NRC-92-0024, Detroit Edison 1991 Annual Rept
| ML20090L666 | |
| Person / Time | |
|---|---|
| Site: | Fermi  |
| Issue date: | 12/31/1991 |
| From: | Garberding L, Lobbia J, Orser W DETROIT EDISON CO. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| CON-NRC-92-0024, CON-NRC-92-24 NUDOCS 9203230062 | |
| Download: ML20090L666 (53) | |
Text
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f
" ::M',":'- ,
l 'v.v Detroit ...- :
Ecison EEF"* I an.
March 17, 1992 NRC-92-0024 U. S. Nuclear Regulatory Ccamission Attention: Document Centrol Desk Washington, D. C. 20555 i
Reference:
Fermi 2 NRC Docket No. 50-3*1 NRC License Nc. NFF-*3 Subjects gnual financtel Eect;rt Pursuant to 10CFR50.71(b), please find attached one copy of
- . the 1991 Annual Financial Repcrt for the Detroit Edison Company.
If you should have any questicns regarding this rcport.,
please contact Barbara Stemasz at (313) 586-1683 Sincerely, dW s
cc T. G. Colburn wrenc.
A. B. Davis w/ene.
R. W. DeFayette w/en:..
S. Stard: w/ enc.
Region III I
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9203230062 PDR 911231 I ADOCK 05000341 cvuuv. PDR
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A- PROFILE OF DETROIT EDISON ICONTENT$
I l etter io Sluireholders 1 i
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Stt etigthening tlic ('ote llusinew 5 hlliltlillyVilNlulllVr g gy,,g g; g pug [
ninl shareholtlcr i Keeping our llouse in ontei 11 p _
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Electric Light and Pulver d4 InallaZille'S][ll)LlL'{ccfl'lc)Ili[lif DETRoll EDISON $ERVICE ARE Ac U[OfC35'G!!
- F< smit = h Wm4:1Patj f'N Power Plant-Nwl4mr $ Lab Pati: 1 Hnrvice Aren " i[AladurC<mnoctest HIGHLIGHTS Itml liitto % increme alleerenei operanny Rnenues 0,591,337,tHM) 0,576.2x i s m
- O4 1.alliiny% lot C01111H011 hlix k N35.205,lH H1 $479.2xo,UllO l \ ,7 1.ainmys per Conunon hhare V.64 5 t 26 11.7 Common hh,un Outst,mthny i M eiaye i 14fi,945,932 14hAxVo9 Dnidends Declaird ivt Ahaic $1,HM 51.78 5h Glow Ubbi3 Plant $ 11,997,N62.(N H) 511,749,142 j k n 2I Capitahration $7,.I l 9,073,t H NI $7.xW614 im (6 on System hales of l lectacu3 t L% h Thomantisi 41,049,lHNI 40304.tuni 1.3 Ny stem CapaNbty at 'I nne ol l'cok I LW 6 lu,121,(HHI 9,951 ( m 1.7 N3 stern Peak Demand tkW j N,9SlhutKI 9fil2J a k) (0 66 I Icettic CO%ltillief% 411 Yeal I lid 1,94I,UlHi l ,42 7,( h N ) Oh
' im % fee er er< im A ntmr o! r. r s , e s /r u f o r, d ne rmst2 ,n, , i .4 rdt. 64neffn , , /n i , i i ( <s a 1 oo um r < ,,,1 n,
A PROEllE Ofj TROIT
$ EDISON 1)etioit I'dison is a publh13 im ned electiic utihty oct ving inotP thati 1.9 inillion ru*toinct s in 7.600 stpuue toiles of Southea*ter n Sin higan. The cornpany is positioning itself f or inctcased cotopetition, with an nopros ing balance sheet, strong cash flow and relatn ely low espo use to provisions of 1he Clean Air Art 31odest growth in electric denuind espected thiouph 20lni will be tuet with eso ting capacity atul con et s ation.
Sik AT E GlC O B .l E C f l V E 5 The rotnpany is focused on deseloping it, core hu i-new - suppl3 nig electricity. Thi conunitnient is vupported through aggrenise on t redut tion, tnato tiVille talget tilalkelm to ilu Pake IPVOniles, thang-ing Corporate Chhtu e to des elop oignin7ational ellhiencies, atul reducing long terni debt obliga-tion
- to sitengthen the balance -heet.
I N V E 51 M E N T C O N 51 D E R A T I O N S Corninon Stock ("IITID has been listed on the New Yor k Stmk ihrhange since 1909 and is also lixted on the hiidu est Stock 1% change. 5 hares out-8tanding total neatly 117 inillion. Shareholders to-tal nearly 168,900.
1)lvidentl= hm e been paid to sharehohlers quar-terly *ince 1909. The current indicated annual rate is $1.99 pet share, payable on danunry 15, April 15, July 15 and October 15. A Dnidend licin-ve> tinent and Cash l'un base Plan is available.
1)eht Itatingw. A i by $1oody's inve tor Service, Illllh by Standard & l'oor's Corp. and A. by Fitch Investors Sen ice.
= Total Shareholder licturn was 30 percent for 1991,1H percent Ihr 1990 and 56 percent Ihr 19F9.
