NRC-91-0034, Detroit Edison 1990 Annual Rept
| ML20073B063 | |
| Person / Time | |
|---|---|
| Site: | Fermi  |
| Issue date: | 12/31/1990 |
| From: | Garberding L, Lobbia J, Orser W DETROIT EDISON CO. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| CON-NRC-91-0034, CON-NRC-91-34 NUDOCS 9104230496 | |
| Download: ML20073B063 (44) | |
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Detroit r.- , Edison siinE " ma. " t April 19,' 1991 r NRC-91-0034 U. S. Nuclear: Regulatory Commission. Attention: Document Control Desk .; Washington, D..C. 20555 :
Reference:
Ferai 2 ' NRC Docket No. 50-341 - NRC License No._NPF '
Subject:
Annual Financial-Report Pursuant'to 10CFR50 71(b),-please find attached one copy:.of the 1990 annual financial. report for-the Detroit, Edison-Company. If you should have any questions regarding this: report, ~~ please contact Barbara Siemasz at (313) 586-1683 ,
-Sincerely, t
cc: A. B. Davis w/ enc. R. W. DeFayette w/ enc. W. G. Rogers w/ enc. ? J. F. Stang w/eno.. Region III-9104230476 901231' PDR .ADOCK 05000341 I PDR r I[jy[ l/ A
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Detroit Ecison ' 1990 ANNUAL REPORT 1 I i
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. To our shareholders:
he year 1990 was an outstanding one for Detroit Edison. Record revenues, near record sales, record earnings for common stock, a 23 percent increase in earnings per share, common stock reaching a 23-year high of $30.25 and closing at $28.25 - up I1 percent from the 1989 close - and a market price-to-book value ratio rising to a level among the highest in the industry. Clearly we are proud of these results and of the people who worked extremely hard to achieve them. Following are some of their accomplishments: Compared with 1989, they produced more with less - 5 Setting a kilowatthour sales mark second only to the record hot year of 1988, despite a significant downturn late in the year as the national recession took hold. Of particular note is that while sales to the automotive and steel industries dropped significantly, sales to the commercial segment increased, setting records in nine of the 12 months and all four quarters, as well as for the year as a whole. 5 Reducing fuel and other power supply costs. E Keeping the growth of other operation and maintenance expenses well below the general level of inflation. E improving the efficiency of our fossil fuel power plants, placing us for the second consecutive year in the top 10 among the 100 largest U.S. utilities. E Setting new operating records for our Fermi 2 nuclear power plant, with capacity. factor and availability surpassing industry averages for the first time. E Making effective use of company assets by selling electricity outside our service area when capacity was available and transmitting, for a fee, electricity produced by neighboring utilities and sold to Canada. E Producing and delivering more electricity to more customers with 14 percent latter to Shareholders i ewer employes than we had three years ago. On the financial side: Power Supply 4 E We reduced costs by refinancing older, higher-cost debt with lower-cost debt. Nucle:r Generation 6 E We increased our common stock dividend to an indicate'd annual rate of $1.78 Energy hlarketing 8 per share from $1.68 per share in 1990 and again - to an indicated annual rate ynd Distribution of $1.88 -in February 1991. N'u$lt["[upport E We issued mortgage bonds for $537.1 millimi to purchase the remaining ii rin:ncial neview 12 percent share of our Fermi 2 nuclear plant held by the Wolverine Power Supply Cooperative, Inc., and still maintained the common equity portion of our capital-Fin:ncist Statements 14 structure at 32.8 percent.1With no major construction under way we anticipate
- that internal cash generation will enable us to repay additional debt, thereby Notes to the Statements 20 increasing the eqtdty share in the coming years.
Min:gement's Discussion 31 E And finally, with no plans to stray from the energy business, we are using ~our' resources to strengthen our core business, to become a "best-in-class" electric
.10 yeir Comparathe 36 L Operiting Results utilit}
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'" ear Stailstical38 While these results are impressive, one outstanding year does not represent - or -
ensure -long-term sustainable success. That will come only as we are able to'
' Corporate Data 40 inake more basic changes in the way we go about our business. But we are working Dir;ct:rs and Omcers 41 Y uxMutaseAween T
a a J hard at those changes - to learn more about our business environment and our custom- - ers, to give greater focus to our goals, to transform our commitment to continuous improvement from words to across the-board action, and to change that elusive concept-called corporate culture - expecting more of employes'and giving them, in turn, the - ' opportunity to share in the increased value resulting from their increased contributions. These changes represent a long-term process, made necessary because the competitive pressures that have challenged major segments of American industry in an increasingly global economy are now extending to the electric utility industry as well. The protec- . tion once afforded by regulation is being eroded by the demands of industry, on the one hand, and increasing regulatory reliance on market forces on the other hand. For Detroit Edison,' the need to change has been particularly critical. Construction of - new state-of-the-art power plants, the need to import all of our fuel from other states, and Michigan's high business costs and stringent endreamental replation all raised - our costs. Our goal had to be to overcome these and other factors to enable us to provide superior value to our customers - competitive prices and better service - in order to provide '; increased shareholder value. For several years now we have been involved in a series of initiatives to help us change - into the kind of company we believe we must become, We are pleased with the signifi-cant progress made to date - thanks largely to efforts by employes to change systems, work methods, policies and practices after generations of what had become standard and comfortable ways of doing things. We have swallowed our traditional pride - and have beco'me better listeners - with a massive effort to find out how the "best-in-class" among utilities and other industrial and service companies do things, then adapting the most successful practices to our own operations. As part of our effort to change the culture of our company we are empowering em-ployes further down the line to make more decisions and accept greater accountability. A new compensation plan, which rewards employes for the achievement of important shareholder value goals, establishes a framework for this change. One other major obstacle that lay in the way of our efforts to become a lower-cost-company was the threat of new clean air legislation that would require massive new-expendimres. Michigan utilities - and their customers - already had spent far more on environmental protection than utilities in most other states - and achieved far greater results. Fairness demanded that we and they not pay the price again, We delivered that message in Washington; the Michigan congressional' delegation understood it and agreed with it, and worked hard to include in the new act provisions that would ensure equity.
- Aa a result, Detroit Edison already is in compliance with the first phase of the new requirements, which take effect in 1995, and therefore will not require ne_w expendi-tures by that date. Moreover, we estimate capital ex~penditures of about'$170 million to comply with phase two, which begins in 2000, while utilities in other states wi_Il be spending hundreds of millions and even billions of dollars to comply with both phases.
Our improved financial results during the last two years have been dramatic. Still, it ,
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. would be unrealistic to expect such improvement in financial results every year. The 2mmunaw t
Execulive Vice President and Chist Financist Otticer istry G. Garbording, left, and Chattman of the Board. President and Chitt Execullve Ollicer
.lohn E. Lobbla silho Cost Handling ControlRoom at hfonroe Power Plant nest hfonroe hfich. rkrough effective fuelblending, the plant used more lowsulfur costin 1990 than ever 2' before, contributing to the company's $ r already meeting lederalclean air /,L' requirements mandsted for 1995.
W [#!% national economy is uncertain. Only time will tell whether our own reduced depen-dence on industrial sales represents positive results from efforts to diversify Michigan's economy. The Middle East situation remains uncertain, With a new governor, the shape and direction of state policy and utility regulation still are to be established. The exact nature of our industry's structural changes also is uncertain. And Michigan's basic industries still are struggling to gain competitive parity with foreign manufacturers. But however these uncertainties are ultimately resolved, we believe we will be positioned to deal with them. As we are able to continue on our course of change and improvement in the way we do business, we will be better able to deal with external events and uncertainties and assume greater control over our operatione and our results. We thank you for your patience and support in the past, and pledge our continued best efforts on your behalf in the future. AK , N1L Larry G. carberding John E. Lobbia Ewcutive Vice President and Chairman of the Board, President and Chef Fmancial OfIicer Chief Executive Officer February 26,1991 smaa>v,m 3
Esecullve Vice Presidentand Chief FInsacts! Otticer Lstry G. Garbording, left, and Chairman of the Bostd, Prasident sad Chief Esecutive Olticer
.lohn E. Lobbis et the Cost Handling ControlRoom at htonroe Power Plant
( nest hfonroe, hfich rhrough attective fuelblending, the plant usedmore low sulfur cosiIn 1990 than ever before, contributing to the company's : ., stresdymeeting lederalclean air , i requirements mandsled for 1995.
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national economy is uncertain. Only time will tell whether our own reduced depen-dence on industrial sales represents positive results from efforts to diversify Michigan's economy. The Middle East situation remains uncertain. With a new governor, the shape and direction of state policy and utility regulation still are to be established. The exact nature of our industry's structural changes also is uncertain. And Michigan's basic industries still are struggling to gain competitive parity with foreign manufacturers. But however these uncertainties are ultimately resolved, we believe we will be positioned to deal with them. As we are able to continue on our course of change and improvement in the way we do business, we will be better able to deal with external events and uncertainties and assume greater control over our operations and our results. We thank you for your patience a .d support in the past, and pledge our continued best efforts on your behalf in the future. L Larry G. Garberding John E. Lobbia Executne Vice President and Chairman of the Board, President and Chief Financial Officer Chief Executive Officer February 26,1991 nncamu,wma 3
Delivering On Our Commitments Sue flogers fur!supplyJorrman;Ibennh flergmtmser, systems engineer: Terri Rome-Shehon, buyer, ami Ted Krupa, principal engineer, are among some 9,600 (Jetroit lidison employcs who share a common rision: prmiding superior customer salue to build shareholder value,und making their company "best in claw" umong the nation's electric utilities. Making commitments is easy. Iklivering is the challenge. , Meeting commitments takes leadership and direction, but tmnt of all it takes ;>cople. Iktroit 1 dison 's employes showedin i990 why customers hold the company in such high regard: I;mployes care about what they do, look for opportunifics to serve customers better and, cach in his or her own way, contribute 10 cnhancing the cornpany's ability to perform wellin un environment ofconstant change. Fully comprehending what the people of fletroit 1:dison accomplished in changing and bettering the company
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in 1990 h made emier by e.namining the accomplishments within the primary areas of the company - Power Supply, llncrgs Marketing tmd I)istribution, Nuclear Generation, and the Cmporate and Community Auppon organizations. The employes ofeach area have stories to tellabout theparts they have playedin IV90. I:ach story is a new chapter in the books of shareholder and customer Yahoe at Iktroit lidhon, Power Supply ue Rogers and her work shift handle one of Detroit The company's Venture Fuels partnership sells Edison's most valuable resources. They help direct Western coal to other utilities and coal users in - low sulfur, low cost Western coal into the boilers of North America, and sells expertise in coal. blending , the company's St. Clair and Helle River power to help others realize the Gnancial and environmen-plants on the St. Clair River, tal gains already accruing to Detroit Edison. As a fuel supply foreman, Rogers and her shift team Results of using more Western coal include a 63-play an important role in a pmcess critical to both percent reduction in sulfur-dioxide emissions since Fuel Mix Trend Detroit Edison's and Southeastern Michigan's 1974 - while increasing electricity production 17 al 0 economic and environmental progress, percent - and full compliance today with sulfur-0 Gas "Our St. Clair plant originally was designed to burn dioxide standards mandated for 1995 by the tough 0 Nuclear higher sulfur Eastern coal back in the 1950s and new Clean Air Act Amendments of 1990. l
'60s - before society became concerned with sulfur Burning Westem coal also makes Detroit Edison l
1973 emissions and the envimnment," Rogers said, more competitive in sales to other utilities - As environmental awareness grew, the company first another way of turning off peak capacity into began using low-sulfur Western coal at the St. Clair additional income. In fact, net bulk power sales plant. The lessons learned at St. Clair made the inneased by $36 million in 1990, due in part to 80 % transition to Western coal casier for the company's paanng effmencies. 6% other plants. The nmst imponant development in use of Western 14 % Rogers and her shift team are part of Detroit coal by Detroit Edison in 1990 took place at the Edison's Power Supply organization, which pro- company's 3 000-megawatt Monroe Power Plant - duces the fossil fuel generated electric and industrial the company's largest and the second largest coal-fired plant in the United States. By 1989, Monroe commitments to its customers, its shareholders and had increased its use of W estern coal to 25 percent 81981 steam power with which the environment. - representing a steady increase during the last few
- years. Yet, thanks to still further advances by "We have a job to get done - to keep the St. Clair Detroit Edison Power Generation engineers and Fuel 92 % and Helle River power plants fueled," Rogers said. Supply personnel,1990 Western coal use at the plant l l 4.3% "I feel particularly good about the positive environ' rose to 40 percent of the 8 million tons burned by 3.7% mental aspects of our plants - I have small children the huge facility - representing a cost savings of and I have to worry about the environment they'll .$11 million. Companywide, Detroit Edison fossil-
- have to deal with in the future. I'm proud of our fuel plants bumed 63 percent Western coal in 1990.
1990 efforts and the part I play in them." In operating its fossil-fuel generating plants, Power The tie between environmental and financial Supply uses about 99 percent coal, which is abun. progress is vital to Detroit Edison. Encouraged by dantly available in the United States. Oil and natural Michigan's stringent clean. air regulations and gas together represent less than i percent, compared l 83.2 % federal air quality rules, the company pioneered the with an average of about 20 percent for all U.S. 1
- l. 10.5 % use of Western coal by non Western electric utilities 1 0.4% tmd remains a leader in the use of Western coal and l 0.4%
the blending of that fuel with other varieties of coal. 4 mnetenw
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e!cctrie utilities. Reducing the company's depen- contracts, and the dence on oil and gas through the use of coal and selection of new nuclear fuels has helped ensure the dependability of suppliers and services - Detroit Edison's electric generating system and - as well as blending .. reasonable electricity prices for its customers. of coals and improved . Further reducing operation and maintenance costs plant performance - and improving efficiency are keys to the company's 1990 fuel expenses ) continuing success. The following are contributing were $44 milhon less , to this effort: than budgeted. D A Management Control System, designed to E improvements in two , better identify and focus attention on the real key measures of operating efficiency: l costs of doing business. The results are lower j generating costs, making Detroit Edison more 1. Fossil fuel heat ,,,,y,g,,,,,,y,,,,,,,g,,,, competitive in the bulk power market, rate, which measures the amount of energy osages sur,uy ., n,,,ntenance recluired to produce a unit of electricity, our ge at one ,iine o,, 5 A new maintenance management program, , featuring a sophisticated computer system improved slightly over 1989 to the best y,,,,,,,,7,,,,,,,,,,,,,,,,, installed at the Belle River Power Plant in 1990 level in three decades. Detroit Edison ,na,ntenance superv,w s,is ranked lifth best in 1989 in fossil fuel heat or d 'r*"ow and scheduled for extension to four other plants ','"amc later in 1991. When fully installed, the program rate among the country s 100 largest ,,,,'",,,,,,y,,,,,,,,,,,,,,,,, , is expected to save $15 million a year in power electne utilities. ca,i,mt ort,,, cos,s n,,,vered n, plant maintenance. 2. Fossil fuel plant availability - the percent-age me a p ant n avadaW to generate [# "y',",",n",.,,d#
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O Continuation of an organizational restructuring to increase efficiency and accountability. electricity - rose from 86.4 percent in atend,ao technology 1989 to 87.5 percent in 1990.
- D Advances in fuel procurement. Through renego-tlations, buyouts and buydowns of existing umimure S
l l 1 l Delivering On Our Cornmitments Nuclear Generation. Dennis Bergmooser and a journeymen take care of Penni 2's four huge emergency diesel generators as if they owned them. A sense of plant ownership by the people who kdow it best - the employes - can be seen in the plant's improved performance as measured by both federal regulators and industry oversight organizations.
"If the plant ever loses power, the diesels have to start," said flergmooser, a systems engineer in 110th the Nuclear Regulatory Commission (NRC) and Technical Engineering who is in charge of maintair- . the institute for Nuclear Power Operations (INPO)-
ing the generators. Fermi 2 has four large diesel. in their regular reviews of Fenni 2's operational and powered generators which provide power to safety organizational performance - have noted continued systems if electrical circuits providing rquiar power significant improvement. fall- The NRC's Systematic Assessment of Licensee "Our engines always are ready to start," said Performance, published in March 1990 but covering i Bergmooser, who proudly pointed out that the 1989, cited improvement in maintenance and generators' availability of 99.3 percent over the past engineering and gave the plant top marks on emer-year is among the country's best. gency preparedness, nuclear security and radiological C "t*IS' "As long as we keep them in the pmper condition, I know we've kept up our corner of Fermi 2," A summer INPO review found improved overall
, Bergmooser said. performance. But even more importantly,INPO -
f und "significant progress in many areas," and Bergmooser- who was named Fermi 2's 1989 showed where further improvements could be made, Employe of the Year - and his fellow crew mem-bers know their machinery so well that autside C""Cluding that the plant and its people are moving in the n.ght direction. technical support - once relied on to help impmve operation and availability - is virtually a thing of The "right direction" included a net capacity factor of the past, as the near perfect availability record would 77 percent for 1990, the plant's best yet, despite a l suggest. five-week outage late in the year to repair one of the plant's three low pressure turbines. Until then, the The crew members have worked together to tighten operating and maintenance pmcedures and eliminate plant had maintained a capacity factor of 85 percent. l costly, time consuming and operator. challenging Still, planned outages for equipment repair were requirements which no longer are needed. Many of fewer, shorter and less costly in 1990 than in past the changes resulted from suggestions made by the years, reflecting better planning and resource crew. utilization. Other indications of improvement in
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1990 included reductions in outstanding mainte-
"I hsten to my maintenance crew's suggestions " nance, radiation exposure and the plant's forced-
,, - Bergmooser said. "They know the machines better outage rate.
than anybody." The diesel crew members also work
- Many changes have played integral parts in what has
.' closely with other personnel assigned to different systems so their efforts complement each other, . been one of the most dramatic turnarounds in the .
rather than complicate and confound. nuclear industry, They include impmved training; a deficiency tracking system, which allows important A sense of ownership and attention to detail add uP issues to be identified and addressed; increased .
. f; ; to professionalism, nuclear industry style - a way attention to accountability and teamwork throughout of life at Fermi 2. It's the kind of commitment Fermi the organization; a dedication to self improvement fs 2 people have to the operation of the plant and to pmgrams; an employe recognition program; and the -
g,. f / E, supplying electricity to Detmit Edison's customers. Nuclear Generation Business Plan, which charts the r)i U -
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The year 1990 proved to be one of transition at Fermi entire organization's direction. 2, with improvements in Nuclear Generation's ability Late in the year, Fermi 2 had to begin storing its own tPd I (i I' I bl Y80d C Cully- low level radioactive waste as the three states that
' impfocedperformance at
- Fermig was citevin 1990 by On Feb. 21,1990, Detroit Edison took' complete had traditionally accepted waste from Michigan
- federstreputators and ownership of the Fermi 2 plant, acquiring the final ' generators - Nevada, South Carolina and Washing-
- r nhatt tracting th, Il percent share from Wolverine Power Coopera- ton - halted access from Michigan in response to commitment ottermit - tive,Inc., which serves more than 140,000 customers what they felt was a lack of progress by Michigan in people such as Sean Farrell, in rural northern Michigan. Wolverine initially siting and constructing a . low level repository on .
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p7 assumed 20 percent of the plant's ownership in 1977 behalf of the seven-state Midwest Compact, when construction was resumed after a two-and a' The cutoff should have little immediate effect on half year suspension because of a Detroit Edison Fermi 2 since the plant has enough storage space for capital shortage. Wolverine's infusion of capital in f ve years' worth oflow level waste. 1977 allowed Fermi 2 construction to resume. 6 tmoummuar
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(hic new en\ Irontuental thallenge in l'NU turned out to be an operational challenge as well. The /ebra nittwel af tls ed \ la a l(uropealt treighter dumping ballast w ater into the (ireat l.akes se\eral years ago.
