 l and amortization
() Denotes Deduction NOTES: (1) See Note 1 of Notes to Consolidated Financial Statements for the basis of the prevision for depreciation. (2) See Note 1 to Schedule V for the year ended December 31, 1988. (3) Depreciation and amortization on electric plant in service as shownason Depreciation the Consolidated shown on the Consc11 Statement of Incoee dated Statement includes $369 of amortization of deferred charges. of Cash Flows includes $1,487 of depreciation charged to clearing accounts.
*l SCHEDUIJC VIII TEAR ENDED DECDEER 31, 1990 IONA POWER INC.
CONSOLIDATED VALUATION AND QUALIFTING Au.vuni5 (In Thousands) Column A Column B Colu:nn C Column D Column E Deductions for Purposes Balance Additions (Note) for which Balance Dec. 31, Charged to Charged to Reserves Dec. 31, Description 1989 Income Other were Created 1990 Reserve deducted from applicable assets-Uncollectible accounts $ 240 $ 941 $ -
$ (1,026) $ 155 '
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S e vLE VIII TEAR E2CED N 31,1989 IONA POWER INC. CONSOLIDATED VALUATION AND QUALIETING AmnTS (In Thousands) Column B Coluzna C Coluzun D Column E Coluzon A Deduc' dons for Purposes Balance Additions (Note) for Which Balance Dec. 31, Charged to Charged to Reserves Dec. 31, Description 1988 Income Other were Created 1989 Reserve deducted from applicable 240< assets-Uncollectible accounts $ 291 $ 830 $ -
$ (881) $
s u N 8 %- ~_ .~ , - ~_
SCHEDULE VIII TEAR ENDED NP' GEER 31,1988 IOtEA POWER INC. CONSOLIDATED VALUATION AND QUALIFTING ACCvunis (In Thousands) t Column A Column B Column C Column D Colu=n E Deductions for Purposes Balance Additions (Note) for Which E31ance i Dec. 31, Charged to Charged to Reserves Dec. 31, Description 1987 Income Other were Created 1988 [ Reserve deducted from applicable
$ 679 $ 888 $ -
$ (1,276) $ 291 '
assets-Uncollectible accounts e us bJ l l i t I
.-i SCHEDULE IX TEAR ENDED
' DECEMBER 31, 199C l IOWA POWER INC. CONSOLIDATED SHORT-TERM BCRROWINGS (NOTE 1) (In Thousands) Column A Column B Column C Coluzen D Colurcn E Column F Mm wi == Average Weighted Weighted a:nount amount average Category of Balance average outstanding outstanding interest rate aggregate short-term at end of interest during the during the during the borrowings period rate period period (Note 2) period (Note 3) Commercial
$ 45,200 8.1% $54,600 $34,368 8.3%
Paper Y n 1 NOTES: (1) Commercial paper may be issued in an amount not to exceed 25% of gross operating revenues for the preceding twelve months and is issued with maturities not to exceed 270 days at interest rates then in effect. At December 31, 1990 coernercial paper maturity dates ranged from January 11, 1991 to February 15, 1991. (2) The computation of the average amount outstanding during the period is based on the sum of the daily amount outstanding divided by the number of days la the year. (3) The computation of the weighted average interest rate for e-rcial paper outstanding in 1990 is based on the sum of the annual interest on each cnworcial paper transaction divided by the sum of the daily net amounts of cocunercial paper outstanding. t
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SCHEDULE IX ! TEAR ENDED DECEMBER 31, 1989 IONA POWER 12C. CONSOLIDATED SHORT-TERM BORROWINGS (ICIE 1) (In Thousands) L Column A Coluz::n B Column C Column D Column E Column F ; i Fa v i a== Average Weighted Category of Weighted amount amount average i aggregate Balance average outstanding outstanding interest rate short-terin at end of interest during the during the during the borrowinos pe riod rate period period (Note 21 period (Note 3) 1 e Commercial 3 i Paper $ 11,400 8.7% $20,900 $7,780 9.2% i w w 4 NOTES: (1) C - rcial paper may be issued in an amount not to exceed 255 of gross operating revenues 4 for the preceding twelve amonths and is issued with maturities not to exceed 270 days at interest rates then in effect. At December 31, 1989 cocunercial paper maturity dates ranged from January 22, 1990 to February 9, 1990. 1 j (2) The computation of the average amount outstanding during the period is based on the sum of the daily amount outstanding divided by the number of days in the year. (3) The computation of the weighted average interest rate for co=unercial paper outstanding in 1989 is based on the sum of the annual interest on each c-rcial paper transaction divided 9 by the sum of the daily net amounts of cournercial paper outstanding. i L r b