YE AR E ND HIGHLIGHT S 1991 1990 1989 l'er Sluur I)uta:
Earnings $:Uit $ :1.26 $ 2 65 1)ividends SI ss $ 1.78 $ 1.6s Ikiok Value $1932 S17.56 $16.07 hlarket Price 8:11.75 $28,25 $25.38 Of her I)ata:
it" turn on Equity 19f/i 19l'< 16x ,
Payout Hatio 51', 54', 63',
1 Operating 1)ata:
Etnployes 9.357 9,669 10,251 Fuel Co-t i c/3111t u i 15:Ut 155.8 169.2 lleat 1(ate flittt'kWh) 9.9so 9,910 9,9 10 Capabihty (51W1 10,267 10,130 10,681
ELECTRIC PRODUCTION' Tlw coinpany genet utes electricity u>ing abundant domestic supplien of tool - including environmen-tally nound low +ulf ur Western cual - and uranium fuels, with sotue peaking nipabihty provided by natural gas and oil. 51ajor power plant constt uction is compl+' for this (entury. Envirotonental protec-tion Contillues to lie H Iof elnost coll *ide!atioli, wItli tuore than $2.r> hillioriinvested in einituninetital controls vince 107IL SERVICE T E R RIT O R Y a
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-f v 7-CUSTOMERS llesidential customers total sonw 1.77 million and represent 30 percent of system sales. Over the past five years, they have steadily increased in number.
Commercial customers total more than If.d.000 and represent 22 percent of system sales. They range from grocery stores to oflice buildings to medical facilities to simill manufacturing facilities.
This segment has led the way in sales growth for the past five years. Uses include heating and cool-ing lighting and pnressing.
Industrial customers total nearly 2.800, represent-ing 44 percent of system sales. This segment re-tains its historic concentration in the auto and steel industiies, but with notable diversification in-cluding corporate headquarters, research and engi-neering, and computer technology facilities.
F OR YOUR CONVENIENCE Investor llelations
Contact:
ltonald J. Giaier (313)237-8030 Shareholder Services
Contact:
llonald J. Gdow3ki (313)237 M739 Detroit Edison 2000 Second Avenue Detroit, hiichigan 48226 Note: All data as ofIke. 31,1991. u. den otheruiw noted.
t year of continued impmvement in financial perfbnnance, continued challenges, contin-
[" ',' ued pmgress toward operational excellence, continued recognition within the industry
- and n sudden July stonn that pmved to be the worst in our 88-year histmy. That,in a nutshell, was 1991 lbr Detmit Edison - a year that, ovendl, hmught lasting positive value for Detmit Edison customers, sharehoklers and employes.
Financially, in 1991 we increased system sales and recorded record revenues, record earnings and increased earnings per share.
Ggww[w We also raised the dividend Ihr the second -W-Gr ~~~~; -
~ ~ ~ -
consecutive year (and a th. ir d strmg;it year. 1991 brought lastingpositive in early 1992), saw the market piice of our stock increase fbr the f,ourth consecutive pggy,yh.gjiigj[y custoiners,
_ __ _ _ i _ - -- --
year and made significant progtvss toward shareho/r/crs anc/ c/ng/ oyes, 8t rengthening our capit al struct ure.
Specifically,in 1991 system sales of 41.0 million megawatthours (MWh) were up 1.3 percent over 40.5 million MWh in 1990; operating revenues of $3.59 billion were up slightly fmm
$3.88 billion in 1990; earnings fbr conunon stock of $535.2 million were up 11.7 percent over
$479.3 million in 1990; and earnings per share of $3.04 were up 11.7 percent over $3.26 in 1990. These financial achievements were made possible by impmved - and in many cases record - perfbrmance in many key operating areas, such as power plant availability and elli-ciency and continued tight cost control across the board, as well as by modest rate increases. ,
These were among the highs fbr the year. Many more are discussed in this report, llut in mid year we rustained a low - a sudden stonn that devastated our service area with near-hurricane-fbree winds, torrential downpours and more than 800 lightning strikes recorded before monitoring equipment itself was knocked out. The result was 680,000 customers -
more than a third of our total - out of service, many fbr as long as a week.
The inability of many customers to reach us by telephone fbilowing the stonn, and the exist-ence of rapid population growth areas with above-average outage frquencies, thistrated many customers, drawing the attention of public oflicials and the news media. We were this-trated too because we had set speed records fbr restoring service following the stonn and aheady had mapped out a comprehensive $125 million reliability improvement pmgram -
including an expanded telephone system. But these improvements had not yet been made when the storm hit. As discussed elsewhere in this report, the impmvement program has since been expanded - with a price tag approaching $200 million - and implementation now is under way, with completion scheduled fbr 1994.
Impmving customer service is but one fbeus of the major changes under way at Detmit Edi-can. Another is the sweeping eflbrts to change the proverbial "em porate cult ure," including a broad efibrt to provide employes with greater involvement and accountability. 'lbward this end in 1991 we eliminated two-thirds of the volumes of General Orders and other rules that have governed company practices in the past -often right down to prescribing every detail and provision fbr every contingency. These volumes of ndes were replaced by fewer than 100 pages of policies that leave interpretation to thejudgment and discretion ofindividuals. The remaining third of the rules will be replaced in 1992.
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We also have revamped phi- F' M losophies and guidelines ihr f s hiring, transfi rring, rewanl- .
ing and terminating "
employes, and revised hun.
dreds of work rules and pay practices.
in 1990 we became one of the ,
first utilities in the country to extend an incentive pay plan, j hased on achievement of sig-nificant corporate and ,
depart mental goals, to cover all non represented employes.
In 1991 management and lo- 3,;:
cal 17 of the International llrotherhood of Electrical Workers, which represents our 600 plus linemen, signed a new contract that included not only new work rules per-
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mitting major efliciencies but, peThaps more signilicant1y, la 0. Gorbordin left, enctutive vi$$$lErnt and thlei finantial officer,
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and John E. Lobbia,g,hairman, s president and shief e xecutive offiter, oiscuss aVreement to develoI) a enhentements to customer communi<ation with Judith Balreff, senior "gidnsharing" prograin to customer representative, enable local 17 members to share financially in their own productivity impmvements.