~l he tiny niollusks quhkly nude then w ay by the ,,
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}hirtion of l ernli 2, as w ell as at the \lolMoe l'ower plant t he qtuck and innos au\e response by Detroit lahson personnel denionstrated leadership, as attested to by sus h dl\ elst' pilbhcallons as / br .\ CH )iV5 % ould be t tken - illsidt' illld outside the plant - 10
/ imC s. liUir 111aga/Inc and .Njn en Illu sn eitril. protect the ptiblic's health athi safety .
t he hononi hne ot I ernu Ts conuintment to the The decade et the % opened well for 1:ernu 2, but cit \ trit!Mllent is that .tgaln til l'Nt), radioltigical and the challellge inhead ts Ior Nuc! ear (ielleration to thin-radiological stir \ e)s athl repirtilly', show ed that coritintie to deli \ er on its conunititlerth by btiildilig the operation of I crnu had no diwenuble unpact on still turther on its impro\ ements and torging ahead the plant's surrouttthnyt hloreo\ er. the highly rated towitrd the tiltinlate goal - to establish I:ernli 2 perf ormance 01 the planti Emergency Response among the "best in class" for nuclear pow er plants. ()fgani/attoll delHollstrated that in the unhke!) e\ent ol a serious emergency at i ermi 2. sutthient actions
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ballast water into the Great 1.akes several years ago. [ The tiny mollusks quickly made their way by the
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QpM millions into cooling systems in the non-nuclear portion of Fenni 2, as well as at the Monme Power Plant. The quick and innovative response by Detroit QQ"'^" @G,]g<h* u , Edison personnel demonstrated leadership, as attested .. to by such diverse publications as The New York would be taken -inside and outside the plant - to caretur ana den,caten Times, Time magazine and Sports #hastrated. protect the public's health and safety. '""'"',"y "[',",",g",'l,,, The bottom line of Fenni 2's commitment to the The decade of the '90s opened well for Fermi 2, but n'd"' " he'n'"o "mv" 'ae n' '"' environment is that again in 1990. radiological and the challenge ahead is for Nuclear Generation to '"
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non radiological surveys and reportings showed that continue to deliver on its commitments by building are o,nn,s serg,nnuser systen,s the operation of Fermi 2 had no discernible impact on still further on its improvements and forging ahead 8"p'"**r ' nun irmn ten and n,s the plant's surroundings. Moreover, the highly rated toward the ultimate goal- to establish Fermi 2 performance of the plant's Emergency Response among the "best in class" for nuclear power plants. l,'l," f,',","((j,j'"'"ll"j,,,,,,, rtarm m cnaei wueca,n ,,no Organization demonstrated that in the unlikely event 1" notar solver .. of a serious emergency at Fermi 2. sufficient actions t$N Ol1l0tl fi$9CM k%M! Rtp.'t!
] Deliverine On Our Commitments l Energy Marketing and Distribut,lon
! xcept for a wood pole mounted with antennas, Theodore J. The substation project also is one of a series of new Krupa's efforts at Detroit Edison's Golf Substation in programs that reflect Detroit Edison's renewed j hiacomb Township in Detroit's northeastern suburbs commitment to improving customer reliability, a goal remain largely unseen. But the 4,000 customers evident in the company's tough outage-duration currently served by the substation will reap the targets. As it turned out, due partly to hiother benefits of those efforts - improved reliability of Nature, the company fell short of its reliability target their electricity supply, in 1990 as the nfth and sixth worst storms in history Krupa is a principal engineer with Overhead Lines helped make it the wettest year of the 20th century in - Engineering in Detroit Edison's Energy hlarketing S utheastern hiichigan. and Distribution (Ehi&D) organization, the link But the future h>oks brighter, regardless of the between the company's power generation facilities weather. A new computerized outage-analysis and its customers. He is part of a project team - syr. tem was implemented in all six regional divisions including employes representing Engineering, in 1990. The system rapidly analyzes customer System Technical Services, Energy Management power-loss reports and automatically identifies the Systems, Telecommunications and Macomb Division equipment most likely to be responsible. This
- that has been involved since early 1990 in the enables work crews to locate trouble spots more design and installation of a state-of the-art automated quickly, reducing outage durations, and provides distribution system at Golf and a neighboring customer representatives with better restoration time substation. cstimates to pass along to customers.
The system, which will be activated in late 1991 to A new central work group, System Optimization, also start a two-year-long pilot project, will allow com- is working with the regional divisions to identify the pany employes to perform maintenance inspections characteristics of electric distribution circuits that fail and circuit switching from remote facilities with the to meet stringent performance criteria. The group help of computers receiving data via radio signals. then develops new design and operating concepts to Hence the need for the antennas. Employes will be correct the problems identified. As a result of this freed from following time-consuming and costly group effort,50 new circuits are being identified for switching and manual inspection procedures. installation by 1994 to improve reliability. These in addition to saving time, work and efforts also will reduce outage durations and storm-money. the automated distribuuon related costs. system will result in more efncient use of At the same time, the company introduced a new existing substations as well as faster customer communications network that enables power restoration to customers through representatives to answer customer calls more remote alarms that permit earlier detec- pmmptly. By integrating the six previously distinct tion of problems such as power division telephone centers into a single customer-interruptions. contact system, the network directs customers' calls "Both customers and shareholders will to the first available customer representative any-benefit," Krupa said. " Customers will where in the company if all the local division gain improved reliability, while we customer representatives are busy, anticipate that shareholders will need to Ultimately, providing the right mix of customer invest in fewer substations in the future." service, quality, reliability and price depends on The substation project isjust one of a kn wing the needs and desires of customers. The broad array of new initiatives and key, increasingly, is recognizing that different improved methods being instituted segments of customers have different needs - a throughout EM&D and Detroit Edison, e neept that is particularly criticalif Detroit Edison's many of which use " benchmarking " business customers are to remain competitive, Through this process, the company compares its own Accordingly, the company's Marketing group ec nfelan o)e a es a new cutomateddistribution ys!,m methods, function by function, with the methods used restructured in 1990 along segments, by customer at Gott substationin Macomb by other utilities and industrial and service companies size and type, changing from an organization
,$," ,[^8 ",8",,'y,, tem, aconsidered "best in class." previously focused on the company's products and remote maintenance "In the case of substation monitoring, maintenance electrical applications. The group initiated a major
" ' research project in mid-1990 that involved face-to-Itc$l g s$lna e ang and trouble-shooting," Krupa said,"we found that, improving customer sery/ce, while our capital investment was competitive with face discussions - both individual and group -
others', out operation and maintenance expenses were with thousands of customers. The research findings, higher. This new automated system is designed to expected in mid-1991, will be used to design the reduce our operating costs." c p ny's programs, providing the proper mix of - services and prices customers are wdling to pay. 8 amtww
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f . . e central focus lot a record breaking substation ' , j .1 ' ' / '.', construction project completed in 1990. Detroit f 'l lidison's ENIA D organization. secognitine and - - s - . respondmp to the competitis e prewures l$cing } ord, *
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_ 'O Plant and its espanded power needs in utvut four ggg g g , ,,, g,ggg 4 ,,,,,,, months, one quarter the usual construction time. ,The ' to r co ditionix in by buildino 'lhe prov'd e 8'""# ' 'h#' " '"# C' project also w as co.npleted under budget. r im oises mak.ing ice during olt. peak hours, then AdamMas8a8 a,w s, ,,,,,, ,nyn da ., ma8a8a',,af .. EhlkD also launched 13 new dematal side manage- using the ice for cooling during peak periods. This tacsfatate OPeinteori of the ment and energy consersation prog.mus that beh, enables customers to low er their energy costs for '"',"""# customers use energy more ef ficiently - sasing cooling while helping defer Detroit Edison's need 7,*,g',",,",',,#
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customers mone), minimiting shareholder insest- to build new power plan % by reducing peak eRe- #a tasser newer res#warma - ment in new power plants and providmg emironmen- tricity demand. '"*"* tal benefits. One is a unique pilot project undertaken - i "* with Eastern hiichigan Unisersity that is testing the .' w ow m o,e 9
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as , . [. In the meantime, the company continued to work * * ' closely with customers such as Ford Motor Co., . Detroit Edison's second largest customer with 37 ' . ' - facilities in Southeastern Michigan. Ford w as the - ' - ., , centnd focus for a record breaking substation , - construction project completed in 1990. Detroit <. . Edison's EM&D organization, recognizing and
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built the substation to serve Ford's Wixom Assembly ' Plant and its ex,panded power needs in about fout fmibility of ice storage as a possible attemative i "o,"r'e < mo t' 'A ua3 months, one quarter the usual construction time. The """"""'""""'""""" to air conditioning in large buildings. The project -- project also was completed under budget, nvolves making ice during off peak hours, then I f;IiN,[r',h"$,I$"",'n - ., EM&D also launched 13 new demand-side manage- using the ice for cooling during peak periods. This 'm "d* "i" "I'* ( "a' ment and energy conservation programs that help - enables customers to lower their energy costs for '",'*;, ,'l',',,''"]('y'"j["" customers use energy more efficiently - saving cooling while helping deler Detroit Edison's need y.sico. u c.,ny ,,.o n, wa, customers money, minimizing shareholder invest- to build new power plants by reducing peak elec-ment in new power plants and providing environmen- tricity demand. I"i" "le * ' rr'" " "imat
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l f k Delivering On Our Con 9mitments j Corporate and Community Support , erri Rouse Shehon is one of hundreds of players involv-d in a customers, and subject to the same kinds of coInpeti-revolution that h chang ing the way Detroit Edison tive pressures and options as in the external markel-
- buys the equipment and services critical to its place.
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succewful operation. Rouse-Shelton comes to work The company's lluman Resources organization is
- each day knowing that new partnerships she has creating revolutions in the way it provides recruiting, I
helped fonn with u -rs of those services are making a hiring, training and retraining, and compensation pmitive diff erence to the company. l systems that will enable the company to perfonn better As a buyer of contract personnel services - some. with a more diverse work force in a more competitive l times called " temporary help"- Rouse Shelton environment. And as the work force becomes more carries out a new game plan that she helped formulate diverse,in terms of race, ethnic background and life i in 1990 as part of a Material Management initiative. experiences, programs such as Seeking to Understand the Different - designed to sensitize employes to Through the initiative, Rouse Shelton said, a task force of employes from Purchasing and user groups ethnic and cultural differences - further aid the development and perfonnance of people. jointly reviews procedures for buying materials and services. The cooperative effort is a fluid and Faced with changing industry structures and practices constant one as buying procedures continue to and a company changing rapidly to prosper in the new improve and are melded with the needs of supervi- environment Community and Governmental Affairs sors and employes who use the services every day in ensures that the complex process is understood by the field, legislative and regulatory todies,
- "We started re-thinking the way we were doing The Legal organization maintains an intensified l things," Rouse-Shelton said. "It'ri great to get the preventive law program and unique lhl fation manage-i best price from a supplier, bu'. with price as the ment measures to help ensure the company's success.
primary focus you don't always get quality - und And Public Affairs has to generate toth public and that's a major concern of buyers and users alike. My employe understanding and approval of changing i responsibility h to put in place the best contract I can company practices and directions. That process can be
- one that fulfills the corporate and users' interests difficult, because the public's definition of expected of reducing costs <md getting the job done. behavior - especially with emotionally charged issues "In a way, the users of services are such as the environment and education - changes playing a key role in their own today as never before due to the speed and volume of buying decisions, with the support communication.
of buyers like me. And it's a win- h so-called " acid rain" an environmental hazard? win situation " Does the burning of fossil fuels cause global warming? , Savings from the Material Man. Arc energy fields emhted by electric wires and agement initiative reached nearly appliances a health hazard? Does hical control of l 520 million in 1900- sustained, schools improve education? not one time, savings. For these and many similar mutters, the answer too
- , : The contributions of Rouse- often is, it depends on which report you read and Shelton and her associates are when. At the same time, companies such as Detroit i
helping increase the productivity Edison must take the long range approach, rather than
'~~1.$cg j and cost effectiveness ofline the day's popular view, if they are to operate consistent h organizations, and provide better with the public interest. Detroit Edison made such hect;EE85 L m ( value for Detroit Edison custom- long-range decisions -including protection of the Q W-h
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? ers. Their efforts are representa-tive of the gentle revolutions being environment - many decades ago.
in the 1920s Detroit Edison became the first electric Jane Snskt, a substation created by support groups throughout Detroit Edison, utility in the country to install an electrostatic precipl. oYd cts's cl sfo tlh One key to the creation of such revolutions is a tator on a power plant to reduce fly ash embslons. To Amer /csn heritspe forstudents greater emphasis on teamwork between line and date the company's environmental commitment - Su r rtS W P a nS at common Foah and some a&ns to comNy & n gMons, smne to go his rc na as a one12 working together to meet them. beyond them -- totals more than 52.5 billion. employes to be first recipients ofunt tyIe'trIc Aws # ' J'"E Another key is the Shareholder Value improve- In the past, ridding power plant emissions of poten. honoring the company's retired ment Plan - an incentive pay plan, based on such tially harmful substances has been effected by reducing castrman of the soard and common goals, that in 1990 covered the company's the amount of those substances, such as the sulfur chief tsecutive Orncer. entire 5.675-person non-represented work force. content of fuel. Increasingly Detroit Edison is turning 5 Another key is a shift in orientation that has to incentives to reduce the amount of electricity used. support groups viewing line organizations as The first such energy conservation programs were begun in the 1970s. Current energy conservation 10ru nw u m m w*
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programs tre expected to cost the company $13 Foundation contributions , k million through 1991, with expanded programs to education totaled proposed for 1992 94. f nearly $800,000 in 1990 Other activities undertaken in 1990 to help the and are expected to r e environment, and encourace others to do the same, apprcach $1 million in 1 4 w. included planting thousands of trees, supporting other 1991, with growing 4 tree-planting organizations such as the Greening of emphasis on programs at g Detroit and Global Releaf of Michigan, taking the lower grade levels. company's Enviro-Magic show to thousands of children in schools, and supporting environmental The Foundation - and individual employes - also support many other activities in Southeastern g communications, such as the Public Broadcasting Michigan that affect the long term health of our we J- ' m Service series " Race to Save the Planet." communities, such as strategic planning and * <- Detroit Edison has become a part of other revolutions pmblem+olving efforts, United Way, cultural ; in the community, too. Through the Detroit Edison institutions, and local civic organizations, i Foundation, the company became the first corporate Whatever the environment, w hatever the resource, 4 , ,
" partner"of a Detroit school under the new Detroit Detroit Edison and its people continue to demon- -
4 Compact, designed to improve the city's schoolt strate responsibility, caring and action as they Through the Compact the company provides techni- respond to, support and lead the revolutions that cal and financial help to the schools and guarantees make a difference in their business and in their qualifying students either jobs or college educations. communities. The people of Detroit Edison are The company, through its organizations now has continuing to deliver on their commitments. partnerships with 23 area schools. Detroit Edison wwuwwa a m r 11
Dellvering On Our Comtititments Financial Review Detroit Edison delivered shareholder value and strengthen its financial base during 1990. Earnings for common stock of $479.3 million set an all. time record, with per share carnings of 53.26, up 23 percent f om the previous year. a Under the December 1988 rate case settlement, a rate increase of $76.8 million, or 2.5 percent, went mto ef fect in January 1990, an increase less than the rate of inRation (see graph on opposite page). The fourth step of the rate order, an increase of
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Operating revenues rose 3.2 percent from 1989 to a 581.9 t.:lllion, or 2.6 percent, w ent irto effect in record 53.3 billion, while Operation and Maintenance January 1991, Additionally, an expense stabilita-(O&M) expenses actually dropped by $161 million, tion surcharge of $27.6 million - to help offset or 9.1 percent, to $1.6 billion. Despite a slowing cost increases resulting from innation - w ent into kical economy, commercial sales set a record for the effect in January 1990, replaced by a similar year, while total kilowatthour sales were virtually surcharge of about $55 million in January 1991. unchanged from a y ear earlier. Common stock reached a high in 1990 of $30.25 per share, up from a low of $12 in 1988, The stock 1990 Financing outperformed the Dow Jones 15 Utilities Average throughout the year and was up I1.3 percent by year. Type of Grosa end, while the Dow Jones 15 average was down 10.8 Security and Amount Interest percent. Month Sold (Millions) Rate The dividend was increased in 1990 to an indicated annual rate of $1.78 per share, compared with 51.68 I'"II"'i"n Control B<mds per share for the previous eight years, and again - to April $ 7.3 7%% l an indicated annual rate of $1.88 -in February July 32.4 Adjustable rate g 99 g , August 2.2 79 November 50.7 7.65 Common shareholders' equity in 1990 rose to 32.8 $ 92.6 percent of total capitalization, up slightly from 32.3 Mortgag Bonds percent in 1989. The increase in common sharehold. Echruary* 537<l 8% ers' equity occurred despite the issuance of new debl Total Financing $ 629.7
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of $537.1 million to buy back the remaining il percent share of Fermi
- Purchase of Wolverine Cooperative % Interest in Fermi 2 2 held by the Wolverine Power Supply Cooperative,Inc. Overall, the increase is attributed to improved SecurltleS Redeemed during 1990 earnings and the continuing goal of reducing debt obligations through Principal retirement of maturing debt and early Amount Interest retirement of other debt. Redemp, Demimion NiHione Rate lions of maturing debt and preferred and preference stock totaled $199.4 Early Redemptions million, while early or optional General & Refunding redemptions totaled $152.4 million, Mortgage Bonds Particularly significant in 1990: Series EE $ 2,5 11%%