l SCHEDULE IX YEAR EP.T ED DECEMBER 31, 1988 l IOWA POWER INC. CONSOLIDATED SHORT-TERM BORROWI!GS (NOTE 1) (In Thousands) Column E Column F Column B Column C Column D Column A Na vi =m Average Weighted amount average Weighted amount Category of outstanding outstanding interest rate Balance average during the aggregate during the during the at end of interest period (Note 3) short-term period period (Note 2) borrowings period rate t Commercial $43,200 $20.460 7.1% Paper $ - i NOTES: to exceed 25% or gross operating revenues (1) Commercial paper may be issued in an amou2t not for the preceding twelve months and is is:ued with maturities not to exceed 270 days at interest rates then in effect. (2) The computation of the average amount outsta.nding during the period is based on the sum of the daily amount outstanding divided by the nAr of days in the year. rate for cor=nercial paper outstanding in (3) The computation of the weighted average interest 1988 is based on the sum of the annual interest on each by the sum of the daily net amounts of c-rcial paper outstanding.
.4 SCHEDULE X l
1 IONA POWER INC. l SUPPLEMENTARY CONSOLIDATED INCOME STATDENT INFORMATION J (In Thousands) Column A Column B Charged To Costa And wm naes Year Ended December 31 1990 1989 1988 I Tames, other than payroll- )
-and income taxes - :
Property $22,979 $21,421 $22,108 NOTE: The amount of maintenance, other than set.forth on the Consolidated Statement of Income, is not significant. Advertising costs are not significant. IPR paid no royalties. Depreciation and amortization of intangible i assets is included in Schedule VI. I b i L v
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- I EX111 BITS INDEX j Exhibit F,ymter Descrintion 22.1 Subsidiaries of IPR.
24 Consent of Independent Public Accountants. < 28 lowa Power Inc. Payroll Based Employee Stock Ownership Plan Armual Repon on Form 11 K. t e
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Exitibit 22.1 SUIISIDIARIES OF JOWA POWER INC, Jur sdiction Subsidiary of Incormnition Redlands incorporated ygg, CDEC Railway Inc. jg,, l l r l -
-592
. i, e 1 Exhibit 24 1 CONSENT OF INDEPENDENT PUllLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our repon dated January 31, 1991 included in this Fonn 10 K, into the Company's previously filed Registration Statements File No. 33 210CH and File No. 2 85102. Chicago, n!!nois, March 21,1991 ARTilUR ANDERSEN & CO. 4 I 60
Exhibit 28 i SECURITIES AND EXCilANGE COMMISSION , I WASil!NOTON. D.C. 20549 l t FOlB1 11 K l ANNUAL REPORT Pursuant to Section 15(d) of the Securitics Exchange Act of 1934 For the year ended December 31, 1990 IOWA POWER INC. PAYROLL-DASED EMPLOYEE STOCK OWNERSillP PLAN IOWA POWER INC. 666 Grand Avenue. P.O. Box 657 Des Moines, Iowa 50303
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7._...____.._.._ ) REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 To lowa Power Inc.: We have audited the accompanying statements of financial condition of the Iowa Power Inc. Payroll Based Employee Stock Ownership Plan as of December 31,1990 and 1989, and the related statements of changes in ownership interest for each of the three years in the period ended December 31,1990. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opirdon 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 perfonn the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An xdit includes examining, on a test basis, evidence supponing the amounts and disclosures in the fit.incial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits pmvide a reasonable basis for our opinion. In our opmion, the financial statements referred to above present fairly, in all material respects, the financial position of the Iowa Power Inc. Payroll Based Employee Stock Ownership Plan as of December 31.1990, and 1989, and the changes in the ownership interest for each of the three years in the period ended December 31, 1990 in conformity with generally accepted accounting principles. Chicago, Illinois, March 21.1991 ARTilUR ANDERSEN & CO. i i f ei i 2-l ( r--....., .*,,,..m.,,..~. ..<.-,,,-,....,.4.-,,..,--....w....