We are condensing an extensive agenda (br change into an ext remely short tinw period. Ilut the need to reduce costs in the short run - and change the way we go about our business in order to sustain continuous improvement and elliciencies in the long run -is critical. We be-lieve we can't allbrd a more leisurely transition because the automobile industry, the basic economic strength of our service area, is experi icing both increasing fbreign competition and a severe recession. Moreover, the region's anchor city, Detroit, already had severe eco-nomic problems. Iloth of these afli et our business and both will require extraordimu v efibrts, (
both in the community and in our company, to counter their fimmeial impacts.
At the same time, structural changes are occurring in our indust ry -initially in the form of increased cogeneration and independent power production. These developments have been driven both by specific legislative and regulatory proposals and by many large energy users, who themselves have been ihreed by new, ollen ihreiga competition to strive Ihr better pmd.
ucts at lower cost in their own businesses.
Some of those who want to change public laws, however, have advanced pmposals which ig-nore certain laws of physics, economics and basic fbirness. For example, some want to create a new class ofindependent power producers, Exempt Wholesale Generators, exempt fmm the traditional regulation and financing standards u+ which utilities operate. This would 1.o mm m . 53 m -_,om
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bring to the electric utility industiy the infiunous "unlevel playing fiehl" that wei e heard so much about in other industries. Other proposals ignore the rights of utility customers mid the utility's iesponsibilities to them.
Massive change in regulatory policy in other industries, iushed into without proper consid-eration of consequences, has led to concent ration of businesses, higher prices, customer dissatisfaction, business fhilures mul taxpayer bailouts - as witness the savings and loan industry, trucking, airlines, telecommunications and others.
We believe the long term hazards of such changes are far more significant, in terms of pre-serving the long-term health of the industry so critical to serving customers, Ihan any apparent short term profit opportunities. Consequently we havejoined with a numbei af other utilities with similar views to fight this kind of" quick fix" and potentially disastrous legislation. In that eflort we've pointed out to our Senators and Congressmen,"ifit ain't broke, don't break it," as has happened frequently in the industries noted above.
Nevertheless, many industry observers, including ourselves, believe that some fm ther structural change in the industry may come about; in fhet, the Senate passed a nmjor piece oflegislation along this line in February 1992, with the House of Representatis es poised to consider its own version. In this enviromnent we simply must get our own operating house in better order. That's why, even as we oppose many proposals fbr industry change, we are trying to accomplish a generation of our own change in a fbw short years. We believe we are making impressive progress in this efIbrt.
For the inunediate financial future, a rate case settlement under which we have operated since 1989 froze our rates through 1993, except fbr certain pre-authorized increases. During this mora%rium cost savings have inunediately benefited our shareholders, helping to re-store out financial strength. Starting in January 1993, the savings will benefit our custom (rn as well, in the Ibrm of reduced rates, making us a more competitive supplier but lowering earnings in the short term. However, we expect cash flow to remain strong. We be-lieve that a strong cash flow, improved competitive position and a simnger financial condition are the fbundation of shareholder value.
That is our goal. We're working hard at it. And you have our commitment not to let up.
Finally, we noted at the start of this letter that 1991 had both its high points and low points.
One of the highest was being named Electrie Utility of the Year by Electric Light and Paver nmgazine. We are deeply pmud of this award, trimmily because it is a tribute to the hard work, dedication and intelligent oversight of our 9,340 employes and t he thou-sands who preceded them in building Detroit Edison and the tradition of excellence that earned the award. We know that fbr their contributions they have the appreciation of our management, Board of Directors and shareholders.
2[dkqfwlq i [.M N lerry G Garberding John E. l.ohbui 1.xecutne vwe Premlent channmn of the amud. ernident in nd ('hH I l'lOn!K ud ( dfiCOT HDd ('hlt [ b\ttull 4, ( U[WCT I Phruarv 11,1992 I *' ( [!!I[tt { ; i g ;, ,q 14rei A Ps h .+ A t I ! I ('I I l
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Wes nry UPruoted nn&, mteregre don n, j company's fortunes for years to in the electric utility industry, trees were strewn over electric
- come. That's because 1991 u ns a Suddenly,in mid year, the at. wires, houses and streets. De-l year of significant financial suc- tention of the company,its em. spite restoration of service by the cess, positive internal change, playes,its customers an *te company at record speed, many l intensified customer fbcus, grati- regulators was diverted o,. customers, the news media and
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l fying industry recognition - and nature's wrath - a violent storm public officials wondered if De-valuable lessons learned. that underscored the need to troit Edison's senice was as it also was the year of the strengthen and accelerate a good as it should be.
tempest. wide array of customer service improvements already on the Tet, a top performer l The first half of 1991 was posi.
! tive and promising. Despite a company's drawing boards. But adversity ollen brings oppor-i sluggish economy - particularly On , July 7,70 mile an hour tunity. The company responded
! in Southeastern Michigan, an winds, tornadoes, torrential rain aggressively by expanding its i area dominated by the depressed and devastating lightning multi-faceted improvement plan, i automobile industry - Detroit struck Michigan, leaving more even as it further strengthened j than a third of the company's i
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time the year ended. Detroit d, elixnt EdlSon w Strw. .mg to become Edison was well on the way to -- - -- - - -- - - - - - ------ - -
strengthening its distribution a [yggf.jn.g[ggg glgefpjC liflllly in Gll GS])CCl3 system and regammg the stmng _ _ _ _ _ _ _ _ _ . .
public trust it had traditionally -
quyed, ofllS l)USinCSS, Strengthening tlw Core 13ttsinOSS to protect lum er lines. Distri- coordination with police and bution lines are lving up- fire nuthorities dunng emer.