Series SS 10.0 10 % a Earnings improved in both dollar Series UU 100.0 10 % Market to Book Rallo amount and quality, with non-cash earnings of $ 112.5 about 32 percent compared with about 90 percent l'ollution Control Bonds non-cash earnings recorded for much of the last Series P $ 22.1 9.8% decade. Internal cash generation is about 250 Series Q 9.6 9,9 percent of capital expenditures, thus permitting $ 31.7 repayment of some higher cost debt. Operation /> referred & /> reference Stock and maintenance expenses dropped by more than 9 9.60 % $ 3.2
$2.75 Series B 2.5 11 %
percent - a significant achievement considering
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that kilowatthour sales were essentially unchanged g g from a year earlier and only slightly below the all- Total Early Redemptions $ 152[4 time sales record. Key shareholder value measures Mandatory were tied - for the first time - to incentive Redemptions 199.4 compensation for management and all non- Total Redemptions $351.8 j represented employes. 18 snamummuaw
O Killiwatthout sales reached near record levels Debt financing issued in 1990 totaled $629.7 despite generally slower economic activity in the million - 5537.1 million for the parehase of area, particularly among the company's key Wolverine's remaining interest in Fermi 2,541.9 customer segments - automotive and steel million to refund securities at lower interest rates, producers. The continued strength is a reflection and 550.7 million to continue a strategy of maxi-of the increasing number of customers in the mizing lower-cost tas-exempt capital. Following service area, and growth in the commercial and this strategy, the company for the first time com- - non-automotive manufacturing sectors. Sales pleted an early redemption of two series of out-totaled 40.596 billion Lilowatthours (LWh), standing pollution control revenue bonds - more virtually unchanged from the 40.585 billion kWh than 532 million wmth - refunded through an sold in 1989. A 1.6-percent increase in commer- adjustable interest rate issue. cial sales was offset by slight decreases in residen-In the first quarter of 1990, ratings on Detroit tial and industrial sales. Edison's securities were raised by two major ratings 0 The number of customers served increased 1.2 services.1(atings on general and refunding mort-percent, w hile the number of company emplayes page bonds, secured and unsecured pollution decreased by about 6 percent. The number of control bonds, and preferred and preference sock customers rose from 1,905 (XX)in 1989 to a record were raised by both Moody's investors Service, - 1,927,000 in 1990, w hile the number of employes Inc., and Standard and poor's, Inc. dropped from 10.254 in 1989 - the lowest level in The year 1990 was a good one for Detroit Edison - 12 years - to 9,669 in 1990. Its shareholders, customers and employes. The D The company's year end market price tohmL company continues on its present course - to value ratio increased slightly to 1.61 in 1990 from perform as necessary to meet the needs of its 1.58 in 1989. This ratio wes 1.2 at year-end 1988. customers and, in so doing, to improve The year end level of this key measure of share- shareholder value. holder value places Detroit Edison among the top four investor owned utilities in the country I-
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I The Detroit Edison Company and Subsidiary Companies Repod of Management's Responsibility for Financial Statements , mura-The consolidated financial statements of1he Detroit for expressing an opinion as to w hether the Gnancial Edison Company and subsidiary companies have statements are presented fairly, been prepared by inanagement in conformity with 1he Board of Directors, through its Audit generally accepted accounting principles, based upon Committee consisting solely of outside directors, currently available facts and circumstances and meets with Price Waterhouse, representatives of management's best estimates and judgments of management and the internal auditors to review the 1.nown conditions, it is the respmsibility of manage- activities of each and to discun accounting, auditing ment to assure the integrity and objectivity of such and Gnancial matters and the carrying out of resgm-financial statements and to assure that these state- sibilities and duties of each group. Price Waterhouse ments fairly report the Company's financial position has full and free acceu to meet with the Audit and the results of its operations- Committee to discuss its audit results and opinions. To meet this responsibility, management main- without management representatives present, to allow tains a high standard of record keeping and an for complete independence. effective system of internal controls, including an extensive program of internal audits, written admin. istrative policies and procedures, and programs to assure the selection und training of qualified person- . nel, Larry G. Gart ordinD These financial statements have been audited by Executive Vice President the Company's independent acce.untants, Price and Chief Financial Officer Waterhouse, whose regn1 appears on this page. Their audit was conducted in accordance with generally y accepted auditing standardt Such standards include the evaluation of internal accounting controls to h/ ((6/gd establish a basis for developmg the scope of the audit, # I as well as such other procedures they deem necessary {Lo n c t e Board. Pretident and Chief Enocutive Othcer Report of Independent Accountants PriceWaterhouse O
- 200 Rl;NAISSANCE CENTER DETROIT, MICillGAN 48243 -
Febnsary 8,1991 - To the Board of Directors and Shareholders of The Detroit Edison Company in out opinion, the consolidated financial statements free of material misstatement. An audit includes appearing on pages 15 through 30 of this report examining, on a test basis, evidence supporting the present fairly, in all material respects, the Gnancial amounts and disclosures in the fmancial statements, position of The Detroit Edison Company and its assessing the accounting principles used and signifi subsidiary companies at December 31,1990 and -, cant estimates made by management, and evahmting 1989, and the results of their operations and their l the overall financial statement presentation. We cash flows for each of the three years in the period believe that our audits pmvide a reasonable basis for ended December 31,1990,in conformity with the opinion expressed above, generally accepted accounting principles These As discussed in Notes 4 ano $ to the consolidated financial statements are the responsibility of the financial statements, the Company changed its Company's management; our responsibility is to methods of accounting for disallowed plant costs and express an opinion on these financial statements abandonments, unbilled revenues and property taxes based on our audits. We conducted our audits of. in 1988, L these statements in accordance with generally ( accepted auditing standards which require that we - . l plan and perfoim the audit to obtain reasonable . I assurance about whether the financial statements are - Au.4 M. l 74 wwrmew
no o,e as,.,c,,, arm sawc,coene Consolideted Statement of income monmiam.w.i Year Ended December 31 1990 1989 1988 Operating Hestnues Electric - $3,279,248 $3,171,456 53,070,724 Steam 27,491 31,$75 - 31,448-Total Operating Revenues $3,306,739 53,203,031 53,102,172 Opercting Espenses Operation Fuel $ 7NN,35$ $ 820,765 ' $ 846,678 Other power supply (13,142) 142,240 = 146,773 Other operation $45,476 ,506,889 $14,024 Maintenance 279,528 291,365 -275,610 Depreciation and amortitation 406,330 371,682 -332$$1 Delerred Fermi 2 dereciation und ntnortiration (39,20N) (35,234) (44,143)- Taxes other than locoms 280,459 225,763 212,656-Income ta3cs 209,931 129,626 89,944
'lotal Operating Expenses $2.427,729 52,453,096 52,374,(93 Oper: ting income $ M79,010 - $ 749,935 - 5 728,079 Other income and lieductions Allowance for other funds used during construction 5 - $ - ^$- 1,663 Ikferred Fenni 2 return . 7N,379 107,169 134.264-Other income und deductions (7.22t') ,675 (789) locome lases 2,304 843 (769) -
Disallowed plant costs - - (875,372) Accrethn income 48,794 $0,188 25,866 Income tase- ..milowed plant costs and accretion income (N,198) (17.047) 225,171 Net Otha 'nconx and Deluctions $ 113,950 $ 141,828 5 (489.96M income liefore Interest Charpes $ 992,960 5 891,763- 5 238,113-Interest Charges Long term debt $ ' 472,369 - $ 444,204 ; $ 451,415 Amortiration of debt discount, premium and expense ' 4,$39 4,368 "4,593 Other 4,853 - 20,980 20,663 Allowance for borrowed funds used during construction (credit) (3,260) (3,740) (3,224) Net interest Charges $ 47N,501 5 465,812 5 473,447 income (Loss) liefore Cumulatis e Effect of Accounting Changes $ $14.459 - _ $ 425,951 $ 1235,334) Cumulatige Effect for Years Prio to 1988 of Accounting Changes for (Notes 4 and 5): Disallowed plant costs and abandonments (net of income taxes of $111,257) - - -(344,147)- j Unbilled revenues (net of income iases of $40,912) - - _ 6l,367 -; Property taxes (net of income taxes of $101,306) - - 139,288 Net income (Loss) .
' $ $14,459 5 425,9$1 . $ (378,826). -!
Preferred and Preference Stock Dhidend Requirements 35,179 37,018: 49,757 Earnings (Loss) for Common Stock (Note 5) - $ 479,280 $ 388,933 5 (428,583) Common Shares Outdanding- Aserage 146,N88,N09 '146,816,363- 146,761,458 L Fernings (Imss) Per Share ilefore cumulative effect of accounting changes . _ $3.26 - $2,631 $(l,95) Cumulative effect for years prior to 1988 of accounting changes for: Disallowed plant costs and abandonments - - - : (2,34) L Unbilled revenues --
-o ' 0,42 Property taxes . '-- -0.95~
, Farnings (Imss) Per Share (Note 5) $3.26 - 52.65 ' > $(2.92) - 1 (See accompanying Notes to Consolidated Financial Statements.)l
-l 9
buya.Wrne 15 -
The OrtroII Edison Company sad Subsidiary Companlos
- Consolidated Balance Sheet tooitriininoni.ne )
December 31 1990 1989 ASSI:1S Utility Properties I'lant in servke Electric $. .J,21.335 510,89.4.234 Steam 61.773 59.456 ilies3,108 510.952,690 Less: Accumulated depreciation and amortiration _ , j,; 124,219) (2,787,815)
?
- d5N,HH9 5 H,164,875 Comtruction work in progress 66,034 63,046 Nuclear fuel - 8,632 Net utilitgroperties 5 NA24,923 5 8,236,553 Property under capital leases (less accumulated amortiration of $127,372 and 5121,465, respectively) 5 143.596 5 149,593 Nuclear fuel under capital lease (less accumulated amortiration of $182,254 and Sl12,872, respectively) 284,224 291,935 Net progynder capital lenses 5 427.N2' 5 441,528 Total owned and leased properties 5 9,052,7 5 8,678,081 Other Property and lmestments Non utility property 5 9,663 5 9,739 i investmentr, and speelat funds 45.55N 41,092 Nuclear decommissioniny trust funds 15,6N9 5,H25 ;
$ 70,910 $ $6,656 Current Assets Cash and temporary cash investments (at cost, approximating market value) 5 145.946 5 15,664 Customer accounts receivable and unbilled revenues (less allowance for uncollectible accounts of bl0,(KK) and Sl9,(KK1, respectively) 1H5,934 197,139 Other accounts receivable 33,396 58,629 inventories (at average cost)
Fuel 176.494 176,201 Materials and supplies 161.959 147,553 Prepayments and other H.221 7.279 5 711.950 5 602,465 Deferred Dcblin i Unamortired debt expense - $ 49,094 5 50,913 Accumulated deferred income taxes 208,184 196,399 Unrecovered plant rests 14,561 20,183
' Fermi 2 phase in plan 424,959 320,810 ;
Fermi 2 deferred amortiration 13,438 .
- i Other 27,486 24fN2, 1 5 737,722 5 612,397 '
Total $10.573,325 5 9,949,599 (See accompanying Notes to Consolidated Financial Statements.) 16reten u w w w mom -
The DelrollIdison Compspy end Subsidisty Companlos Consolidated Balance Sheet (ooii.riininous.nai> December 31 1990 1989_ l.l Allil.lTil:S Capitalitation Common stock 510 par value,160,(KK),(KKI shares authorized; 146,921.695 and 146,859,569 shares outstanding, respectively (460,354 and 522,524 shares, respectively, reserved for conversion of preferred stock) $ 1,469,217 51,468,596 Premium on common skick $52,985 552.501 Common stock expense (47,766) (47,742) Retained earnings used in the business 614,016 396,705 l otal common shareholders' equity $ 2,588,452 $2,370,060 Cumulative prefened stock 51(K) par value,9,(K10,(KKI shares authorized; 3,273,477 and 3,379,537 shares outstanding, respectively (3,539,827 shares unissued) Non-redeemable preferred stock 238,414 239,495 Redeemable preferred stock 74,073 86,484 Cumulative prelerence r,tock $1 par value,30,(KK),(KK) shares authorlied; 2,980.180 and 3,380,180 sharen outstanding, respectively (27,019,820 and 26,619,820 shares unissued, respectively) Non-redeernable preference stock 47,N91 47,891 Redeemable preference stock 15,805 - 25,318 teny term debt 4,923,999 4,561,(K)5 Total Capitalitation $ 7,888,634 57,330,253 Other Non Current I. labilities Obligations under capital leases $ 126,202 $ 131,358 Accumulated rute refunds, with interest 4,707 2.627'
$ 130,909 5 133,985 Current I, labilities Amounts due within one year Long term debt $ 110,474 $ 168,789 Prefened and preference skick 16,750 13,750 Obligations under capital leases 301,618 310,170 Accounts payable 149,449 229,6N Property and general taxes $6,101 41,512 Income taxes 15,570 8,328 Interest 108,926 105.975 Dividends payable 73,962 70,782 Payrolls 61,018 59,332 Fermi 2 refueling outage 20,0(H) -
_ Other 74,364 40,183
-$ 988,232 $I,048,425 I)cferred Credits Accumulated deferred income taxes $ 1,133,869 $1,065,329 Accumulated deferred investment tax credits 376,743 333,003 Other $4,938 38,6N
$ 1,565,550 51,436,936 Commitments and Contingencies (Notes 2,6,12 and 14)
TotaI $10,573,325 $9,949,599 (See accompanying Notes to Consolidated Financial Statements.) woanr,sauwa nw 17
He Ortroit Ulson Company and $nsidiary Companies Consolidated Statement of Cash Flows mamin7hounam $ ; Year Ended December 31 1990 1989 1988 Operating Actititles Net income (l.ou) $ $14.459 $ 425,951 $(378,826) Adjustments to reconcile net income (loss) to nel cash from operating activities: Cumulative effect of accounting changer , Disallowed plant costs and abandonments - net - - -344,147 1 Unbilled revenuch and property tates - net - - (200.655) I Disallowed plant costs - - 875,372 Accretion income (48,794) (50,188) (25,866) ' Depreciation and amortiration 406,330 371,682 332,551 i Deferred fermi 2 depreciation, amortization and return (I17.587) (142,403) (178.407) , Deferred income taxes and investment tax credit - net 100,453 86.516 (137,522) Provision for Fermi 2 refueling outage 20,tHNI - - Sale of accounts receivable and unbilled revenues - 200,0(K1 - Other 29,538 (713) (28,452) Changes in current awets and liabilities: (a) Customer accounts receivable and unbilled revenues Il.205 -(30,457) (60,687) uher accounts receivable 25.233 (27,103) i1,054 inventories (4,004) 59,(X13 386 MPSC ordered refunds, with interest - (10,239) (23,080) Accounts payable (73,014) 34,829 3,659 Tates payable 21,972 489 (251) , Interest payable 2,951 3,597 2,469 ! Other 34,676 (4,829) 12.091 Nel cash from operatintactivities $ 923,418 $ 916,135 5 547.983 j intesting Aethitles Plant and equipmert x ;ienditurca $(230$01) $(242,973) $(235,127) Purchase from Cooperative - Fermi 2 (b) (2,507) - (4,12i) Sale of nuclear fuel . 31,846 Changes in current assets and liabilities (a) (15.522) 3,093 (8,890) ; Other (20,735) (18,836) (14,876) Net cash used for investing activities $(237.119) $(258,716) - $(263,014) Financing Aethitles issuance of unsecured promissory notes $ - $ 50,046 $ 201,924 Sale of general and refunding mortgage bonds (b) -- 296,460 - Funds recched from Trustees: Installment sales contracts and loan agreements 98,679 228,265 7,300 Increase (decrease)in short term borrowings - (229,325) 229,325 'l Repayment of long tenu debt (332,203) (679,965) -(247,975) i Redemption of preferred and preference stock (19,500)1 (16,250) (283.250) i Dividends on common, preferred and preference stock (293,391) (284,024) (3(M,106) i Other _. (9.602) (10,609) J(24,001) j Net cash used for financing activities il556,0171 $(645.402) $(420,783) - 4 Net inercase (Decrease)in Cash and Temporary Cash Imestments - $ 1/9,282 $ 12,017 $(135,814) Cc:h and Temporar3 Cash lmestments at lleginning of the Perim! l$,664 3,647 139,461
~
Cesh and Temporary Cash lmestments at l'nd of the Period $ 145,946 E $ .15.664 $ 3,647 . Supplementary Cmh I' low information Interest paid (excluding interest capitalized) $ 469,372 - $ 453,739 $ 466,721 ! Income taxes paid ll0J59 : 59.541 10,813 New capital lease obligations 75,0$$ 36,459- 5,,638 ; - For purposes of the consolidated financial statements, the Company considen investments purchased with a maturity of three months or less to be temporary cash investments. (a) Escludes cumulative effect f or years prior to 1988 of accounting changes; I (b) Excludes the non-cash investing and fmancing effects of the Company's February 1990 purchaw of the Penni 2 ownership interest of Wolverine i power Supply Cooperative, Inc. throuFh the bnuance of 1537,1 million of its General and Refunding Mortfuge lionds. -
]
i (See accompanying Notes to Comolidated Financial Statements.) 18 m a w re w 1
The Detroll Edison Company and Subsidiary Companies Consolidated Statement of Common Shareholders' Equity (oaminmmam Premium Retained Common Stock on Cominon fiarnings 510 Par Common Stock Used in the Shares Value Stock !!xpense ilusiness flatinee at December 31,1987 146,751,865 51,467,519 5551,662 5(47,700) 5948,$(4 issuance of common stock on conversion of convertible cumulative preferred stock,
$M4 series 31,347 313 245 (12)
Premium and expense associated with preferred and preference stock redeemed (19,905) Net loss (378,826) Cash dividends declared Conunon stock - 51.68 per share (246,564) Cumulatise preferred and preference stocL* (48,287) llilince al December 31,1988 146,783,212 51,467,832 5551,907 5(47,712) 5254,922 issuance of common stock on conversion of convertible cumulative preferred stock, 5%9 series 76,357 764 594 (30) lixpense awwlated with preferred and preference stock redeemed (556) Net income 42$,951 Cash dividends declared Common stock - $ l.68 per share (246,667) Cumulative preferred and preference stock * (35,945) llalance ut December 31,197 9 146,859.569 51,468,596 5552,501 5(47,742) 5396,705 Iwuance of common stock on com ersion of convertible cumulative preferred stock, 5%9 series 62,126 621 484 (24) lispense associated with preferred and preference stock redeemed (577) Net income 514,459 Cash dividends declared Common stock - 51.78I rr share (261,478) Cumulative preferred and preference stocL* (35,093) llalance al Decemher 31,1990 146,921,695 51,469,217 5552,985 5(47.766) 5614,016
- At established rate for each series, l
(See accompanying Notes to Consolidated Financial Statements,) rm wt w w w r79-in- . ~ .4
The Detroll Edison Company and Subsidiary Companies Notes to Consolidated Financial Statements , Note 1 maintenance and repain are charged to expense, and the cost of new pmpeny inuaHed, w hd replam propeny rethed is charged Significant Accounting Policies to property accounts. Industry Segment - The Detroit Edison Company (" Company") Deferred l'ermi 2 Depreciation and Return - An hiPSC-is a regulated public utility engaged in the generation, purchase, authorized phase-in plan for Fenni 2, which was effective on transmission, distribution and sale of electric energy. January 24,1988, provides for gradual rate increases in the early Regulation - The Company is subject to regulation by the yenn of plant operadon rather than a one-time substantial rate
~
hiichigan Public Service Commission ("h1PSC") and the Federal increase which would le provided by conventional ratemalmg. Energy Regulatory Comminion ("FERC") with respect to ac, SFAS No. 92," Regulated Enterprises - Accounting for Phase-in counting matters and maintains its accounts in accordance with Plans, pennh. the capitallianon of costs defened for future Uniform Systems of Accounts prescribed by these agencies. As a '""YCIF Wuter a phaseen plan. In acconlance we the Fenni 2 regulated entity, the Company meets the criteria of Statement of rate phasea.n plan. the Company recorded non cash income items Financial Accounting Standards ("SFAS") No. 71," Accounting of derened deprea,ndon ($218 niilhon,535.2 million and $44.1 for the Effects of Certain Types of Regulation." This accounting million in 1990,1989 and 1988, respectively) and deferred return standard recognites the ratemaking process w hich results in IIII""I"IY90'I9N9 dif ferences in the upplication of generally accepted accounting Ib7E'4 and 1988,"IIII""' 5I07'2 respectively). *IIII""""d Deferred II34l
- ion is that portion of deprectat principles between regulated and non regulated businesses. Such depreciation expense not emered in cuneg nues. Nfened retum dif ferences concern mainly the time at w hich various items enter a the acemal of carrying charges on I enm 2 costs not covered in into the determination of net income in order to follow the prin. cunent rates. See Note 3.