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u IOWA POWER INC, PAYROLL !!ASED EMPLOYEE STOCK OWNERSillP PLAN STATEMENTS OF FINANCIAL CONDITION (NOTE 1) ASSETS December 31 1900 1989 INVESTMENTS Midwest Resources Inc. common stock held by Tnistec 390,527 shares and 413,382 shares, resperthcly. - (Note 2 (d)) Value at 6te of Company's contribution $3,966,525 5 4.188,256 Urutalized appreciation in market value 3.209.3R6 3.050.109 Market valte as of December 31 (Note 2(b)) 7.175,911 7,238,365
- 142,257 DIVIDENDS RECE!VAliLE 175 159 OTilER ASSETS
$7,176.086 $ 73R0,7R1
- 1. LABILITIES AND OWNERSillP INTEREST LIABILITIES Market value cf Midwest Resources Inc, con.. mon stock to be distributed to terminated employees-32,572 shares and 53,366 shares, respectively $ 598,505 $ 934,435 4 4 Accounts Payable 598,509 934,439 Total Liabilities 6.577.577 6.446.342 OWNERSillP INTEREST (Allocated (Note 1(c)))
$7,176.086 $ 73RO,7R1 The accompanying notes to financial statements are an integral pan of these statements, 3
o~ e, 1 1
.. l IOWA POWER INC.
PAYROLL BASED , EMPLOYEE STOCK OWNERSillP PLAN STATEMENTS OF CllANGES IN OWNERSillP INTEREST (NOTE 1) Year Ended December 31 1990 1989 1988 DALANCE beginning of year $6.446342 ??Jhp1(1 }7.065.783 PLAN INCOME Dividends on stock held by Tnistee 451,75( 1L8. 41 630,830 (Notes 1(d) and 2(c)) Unnalized appreciation (depreciation) 300.598 1.202.484 (R(u.912) in market value of investments 761.354 f.786 A56 (174.082) DISTRIBUTIONS TO PLAN PARTICIPANTS 532,936 458,114 Tenninated panicipants 36.112 Dividends paid 504.007 505.808 644.8( 2 (Notes 1(d) and 2(c)) 630.110 1.128.834 1.102.9%],
$6,577.577 $6,446342 $5.78R,720 BALANCE, cad of year The accompanying notes to financial statements are an integral pan of these statements.
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IOWA POWER INC. PAYROLL BASED Eh1PLOYEE STOCK OWNERSillP PLAN NOTES TO FINANCIAL STATEhiENTS (1) T11E PLAN: (a) Oeneral and Plan Participants towa Power Inc. (IPR or lowa Power), formerly Iowa Power and Light Company, is an Iowa corporation wNch became a wholly owned subsidiary of h11dwest Resources Inc. (htWR) on November 7,1990, pursuant to the merger of Iowa Resources Inc. (lowa Resources or IOR), a holding company of whien IPR had been a whollyewned subsidiary since November 1,1979, and bildwest Energy Company. IOR adopted the Iowa Resources Inc. Tax Reduction Act Employee Stock Ownership Plan (Prior Plan) without chaq',e fmm IPR on November 1,1979. The Prior Plan was amended in 1980 to comply with cenah trages in tax laws. The Prior Pian was amended to tlk. Iowa Resources Inc. Payroll Based Erapny:e Swek Ownership Plan (the Plan) effective January 1,1983 to comply with changes in federal rs ins wiu h replaced the investment based tax credit with a payroll based tax cred!t. INrsuant to the eteiger of IOR and h11dwest Energy Company on November 7,1990, IPR became the sponsor of 6,e PAYSOP Plan.