Dettuit Edison is striving to be- graded and additional gencies.
come a best in class electric util- lightuing protection installed.
- Speeding restoration.The ity in all aspects ofits business. Virtually every mile of the company is expanding the Timt means to be among the company's distribution system damage'anessment capabilb nation's best at rutming its basic will be inspected closely to ties ofits computerized Out-business without overly divert- identify specific repairs or im- age Analysis System, which ing the attsntion ofits manage- provements needed. Heat +en- collects infbrmation from cum ment or the irsources ofits sitive infrared photography is tomers and other sources, shareholders to unrelated busi- being used to identify poten- identifies problem areas and nesses. tially troublesome
- hot spots" pnwides data fbr more effec-Every organization in the com- (br repair. Technicians are tive deployment of resources, pany has been charged with testing utility poles for unseen , impniving communication identifying the best perfbrmers decay with ultrasound sen- with customers. The com-anmng all industries nationwide sors, similar to the equipment pany is significantly enhanc-in their particuhir functions, used by physicians to explore ing telephone capabilities in learning from them and adapt- inside the human body. A spe- 1992 with installation of a
'ng better practices as appropii. cial organization was fbrmed $9 million automated tele-ate. The result: a process of to coordinate the overall effort phone system to help handle continuous improvement, lead- to improve reliability, both emergency calls and nor-ing to best-in class operation- v Minimiring the Impact of mal customer business. Some Company managers also learn damage. Electrical circuits 1,300 t nmk lines reachable by assessing their own perfor- are being split in areas of re- through a single toll free 800 mance. Thus the aftermath of cent rapid population growth, telephone number can handle the July 7 storm, fbr example, reducing the number of cus- up to 40,000 customer trouble pnwided a strong impetus fbr tomers affected when circuits calls per hour during emer-accelerating and enhancing the are crippled by lightning gencies, compared with about progtum of service improve- strikes or other occurrences. 2,500 calls praviously. The ments already under way when in all, motv than 100 circuits company's new centralized 24 the stonn struck, with plans fbr are being added, some with hour Customer Telephone expenditures of $200 million switches to test tile feasibility Center is staffed with 38 per-over and above normal mainte- of re routing power when cent more customer represen-nance through 1994. damage occurs. To better pro- tatives than before, providing The following four facets of the teet the public from contact faster and more eflicient per-service enhancement plan will with downed wires, public sonal responses to customer result in improvements that po- safety teams of employes, re- information and service needs.
sition the company for top per- tirees and community volun- Field operations, on the other ihnnance day in and day out as teers have been organized and hand, have been consolidated well as during storms and other trained to guard such haz- along a nervice center concept to emergencies: ards. Also, communication improve senice to customers.
- Preventing damage. Main, channels have been strength-tenance and tree trimming ened for improved contact and schedules have been escalated tat o t t i c a i to s o s E E i99i a sseai steoit
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- , RIDiflNING *Bli$lN155 AS U$llAL.* Careful generation planning dittotes a new era of service for the idle Marypille Power Plant to help meet tvstorners' l electricity dernands in the future. Above rnaintenente journeymon
, ', Nicholas lutos refurbishes a turbine oilpump,
?d' in lu ginning late in }pp2 - all of w hich help avun* South-l e % to coordinate these ser- eastern Michigan of an ad-g" i
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vice centH functions, tie equate supply of electricity at f[ thetu to other critical coin. the lowest possible cost.
l % A. ,_ A/ puny infonnation and data lietroit lOlison elitered 1991 al-1 -i N,: R C% systems, and manage ready atnong the best in-class in
% 4$9% work more ellectively. elliciency of generating electric-l N itv. In heat rate, which relates Q/irlency rollnix j All the diverse ser. e[ect ricity out put to raw energy vices necessary to provide, input and is the basic measure maintam and improve elettric nor i as p tung dechic-i - 1 db, d @. of power plant ediciency, the service to customers - as well as .
company's fossd fueled plants
! restore it when necessary - are and enwy.ndy,is tlu abdit3. to P"" hue a w hen a, ,s needed, hey d Mh mom' dw adon's l represented at each of 15 ser- g gg ; j vice centers throughout South- to dos are can ftdly managed congruction and maintenance W dw M 4 w M W di j eastern Michigan. Through n- adhd& ,it ow to these centers. couomere service Pr"cde"s acar goab and o$c- No a truiute to die design, needs are identified, planned live. , expanded employe t ram- g , pg g l
and satisfied. Mditionally, a " realistic and
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- new computerized work uan- haMnced f"e % dm inm.s gna agement System will be phased- f"C h V" P""" PI ""I DI """i"E '
and fuebprocurement practices Ihe comp un contmued aggres-sive measures to control fuel i
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costa during the year. From 1985 through 1991, while elec- T/le Colnpany enlered 1991 tricity use in Southeastern - -- - - - - - - -
Michigan rose by some 12 per- a/reac/y apnong //;c hesf./n.c/ ass cent and the generalinflation levyl by 2a.9 percent, Detroit in efficiency ofgenerating electricitv.