ciple of matching costs and revenues. See Note 3. Deferred Fermi 2 Amortitution-The December 1988 hiPSC Principles Applied in Consolidation - The Consolidated Finan- rate ony pmvides for the Company's February 1990 purchase of cial Statements include the accounts of all subsidiary companies, Wolvenne Power Supply Cooperative, Inc.'s O' Cooperative") all of whkh are wholly owned. ownership intnest in Fenni 2 for $513 million to be treated as a regulatory asset with a 19 yent pnnetpal amottiration and associ. Rnenues- Effective January 1,1988, the Company changed its ated interest of 8%. Since the straight line amortization of the methmi of accounting to record unbilled revenues for electric and teputatory asset exceeds the revenues provided for such amortira-steam heating services provided after cycle billings through month- tion during the first ten years of the reemery period, the difference end in order to better match revenues with expenses. See Note 5-s being deferred on the balance sheet. The Company recorded Revenues for 1988 also included the recovery of fuel and pur- deferred amortization, a non cush item of income, of $13.4 million chased power costs, subject to annual Power Supply Cost Recm- in 1990 S e 40te 3. cry ("PSCR") reconciliation hearings conducted by the h1PSC. Any over or under recovery of these costs was recorded in the Income Taxen Defened income taxes are provided for timing Comolidated Balance Sheet pending the resuks of such hearings. differences between bd and taxnMe income to the extent The MPSC's order of December 27,1988 temporarily suspended authorized by the hiPSC. llor federal income tax purposes, the the PSCR Clause effective January 1,1989 through December 31, Company computes depreciation using accelerated methods and 1992. See Note 3. shorter depreciable lives. Investment tax credits utilized which relate to utility property are deferred and amortiied over the Property 'I. axes - Effective January 1,1988, the Company estimated composite service life of the related property, invest-changed its method of accounting for property taxes so that such ment tax credits related to disallowed Fermi 2 plant costs are taxes are accrued monthly during the fiscal penod of the applicable recorded in other income and deductions under the flow through taxing authority. This is considered the most acceptable basis of method when utilized. See Note 8. providing for property taxes. See Note 5. Allowance for Funds Used During Construction ("AFUDC")- Propert,5, Depreciation and Amortiration, Retirement and AFUDC, a non operating non cash item,is defined in the FERC Maintenance - Utility properties are recorded at original cost-Uniform System of Accounts to include "the nel cost for the period
'llhe annual provision for depreciation is calculated on the straight ^ of comtruction of borrowed funds used for construction purposes ime remaining life methmi by applying annual rates appro,ed b) and a reasonable rate on other funds when so used." AFUDC the MPSC to the average of year beginning and year-ending invobes an accounting procedure whereby the approximate balances of depreciable property by primary plant accounts, f,or interest expense and the cost of other (common, preferred and major generatmg umis, the first year's depreciation expense is preference shareholders' equity) funds applicable to the cost of calculated on a monthly basis commencing wi;h the month in construction are transferred from the income statement to construc-which the unit is placed into commercial operation. Provision for tion work in progress in the balance sheet. The cash recovery of depreemtion of Fenni 2 was 2.63% of average depreciable property AFUDC, as well as other costs of consttuction occurs only when for 1990,1989 and 1988, except for $300 million being amortized completed projects are placed in service and related depreciation is over 10 years commencing in 1989 and 5513 million being authorired to be recovered thmugh customer rates. See Note 4.
amortired over 19 years commencing in 1990. See Note 3- The Company capitalized AFUDC at 9.65% in both 1990 and 1989 Pmvis,on i for depreciation of all other utility plant, as a percent of and 10.18% in 1988. average depreciable property, was 3.3% for 1990,1989 and 1988. In general, the cost of properties retired in the nonnal course of business is charged to accumulated depreciation. Expenditures for 20 newsww
Accretion income - In accordance with SFAS No. 90. " Regulated Electrification Administration, and bear interest at the rate of 8%. I linterprises - Accounting for Abandonments and Disallowances of Prior to 1940, the Company purchased 100% of the Cooperative's Plant Costs," the Company records a non. cash return (accretion Fenni 2 capacity and energy entitlement. !!u)back payments to income) on certain plant costs w hich have been discounted to the Cooperative were 588.8 million und $102.4 million in 1988 and recognite an h1PSC disallowance of a return on the investment. 1989, respectively. The Company recorded $32.2 million,533.1 million and $16.8 See Notes 3 and 4 for a discussion of the h1PSC's treatment of million of net after tas accretion income in 1990.1989 and 1988, Fermi 2 project costs of 54.858 billion (including the purchase of respectively. See Note 4. the Cooperative *s interest in 1990). Ccpitalitation-Discount, Premium and thpense - The 1.icensing Operation and Decommissioning-The Nuclear discount, premium and expense related to the issuance of long. Regulatory Commission ("NRC") maintains jurisdiction over the tenn debt are amortired over the life of each issue. The discount, licensing, operation and decommbsloning of Fermi 2. From time premium and expense related to debt redeemed without refunding to time the NRC considers taking enforcement or other action are written off to expense in accordance with h1PSC regulations. against the Company as a result of alleged technical and procedural Capital stock premium and espense related to redeemed preferred violations at the plant. Enforcement action has resulted in fines and preference stock are written off upainst retained earnings used levied against the Company of 5230.000 in 1988. No fines were in the business. levied against the Company by the NRC in 1989 and 1990. Unreemered Plant Costs- Amortitution of unrecovered plant Dudng 1990,1989 and the pedod from january 23,1988 costs commences w ben recovery of such costs is authorized by through December 31,1988,I;enni 2 has tren available for system accounting and ratemaking orders of the h1PSC. No return on Imwer genemdon 82.9% 63.7% and $7.2% of the time, respec-investment is provided for unrecovered plant omts. See Note 4. Ovely, ne planPs capacity factor Oneasured by the unmunt of The Company is amortliing costs of 571.3 million associated with imw er pmduced as emnpared to_ full power capability) was 77,2% the abandoned Greenwood Unit Nos. 2 and 3 over the perimi 1983- 54M and 442% respectively,during these same perials, Fermi 1993. The unamortired balances at December 31,1990 and 1989 2 plant availability and capacity factors have been adversely were 514.6 million and $20.2 million, respecthely, in ine Consoli, af fected by both ssheduled shutdowns (8.15 and 7 weeks in 1990, dated Statement of Income, amortization of unrecovered plant 1989 and 1988, respecdvely) and Imced shutdowns (1,4, and 14 - costs of 57.1 million in both 1988 and 1989 was reclassified from weeks in 1990,1989 and 1988, respectively) as w cil as power level j other openition expense to depreciation and amortization expense restdenons necesshated by mechanical dif ficulties. These power in order to confonn with the 19o0 presentation. level restrictmns will continue through the refueling outage , i scheduled for h1 arch 1991. Fermi a Refueling Outages - The Company recognites the cost The h1PSC regulates the recovery of costs of decommissioning of Fermi 2 refueling outages over perimis in which related rev- nuclear power plants. A January 1987 h1PSC order authorized the : enues are recognized. Under this procedure, the Company record 5 establishment of a $100 million Extemal Trust Fund (in 1987 a provtsmn for incremental costs antie pated to be incurred durmF dollars) to finance the decommissioning of Fenni 2. The order the next scheduled Fermi 2 refueling outage. appmves a decommissioning suicharge on customer bills under
- Ecases- See Note 12, w hich the Company is collecting approximately 53 millior.
I'mployes' Retirement Plan and Other Postretirement "."*!allyJ Effective in July 1990, an NRC rule requires decommis-lienefits - See Note 15. nomnp funding based upon a she specific esumate or a predelet- , mined NRC formula. Using the NRC's formula, the Company
-i estimates that the cost of decommissioning Fenni 2 is $171 million Note 2 (in 1990 dollars). Although the currently authorized surcharge Fermi 2 does not provide adequate funding under the new NRC rule, the Company belies es increases in decommissioning costs will-Gener.d - Femd 2, a nuclear generating unit having a design eventually be substantially recovered in rates charged to custom- .
electncal ratmg of 1,093 megawatts, began commercial operation ers. I on January .'3,1988, This unit represents approximately 33% of the Company's total assets,12% of total operation and mainte. Nuclear Fuel Disposal Costs-Tne Company has a contract with - nance expenses and i1% of the Company's summer net rated the United States Depanment of Energy (" DOE") for the future capability, storage and disposal of spent nuclear suel from Fenni 2. Under the In February 1990, the Company purchased the Cooperative's tenns of the contract, the Company makes quanerly payments to i 1.198% Fenni 2 ownership interest for 5539.6 million (5513 the DOE based upon a current fee of I mill per kilowatthour . million for plant, $23.2 million for nuclear fuel and 53.4 million applied to the Fenni 2 net generationi The spent nuclear fuel for materials and supplies and other). As payment of the purchase chsposal cmt is incimled as a cmnp(ment of the Company's nuclear price, the Company made a cash payment of 52.5 million and fuel expense. The DDE has publicly stated that it will be unable to issued $537.1 million of its General and Refunding htortgage store spent nuclear fuel at a permanent repository until 2010, i _ Honds, which are held by the United States of America, Rural However, the DOE is punuing interim storage options. The Company estimates that custing temporary storage capacity'at Fenni 2 will be sufficient until the year 200(L Amenuww%m 2L
Th0 Otfr0ll[ dis 0n Comps:y and S:bsidisty Companies , Notes to Consolidated Financial Statements . Insurance - The Company insures I enni 2 w ith propen) damage January 1,1989,(4) transferred a court oidered $12.1 million insurance prosided by Nuclear hiutual Linuted ("Nh1L"L Nuclear annual surcharge to base rates ellective January 1,1989 and (5) tilectric insurance Limited ("Niill") and American Nuclear suspended the PSCR Clause for the four year period January I, insurers ("ANI"). The Nh1L and Ni It insurance policies provide 1989 through December 31,1992. 5500 milhon of composite primary cos erage and 51.125 billion of The order provides for a five year moratorium on base rate exceu cos erage, respecin cly , for decontamination costs, debris changes, through Decemtwr 31,1993, w ith exceptions f or previ-removal and repair and/or replacement of property. Under the ously authoiired rate increases uhe Fermi 2 phase-in plan) and for Nh11 and Niill policies, the Company could be liable for maxi- federal income tax law or reFulation changes, new acid rain mum retrospectis e assewments of up to approsimately 521 inillion legislation and new cogeneration legislation that would increase or per low,if any one low should exceed the accumulated funds decrease cosh by $$ million (1988 dollars adjusted by the Con-available to NML or NEIL. An additional 5560 million of excess sumer Price Indes," cpl") or more annually. Ilowever, an eywnse cou rage is provided by ANI for which the Company pays an stabilitation procedure, applicable to approsimately 5750 million annual premium and k not liable for retrospective awewmentt of Company operation and maintenance expenses, permin tales to Accordmply, the combined limits proside total property damare be adjusted for the effects of inflation on January 1,1990.1991 insurance of 52.185 billion. The Company is aho insured by Niill and 1992. A surcharpe or credit under this procedure h based on for replacement power costs awociated with accidental plant the annual change in the CPI lor the preceding 12 month period outapet October i through September 30, as follows: As required by federal law, the Company maintains 5000 million of public hability insurance for a nuclear incident. I urther, CPIchange Adiustment to liase under the Price Anderson Amendments Act of 1988, deferred os-2s Mne premium charges of 563 milhon may be levied against each w - 89 M of chang in cuen of 2% licensed nuclear facihty, but not more than 510 million per year Mme than kN IM ohhanF ni ewe"or 89 pins ,1w per f acility. On December 31,1990. there were 115 licensed nuclear facilities in the United States. Thus, deferred premium An expense stabili/ation procedure surcharge was implemented charen in the aggregate amount of approsimately 57.2 billion on January 1,1990, which provided for annual revenues of couht X levied against all ow nets of licensed nuclear facilities in appmtimately $27 inillion for 1990. This surcharge was super-the esent of a nuclear incident. Accordmgly, public liability for a seded by a similar surcharge implemented on January 1,1991, single nucleat incident is currently limited to approximately $7.4 which prodles for annual revenues of appmsimately $$$ million billion. for 1991, Set forth below is a summary of the Company's scheduled rate Note 3 increases and other rate chanFes for the perial 1988-1944 Rate Matters excludjng surclunges Thjuununary indudn die increases authorved as part of the I ermi 2 phai,e in plan. General- The Company is subject to the general regulatorv juri diction of the hlPSC, which, from time to time, iwues its 1 "'"i orders pertaining to the Company s conditions of senice, rates and me
'{""'[I tun us
{'#' 3, Anmuna g, Amounn changes recovery of certain costs includmp the cosh of generating facili-UUk 198h % 6N 4 5- S bM A $ 6M ,4 During the 1980's, the Company completed a major power iox9 inu 03 ima 173. t plant construction program with the commercial operation of two 76 8 13A m2 26u Greenwood, Belle River and Fermi 2 Power Plants. A series of l*l 8 L9 73 89 6 3D rate proceedings were conducted by the h1PSC in response to Company requests for increased revenues to reflect the additional
'[N *$3 3j 7
$m (d" nm m 3.7 m plants in service. These prmeedings were concluded by the December 27,1988 iwuance of an h1PSC order approving a oo $70.8 mdhon required umknhe renni 2 phaa.c4n plan will, umid the MPSC3 seulement agreement among the Company, h1PSC Staff, hiichigan I*'"d*' I"8 8 "*'d" I"d*d " "" ""#" k '""4'"'#"' !" ""'
Attorney General l"AG") and other interEenors' d"# """"""" "I " ""# "** " *"' l" ** # #"# '" "" "" "*""" deferred are recovered dunny Ow period en,hng no later than twember 31," The December 1988 h1PSC order together with a previous April iws. 1986 N1PSC order established a sesen year rate phase in plan for Fermi 2, provided for both direct and indirect disallowances of During the Penni 2 phase in period, the Company is recording Fermi 2 plant costs, and excluded the Company's investment in its related non cash items of income consisting of deferred deprecia-795 megawatt Greenwomi oil fired unit from rate base through tion and deferred return totaling $506.5 million (annual deferrals December 31,1993. See Note 4. for the first five years of commercial operation of Fermi 2 as Aho, the December 1988 h1PSC order (1) increased the follows: $178.4 million in 1988,5142.4 million in 1989,5104.2 Company's base rates by $29.5 million annually effective January million in 1990. 563.2 million in 1991 and $18.3 million in 1992h 1,1989, (2) provided for an overall rate of return of 9.659, w hich with these deferred amounts amortized to operating expense as the relicets a return on common equity of 139,(3) transferred the cash recovery of the deferred amounts is realized through revenues collection of $159 million of revenues ($151.7 million h1PSC during the years 1993-1998. jurisdictional) from the PSCR Clause to base rates, effective The February 1990 purchase by the Company of the Cooperative's ownership interest in Fermi 2 (5513 million)is treated as a regulatory asset with a 19 year principal amortization 22 wwum w
i and associated interest at NL The debt incurred in connection Note 4 with this purchase and the associated interest are to be escluded Accounting for Disallowances of Plant Costs i from the calculation of the Company a overall return on im est-ment. Since the straight kne amortitution of the regulatory asset in December 1986, the Financial Accounting Standards lloard l exceeds the revenues provided for such amortiration during the ("FASil") issued SFAS No. 90 which, among other things, first ten years of the recovery period, the Company is recording requitvs any disallowed costs of a recently completed plant to be , . deferred amortization, a non cash item of income, totaling 567.2 recognized as a loss w hen such a disallowance becomes probable million ($13.4 million in 1990, $11.9 million in 1991,510.4 and a reasonable estimate of the disallowance can be made. If part j million in 1992,59.0 million in 1993, $7.5 million in 1994,56.0 of the cost is disallowed indirectly (such as a disallowance of milhon in 1995,54.5 million in 1996,53.0 million in 1997 and return on investment on a portion of the plano, an equivalent 51.3 million in 1998). The accumulated defernd will be amortired amount of cost shall be deducted from the reported cost of the to operating espense as the cash recovery of the deferred amounts plant and recognized as a loss, is reallied through revenues during the years 20(Kb 2008. In 1988, the Company adopted SFAS No. 90 and recorded net ; During the perim! January 1,1989 through December 31,2(K13, after tax losses totaling 5968 million, or 56.60 per share ($344 . the order established a cap on Fermi 2 capital additions of $25 million, or 52.34 per share, cumulative effect at January 1,1988 million per year cumulative, adjusted by the CPI, a cap on Fermi 2 for years prior to 1988 and a $624 million, or 54.26 per share, non fuel operation and maintenance expenws at the level presented charge to income in 1988 which is net of accretion income of $l7 1 by the Company in its economic study provided in the rate case, milhon, or 50.11 per share). These losses reflect the MPSC's adjusted by the CPI, and a capacity factor perfonnance standant ratemaking treatment for costs incurred in the construction of the .. based on a three year rolling average (ommencing in 1991. For a Fermi 2 and llelle itiver Power Plants and the removal of Green-major capital investment of $200 million or more, the Company womi Unit No. I from rate base, as shown below, shall apply to the MPSC for prior approval. If approved, and if ! found to be remonable and prudent, the major investment will be DaaHowed hwonw Net included in rate base. Under the performance standard, effective - Cmn lasn tm January 1,1993, a disallowance of net incremental replacement Wdl** 8 . power cost will be impowd for the amount by which the Fermi 2 ",n[2j<p <g,tl [giu n three year rolling us erage capacity factor is less than the greater of twemter 1988 (57un muhon) cither the average of the top 50% of U.S. boiling water reactors or htPsC onters 5( t.027) 5242 5(7ks) 30 % 1:enni 2 - Recovery ti30n million) The Company has and believes it will continue to operate under mer 10 yeen beginning January 1 the tenus of the order with no significant adverse effects as a result 1989 with unemm. ter Denmber of any cost recovery restrictions contained therein. ' 988 h"'5C ""'" 04D 4" ('3'
*""*"al Una No,1 - knnowd The order also provides that if nuclear operations at Fermi 2 , permanently cease, the remaining net rate base investment amount fl ),dIh"$"l[,"k ~
shall be removed f rom rate base and amortlied in rates, w,thouti 1993 wini no reiurn, per April 1986 return, over ten years with such amortiration not to exceed $290 ami December 1988 htP5C orden OS)) $2 000' million per year. In this event, unamortired amounts of deferred Odier- nette kiwr Power Plant depreciation and deferred return, recorded in the balance sheet emin duatlowed in 19NS.the under the phase in phm prior to the removal of Fermi 2 from rate abandonnwm or munwood Unh 2 bme, will continue to be amortized, with a full return on such [79,,""I3,$ Imn Note Di {g, 3 , , unamortlied balances, so that all amounts deferred are recovered Tsg - go,33oj $343 $(v333 during the perimi ending no later than December 31,1998. Also, t,em Accrenon incane rnuhing rnim amortitution in rates of the $300 million and 5513 million invest- loues due to diwountins 26 (91 ' 17 ments in Penni 2, shown in the table t.elow, would continue. Net Total id.3Ni - $D6 stuox) A summary of the ratemaking treatment of the Company's Fenni 2 project costs (including the purchase of the Cooperative's ^"f*['$"l,i93g interest in 1990)is as follows* Disanowed plant emis s (873)- 5234- $<o4t> Accretion income 26 (9) , 17 F enni 2 Pmicct Cmb . .
$ (k49) $223 Sib 24)
Cumulative errgt for yenn N#"d prior to 1988 r455) - tit ' (344) !
- in rate tee, w uh recovery and return $3.018 Net Total ' it 1.394 $D6 St96Mi Anwrtised over 10 years w ith no return Nin - ' - .
Amortimt m er IV years, w hh amdated interest $13 l Wriner ort by die Company ($327 nulhon dnallowed katPSC onter or Aptil 1986 and $700 milhon The losses for Greenwood Unit No. I, the abandoned Green. dnanowed in htPsc onter or Iwemier 1988i l.027 wood Unit Nos. 2 and 3, and for a portion of Fermi 2 are recorded T""! _ 54 "5" as a discount (reduction) of the Company's investment in these > units. These net after tax losses, due to discounting, total $198 - million and such amount will be restored to net income over the See Note 4 for a summary of the manner in which the Company perimi 1988 1998 as the Company records a non cash return accounted for the dballowances shown above. (accretion income) on its investments in these units.