'Ihe Plan tenninates by its own terms "at midnight on the last day of the Plan Year immediately preceding the first Plan Year in which the payroll based credit is no longer available to IPR under the Code." The 1986 Tu Reform act climinated the payroll based credit, and therefore, the Plan
- terminated December 31, 1986. IOR discontinued its contributions in 1987, no employee matching contributions were pennitted under the Plan.- Nonetheless, the Payroll Based Employee Stock Ownership Trust provides that the Trustee shall continue to fullill all holding requirements under the Plan.
At December 31.1990,1989 and 1988, there were 1,083,1,131 and 1,177 participants, respectively, in the Plan. Included in the assets and liabilities of the Plan at December 31,1990 are 24,607 shares of h1WR common stock valued at 5452,154 held for 82 former employees who elected to defer the distribution of their stock to future periods. (b) Tmstee Arrangements Contributions made under the Plan are held, managed and contmlled by use of a trust (the Trust) by a trustee and administered by a committee, designated by IPR's Boani of Directors, pursuant to the Iowa Power Inc. Payroll Based Employee Stock Ownership Plan Agreement. (c) Ownership interest A separate account is maintained to reflect the common stock balance of each participant. (d) Dividends Cash dividends on shares of common stock allocated to each panicipant's account are paid to the participant when received by the Trustee or, at the panicipant's election, reinvested in common stock under the terms of htWR's Dividend Reinvestment and Common Stock Purchase Plan.
7 (e) (Tenente and Yestine Participants have a vested right to all shares of common stock allocated to their accounts and dividends reinvested under the optional election desented in (e) above. Common stock attributable to IOR's contributions cannot be withdrawn until the end of the 84th month subsequent to the month the stock was allocated except that, in the event of tennination of employment, death or pennanent disability, a panicipant's account will te totally distnbuted. Distnbution of panicipants' accounts will be made in common stock except for fractional shares. Fractional shares will be purchased for cash at the then current market value, tO 1 ceal and income Tax Status The Plan is subject to the Employee Retirement income Secunty Act of 1974 (ERISA) which was enacted to protect the interests of participants and their beneticiaries. IOR received a fonnal Intemal Revenue Service (IRS) determination on February 4,1985 that IOR's contnbutions to the Plan were qualified under Section 401 of the intemal Revenue Code of 1954, as amended. The Plan is not subject to federal income tat (2) ACCOUNTING POLICIES: (a) ITasis of Accountine The financial statements are presented on the accrual basis and, accordingly, income is reflected when camed. (b) Valuation of Investments Common stock of h1WR held in the Trust is reponed at market value as detemlined by the closing price at year-end on the New York Stock Exchange-Composite Transaction Listing. (c) Dividend Distributions Cash dividends distributed or reinvested are allocated among panicipants to the neamst cent based upon each panicipant's ownership interest. (d) Mercer On November 7,1990. IOR and hiidwest Energy Company (h1WE) merged into hiidwest Resources Inc. (htWR), a newly created holding company. De financial statements are presented as if the companies were merged as of the earliest period shown. htWR issued its own stock to IOR and h1WE shareholders. IOR shareholdets received 1.235 shares of htWR common stock for each share of LOR common stock held. For htWE, the exchange ratio was 1.080 shares of htWR common stock for each share of h1WE common stock held. All share amounts are presented in equivalent htWR shares. 6-