Edison a fuel costs decreesed by. _ _ _ _ _ _ __ _ n._ _ _ _
more than 24 percent. That re-sulted from:
v Detroit Edison's pioneering cent of the time, up from 87.5 A trueperformer Western coal strategy, which percent in 1990 and above the . ,
brings low-sulfur coal from national average. I.ernu 2, Detroit Ed.tson s only Montana and Wyoming at v Leasing 153 megawatts 01W) operating nuclear power pla(the lower delivered c, ' than from - one-sixth of Detroit Edison's pmdums akut if,rwreent of F-astern states. N ' tpc.ny company s electncity. lt also share - of availabe , apacitv also has led the indstry in at the Ludingtoa Pumped ' "P"*"ts Detroit Ed, son i s blending Western coal- Storage Hydroelectric facility lamesy:ngle mvestment. Be-which has lower emissions to Toledo Edison Co. thm.gh mow knm s umt fuel costs are than most coals - with other 1993 to pwduce more t . n the lowest m the Detroit Edison system, the more Fernu 2 oper. H coals. The company now uses $22 million in n evenues. The ates, the lower the company s about 12 million tons of West- 1,87241W facility is owned total fuel costs.
ern coal a year, or about 63 jointly with Consumers Power percent ofits total coal con- Co. Federal regulations governing sumption We opead n o S.nu ar
- Improved maintenance of ex-e A strategy focusing on use of p we plants, as we'l as the isting power plants rather coal and nuclear fuel, with than building new generating mmpanfs own stig at goais limited reliance on oil, which facilities. fu s fety and other perfor ,
m nee criteria, rrovide addt-can be vo1atile in supp1y and , Installation of a computerized pnce.
tional yardsticks for measuring maintenance management overall plant perfonnance.
r Aggressive management of system m five power plants to fuel purchases, meludms re- Fermi 2 performance continued better coordinate and sched-negotiation and even eat wact ule plant maintenance.
buyouts when appropnate, re-
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- A cooperative effort between sion% latest Systematic Assess-sulting in savings of $22 mil- union and management under hon m 1991 alone. ment of Licen'see Perfonnance.
which maintenance personnel y Conversion of the Greenwood A key reason for the plant,s con-performed some $6 million in Energy Center to burn less ex- tmmng unpmmnent has been a power plant work normally pensive natural gas as well as busmess pl'm identifying spe-performed by contractors.
its original fuel- residual oil. Another tool used to propel th Lsmg natural gas at this [s$ t Im p r t ng company's power plants toward and support functions, phmt saves the company up to best-in-class operation is a con.
$100,000 in fuel and pur- tinuous program of hench-liighlights of 1991 Ferm.i 2 per-chased power coats each day marking - tracking the perfbr- f rmane meluded:
the plant rims, as well as pro- mance of up to 44 other power v Coming within five days of viding greater flexibility. plants nationwide. The process matching the plant's longest Additional steps taken in 1991 measures Detroit Edison perfor. continuous reactor run - 169 to control production c9sts and mance against other plants and days, set in 1989. The near-increase revenues included: seeks to adopt the best methods record 1991 rtm of 164 days
'r Continuous and effective of the leaders to improve plant ended in mid-December when plant maintenance to keep the operations and reduce mainte- the plant shut down for a company's fossil-fueled plants nance costs. transfonner replacement.
available a record 90.4 per-
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THE DEffolf EDISON 1991 #ANUAL REPCRi
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STRENGTHENING THE CORE BU$lNESS. Fermi 2 performance was improved in i991 in on award-winning project to replace some 60,000
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,e condenser tubes. Checking tolerances on new titanium tubes with a contractor employe is John O'Donnell, project field engineer.
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refueling outage - was 54.6 The issue of radioactive waste pt ^ cent, and in 1990 - when di-posal renmins politically there was no refueling stop- alive and still unrenolved. Three g{ , ,.; page - 77.4 percent. states that historically have ac.
3 + lleplacing some 60,000 tubes cepted low level waste from in the condenser on time and Shchipm South Carolina, Ne-v Setting two monthly w
% under budget. The massive vada and % ashington - con-power generation records.
project earned first place hon. tinue to refuse stupments.
v ileducing refueling outage Alichigan, which had ben des-ors m a top hiichigan Society duratwn to 73 days, com' ignated the first -host state" fbr of Professional Engineers com.
pared with 102 days m 1989. a seven-state Slidwestern low-petition, received interna.
The third refueling outage . tional recognition from level waste-disposal coalition, starting in September 1992 is was ejected from the group lbr Japtefs nuclear power inJus.
expected to require only try and now is an industrs lack of progress in finding a about 50 days. ~
waste-repository site. The issue stimdard.
v Achieving a capacity factor- , Placing among the nation's i" still awaiting final determi-electncity produced as a per- best nuclear plants in overall nation in the courts. 51ean-centage of total capacity ,of protection of workers from while the Fermi 2 plant has 66., percent despite the ,,J- sulh,eient capacity to store its radiation.
day refueling outage. T he own low-level waste materials plant's capacity fhetor in ihr about five years 1989, which included the first
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Electric system sales n'se Despite tneprolonged national Despite the prolonged national _ _ - _ _ - - - . _ _ --
economic downturn - mnplified gggyy9,y;jg gggyyyjg,y.yy, gjpgjy.j(jjy ggjgg locally m, the automotive and -
steel industries - electricity sales ~~~~~~~.
have continued to merence. ll(IUe Callil!! lied to 511C1'eaSC,
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1991 system sales totaled 41.0 hillion kilowatthours (kWh h up 1.3 percent fmm 40.5 billion The financial community took whi-h will reduce annual inter-kWh in 1990. The increase re- note of this 1991 perfbrmance: est costs another estimated flected modest growth in the r Moodv9 Investors Service up. $7 million.
commercial sector, as well a" graddl ratings on the com-growth in air conditioning use in pany's general and refunding HedeUning " Business homes and businesses during a mortgage londs, pollution con- as Usual" hotter than-normal summer. trol revenue bonds and pre-System sales topped those for " Business as usual" was sus-24
$wy 490 in each of the last three ferred and prefe ence stock, while Fitch Investors Service pended for Detroit Edison with
- tiths of 1991, increased ratings on general the rate case settlement reached j w monthly record peaks were and refunding mortgage londs in 1988 with the Michigan Pub-lic Service Commission and in-in May, June, July, Septem- and preferred and preference
%,M s and October, while a record r,tock, tervenors.