^metutmw 23
Ihr Detroit Edison Company and Subsiglary Cornpsnies Notes to Consolidated Financial Statements . in i984, foiiowing wmmerciai operation of nelic River unii
-Note 5 No.1, the Company began contractual purchases of 10(N of Accounting Changes in 1988 ggppA s capacity and energy entitlement. Such purchases contin-SI'AS No. 90 - See Note 4. ued at 100% through 1990, with the amounts declining thereafter through 1994. The cost for the buyback of power is based on Unbilled Retenues - As do. cussed in Be 1, effective January 1, h1 PPA's plant-related investment, interest costs incurred by h1 PPA 1988, the Company changed iti, metht ,1 o' eccounting for revenues on their original project financing plus 2.5%, and certain other to record an estimate of revenues for chuac and steam heatmE costs such as depreciation and operation and maintenance ex.
service rendered and unbilled at the end of each month. The effect penses. Buyback payments to h1 PPA were 572.6 million,571,3 of the change in accounting w as to increase camings for common million and 570.3 million for 1988,1989 and 1990, respectively, stock by 582.4 million (50.56 per share) of w hich an increase of and are currently estimated at $58.2 million 551.1 million,512.6 561.4 rnillion (50.42 per share) represents the cumulative effect of million and 56.2 million for 1991,1992,1993 and 1994, respec-the change at January 1,1988, and an increase of $21.0 million givety, (5( 14 per share) represents an increase in earnings for the year Pumped Storage - Operation, maintenance and other expenses of the Ludington Pumped Storage Plant are shared by the Property Taxes - As discussed in Note 1, cifcetive January la Company and Consumers Power Company (" Consumers") in 1988, the Company changed its method of accounting for property proportion to their respective interests in the plant. See Note 14. tases so that such taxes are accrued monthly during the fiscal period of the applicabit taxing authority. The effect of the change m accounting was to incterse camings for common stock by Note 7 5165.6 million (51.13 per share) of which an increase of $139.3 Sale of Accounts Receivabie and Unbilled Revenues million (50.95 per share) represents the cumuluth e cf feet of the in f ebruary 1989, the Company entered into a five year program change at Jamiary 1,1988, and an increase of $26.3 million (50.18 for the sale of $200 million of the Company's accounts receivable per share) represents an increase in earnings for the year 1988, and unbilled revenues. The sale was accomplished by an assign-Pro l'orma Amounts - Assuming that the Company had applied ment of an undivided ownership interest in the Company's accounting changcs for SPAS No. 90, unbilled revenues and customer at ounts receivable and unbilled revenues. At December property taxes retroactively, total and per share loss for common 31,1990 ani 1989, customer accounts receivable and unbilled stock would be 5285.1 million and 51.95, respectively, on a pro revenues on he Consolidated llalance Sheet have been reduced by forma basis for the year 1988. 5200 million rflecting the sale. All costs associated with the program are being (harged to other operation expense in the Note 6 Consolidated siniement of income. Jointly-Owned Utility Plant Note 8 The Company's portion of jointly-owned utility plant is as follows: Income Taxes Ludmgion Total income tax expense as a percent of income (loss) before tax Pumped was less than the statutory federal income tax rate for the following DeHe kner Storage reasons' ln.sen he date 19s4 19k3 pj73 Undnided nwnership interest ' 49% investment Unillam4 S t .022.6 $168.9 Percent of Income (Loso Itcfore Tas Accuroulated depreciation (nulhono $ 19lj $ $7.7 1990 1989 1988 Statutory Hunne tas rate RO% RO% (RO)4
* 'the Companyi undn idt d ow rwnhip interest is 62.78% in Unit No.1,8139% of DnaHowed plant costs and the poruon or dw facihnen upptwnble to Delle River used jointly b) the Delle atendonments - -
212 River and St. Clair Power Plants.4939% in certain trammission knes and at least perened fenni 2 depreclation 70% in I,k ihties used in common w tth Unit No 2, and return 14.0) t6,In 00.l) AIUDC O 7) 14.2) ($ 1) Investment las credit (2.10 (1.8) (5 0) llelle Rher- Tim hiichigan Public Power Agency ("hlPPA") has Depreciation 44 59 5^ an undivided ownership interest in llelle River Unit No. I and **'-" *3 ' ON *" certain other related facilities. h1 PPA is entitled to 18.61% of the
" " * "'""*'" "' 2" * '2' "
capacity and energy of the entire plant and is responsible for the same percentage of the plant's operation and maintenance ex. penses and capital improvements. The Company is obligated to provide h1 PPA wi:h backup power when either unit is out of [ service. 24 mamm _ m
}
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Components of income taxes were applicable to the following: income over a five year period rather than over the life of the plant. Such credits to income amounted to $12 million for 1940 nw n,39 i9sg and 524 million for each of the years 1989 and 1988.
~ The Fenni 2 phase-in plan requires the Company to record opranns npene additional deferred income tax expense related to deferred depre-runen 5:37220 $ 61.sii s 39,i w cintion totaling 533.5 million ($11.8 million in 1988,59.4 million ocrened - net in 1989,56,9 million in 1990,54.2 million in 1991 and $1,2 Dorrowed futuluomponent of AITDc (12.61 l } (24.180 (23.k68) million in 1992), with these amounts amortlied to income over the tuptetiation and amortuatmn 76261 90.456 114.434 period ending December 31,1998, t il i re ues (l (4 (t ) ) >> The cumulative net attlounts of income tax timing differetices Ahernatise mmimum in 419 toA32 367 for which deferred taxes have not been provided at December 31, i I enni 2 t apitaiued labru and espene 0.692) 0.943) 2,575 1990 and 1989 are 52.1 billion and 52.3 billion, respectively. The Irkhrni construction costs 0.kM ) (1.477) 1.333 tax etrect of these amounts not provided for currently will be r t r construenon ( ) (,V recorded w hen such tascs become payable and are recovered from l ennl 2 tefuchng outage (6.koos - - Customers, j htKhigan Single Dusmns in (6.3246 - -
Investment tax credit Carryforwards of approximately 536 l shuchoider niue imenivemeni piar. (2 32) - - million are available to offset future years' tax liabilities as Other i [iSIn ~ 0.72 h i3 W h [ permitted by law. Such credits,if unused, expire over the period 2000 through 2005. (857) 20.77: 53mn 67.316 As authorlied by the MPSC, deferred income taxes are recorded , insnunent tau redit - nei for tax credits generated under the Alternative Minimum Tax i Utdued 64.468 24.892 (7,140) ("AMT") system created by the federal Tax Refonn Act of 1986. Amonued d 23N d o.5M) (0.61 h The Company has an AMT credit carryforward of approximately Totai 9 million at December 31,1990. After allinvestment tax credit 2 i other income and deduenom canyforwards are uwd, the AMT credits, w hlch can be carried curreni 0,36to (460) ISxi forward indefinltely, can be used to reduce regular tax liabilities tuterred - net (738 08n 0 125 whenever such liabilities exceed AMT liabilities. ,I loiai a.wn rn 169 In December 1987, the FASil issued SFAS No. 96. "Accouni-Daanowed pianuma and unreinm wome ing for income Taxes," however, the effective date was deferred to c ren; coSkh a.03ro 07216) 1992. SFAS No. 96 tequires an asset and liability approach for twano.ed pianuosa 20S88 23.97 t 082.7 t 7) financmi accountmg and reportmg for income taxes. It requires the Accretion inconw 16,591 17 S 64 9.ox6 Company to recompute its tax liability at the then current tax rate Ahenmuse nummum in - a t.9%) - and adjust the Accumulated Deferred Income Tax asset and imntmenna creda in.4am - 043241 liability amounts in the Consolidated llalance Sheet, in addition, it Total 8,198 17.m7 a2s.i7 h run requires the Company to record additional deferred income taxes e enec or aaounnne chang" fm tempry differences not previously recognized (including the twanowed piani cosn and abandonmenn -
- 0 na373 $2.1 billion discussed above) and all other existing differences that Unbitied en enun - - 40,912 will result in taxable or deductible amounts in future years, SFAS Propens inn -
- 10:306 No. 96 requires the recognition of an asset to the extent that such Tiot - -
30.961 additional deferred income taxes are associated with probable Totat income inen 52 3.823 $i43.830 sooi.497' future revenue from customers. In late 199(), the FASin approved a package of tentative revisions to SFAS No. 96. It is unticipated , that the FASil will issue a new statement on income taxes by the in accordance with MPSC requirements, deferred income tax cnd of 1991 which would supersede SFAS No. 96 and require accounting was not followed for the borrowed funds component of adoption no later than 1993, The Company expects that when AFUDC and indirect construction costs relating to Fermi 2, nor is SFAS No. 96 or a new statement on income taxes is adopted, it it followed for interest on nuclear fuel financing (see Note 12) and will not have a material effect on net income, certain other current income tax deductions, in 1985, the MPSC ordered that, for accounting and ratemaking i purposes, the accumulated deferred income taxes related to indirect construction costs and the borrowed funds component of AFUDC -i for flelle River Unit No. I and common plant be amortized to i muww 25
. . --- - - - -. - - . . .~. . The Detroit Hison Company and $6sidiary Companies Notes to Consolidated Financial Statements [ Note 9 Prerened Sioct,5nw Series, may be redeemed at any time in P"" " "P " ' $"H "
"[ I'lj, d l $e'rjsI'P" "
Short Term Credit Arrangements and Borrowings As described below, at December 31,1990, the Company had total The Company's 9.32% Series,7.68% Series,7.45% Series and ! short-term credit arrangements of $301.1 million under which no 7.36% Series Preferred Stock are redeemable solely at the option borrowings were outstanding. of the Company at a per share redemption price of $101, plus The Company had bank lines of credit of $200 million all of accrued dividends. w hich had commitment fees in lieu of compensating balances. On January 15.1988, the Company redeemed all of the out-Conunilment fees incurred in 1990 for bank lines of credit were standing shares of certain series of its $1 par value Preference approximately 50.3 ml!! ion. The Company uses bank lines of Stock, as follows: 3J100JKO shares of $3.42 Series at $27.35 ter credit to support the issuance of commercial paper, share,2,250JX10 shares of $3.40 Series at $27.3$ per share and eurocommercial paper, bankers' acceptances and bank loans. All ?$0JX0 shares of $3.12 Series at $27.00 per share. borrowings are at prevailing money ma Let rates which are below On October 15,1988, the Company redeemed 2 600JK10 shares the banke prime lending rates. of $3.13 Series and 1,400J100 shares of $3.24 Series, $1 par value The Company has a nuclear fuel financing arrangement with Preference Stock, constituting all of the outstanding shares of both 4 Renaissance Energy Company ("Renaltsance"), an unaffiliated issues, at a price of $27.17 and $27.2$ per share, respectively. company, Renaissance may issue commercial paper or borrow The Company's $2.28 Series Preference Stock is redeemable from participating i.anks on the basis of promissory notes. To the solely at the option of the Company at the stated per share redemp-extent the maximum amount of funds available to Renaissance tion price of $25.75, plus accrued dividends, prior to January 15. (currently $400 million)is not needed by Renaissance to purchase 1993 and $25.25 per share, plus accrued dividends, on and af ter nuclear fuel, such funds may be loaned to the Company for general January 13,1993. corporate purposes pursuant to a separate Loan Agreement At Apart from MPSC approval and the requirement that Common, December 31,1990, $101.1 million was available to the Company Preferred and Preference Stock be sold for at least par value, there under such Loan Agreement, See Note 12. are no legal restrictions on the issuance of additional authorized shares of such stock, Note 10 Common Stock and Non Redeemable Cumulative Preferred Note 11 ;
^
and Preference Stock Redeemable Cumulative Preferred and Preference Stock Non-redeemable Cumulative Preferred and Preference Stock Redeemable Cumulative Preferred and Preference Stock outstand, outstanding at December 31 wat ing at December 31 was: i Date of tssuance 199n 1989 Date of lituance 1990- 1989 (Thouwmhb . . fTowuwmbl Non Redeemable Preferred ShwL Redeemable Preferred $twL SM4 convenible series. 81,897 9.72% wrien,350.(xxiand aml 92,937 sharen, respectively October 1967 $ 8,190 $ 9,2% 375jXKi shares. respecuvely December 1978 $33Jx(1 $37,500 9.324 wries,499,080 shares October 1970 49.908 49.908 9.729 series,70,000 und 7.689 neris 5003XU shares hiarch 1971 50jtt) 30jtt0 73.(NKi nharen, resivetleely January 1979 7JMX) 7,500 7.439 senes, bilWWXhhares Novemtvr 1971 60JXW) 60Jul0 9.NW neries,230,750 and 7.36% menes,730JX0 hhares December 1972 75,000 73JN0 266.250 nhares, respecuvel) ' Octoter 1979 23,075 26,62$ Non redeemable prefeited 9.NM series, 191,750 and stock espeme (4.6k4) (4.709) 22 t.250 shares, respnuvely . January 19M0 19.17$ 22,123 Total Non 8(edeemable Redeemable preferred stock Preferred Stock $23N 414 $239.49$ due within one year (9,230) (6,2$0) Redeemable preferred ntock Nc> Redeemable Preference Stak
P"""
#L -
SU
$2.28 series. 2,000jtX) shares December 1977 $ 2,000 $ 2JXX) -
gg gg themium on non-redeemable preference stwk 4RjWM) 48jto Ntwredeemable preference Redeemable Preference Siwk stock etpen e f2,1(m (2,1091 $2.75 wrien,380,180 and Total Non Redeemable SRO,1N0 thares,respecuvely > . July 197$ $ 3k0 $ $h0 - Preference Shwk $ 47,891 5 47,g91~~
$2.75 gries li. 600JX0 and I
B00jX0 thares, ter,pectively Decensber 197$ 600 800 Premium on redeemable preference utmL 23,524 33,124 The Convertible Cumulative Preferred Stock, $%% Series,is Redeemable preference isoet.. . convertible into Common Stock. The conversion price was $17,79 due within one year (7,$00) (7,$00F per share at December 31,1990, The numbers of shares converted Redeemable preference stock i during 1990,1989 and 1988 were i 1,060,13,592 and $,581, ~
[] Redeemable '
respectively. The number of shares of Common Stock reserved for Iwrerence siock . $1s.803 525.318 issuance upon conversion and the conversion price are subject to further adjustment in certain eventsc The Convertible Cumulative . 26 swunttwo '
se I The following redermable series of Preferred and Preference On January 15,1988, the Company redeemed 200AKKi shares of Stock are entitled to the benefit of sinking funds (prosided that no 13.50% Series, > RK1 par s alue Preferrtd Stock, constituting all of disidend arrearages esist) providmg for the annual tedemption of the outstanding shares, at a composite price of Sl(Lt.05 per sharo, shares at stated per share prices, plus accrued dis idends: The combined aggergate annual amounts of redemption requirements at December 31,1990 for all series of redeemable Nonfumulame Preferred and Preference Stock are 517 million for 1991,$11 OPuon to million for each of the years 1992 through 1994 and 59 million R 'd"'"' Annual hke Atklunuud for 1995' Number ivr sharen in Redcernable Senes of Shares Share AnyYear Ole 12 hetened $bs L g ggg 9.725 30Aui Smo . ton o otos 32.5m un 32.sm* Future minimum lease payments under long term noneanceliable heteren6e sukk leases, consisting of nuclear fuel ($386 million computed or a senes ti LNnb 2j [ projected units of prmluction basic, lake tenels (572 million), hwomotives and coal cars (579 million), office space (541 million) 'Not to tweed 220JN U eumulame adJmonal shares and computerN diclM and other CQuipment (556 million) at December 31,1990 are as follows: The following numbers of shares were purchased for applica-tion to sinking fund requiremchtN (MfIlNWo (MilludH) 1991 $1nd iw4 $ 80 l om toxu ivu tw2 100 tws u hefened Nhw L,9.721 Senes HH Remanung ytan 2 30 finn 30Jrio _ helertfd $hEk,9 f#i henes fdjNO 32,$(R) 32,$nn U heteterne Shwk 12.7$ heries 20nju o 200nio 2nnjun Prefriente blo6 L, R73 Senes 11 2(Kl.1 Win 2(Kl#iO 2(U#in The Company has a heat purchase contract w hh Renaiwance in the esent that a payment due under requirements of a sinking which provides for the purchase by Renniuance f or the Company fund for any series of redeemable Preferred or Preference Stock is of up to 5400 million of nuclear fuel, subject to the continued not made, no dividend shall be paid (other than a dividend paid in availability of funds to Renaissance to purchase such fuel. Title to junior stock) or declared or other distribution made upon any the nuclear fuel is held by Renaissance. The Company makes junior stock (Common and Preference Stock in the case of Pre. quarter!y payments under the heat purchase contract based on the ferred Stock, and Common Stock in the case of Preference Stock) consumption of nuclear fuel for the generation of electricity. until such payment is made. Renniwance's investment in nuclear fuel w as $284 million and The following series of Preferred and Preference Stock, which $292 million at December 31.1990 and 1989, respectively, The are redeemable pursuant to sinking fund requirements, may also be decrease in 1990 from 1989 of $8 million includes additions of $$9 redeemed at the option of the Company at stated pet share redemp. million (purchases of $45 million and capitalized interest of 514 tion prices, plus accrued dividends: million)less $67 million for the amortiration of nuclear fuel consumed in 1990. twreasing hiur on and Under SFAS No. 71, amortiration of leased assets is modified Redeemable Senes i nim To To After so that the total of interest on the obligation and amortiration of the Iwrened shwk leased nuet is equal to the rental expense allowed for ratemaking u 729 5102 90 bis-94 giot.no i.15 94 purposes. For ratemaking purposes, the MPSC has treated all H iwr rIt eshwk leases as operating leases. Net income is not affected by capitali-n?5 radon of leases, 23.23 7. is.uo n 7ssenesit gaio bis.91 23.23 i . i s.9 Rental expenses for both capital and operating leases were $124 million (including 580 million for nuclear fuel),5106 million (including 558 million for nuclear fuel) and $103 million (includ-ing 557 million for nuclear fuch for 1990,1989 and 1988, , respectively, j e Y hY Y Y
The Dettelt Edison Conipany sad Subebile/y Companies , Notes to Consolidated Financial Statements . Note 13 Long Term Debt lana Rair' IVM) 1989 The Company's 1924 hjortgage and Deed of Trust ("htortgage"), gg,g the lien of w hich covers substantially all of the Company's ,In Empi Revenue norni obligationi properties, provides for the issuance of additional bonds (1) based Installmeni $ates Contracts (Secured by upon property additions, combined with an carnings test provision, correspomting amoums of General and or (2) based upon retirements of previously issued bonds, At Refunding Mortgage lh.nds) December 31,1990, approximately $2.3 billion principal amount Cay or penoit, due 3/ihl 6/iN4 7,589 $ 4,375 $ 8,130
'Y 3 of additional htortgage Bonds could have been issued on the ba'ds Cli ,$f$'iD*3fj'[ gs99 3,i 3 3,g 99 of(1) above, assuming an interest rate of 9.875% on any such Cuy of River Rouge, additional Mortgage llonds At December 31,1990, approXI- oue 2/:$/91. Iws/02 6 96 43,620 45,090 mately 5286.7 million of additional bonds could have been issued Cuy of Superior,due 2/IN1 2/l/01 - 8.11 39,1f0 39,800 Coy of Trenton, due 3/INI - 3/1/05 1st . 5,675 3,810 on the basis of bond retirements, County of Monroe, Long term debt outstanding at December 31 was: due 3/INI 9/1/20 7,91 202,605 162,780 County of St. Clair, '
due 6/15Mi . 5/1/22 10 35 178,745 203,920 ' interest g,ie. 1999 19g9 ten: Unamortlied net discount (416) (425) Funds on deposit with (Thouwmh) "t rustee (454) (4,353) ; General and Refunding Mortgage Dords Anmunt due within , .i Series R, due 12/1/96 6 91 5 100,000 $ Ife,000 one year (9,970) -(10,530) Series S due IWIN8 6.4 150,000 150,(X10 1 466,395 5 453,412 Series T, due ID/lN9 9 75,000 75,000 Installment Sales Contracu Series U, due 7/l AX) 9X, 75,(XX) 75,0(X) County of Monroe, Series V, due "'"!?% e.15 100,(x10 100,(XX) due 5/lNI - 12/1/19 9.91 $ 428,460 $ 430,6(X) i Series X, due 6/15/01 8% 100,(KK) !(X),(X0 Less: Funds on depimit with l Series Y, due 11/15/01 7% 60,000 60,(KU Trusice - - (2,124) Serien Z, duc l/15/03 7% 1(0,(xU 100,(XX) Amotmt due within Series AA,due!ht'4 9% 100.000 10lVNX) one year (2,140) (2,140) Serien Et, due I t l',N6 lih 15,000 20,000 5 426,320 5 426,336 ; Series lill, due 'll M16 10% 50,(xX) 50,000 I tean Agreements Senes PP, due (WlM)8 9% 70,000 70,(x0 Pollution Bond Refunding Projects, l Series RR, due IWl5/08 9.8 70,0l0 70,(XX) 7,67 1 94,925 5 53,025 i due 2/15N4 - 8/15/10 Series SS, due 3/15N8 10 % 80,(KX) .100,(x0 : Seriet UU due 9/15/09 10h - 100,000 I 'U'# I'" l 1980 Serles it, due 4/lN7 12 % 40,150 46,800 Unsecund Pmmissory Notes - 1905 Series A,due 5/IN2 11.9 35,(xx) 35,(XX) Variable interent rates, due 4/15Ml . 8,5091 & 45,(XX) 5 'l71,969 50,(XX) 50,(xX) Iked interest rates, 1925 Senes H due 6/1/92 11.25 1986 Series A,due 4/15/16 200,(XX) due 4/25N1 - t/13M3 10 01 Il5,(XU .125,(Xio 9% 200,(MX) 1986 Series B, due 8/15/16 9% 100,000 100,(XX) less: Amount due within one year (fdMXxn
$ 100JX0 $ 160g0,,,,
19tt6 Series C,due l2/15/16 1987 Series A,duc 2/15/17 9% 9 200,(XXI 300,000 200,(xx) 300,(XX) Total tong-Tenn Debt 54,923,999 (136,9 54,561,u05 1987 Senes D, due 4/lSM7 8% 175,(XX) 175,000 1907 Senes C,due 4/15/14 94 225,000 225,000
- Weighted average Interes rate at December 31,1990 for Tax Laempt Revenue 1987 Series D, due 8/15N2 94 250JXX) 250,(X0 Hond obligations and Umecured Pmminary Notes.