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Iowa Power inc, l'ayroll-Ilased Employee Stock Ownenhlp Phtn Committee has duly caused this armual trport to be signed by the undersigned therrunto duly authoriicd. IOWA POWER INC. PAYROLL BASED Eh1PLOYEE STOCK OWNERSillP PLAN TRUST Ily L S. Rorema J. S. Roterna. Trustcc Dated; h1 arch 28,1991 l l l l l l l 7-
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t 448 Grand Avenue P.O. Bos 467 Dee Momes lowe 63303 51bitti 2900 i Analysts' informauon Note: Data listed herein are esumates subject to significant changes as future outkr,k changes. Forecast Actual Race of l 1990 1991 1992 1993 1994 1995 0 o3% , 5,381 5,528 5,674 5,809 5,950 6,095 - , Retail Electric Sales (Millicos of kWh) Amousi Sales Growth Raio 2.8 % 2,7 % 2.6 % i45 2.4 % 2.4 % 2.6 %
. Electne Genereung capability (mW) 1,601 1,601 1,601 1,601 1,601 1,601 -
1 Capsetry Purchases . 46 81 104 127 150 173 28.4 %
- Capacity seles 3 3 3 3 3 .4 8.3 % i 1.390 1,410 1,418 1,427 I:439 1,451 0.7 % -
Peak Desmand 22.0 % - Percent Reserve Margin (a) 18.3 % 19,1% 20.0 % 20.9 % 21.5 % t Fuel Sources for Energy Coal 57 % $6% $6% 56 % $6% 56 % 43 % 44 % 44 % 44 % 44 % 44 % ,
- Nuclear lb) 0% 0% 0% 0% 0% 0% -
Oil / Gas f 5-Year i Total i Capital Require meets (Millions) Capital espealetures $ 69 $ 89 $ R2 $ 81 $ 88 $ 79 $ 419 f 9 0 1 1 1 12 , Matunees and sinking funds 1 Total Capital Requireements 5 70 - $ 98 $ 82 $ B2 5 89 $ 80 $ 431 { t Sources of Capital internal Sources of Capital'
- Depreciauon and amorttzation $ 50 $ 53 $ 60 $ 63 $ 69 $ 71 $ 316 1 -3 2 I I I I ,
Deferred tan stems-net other 115) (6) 0 II) (4) $ (6) ;
$ 36 5 50 $ 02 5 63 $ 66 5 77 5 318 i Subtotal 77 % 74 % 96 % 74 %
Percent of Total Capital Requirements Sl% $1% 76 % + External Sources of Capital 3- 0 $ $ $ 95 $ 13 $ 40 $ 16 $ 169 toeg-term financmg Short-term financmg 34 43 (75) 6 (17) (13) (53
$ 34 $ 4R $ 20 $ 19 - $ 23 5 3 $ 113 Suhtotal 49 % 49 % 24 % 23 % 26% 44 26 %
-- Percent of Total Capital Requirementa Total Sources of Capital $ 70 $ 98 $ 82 $ 82 $ 89 $ to 1 g
' See reverse side for addsuonal mformation.
Analvsrs Conta(1 Gary J. Harward, Chief Financial officer-Midwest Power Group. Telephone 1712) 277-7722 May tu 1901 LSue Rozema. Treasurer-Mid*cs: Resources Inc., Telephone (51$) 281-2250 P W M v w ~ - m oro~yem,.,qr.,yg,--y,m,,.p.7 ,. g.,,. ,4 _, ,
F . I l'orecast Actual 1990 !991 '1992 1993 1994 1995 e laterest Coverstes Pretat with AFUDC 3.1 3.0 3.0 3.3 3.3 3.5 Supplemeoul, pretan with AFUDC 2.7 2.6 2.7 3.0 3.0 3.1 r Capitalaauon Rauos (Year-emis long-term debt 49% 48 % 48 % 47 % 48% 46% Preferred stock 3% 3% 3% 3% 2% 2% Common equity 48 % 49 % 49 % $0% $0% $2% Notes: (s) The Mid America Power Pnot (M APP) requires a 15 % reserve margin. (b) loma Power has a long-term power purchase contract with the Nebranks 1%Isc Power District for one-half the capacity of the Cooper Nuclear Station. The station went into service in 1974. i i 1 9 0 i
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e J. . . . F orecast j Actual 1990 1991 1992 1993 1994 1995 l Interest Coversges Pretat with AFUDC 3.1 3.0 3.0 3.3 3.3 3.5 Supplemoetal, presas with AFUDC 2.7 2.6 2.7 3.0 3.0 3.1 Capitaliation Rataos (Yeer-end) i Img-term det4 49 % 48 % 48% 47 % 48 % 46 % Preferred stock 35 3% 3% 3% 2% 2% Common equiry 48 % 49 % 49 f, 50 % $0% $2% Notes: (s) The Mid America Power Pcul(M APP) requires a 15% reserve margin. (b) lows Power has a long-term power purchase contreel with the Nebraska Public Power Datrict for one-half the capacity of the Cooper Nuclear Station. The station went mio service in 1974. - - . . . - - - . - . . . . . - , _ , - _ - . . - - . _ . _ _ . _}}