- jlp gh for a Saturday was set in v Energy Performance lleview Five rate increases ihr Fenni 2 s 'uly. The highest demand dur- ranked the company the most were phased in during the settle-
, ing the year was recorded on prontable electric utility in the ment period, with the latest -
August 29 at 8,980 MW,just 1,7 country in earnings relative to $102.5 million, or 3.3 percent (br percent short of the all-time peak total sales, the average residential customer of 9,133 MW on August 2,1988, v The Wall Street Transcript - efli etive Jan.1,1992.
The company maintains a total praised the company (br im. Itedefining " business as usual" ekttric generating capability of prming shareholder value, also applies to regtdetion:
10,267 MW which, through care- based on a survey of money
- Proposed changes to the Pub-fulintegrated resouru planning managers and security ana- lic Utility llolaing Company discussed later in this report- lysts. Act (PUllCA) of 1935 woulil will ensure that customers' elec- An w sive program to lower loosen federal regulations af-tncity requirements are met the company's interest costs con- fieting independent power pro-without the need for costly new tinued in 1991, with optional ducers. The changes would power plants. Imnd redemptions and allow essentially unregulated
"'Gnancings pnxlucing more electricity producers to com-Ean.'ngs rise pete with regulated electric than $45 million in annual sav.
The proof of success in strength- ings. Taking advantage of a drop utilities. Various eilbrts to-ening the core business, of in interest rates of as much r.s 5 ward PUllCA change are con-course, lies in the bottom line. percentage points, the company tinuing in 1992.
1991 earnings for common stock redeemed and refinanced some r Proposals for transmission ac-totaled $535.2 million, an all- $159.2 million in securities and cess would allow ir. dependent time record and up from $479.3 redeemed early an additional power generators to use exist-million in 1990. Earnings per $397.5 million in securities. In ing utility transmission net-share of common stock were 1991, total interest expense on works at costs subsidized by
$3.64, up nearly 12 percent from outstanding debt was $437.3 utility customers, allowing the
$3.26 per share in 1990. million, down 7 percent from independent producers to
$472A million in 1990. Addi- serve only the most profitable tianal refinancings and redemp- large customers if they wish.
tions are planned for 1992, THE D t' E t O a r t r l S O N 1991 ANNUAL ttPORI
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MEETING OUR RESPONSIBlUTIES. In one of many sompany efforts to serve the (0
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community,dy Jim Carmo concern for education and the envsre>nment are mined by ma and Detroit Edison's safety mascot tovie the Lightning Bug,gician y.
Q dazzling your gsters from Detroit's Lodge Elementary School.
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M Innorafire planning Detroit Edison's integrat d re-
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(1 future no longer is ^ Gen ratien planning options t -----.J .
- business as usual."
nelude rentartmg fbur gener-With growth in elec-
- tiicity demand .n Southeastern ating units taken out of a mee Mich'igan expected to be modest and held m reserve. The first q
of these, the Marysville Power
- probably between 1.0 and 1.5 Pl nt south of Port Iluron, Detroit Edison is one of the percent annually through 2006 -
industry's strongest voices in the need (br additional generat-ing resources will not be evident ff,i '{'h[,'[g "((hr g
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% ashingt<n. and 1,ansing and Conners Creek, River Rouge plays a key role yvith 40 other until early m the next century.
But with high construction costs, Unit 1 and St. Clair Unit 5 -
electric utilities m the Electric are expected to re-enter ser-Heliability Council, which is ir1 creasing environmental con-siderations and the company s vi - s needed to maintain ad-workm, g to ensure fair an-l equate reserves. Economical responsible legislation and ongoing ellbrts to reduce the cost bulk power transactions pro-regulation, of debt, new approaches are needed to ensure that customers, vide another option, through Michigan Electric Coordin'ated future needs are met without System interconnections with undue costs.
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ties with Ontario Hydro in - ThC " cmp /Oye O[/hC [N/UTC" Wl/[ be a canada. cenenaion planning - -~-- - - - - - -- - - - - -
options represent about 1,100 MW m, capacity that other-Icam player with heller shills and, wise would have to be pnr -
vided through new power lHOSl UHpOIYaHl[% Feale/f/WM/H /0 ad, plant construction.
- Demand-side management options, under which custom.