1987 Series E, due 8/15N6 10 % 150,000 150,(X'O 1907 Series F, due 6/15N3 9% 200,0t10 200,(xX) I 1989 Series A,due 7/1/19 9% 300,000 300,000 1,ong Term Deu Maturities-In 1991,1992,1993,1994 and cN,e N /$ 1990 Series C, due 3/31/14 8.357 - 82,056 [ 1995,long term debt maturities consist of $110 million, $421 million, $327 million,562 million and $64 million, respectively,- ' Lew Unanonued net dacoum (13,269) - (14.418r 1. Amotmt due within one year (38,364) (19,150) {
$3,836,359 53,468,232 i
mamn
Note 14 removal activities at the Caner Industrials superfund site. An Commitments and Contingencies adminiunaive mda was issued in May 1989 requiring the potentially responsible parties to give notice of intent to comply Commitments - The Company has entered into purchase commit- with a provision to undertake interim site security and stabilization ments of approximately $421 million at Decemter 31,1990. The measures. The order also provides that the EPA will release for Company has also entered into substantial long tenn fuel supply public comment its engineering evaluation cost analysis and its commitments. proposed selection of a removal alternative. Following this Combustion Engineering, Inc. (" Combustion") has constructed release, there will be a 3(bday period for public comment during I the Detroit Resource Recovery Facility (" Facility")in the City of which time the potentially responsible parties can offer alternative I Detroit. The Facility, w hich began commercial opetition in 1989, remedial proposals. The engineering report has not been released. is fueled by municipal solid waste, and is pralucing steam and - The Company believes that the outcome of the matters dis- ) ciectricity. The Company has entered into a 2(byear Energy cussed above will not have a material effect on its financial Purchase Agreement with Combustion for the purchase of steam poshion or results of operations. In addition to the matters :j and electricity from the Facility, The Company believes that a reported herein, the Company is involved in litigation dealing with ! default has occurred under the agreement and, accordingly, on July the numerous aspects of its business operations and such litigation 2,1990, the Company canceled its agreement to purchase steam is not expected to have a material effect on the Company's from the Facility. Combustion has notified the Company that it financihl position or results of openttions. I does not believe a default has occurred and, further, it will con. . See Note 2 for a discussion of contingen:les related to tinue to bill the Company for steam. The Company and Combus- Fermi 2. f tion are participating in ongoing discussions to resolve this matter. The Company is continuing the purchase of electricity under tli Note 15 . e oe6. Employes' Retirement Plan and 0Nf Postretirement Benefits Contingencies -In September 1986, the AG and the hiichigan Employes' Retirement Plan - The Company has a trusteed smd Natural Resources Commission filed a lawsuit agalnst the Com. noncontributory defined benefit retirement plan (" Plan") covenng pany and Consumers as co owners of the Ludington Pumped all eligible employes who have completed six months of service, 1 Storage Plant ("Ludington"). The Company is a 49% co owner of The Plan provides retirement benefits based on the employe's ! Ludington. The suit, which alleges violations of the Michigan years of benefit service, average final compensation and age at Environmental Protection Act and the common law for claimed retirement. The Company's policy is to fund pension cost calcu-aquatic losses, seeks past damages (including interest) of approxi. lated under the projected tmit credit actuanal cost method, pro- t 4 mately $148 million and future damages (fmm the time of the vided that this amount is at least equal to the minimum funding - filing of the lawsult)in the amount of approximately $89,500 per requirement of the Employee Retirement income Secunty Act of day (of which 49% would be applicable to the Company). On 1974, as amended, and is not greater than the maximum amount November 9,1990, the Court granted the Company's motion deductible for federal income tax purposes. The Company is , neeking dismissal of the case. De Court found that all claims by - operating under the IRS full funding limitation and, therefore, did 1 the AG were pre empted by the Federal Power Actt that FERC was not make a contribution to the Plan in 1988; 1989 and 1990 and l the appropriate forumt and,in the attemative, that a three year does not expect to make a contribution to the Plan in 1991, statute of limitations applied barring recovery before September 3. Net pension cost included the following components: -) 1983. On November 28,1990, a claim of appeal was filed by the AG. l* W89 - W"8 . - In 1986, two environmental organizations requested FERC to - frhmomuh) withdraw the Ludington license or provide some mitigation for fish service cmt - benenu carned during , mortality, in April 1989, Consumers and the Company first the period , . St7,886 ' $ 15,t42 $ 16.032 installed a temporary barrier net around the plant to protect fish on - Intereni coni on projected benero .
-t an interim basis until permanent measures could be developed. A 3,[,Q,, ,, pi,, ,,3- g@$ _ gi$,$ - j2.'2N[
second temporary barrier net was installed in 1990, and a third will x,g.ferrai and anonindonc be installed in 1991 At this time, the Company is unable to twferral or nei gain uouldunns . 3 determine what the total costs will be to maintain temporary barrier - current period M 949) 81,38E (14.597) i i nets and develop permanent measures. ^'nontranon or unacognind prior -
"I .
In January 1989, the Environmental Protection Agency (" EPA") 3,n[,,7,',it unrecognised nei l
; issued an administrative order under the Comprehensive Environ- met resutdng fran inidal mental Response, Compensation and Liability Act ordering the application . (4307) -(4.5071- (4307)'
Company and 23 other potentially responsible parties to begin Net Pension cost 5UN $ lN9 5 153 i
-7 a
' O.$WQ0 WhWW .
w _2_ :_1:_ _ . _ _ _ _
The Detroll Ulson Compa:y and Subsicry Companies , Notes to Consolidated Financial Statements . Assumptions used in detennming net pension cost are as puo 3 39 insx I"II"" $: a 4-,wa
, , gg Cost to the Company of progidmg twahh t'aie and hfe insurance benchh to employes thwount rah B.$4 9.$ % 93% Acthe employes $38.620 541.323 538.k91 increase m future mm;rnsatmn lesch 50 3.5 60 Retired employes 19.066 I5.694 13.090 IApcted long tenn rate of retum on 70tal 557.6sh 557.047 551.981 Plan Aweh 9.3 9.3 9.5 -
In December 1990, the FASB issued SFAS No.106," Employ. The following table reconciles the funded status of the Plan to ers' Accounting for Postretirement llenefits Other '!han Pensions." the liability recorded in the Company's Consolidated Balance The Company is currently reviewing the statement and, as pennit-Sheet: ted, anticipates adopting the provisions of SFAS No.106 in 1993. SFAS No.106 establishes financial accounting and reporting Ikumter 31 standards for employers that offer postretirement benefits other i990 tox9 than pen:, ions. Most employers, including the Company, have erh.mianao accounted for such benefits to both active and retired employes on Plan auen at fair salue, primarii> equny munnes u13Juni Sk6'r, t 76 a pay as you go (cash) basis. SFAS No.106 requires the accrual 1 cn muuanal prnent ulue of benera obhganons: of postrctirement benefits during the active service periods of Accumulated beneni obbgaison, mciudmg s e.ied employes to the date they attain full eligibility for benefits. The benerns or $6M* io.om and ul6.ktuuv ui bso,320 643.566 Company anticipates amortiring the obligation, w hich has not yet increase in fuiure nunpensanon lesch In8.sw IO2.36x been delenuined but which could be significant, over 20 years as Pro.ieued benern obhranon ,789.t ma 742134 pennitted by Sl'AS No.106. The Company expects to continue to Pian amn m eweu of projeued tenera obliganon 43.916 i 21.m2 Unretoymied net anet resultmg fnun imtial recover the costs ofI irovidinE'such benefits throuEh the apphuinn (S t.316i iss.kui ratemaking process and, therefore, the adoption of SFAS No,106 Unret ogmied net gam (22. u,23 <xl.in7) is not expected to have a material effect on net income. l nrewsni/ed prior wn he cost 15M6 7.100 t.iabihiy recorded as Other Delerred Credits in the Consohdated Hatante Sheci 5(i1.416) $ otR48, g0 jg
=
Supplementary Quarterly AnancialInformation (Unaudited) Assumptions used in determining the projected ber. crit obhga- g , gg tions are as follows: Mar. 31 June 3n Sept. 30 Dec.31 Ikeember 31 G housands. e,u ept per share amounto g999 gy39 OperatinF Resenues 5815.561 5796.256 $R93,424 SNotA98 Operanny lneome 233.964 210.099 234.634 20n,313 tbcount rate 8.34 tLS% Net intome 136 $48 117.763 149.143 111,003 Increase m future ownpensation les ch 50 5.0 tenungs for Common Stwk 127.624 108J79 140.381 102.396 I:arnings Per Share 057 0.74 0 96 0.70 The unrecognized net assel at date of initial application is being amortized oser approximately 15.4 years, which is the aveiage 1989 0uarter Ended remaining service period of employes at January 1,1987. Mar. 31 June 3n sent.30 twe. 31 In addition to the Plan, the Company has several supplemental (Thomaisi, einer ver 3ho>r oim'arud non qualified, non contributory, unfunded retirement benefit plans O eratmg Revenues $790.121 5738A4s 1861,752 5792,713 for certain management employes. ()peratmg income 187.531 178.679 218.330 163,395 Other Postretirement lienefits - The Company provides certain " ,""r$r common slott 3 6 6 6 postretirement health care and life insurance benefits for tetired rarnings Per share OM 0.59 0.89 0.53 employes. Substantially all of the Company's employes will become eligible for such benefits if they reach retirement age while still working for the Company. These benefits, as wcil as similar Earnings per share amounts for each quarter are required to be benefits for actis e employes, are provided principally through computed independently and, therefore, may not equal the amount insurance companies and other organizations w hose premiums are computed for the total year, based on the benefits paid during the year The Company recog-nizes the cost of providing these benefits as the premiums are paid. 30twnwi m w 4 _ _ _ _ _ _ _ _ _ _ _ _ . - _ _ . a
e The Detroit wson Company sad Subsidiary Companies Msagement's Discussion and Analysis of Finmial Condition and Results of Operations This discussion and analysis should be r:ad in conjurction wnn the Operating Revenues Consolidated Financial Statements and accompanyit g Notes Total opet ating revenues increased (decreased) due to the fellow-thereto, contained herem. ing factors: Results of Operations an 1989 in 1990, the Company achieved earnings for common stock of # 8'""' 5479.3 million, or $3.26 per share an increase of 23.2% from the Rate OtanFe5 5388.9 million, or 52.65 per share in 1989, Contributing to this 5T increase were higher operating revenues and continutng reductions [e"y'[2dag"[""p, ,, 5s go3 m ! in fuel and other power supply expenses. The increase in operating her e.acuolume and min 11 0) revenues resulted from scheduled rate increases in accordance with Unt,ined revenuci 0) 12h the Company's 1988 rate case settlement and enerp ossmission twergy transtnission nervke, 22 - services. At December 31,1990, the took value et ow Company's Provison for refund to cuuornen 02) - common stock was 517.56 per share, an increase of 9.3% since December 31,1989. Ne' }"{ j j . 1 Total and per share earnings for common stock increased in - 19M9, as compared to a loss for 1988. The loss for 1988 resulted Rate Changes from an necounting change and the write-off of certain plant costs A December 1988 MPSC rate order provided for a Fermi 2 phase-disallowed by the Michigan Public Service Comminion in plan and gnmted 5527.1 million of rate increases and other rate ("MPSC"). Also contributing to higher earnings in 1989 were changes for Fenni 2 to be phased in over the t.even year perimi increased rates implemented as part of the Fenni 2 phase-in plan, 19gg.1994, The order also provides for a moratorium on other - higher accretion income, lower operation expenses, lower interest base rate changes for the five year perkxl 1989199.h an expense charges and lower preferred and preference stock dividend stabilization procedure w hich permits rates to be adjusted annually requirements. for the years 19901992 for the effects of inflation and a suspen- i in 1988, the Company adopted Statement of Financial Account. slon of the Power Supply Cost Recovery ("PSCR") Clause for the ing Standards ("SFAS") No. 90. " Regulated Enterprises - Account' four year period 19891992. The Company expects the PSCR ing for Abandonments and Disallowances of Plant Costs," and Clause to be reinstated beginning January 1,1993. recorded net after tax losses totaling 5968 million, or 56.60 per share. These losses reflect the MPSC's ratemaking treatment for Kilowatthour Sales costs incurred in the construction of the Fermi 2 and llelle River Kilowatthour sales increased (decreased) as follows: Power Plants and the removal of Greenwood Unit No. I from rate
- q base. In addition, the Company adopted changes in accounting for #"
unbilled revenues and property taxes which increased total and per Residential to 1)S 0 .71% share earnings for common stock by $201 million and 51.37, respectively, and partially offset the losses recorded. [";"Jej81 gg gg As a result of the 1bove factors, return on average total common shareholders' equity was 19.1% in 1990,16.8% in 1989 and (15.9)% 1990 in 1988. The returns in 1990 and 1989 were higher than the retum Kilowatthout sales were virtually the same as a year ago. The of 13% provided for in a December 1988 MPSC rate order decrease in residential sales was due to reduced air conditioning primarily because total common shareholders' equity was reduced use during the summer months and reduced heating loads during significantly by the write-offs of plant costs recorded in 1988 and milder winter weather, partially offset by the effect of continued because of improved operating performance, control of operation growth in the number of customers. The increase in commercial and maintenance expenses and energy transmission service sales was due primarily to continued growth in the number of ; revenues, customers. The decicase in industrial sales was due to lower sales ! The ratio of eamings to fixed charges for 1990,1989 and 1988 to automotive and steel customers, was 2.42,2,14 and 0.05, respetively The ratio of earnings to 1989 , fixed charges and preferred aid preference stock dividend require- Kilowatthour sales decreased 0,9% Residential sales decreased 1 ments for 1990,1989 and 19h8 was 2.21. l.95 and 0.04, respec- due primarily to cooler summer weather, Commercial sales l tively. These ratios increased due to an increase in carnings before increased due to continued growth in the number of customers, taxes based on income and to the write off of disallowed plant The decrease in industrial sales was due primarily to lower sales to - costs in 1988. - automotive, automotive related and steel customers, partially offset by higher sales to other industrial customers. Business expansion ' j slowed in the fourth quarter as automobile and steel production - declined toward year-end, reflecting plant shutdowns and weak automotive sales. l L t 19Wa&0ttitMa%%d RiVMI N
- _ _ _ - _ _ _ _ _ _ _ _ _ _ - _ _ h
The DetroII Edison Compstry and Subsidisty Companies Management's Discussion and Analysis of Financial Condition and Results o! 0perallons F.nerg) Transmlulon Sersites provides for the voluntary separation from service of certaio em-linergy transmission service revenues represent fees for the ployes, higher uncollectible, consultant and employe pension and transmiuion of electricity of other utihties over the Company's benefit expenses and an accrual for the 1991 refueling outage at transminion hnes. Revenues will continue to be generated from Fermi 2, whwi. recognizes the cost of the refueling outage over these services in the future but at a substantially lower level, perials in w hich related rev nues are recognited. These increases were partially offset by the expenditures incurred in the prior year Prosision for Refund to Customers for the first scheduled refueling and maintenance outage at Fermi 2. The Company established a provision for refund to customers of prior years' PSCR costs due to a refund to the Company of 1989 proprty taxes on the Michigan Public Power Agency's ("MPPA") Other operation expense decreased due primarily to lower ownership interest in the llelle River Power Plant. This decrease expenses related to an arrangement which provides for the volun-in operating revenues was offset by a decrease in other power tary separation from service of certain employes and the lower cost supply expenses. of operating Fenni 2. These decreases were panially offset by service fees and expenses associated with the sale of $2(K) million OperatinD Expenses of accounts receivable and unbilled revenues. Fuel and Other Pow er Suppl) Maintenance Fuel and other power supply expense decreased due to the follow- 1990 ing factors: Maintenance expense decreased due primarily to lower nuclear plant maintenance expense and to the expenditures incurred in the two 1989 prior > car for the first scheduled refueling and maintenance outage arams at Fermi 2. Partially offsetting these decreases was an accrual for Nei iniem nuipui 5 (si 5t12) the 1991 refueling outage at Fenni 2. Averape unit mst (ik2) (21) jpg Other m 3 Totai $<i88i som Maintenance evpense increased due primarily to Hgher fossil fuel plant maintenanse (primarily ut Monroe Power Plant) and the first scheduled refueling and maintenance outage at Fenni 2. Net system output and aventge unit costs were as follows: Depreclation and Amortitution i990 and I989 iwo 1989 t ws, Depreciation and amonization expense increased due to rumme vlucuwanimm) increases in plant in service, including the Company's purchase of Power piani generanon the Cooperutive's ownership interest in Fenni 2 in February 1990, u I ar jy and the ten; year amonitation of 5300 million of Penni 2 costs Purchased and net interchange ptm er (4.065) (2,089) ( t,41n3 begm, m,ng m WW. Nei spiem output 41467 4A7m 44 25' I)eferred Fermi 2 Depreciatiori and Amortization Average unit mst t5/Megawatthour) $16 51 $2072 121.19 1990 and 1989 Deferred Fermi 2 depreciation, a non cash item of income, was recorded beginning with the implementation of the Fenni 2 rate The decrease in average unit cost for 1990 and 1989 reflects phase-in plan on January 24,1988. The annual amount deferred declining fuel prices due to greater use of lower cost Western low. decreases each year thmugh 1992. Deferred Fermi 2 amortization, sulfur coal, improved operating perfonnance of the Company's also a non cash item of income, was recorded beginning with the generating units and higher net sales of energy to other utilities. Company's purchase of the Cooperative's ownership interest in The decrease in 1990 also reflects lov er buyback expenw as a Fermi 2 in Februar" 1990. The annual amount deferred will result of the Company's purchase, effective January 1,1940, of the decrease cach year through 1999 Wolverine Power Supply Cooperalise, Inc.'s (" Cooperative") Taxes Other Than income Taxes ownership interest in Fermi 2 and as a result of a refund of 1990 propcrty taxes on the MPPA's ownership interest in the Belle Taxes other than income taxes increased due primarily to higher River Power Plant. Ilecause market conditions have changed and Michigan Single Ilusiness Tax and higher property taes. the Company is able to purchase coal at prices lower than some exieing long tenn contracts, the Company is buying out fuel I90 supply contracts whenever it is prudent ar.d economic. Taxes other than income taxes increased due primarily to higher property taxes resulting from the commercial operation of Fenm 2, Other Operation higher Michigan Single Business Tax and higher payroll taxes. 1990 Other operation expense increased due primarily to employe incentive award expenses related to a shareholder value improve-ment plan. higher expenses related to an arrangement w hich 32 wwetmw
1 O e income Tases expects that its liquidity will continue to improve, liowever, i 1990 c-d 1969 ownership of an operating nuclear generating unit such as Fermi 2 income tases increased due primarily to higher pretax income. subjects the Company to significant additional risks. Nuclear The effective income tax rate increased to 29h% in 1990 from plants are highly regulated by a number of govemmental agencies 25.5% in 1989 and 21.5% in 1988. concerned with public health and safety as well as the environ-ment, and consequently, are subject to greater risks and scrutiny i Deferred Fermi 2 Return than conventional fossil fueled plants. 1990 rnd 1989 At December 31,1990, Fermi 2 was insured for property Deferred Fenni 2 return, a non-cash item of income, was damage in the amount of $2.185 billion and the Company had recorded beginning with the implementation of the Fenni 2 rate available $7.4 billion in public liability insurance. To the extent phase.in plan on January 24,1988. The annual amount deferred that insurable claims for replacement power, propeny damage, will decrease each year through 1992, decontamination, repair and replacement and other costs and Other income and Deductions expenses arising from a nuclear incident at Fermi 2 exceed the - jppy policy limits of insurance, or to the extent that such insurance kcomes unavailable in the future, the Company will retain the risk Other income and deductions decreased due primarily to of loss. Although the Company has no reason to anticipate a ! premium and expenses associated with the early redemption of Series UU Mortgage Bonds,10%E and the cost of establishing a serious nuclear incident at I ermi 2, if such an irycident did happen decommissioning fund for Fermi 1, an e perimental nuclent unit !t c uki have a material but presently undetennmable adverse . that has been shut down since 1972, partially offset by higher mgad on the Company s h.quidity and financial position. wrest Ann en temporary cash investments. Ihe Company generates substantial cash Dows from operating , activities as shown in the Consolidated Statement of Cash Flows. Accretion income Net cash from operating activities, which is the Company's 1990 end1989 primary source of liquidity, was $548 million in 1988, $916 Accretion income, a non-cash item of income, was recorded million in 1989 and $923 million in 1990. Net cash from operating beginning in January 1988 in order to restore to income, over the activities has increased due to higher net income, higher non cash period 1988 1998, losses recorded due to discounting indirect charges (depreciation, amortization and deferred income taxes) to disallowances of plant costs. The level of accretiou income income and,in 1989, the side of accounts receivable and unbilled reconled increased in 1989 as a result of additional Fenni 2 losses revenues, recorded in December 1988. In February 1990, the Company purchased the' Cooperative's Interest Charges i 1.198% Fenni 2 ownership interest for $539.6 million ($513 mill on for plant, $23.2 million for nuclear fuel and $3.4 million 1990 for traterials and supplies and other). As payment of the purchase Interest expense on long tenu debt m.ercased due primarily to price, the Company made a cash payment of $2.5 million and the issuance of $537.1 million of Mortgage Bonds to purchase the issued $537.1 million of its 1990 Series A,11 and C Mortgage Cooperative's ownership interest in Fermi 2, panially offset by the Bonds. refunding of maturing securities and the early repayment of certain Net cash used for investing activities decreased in 1990 due to , securiues. Other interest expense decreased due primarily to lower the February 1990 sale to Renaissance Energy Company of nuclear ' levels of shon-term borrowings. l fuel acquired in connection with the purchase of the Cooperative's 1989 ownership interest in Fermi 2. Interest expense on long term debt deercased due to the early Net cash used for financing activities has increased followinc , repayment of certain securities and the refunding of maturing l completion of the Company's power plant construction prograni. securities, partially offset by the issuance of new securities. Debt financing in 1988 through 1990 was used for optional and Preferred and Preference Stock Dividend Requirements mandatory redemption of higher cost long term debt and preferred and pn fen nce su 1990 and 1989 Preferred and preference stock dividend requirements decreased EUeck AprH M, N,We quanedy common stock dividend ; was increased from $0.42 per share to $0.445 per share. due to optional and mandatory redemptions of outstanding shares. Cash requirements for capital expenditures were $227 million in i 1.lquiditY and Capital Resources '1995.