- Management training pm- The company installed its first #
ers are given price incentives grams have switched from a environmental control eiptip. ,
to reduce or revise their use, task fbeus to a results orienta- ment at its Trenton Channel include interruptible service tion. One series of courses pro- Pmver Plant in 1926 and in the for water henting, air condi. vides training in fbur key last two decades olone has in-tioning, other interruptible "best-in-class" areas - cost re- vi sted more than $2.5 billion in options ihr large industrial duction, market management, environmental contnils to pro-customers, and encouraging leadership and communica- teet the air, land and water.
use of energy-ellicient lighting tion. The company blends Western and appliances. These options v Intenml communication has low-sulfur coal with other coals could reduce peak demand by '
been enhancea ;th new pro- to obtain an optimum balance some 600 MW, cesses lbr (ommunication that among environmental protec-stress face-to-face discussion, tion, fuel cost and plant elli-Keeping oltr House as well as take-home video ciency Detroit Edison has led in Order C"*""""* "f t h"""'P""is t h" i"d"*t'7 ""d"""H F i" d"*
m<mthly news and feature oping the technology and sys-llecoming a best-in-class electric television program. tems to burn the low-sulfur utility means redirecting the Changes such as these will help Western coal in boilers origi.
ways employes approach their make Detroit Edison's"employe nally designed ihr coals with a jobs, view the company and its of the future" a team player with different consistency - generally customers, and perform - better skills and, most impor. higher-sulfur and higher-cost changes in the corporation's cul- tantly, greater freedom to act. Eastern coals. The 1,280-MW ture necessary for success in a Ilelle River Power Plant burns competitive environment. Meeting our 100-percent Wertern coal. Tests The company is encouraging Responsibilities ""' ""d" *"Y "t """"I .
U"'r employes to deselop a plants to detennme the maxi-
"workstvle" for the 1990s and With the many changes it has mum low-selfur Western coal beyondIn the following ways: made and the challenges it blend.
- A set of principles was estab. faces, Detroit Edison still recog. Use of low-sulfur coal has been lished to guide hehmior and nizes and meets its responsibili- the primary contributor to De-perfbrmance. These " shared ties to the communities it serves. troit Edison's reduction of sulfur beliefs" guide employes in The company is a leader in pro- dioxide emissions by some 60 teamwork, communications, tecting the envimnment and aid- percent since 1975, even as its benchmarking and striving ing h> cal ellbrts in education, fbssil-fuel power plants pro-for continuous improvements. public safety and human ser- duced nearly 20 percent more vices. electricity. The company's emis-v General policies and practices sions reduction earned a 1991 rephtee vohunes of rules.This - -
is intended to move decision A Mnn Ennnnymental Achievemeryt making down in organiza- For an electric utility that annu- Award in um Natmnal Envimn-tions, encouraging employes ally fuels its plants with nearly *"",tal Award Council's Search for Success. The council repre-to make more of their own de- 20 million tons of coal, protect-ing the environment is a top pri-unts 28 nationa! environmental cisions and be held account-
'ncluding the Al-able for them. ority at Detroit Edison, as it has ""M""I'"l'""*'
been for more than 60 years. liance to have E,urgy, t he m u noa m BAE m i mom mon
_ - R
- O P l R A LI O N $ R f V'l l W ,
National llesources Defense < Presentation to some 17,000 ployed and people with disabili-Council and the Sierra Club. students of an EnviroMagic ties who cannot pay their en-More than wcognition, the Show, which uses magic tricks ergy hills. Customers, solicited to demonst rate environmental by the company, contributed c.ompany's ensironmental efTorts nearly a half md, hon dollars to nw varned Dett mt Edison an pniblems-ee .iable position relative to Detroit E,dison+s commitment to TilAh'+ while Detroit Edison education goes beyond the env . pledged up to $800,000 m.
1990 amendmt ras to the federal Clean Air Act.The Michigan ronment, however, The com. matching funds m 1991, and do-pany maintains (brmal nated another $200,000 to help Congressional Delegation, recog-partnerships with 28 schools in meet t he energy needs of shel-nizing that the state's utilities already had reduced sulfur diox- Southeastern Michigan, through ters for the homeless rhe com-which employe volunteers share an ide emissions dramatically, helped ensure that the finalleg- their knowledge and skills. De. llIlrly also leg 2m to use itsght ideas islation reflected this pnigress, troit Edison specialists tutor at. myujed to 1.8 milhon customers Utilities in nearby states which risk students and participate in W.i their electne hills, to help have not matched this progress job shadowing and mentming, non-pmlit agencies raise money.
now are playing catch-up. De- while the company contributes Meanwhile, Detroit Edison was troit Edisod already is in full materials and conducts tours or honored for working with a com-compliance with Phase I sulfur- its facilities. Together, Detroit munityjoh-placement and dioxide provisions of the amend. Edison and the schools also par- training group in the Downriver ments, ellective in 1995, and is ticipate in a variety of commu. mea southwest of Detroit m the close to compliance with Phase nity activities. lu,nng of nine low ii come 11 sulfur dioxide provisions To help middle-school young. women and minorities. The pm-which go into efTect five years sters gain increased apprecia, gnun gave the candidates on-later. tion of ekctrical safety, Detroit the job training as assistant Imking to the future Detroit Edison gives live andiideotaped power plant operators. All sue-presentations to some 35,000 ceeded mid now are part of the Edison is active in the class-rooms of Southeastern Michigan students ar nually, imparting company a thll-time work force.
to help youngsters gain a lessons that one day could save Thy program parned the 1991 healthy respect for the environ- their lives. Since 1975, more Iphs n ElectneInstitute Award than 350,000 children have par. for Outstanding Aeluevement m ment and learn how to help keep it clean, ticipated in the company's Afh,rmative Action.