* ""dIn"'",*P'"*d * "PP**i"'***'Y 1991 cash requirements 5 'expenditures for capital 3 bi"i " '"'"are
' 99 ' '
The Company's liquidity has impmved since the 1988 commercial ~ estimated at $277 million. . i operation of Fenni 2, a nuclear generating unit comprising 33% of Cash requirements to meet optional and mandatory long-term the Company's assets, as a result of scheduled rate increases in debt and preferred and preference stock redemptions were $352 accordance with the Company's 1988 rate case settlement and million during 1990. Cash requirements for scheduled long-tenu lower levels of capital expenditures, debt and preferred and preference stock redemptions are expected The commercial operation of Fermi 2 completed the Company's powcr plant construction program, The Company has no current ple for additional generating plants. As a result, the Company ! i i i MOwoettuamadNtut08
The Detrol! Edison Company and Subsidiary Companies Management's Discussion and Analysis of Financial Condition and Results of Operations to be $127 million, $432 million and $338 million for 1991,1992 a moderate rise of 0.4 percent projected for 1991. This projected and 1993, respectively, and $73 million for each of the yeats 1994 increase indicates the Company is becoming less dependent on its , and 1995. larger manufacturing customers. The Company's intemal cash generation is expected to be The Company's peak load in 1991 is expected to be 9,002 cufficient to meet cash requirements for capital expenditures as megawatts and is projected to increase at an average rate of 1.5 well as scheduled long-term debt and preferred and prefrrence percent per year over the next 15 years. The forecasted 1991 peak stock redemption requirements, load is 131 megawatts lower than the Company's all-time peak of At December 31,1990, cash and temporary cash investments 9,133 megawatts in August 1988. totaled $146 million. The Company had short term credit arrange- The Company expects to meet near-tenn demand for energy by ments of $301.1 million at December 31,1990, under which no the return to service, subject to environmental regulationsaf borrowings were outstanding. plants currently in extended cold standby and economy reserve units when energy demand and consumption requirements provide - ' Capitallration economic justification. Ilowever, there is continuing interest in The Company's objective is to achieve a capital structure of cogeneration and independent power production from customers approximately 40% common shareholders' equity,510% pre- and regulatory agencies. Cunent laws require the Company, as a ferred and preference stock and 50-55% long term debt. The public utility, to purchase the electrical output of certain non-Company's capital structure ratios (excluding amounts of long- utilities at the Company's avoided cost. Current and proposed term debt and preferred and prclerence stock due within one year) Federal Energy Regulatory Commission and legislative activities were as follows: would further encourage the development of generating facilities t>y independent power pnxiueers. While electric energy produced December 31 by these other sources could result in displacement or loss of sales two 1989 1988 made by the Company, this energy may provide needed future Common Shareholders' liouny 32 M 32.3% 32 4% capacity, Prefcned and Preference Stock 4.8 5.$ 6.0 e tm renn twbi 6u 62.2 si.6 Environmental Matters . unun Hxum imm Protecting the environment from damage, as well as correcting past environmental damage, continues to be the focus of state and federal regulators. The Environmental Protection Agency (" EPA") The ratio of preferred and preference stock to total capitaliza. and the Michigan Department of Natural Resources have aggres-tion has decreased due to optional and mandatory redemptions of sive programs regarding the cleanup of property containing outstanding shares. The Company expects to attain its capital chemicals not dispmed of in accordance with current regulations, structure objectives with futum camings and the redemption of The Company anticipates that it will be periodically included in certain debt securities prior to scheduled maturity when economic, these types of environmental proceedings. Further, additional environmental expenditures will be necessary as the Company - Competition prepares to comply with the 1990 Amendments to the federal An electric public utility must compete with other energy suppliers Clean Air Act. to meet its customers' energy needs. Serious issues facing the Of cleven titles in the Clean Air Act amendments, Titles Ill,IV - entire electric utility industry include deregulation, competition, and V on Air Toxies, Acid Rain and Operating Pennits, respec-municipalization, cogeneration, independent power production and lively, will have the most direct impact on the Company, open access to transmission. Utility customers have the option of Title Ill, Air Toxies, requires the EPA to conduct a three-year self generation or cogeneration and, depending on the extent of study on toxic air emissions from utility boilers, as well as a four-future deregulation, may be able to enter into contracts with other year study of mercury emissions from fossil fuel-fired boilers, to power suppliers. In the future, rather than being solely a supplier determine whether regulations are required. Until such studies are of electricity, electric utilities may be required to offer a combina- completed and resulting regulations, if any, are promulgated, the tion of products and services to meet the needs of customers. impact on the Company is indeterminate. ! Title IV, Acid Rain, requires a two-phased reduction in sulfur Meeting Energy Demands dioxide ("SO 2") emissions and nitrogen oxides ("NO,") emissions 1 Sales and demand are expected to grow at an average rate of 1.5 from 1980 levels by the year 2000. The Company already meets percent per year for the next 15 years. This compares with an Phase i SO2 emission requirements. Phase 11 begins in the year avcrage growth of 1.3 percent during the past 15 years. 2000 and provides that electrie utility units greater than 25 Due to current recessionary conditions, sales for 1991 are megawatts will be held to total annual SO emissions based on a ~. 2 anticipated to increase by only 0.4 percent from 1990. liigher fonnula. The Company currently bums low sulfur coal (less than residential and commercial sales in 1991 are expected to offset the one percent sulfur) at all of its coal-fired units and believes it can
. decline in industrial sales which began in 1939 and is expected to meet the Phase 11 SO 2 emission requirements through additional continue into 1991. - .
blending of coals The additional blending could result in in. Sales to the non manufacturing segment, which incit.de creased annual fuel costs of $40 million per year. Additional . customers such as agribusiness, grocery stores, restaurants and capital .penditures are :xpected to be minimal. government, are projected to grow at the strongest pace in that 15-year period-an average increase of 1.9 percent per year---despite , i M f9MersflAu An# Asf a
A 1 I The amendments provide for the purchat,e and sale of emission with probable future revenue from customers. In late 1990, the credits under certain circumstances. It is therefore possible that the FASB approved a package of tentative revisions to SFAS No. 96. Company may be able to buy or sell emission credits which could it is anticipated that the FASB will issue a new statement on offset the costs of compliance. Ilowever,it is still unknown how income taxes by the end of 1991 which would supersede SFAS No. and to what extent the emission credits system will be included in 96 and require adoption no later than 1993. The Company expects the regulations implementing the amendments, that when SFAS No. 96 or a new statement on income taxes is f The Company is not affected by Pf use i NO, emissions require- adopted, it will not have a material effect on net income, ments. Compliance with Phase 11 N'A emissions reductions will in December 1990, the FASD issued SFAS No.106," Employ-require the installation of low-NO ourners on most Company units ers' Accounting for Postretirement Benefits Other Than Pensions." l by the year 2000. Capital expenditures, estimated at $160 million, The Company is currently reviewing the statement and, as permit-rnay b incurred to comply with these requirements. ted, anticipates adopting the provisions of SFAS No.106 ia 1993. These estimates are based upon the language of the amendments Most employers, including the Company, have accounted for and are subject to change as regulations are developed and - postretirement benefits other than pensions on a pay as-you go implernented. (cash) basis. SFAS No.106 requires the accrual of postretirement Title V, Operating Permits, established an openiting permit benefits durmg the active service periods of employes to the date prognim commencing in 1996. The permits will be valid for a they attain full eligibility for benefits. Tbc Company anticipates prial of up to five years, and are then subject to reissuance, amortizing the obligation, which has not yet been determined but The Company believes that substantially all of the cws of which could be significant, over 20 years as permitted by SFAS compliance will be recovered through the ratemaking pw. cess. No.106, The Company expects to continue to recover the costs of providing such benefits through the ratemaking process and, InHall0n therefore, the adoption of SFAS No.106 is not expected to have a
~
The regulatory process limits the recovery of capital investment to material effect on net income. the historical cost of the Company's investment in utility plant. This produces cash Dows which are inadequate to replace such property in future years, but the Company believes that it will be allowed to recover the increased cost of replacement facilities when, and if, replacement occurs. The cost of fuel used in the generation of electricity, the Company's single largest expense,is subject to increase due to price escalation provisions in long term coal contracts. The MPSC's December 1988 order suspends, for the four year period January 1,1989 through December 31,1992, the PSCR Clause which provided for the current recovery of fuel and purchased and net interchange power expense, llowever, it is expected that such expenses will be relatively stable during the four-year period. 2 Pursuant to the MPSC's December 1988 order <a new expense stabilization procedure applicable to approximately $750 million of Company operation and maintenance expenses, permits rates to 6 adjusted for the effects of inflation. Under this procedure, a surcharge or credit is implemented on January I of each of the years 1990 through 1992 to offset annual increases or decreases in opration and maintenance expenses. Accounting Issues in December 1987, the Financial Accounting Standards Board ("FASB") issued SFAS No. 96," Accounting for income Taxes," however, the effective date was deferred to 1992. SFAS No. 96 requires an asset and liability approach for financial accounting , and reporting for income taxes. It requires the Company to recompute its tax liability at the then current tax rate and adjust the Accumulated Deferred Income Tax asset and liability amounts in the Consolidated Balance Sheet. In addition,it requires the Company to record additional deferred income taxes for temporary differences not previously recognized and all other existing differences that will result in taxable or deductible amounts in future years. SFAS No. 96 requires the recognition of an asset to the extent that such additional deferred incor.te taxes are associated i 19%Qt%lOxnkMiPegwt hh
e The Detrelt Edison Company and Subsidiary Companies Comparative Results of Operations w.iunn$.ng . Operating Resenues 1990 - 1989 1988 19[ Eleetne $3.279,248 ' $3,171,456 $3,070,724 $2,823,910 ' Steam 27,491 31,575 31,40t 30S21 Total Opet8 ting I evenues $3,306,739 $3,203.031 $3,102,172 $2S56,711 - Operating Espenses - Operation I Fuel $ 78KJ55 $ 820,765 ' $ 846,678 - . $ 813.376 , Other power supply (13,142) '142,240 146,773 47.814 Other operation 545,476 '514,017 521,152- 441,686 , Maintenance 279,528 291,365 275 610 - 245,736 . Ikpreciation and amortization - 406,330 - 3fA,554 325,423 237,325 - l Deferred Fermi 2 depreciation and amortization (39,208) (35,234) (44,143) - Taxes oiner than income 250,459 '225,763 212,656 179,308-Income tam 269,931 129,626 89,944 - 159,488 7otal Operating Expemes $2,427,729 $2,453,096 $2,374,C%) $2.124,093 , Operating income $ 879,010 $ 749.935 728,079 ' $ 732,638 Oihir Income and Deductions ~
~
Allowance for other funds used during comtruction $- -- $- :-. 1 1,663 $ 136,452 l Ikferred Ferrai 2 return 78,379 107,169 134,264 . Other income and deductions - (7J29) 675 (789) (3,435) Income ques 2,304 843 (769) 663 Disallowed plant costs - - (875,372) - - Accretion income 48.794 . 50,188 25,866 - Income taxes - disallowed plant costs und acnetion income (8,1981 (17,N7) 225,171 - Net Other income and Deductions $ 113,950 $ 141,828 - $ (489,966) $ 133,680 - Income liefore interest Charges $ 992,%0 $ 891,763 $ 238,113 $ 866,318 = Interest Charges . . - Long term debt $ . 472,369 $ 444,2N $ 451,415 5 417,474 Amortization of debt discount, premium and expense 4,539 4,368 4.593 3,626 Other '4,853 20,980 20,663 23A59 Allowance for borrowed funds uwd during constuction kreshi) (3,260) (3,740) - (3,224) (133,215) Net interest Clurges J 478,50! $ 465,812 $ 473,447 $ 311344 Income ll.oss) Befure Cumulathe Effect of Accounting Changes $ 514,459 5 425,951 5 (235,334) $ 554,974 Cumulathe Effect for Years Prior to 1988 of Accounting Chinges fort Disallowed plant costs and abandonments . (net of income taxes cf $111,257) - - (344,147)' - Unbilled resenues (net of income taxes of $40,912)
- - 61,367- -
Property taxes (net of income tues of $101,306) - ~~ 139.288 - Net income (l.oss) - $ 514,459 .5 425,951 - $ (378,826)- 5 $?4,974 Preferred and Preference Stock Dividend Requirements 35,179 37,018 -49,757 -78,240 Earnings (Im) for Common Stock 5 479,280 $ 388,933 - 5 (428,583) $ 476,734 Common Shares Outstanding. Aserage 146,888,809 -146,816,363 146,761,458 146,729,292 Earnings (Im) Per Share Defore cumulative effect of accounting changes $3.26 .$2.65 - $(1.95) $3.25 Cumulatise effect for years prior to 1988 of accounting
- changes for:
Disallowed plane costs and abandonments $- ,$ - $(2,34) $-: Unbilled revenues $- $, $ 0.42 n $- Property tues $-- $- - $ 0.95 $~ Etrnings (Im) Per Share $3,26 $2.65 7 $(2.92) $3,25 -
- Dividends Declared Per Share of Common Stock $1,78 $1.68 ' $ l.68
$1.68 '
Rttio of Earnings to Fhed Charges (SEC liasis) 2,42- 2,14 - ' O.05 2.54 Ritio of Earnings to Fhed Charges and Preferred and Preference Stock Dhidend Requirements (SEC liasis) 2.21 1.95 0.N 2.09 l I 1 001+NDevdeaMoual%of
P e 1986 19k5 1984 1983 1982 1981 1980
'2,832,945
, $2,738,356 $2,439,835 $2.260,021 $2,078,965 $2,011,217 $1.776.364 363N 49.801 58,3'/0 49,637 44,289 42,R40 36,150 l $2 Ae9.2M $2.788.157 $2.498,205 $2.309.658 $2,123,254 $2,054,057 $ 1.812,514 b
$ 74i,206 $ 785,110 $ 700,789 $ 676,409 $ 718,4?! $ 689,165 $ 670,116 191.126 19o 9l k 184,740 128,921 74,654 139,981 107,767 459.534 421133 403.616 374,lM 372,767 333,440 290,566 258,655 250,798 203,945 187,769 170,974 IM,978 133.270 232,240 218,502 190,420 171.940 161,430 150,240 141,948 177 381 175,556 144,471 142,743 I I8.537 117,224 l 15.52]
126,596 !?4.939 131,459 145,559 96,912 64,388 37,012
$2,1 x6,738 $2. I 73,95 $ 1,959,440 $I,827,505 $ 1,713,705 $ 1,659,416 $ 1.4%,I99
! 682,U6 $ 614,201 5 538,765 $ 482.153 $ 409.549 $ 394 Mt 5 316,315
$ ll7/M $ 113.225 $ 130,350 $ 92,750 $ 47,995 $ 39,398 $ 38,815 (l6,869) (5,240) 1,829 7,877 (4,820) (9,501) 692 8,827 1,M 2 (112) (5,487) 1,155 4,771 (669)
( $ 109.027 5 1094.27 $ 132,067 $ 95,140 $ 44.330 $ 34,668 5 38.838 [ $ 791,573 $ 723,828 $ 670,832 5 577,293 $ A53.879 $ 429,309 5 355,153
$ .W9,429 5 401,272 $ 399,448 $ 351,854 $ 331,469 5 290,N 5 $ 211,857 2,721 2,502 2,191 2,131 2,006 1,853 1,776 4i,410 15 N2 30,592 53,088 $9,779 37,025 19,662 (129.082) (133,103 (163,336) (194.402) (194,076) (133,967) (66,708)
[ i 314.47X $ 286,113 $ 268,895 $ 212,671 $ 199,178 $ 194,956 $ 166,587
$ 477,m3 $ 437,515 $ 401,937 $ 364,622 5 254,701 $ 234,353 $ 188,566
$ 477,095 $ 437,515 $ 401,937 $ 364,622 $ 254,701 $ 234,353 4 188,566 98.803 103.2M iN,t59 98,614 73,245 57,566 51,037
$ 378,292 1 334,251 $ 297,778 $ 266,008 $ 181,456 $ 176,787 $ 137,529 146,M U 77 143,183,133 135,230,827 120,274,269 103,585,915 87,473,581 78,780,86 I
$2.58 $2.33 $2.20 $2.21 $1.75 $ 2.(2. $ t,75
$2,58 $2,33 $2,20 $2.21 $1.75 $2.02 $1.75
$1.68 $1.68 $ 1.68 $1,68 $1 $8 $ 1.M $1.60 2.29 2.28 2.19 2,22 1.85 1.84 1.90 1.81 1.75 1.67 1.67 1.49 1.53 1.53 s
t 2 il senkna Pecctf N
i 1 The DetroII Edison Co:pany and Subsidiary Companies , Statistical Review . 1990 1989 1988 1987 i Operating Resenues (Thousando Residemial- Electric $ 1,N5,081 $ 1,013,677 $ 984,689 $ 905,208 Commercial - Electnc 867,317 828,106 760,NO 701,275 ) Industrial - Electric I,201,254 1,171,389 1,139,778 1,056,906 Other 193,087 189.859 217,665 193,342 Total $ 3,306,739 5 3.203.031 $ 3.102,172 5 2.856 731-Sales (%Ihom of kWh) Residenual 11,513 11,524 11,723 11,134 Commercial 8,688 8.552 8,310 7.87? < Industrial 18,707 I8,762 19.080 18,225 Other 1,688 1,747 1,845 2,260 Total 40,5 % 40,585 40,958 39,a92 j Electrie Customers (Year Endi Residential I,757,878 1,738.494 1,718.835 1.f4 tb Comrnereial 164,919 162,255 158.850 t f6 Industrial 2,739 2.671 2,592 2.007 Other 1,930 1,925 1,917 1.019 Total I,927,466 1.905345 1.882,194 1,856.968 Aserage Annual Use Per Residential Customer (LWh) 6,583 6.668 6.866 6,635 Aserage Annual flill Per Residential Customer $597.51 $586.50 $576.70 $539.44 Aserage Resenue Per k% h Residential 9.08e 8 80c 8.40e 8.13e Commercial 9,98 9.68 9. I 5 8.91 Industnal 6.42 6.24 5.97 5.80 ve Capitalisation (Thousands) long-Term Debt $ 4,923,999 $ 4,56),UOS $ 4.238,536 $ 4,693,687 Pn ferretWreference Stock 376,183 399,18X 410,212 521,894 Common Shareholders' Equity 2,568,451 2370.0s) 2.2
- f,.949 2,919,985 Total $ 7,888,6'14 $ 7.330,253 $ SA"1h97 $ 8.135,566 Capitalization (Percent) long-Term ikbt 62.4 62.2 6 t .o 57.7 Preferred / Preference Stock 4.8 5.5 6.0 6.4 Common Shareholders' Equity 32.8 32.3 ' 32.4 35.9 Total 100.0 /MO 100.0 100.0 Common Mock Data Earnings (loss) Per Share $3,26 $2.65 $(2.92) $?25 Dividend Paid Per Share $1.755 $168 $1.68 $1M Payout 54 % 63 % -% 52 %
Shares Outstandmg- Average 146,888,809 146,816,363 146,761,458 I46,729,292 Retum on Average Common Equity 19,11 % 16.75 4 (15.91)4 16.69 4 Book Value Per Share $17,56 $16.07 $15.10 $19,75 Market Price High $30% $25% $17M $19 Low $23% $17% $12 $12H Miscellaneous Financial Data Average Interest Rate on long-Term Debt 9,2% 9.54 9.6% 95% Average Dividend Rate on Preferred / Preference Stock 8.7 % 8.89 8.9% 10,7 % long Term Debt Obligations and Redeemable Preferred and Pn ference Stock Outstanding (Thousands) $ 5,300,962 3 5,028,961 $ 5,148,498 5 5.232,662 Total Assets Ohousando $10,573,325 $ 9,949,599 $10,060,293 $11,158.214 Gross Utihty Plant (Thousands) . $11,749,142 $11,024,368 $10,766,755 $11,893.418 Net Utility Plant (Thousands) $ 8,624,923 5 8,236,553 $ 8,303,644 5 9,682,875 Capital Espenditures (Thousands) $ 230,201 $ 242,973 $ 235,127 5 709.084 Miscellaneous Operating Data Systen' Capability at Year End - MW 10,130 10.081 10,0N 9,lM , System Capabihty at Time of Peak - MW 9,953 9,942 10,038 9,020 System Peak Demand - MW 9,032 8,7N 9,133 8.427 Reserve Margin at Time of Peak 10,2 % 14.2 % 9.9% 7.0% System Loud Factor 54,9 % $7,3 % 55.2 % 57.4 % Heat Rate - Btu Per kWh 9,NG 9,940 9,990 10.060 Fuel Cost - g Per Million iltu 155,8e 169.2e 1718e 172.9e Numhr of Employes at Year End 9,669 10,254 10.614 l 1.221 38 noe>tusenwRecat
1 e e e 1986 1985 19%4 1983 1982 1981 1980
$ 880.205 $ 827.210 $ 758,124 $ 741,399 $ 676370 $ 642,301 $ 583,701 693,071 651,559 570,082 513,292 473,498 436,868 382,018' 1,063,551 1,034,374 919,490 818,660 754,238 763,167 658,051 232.457 275,014 250,509 236,307 219.148 211,721 188,744 -!
I $ 2,869.284 $ 2.788,157 $2.498,205 $2309,658 $2.123,254 $ 1,812,514 _ $2.054.057 10,492 10,077 10.150 10,256 9,940 10,134 10394 j 7,501 7.130 6,850 6,479 6,252 6310 6,265
!7,240 16,613 16,324 15,162 13,751 15,471 15,472 i 2,807 2,875 2,563 2.402 2,052 2,107 2,1N l 38,N O 36,695 35,887 34,299 31,995 34.022 34,235 1,6M,226 1,M2,9F I 1,629,668 1,621,172 t,619369 1,624.161 1,623,162 148,987 144,942 142,395 140,403 139,376 138,830 136,983 2,384 2.314 2.246 2,253 2,239 2,305 2,293 1,896 1.883 1,885 1,878 1,827 1,821 1,750
{ 1,817,49.1 1,792,120 1,776,194 1,765,706 ~l,762,811 1,767,117 1,764,188 6.350 6,165 6,253 6.332 - 6,133 6,243 6,408
$532.74 $506.06 $467.03 5457,74 $417.33 $395.66 $359 86 8,39e 8.21g 7.47s 7,23g 6,80s 634e 5.62d 9.24 9.14 8.32 7,92 7.57 - 6.92 6.10 6.17 6.23 5.63 - 5.40 5.49 4.93 4,25 .
i
$ 3,656,569 $ 3,770,863 $3,845,272 $3,542,438 $3,218,M9 $2,753,978 $2,450.457 742,273 879,497 894.168 907,505 802,423 60.tl61 591,346 2,716,403 2,588,025 2,379,998 2,195,361 1,872.181 1,675,385 1,514,169
$ 7.115,245 $ 7.238,385 $7.119,438 $6,645,3N $5,893.253 $5.032.524 $4.555,972 51.4 $2 I 54.0 $3,3 54.6 54.7 53.8 10.4 12,1 12.6 13,7 13.6 12.0 13.0 -
38.2 35,8 33.4 33.0 31.8 333 33,2 IIno 100.0 100.0 100,0 100.0 100.0 100.0
$2,58 $2.33 $2,20 $2.21 $1,75 $2.02 $1.75
$1.68 $1.68 $1.68 $1.68 $1.68 $1,62 $1.60 65 % 72 % 76 % 76% %% 80 % 91 %
146,M3,377 143,183,133 135,230,827 120,274.269 103,585.915 87.473,58l 78,780,863 - 14.09 % 13.31 % i2.87 % 13.03 % 10.I4 % 11,12 % 9.47 %
$1834 $17.47 $16.91 $16.63 $16.60 $17,47 $17.85
$19% $17% $16% $16 $13% $12% $13%
$15% $14 $11% $13 $11 $10% ' $10 ,
9.2% 9.9% 9.9% 9.5% 9.5 % ' 9.4 % ~ 9.0% 11.5 % 11.6 % i 1.6% i 1.6% 113 % 93% 9.5 %
$ 4,774,495 $ 4.731,589 $4,460,381 $4,155,329 $3,792,982 $3,182,033 $2,809,976
$10,377,125 $ 9,863,760 $9,276,614 $8,477,218 $7,645,856 $6,617,903 $5.751,801
$11,062,449 $10,466,039 $9,752346 $8,845,779 $8,252,570 $7,139,790 $6,213,495 ;
$ 9,034,716 $ 8,612,890 $8,076,168 $7,320,570 $6,824,058 $5,842,997 $5,026.245 -
5 MS1% $ 710,699 $ 938,004 $ 1,014,568 $1,135,NS $ .964,261 5 -644,540 9,070 9.296 8,898 8,I62 7,762 8,221 8,234 9,199 9,367 9,271 7,810 8,569 8,458 8,531 8.050 7.172 7,350 7,063 6,394 7,171 6,703 14.3 % 30.6 % 26.1% 10.6 % 34.0 % 17.9 % 273 % 57.9 % 633 % 60.2 % 60.2 % 61.7 % 58.4 % 63,1% 10,090 9,990 9,W) 10,N O 10J)60 10,060 10,140 189.2e 202.De 190.6e 190.2e l93.8e 190,$t 178Je 10,967 11,086 11,136 11,t 52 11,208 11,024 10,789 1
3 The Detroit Ulson Company and Subsidiary Companies Miscellaneous Corporate Data . Market for the Company's Common Equity and Related Distribution of Ownership of Shcreholder Matters Detroit Edison Common Stock The Company's Common Stock is listed on the New York Stock (December 31,1990) Exchange, w hich is the principal market for such stock, and the Midwest Stock Exchange. The following table indicates the T*dO*" reported high and low sales prices of the Company's Common Ow nen Shares Stock on the Composite Tape of the New York Stock Exchange Indniduals 86.420 21,834,232 and dividends paid per share for each quarterly period during the Joint Accounis 79.769 27,614.870 past tw o Years: Trust Accounts 7,',52 4,512,801 Nominees 106 79,763,551 Dnidends Institutions and Foundatiom 21,i 102,405 Price Range Paid Brukers and Security Dealen 18 i t nn5 Calendar Quarter Wph IM Per Share Othen 1.109 13,082.831 1989 Fint # 518% $174 $0.42 Second 21% 17 % 0.42 State and Ctentry T1urd 22 % 20% 0.42 Fourth Ow nen Shares 25% 22 % 0.42 1990 Fint 9A -0 43 Michigan 83.354 38,783.391 Second h'6% 7% h'4 % 0.445 FWrida Cahforn,a 12,344 4.869.941 Third '9% i 10,380 3,297,489
'5 % 0.441 Fourth 30A 24 % 0.445 New York 8,RM 81.037,110 lihnois 7,871 2,73 ),46n At December 31,1990,146,921,695 shares of the Company's U$,,
i 3,, i, I Common Stock were outstanding. These shares were held by a Foreign countries 665 191.655 total of 175,588 shareholders. Total 475.5p 146.92i m5 The amount of future dividends will depend upon the Company's earnings, financial condition and other factors. Annual Meeting of Shareholders Corporate Address i The 1991 Annual Meeting of Shareholders will be held at 10 a.m. The Detroit Edison Company Detroit time Monday, April 22, at The Detroit Edison Company 2000 Second Avenue, Detroit, Michigan 48226 General Offices,2000 Second Avenue, Detroit. Shareholders will Telephone: (313)237-8000 I be asked to (1) elect members of the Board of Directors,(2) ratify Independent Accountants the appointment of Price Waterhouse as independent accountants, Price Waterhouse l (3) amend the Company's By-Laws to classify the terms of the 200 Renaissance Center, Detroit, Michigan 48243 members of the Board and (4) amend the Company's Articles of Incorporation to increase the number of authonzed shares of Form 10.K Common Stock, and to limit the liability of and provide mdemn.fi. i Copies of Form 10-K, Securities and Exchange Commission cation for officers and directors of the Company.
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At the April 23,1990 Annual Meeting of Shareholders,12 Requests should be directed to: members were re-elected to the Board of Directors. In addition, Susan M Beale Theodore S. Leipprandt and William Wegner were elected to the Secretary Board. All directors were elected to one-year terms. The Detroit Edison Company Officer Hetirements ec nd Avenue, Detroit, Michigan 48226 Walter J. McCarthy, Jr., Chairman of the Board and Chief Execu. Transfer Agents tive Officer, retired on May 1,1990. Ele was re-elected as a The Detroit Edison Company director at the 1990 Annual Mecting. 2000 Second Avenue, Detroit, Michigan 48226 M. Jane Kay, Vice President Administration retired on Septem. Susan M. Beale Vianessa Y. Lurry ber 1,1990, after more than 47 years of Company service. Polly K. Brown Janet A.Scullen Officer Changes Ronald J. Gdowski Jack L. Somers John E. Lobbia was elected by the Board of Directors to the Elaine M. Godfrey Gloria A. Williams position of Chairman, President, and Chief Executive Officer S phie J. Koziatek effective May 1,1990. Registrar of Stock Larry G, Garberding was elected by the Board of Directors to The Detroit Edison , ompany the position of Executive Vice President, Chief Financial Officer, 2000 Second Avenue, Detroit, Michigan 48226~ and member of the Board effective August 1, l')90. (Preferred, Preference and Cammon Stock) In addition, the following officers have been elected since the Common Stock 1990 Annual Meeting: Robert J. Buckler, Vice President Divi- Listed on the New York Stock Exchange and the Midwest Stock y sions; and William S. Orser, Senior Vice President. Exchange. Symbol- DTE l 40 m m use w mm . 1
y 0
'he Detroll Ediso3 Company and Subsidisty Companies ~
liraitors and Officers 1 Jard of Directors Committees' ference E. Adderley President and Chief Executive Officer, Kelly Services, Audit - Nominating - inc. ( A provider of temporary help, business services ~ Otis M. Smith': Alan E. Schwartz
- and home care services) ' I Lillian Bauder -: Wendell W. Anderson Jr. .I Wendell W. Anderson,Jr. Retired Chaimian of the Board rmd Chief Executive -
OfGeer. Bundy Corporation (Manufacturer of steel David Bing David Ms Gates - ' tubing, flexible hose and engineered plastic products) - Theodore S. Leippnmdt - Patricia Shontz Longe r Lillian llauder President, Cranbrook Educational Community Patricia Shontz Longe . Walter J. McCanhy, Jr.
. Dasid lling Chainnan. Bing Steel, Incc(A steel service center) Dean E. Richardson , Otis M. Smith - -
Imrry G.Garberding Executive Vice President and Chief Financial Officer, The Detroit Edison Company ~ Energy Resources - Nuclear Review David M. Gates Professor of Botany. University of Michigan Pl8""I"E William Wegner* . Theodore S. Leipprandt v d M. Gatest David M.'G,.tes" Marketing Specialist. Cooperative Elevator Company John E. Lobbia Chairman Pn sident and Chief Executive Officer, endell W; Anderson. Jr." Patricia Shontz Longe The Detroit Edison Company David Bing ' Walter J. McCarthy, Jr. Patricia Shontz Longe Economist: Senior Partner. The Longe Company ' - Theodore S, Leipprandt ( An economic consulting and investment Gnn). _ Walter J. McCarthy, Jr. Organization and Walter J. McCarthy, Jr. Retired Chairman of the Board and Chief Executive - William Wegner Officer,The Detroit Edison Company Wendell W. Anderson, Jr/ Eugene A. Miller Chainnan. President and Chief Executive Officer of Executhe - Terence E. Adderley" Comerica, Inc., and Chairman and Chief Executive Eugene A. Miller : John E. Lobbia' . Of0cer of Comerica Bank-Detroit and Comerica llank , National Association Terence E. Adderley Dean E. Richardson Dean E. Richardson Retired Chairman of the Board, Manufacturers Lillian Bauder ' Alan E. Schwanz National Corporation and retired Chaimian of the Larry G. Garberding , Executive Committee of Manufacturers National Dean E. Richardson Bank of Detroit Patricia Shontz Longe'
- Ahm E. Schwartz -
Ahn E. Schwartz Partner, lionigman Miller Schwartz und Cohn : Wendell W. Anderson, Jr " (attomeys at law) Finance _ Larry G. Garberdmg i Otis M. Smith Of Counsel to lewis, White and Clay (attomeys at law) and retired Vice President, General Motors Dean E. Richardsort David M. Gates ! Corporation Patricia Shontz Longe" ' Otis M. Smith ! William Wegner Consultant: Owner of W-Squared. Inc. (A consulting Terence E. Adderley - l firm engaged in providing services to nuclear utility - Lillian Bauder "Chainnan l companies and to the U.S. govemment) -
'"*i""""'
Larry G. Garberding ! Eugene A. Miller j j Alan E. Schwartz
- .i
' Officers iJohn E. Lobbia Chainnan of the Board, Stanley G.Catola; Vice President-Nuclear - President and Chief Executive Engineering and Services F Officer Malcolm G. Dade, Jr. Vice Pr's'.e dent Human Relations
- Larry G. Garberding Executive Vige President and Ronald W. Gresens - Vice President and Controller .
Chiel hnancial 01ficer -
~
t- - Leslie L. Loomans Vice President and Treasurer -
- Leon S. Cohan Sern.or Vice Pres.i dent and l
General Counsel Robert V. Nicols<m Vice President Fuel Supply . l Frank E. Agosti - Senior Vice President S. Martin Taylor. ..Vice President-Community and ; Govemmental Affairs i ' Willard R. Ilolland l Senior Vice President
. Saul J. Waldman Vicd President-Public' Affairs '
- William S. Orser Senior Vice Pres. i dent T
- Susan M. Ileale - Secretary
. Robert J. Iluckler Vice President. Divisions Frederick S. Karuacki General Auditor i IM& call 1wknalMM A['
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