Environmental education ellbrts scluml safety programs.
hv Detroit Edison and the De- HelP has aw, ed troit Ediaen Foundation in 1991 About this AnnualReport included: The current recession has made This report has discussed the v Awarding grants to teachers life more difheult ihr thousands to encourage development of of people m Southeastern Mie:hi-s n voit Edimn is hildha both customer and shareholder classroom projects promotmg gan. As part ofits ellbrt to ease Mw hv sticking to and irnproe-environmental awareness. tius diGiculty, the Detroit Edi-n i Participation in forestry pro- son Foundatmn m 1991 contrib- gggpg,.chsM
,,gg, , ,gm g,pggjf, Misg grams and tree plantings by uted more than $2 imlh,on to h b orda and meeting its nearly 19,000 elementary stu. community service agencies, community responsihdities.
dents as part of National Ar. much ofit m grants matchmg y ,, ,ddabt6 swecuem bor Week observances. employe contributmne The 1 oundat, m n is funded totally by
& ph the challenges and the v Development of an environ- pmbbe being addressed ag-mental poster contest to begin Detrmt Edison. gn ssiwl Colh etinly, these de-in 1992 for elementary school The company mereased its sup- n,lopments represent the broad s dents, designed to generate port for The Heat and Warmth spectrum ofchange voar com-greater awareness of the im- Fund (THAW), a non profit pony is undergoing'to in,roce portance of protecting the en- group of community agencies' the value it provides in the years vironment. businesses and churches that to come.
helps the elderly, the unem-m mwn imon BER n i muu mon
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s uring thepast five closingprice m 24 years.
years, Detroit Edison The company willfile a new mie case J lias impmvbd earnings by mid-1992, in accordance with a -
fin qublity arid quantity, made solid Michigan Public Service Commission;
- rbductions ori the cost side, simngly order; and anticipates, for the long; impmusdbash flow anddecreased term, continued increasesin both '
llls debt-tolequity; ratio, customer and shareholder value.
i:This strengthening ofthe company's 1991 performance earned recognitionJ
[ financial coddition is the result of - (mm manyindustry observers, k sikmificant expense reduction efforts includingselection ofthe company \
?dided by incredsed system sales. As as Electric Utility ofthe Yearby (the companj approaches the end ofa Electric Light andPower
,)five; year rate momtbrium, it is about magazinek fo mdhe a transition' to what may be Jmore trbditionalrate regulation, CO N iE N T S.
gkThisprocessis expectid topass vinancial Review 1s;
]hbknetits Efloweroperating costs };9,Q,*,'y*g,*L"[L"'"P*""ihilitYl ;g
[tdinstomersNAheform bf Ineport ofIsdependent Accountants -
$185 owerthtesi
- p;,,,c;,3 gtyg,,,,1, ,13 \
miThe compxtyl increased the dividend s - - . -
. Nutes to the Fm. .ancial Statements e 24i-
~~
nJ1991forthe tcf - =
second consecutive'
~ Management's Discussion and Analysis L 35j ,
jycarito an indledtsd annualrate of
-Comparative Results of Operations - 140i
]l~C :($L88; arid early in?!M2 increased it.
'~" ' '
~ '
StatisticalReview 42' Jagairito an indicated annualrate: --
s.< , m. . ,
- Corporate Data 44 z fof$L98l s( ., '
- l ' Board of Directors :455 Corkmon stock trached a blbsing:
- 46Y, Board ofDirectors - Committees i . ,.high of$35,in 1991, the highest; -
6~ : ,
Lomeers -asJ
r ,
, ,s a ; ; 4- ei y : A s t
+ .
V -
-} Earnings /R6venuesi - 19 91.' F t N A N C I N G M991 earnings forcommoni < Type of . Gmsa -
i stchk totaled a record $535.2 L Security and - Amount - Interest imillion on operating rev- Month Sohl (Millions) Rate
{cnues of $3.59 billion,up Pollution Contml Bonds
- from 1990 earnmgs of $479.3 May $ 25.9- 6.95M
- million on slightlylower rev.
ien'ues of $3.58 billion; Earn. May 32.8 7.000%
- irigs per aliariwere $3.64, up! alune 37.6 6.900 %
/nearly 12 percent from $3.26_ - September 4L5 6.950%
l in 1990, with an average; December ,
98.4 6.875 %
- 0146,945,932 shares outsthnd . : Total Financing - $ 236.2
&ing, compared with" -
146,888,809 shares in 1990. .*. Refinancing tax.cxempt securitics Earnini;s per share of $3.64 ifor 199_1 represent'a dramatic-M A R K ET*IO B OO K R ATIO
~
- ncovery from 1988,when
l write-offs ofcertain Fermi 2 .
Ecosts resultedin aloss. While :
J shareholders approved an in-5 : crease in the number of auf f thorized common sharesin .
8 u 31991 from 160 million to 400;
" Emillion to increase the .t %.mJ.%~44%m y s u. .<j@i my pm yj'f'p'ii2
, fcompany'd flexibility,it has ' "'4 4#- '. c C"
~ L'- .M '.L.4 @/' '
' ~
s Jbeen more than five years .' - :
'" ~~~
ysince the cornpany sctually; 1.z -
l thadissued significant mim - . - 'L
'.. ~' '
- bers of neW shares" m ,
- l hIn 1991, tha dividend on g. .. i '
' - ?
a tDetmit Edison cunimon stocki
~ twhidt ariindiedtedi fannualrate'of $1.88, up 10)
? cents per share fmm $1.78in : -
. L1990iThis'was the second n ,
4104ent dividend increase ini -
ias"many years, followed by Stock Performance ! holdees a solid 30-percent re-
!yet'anotherincrease earlyin ? u price plus dividends-
-On Dec. 9,?1991, the ;
,101992 2 hgain 10 cents- to an;
- - for the year. The year-end ,
" pan ' market price-tsbook value.
Tindicaled annual rate 2 :
ac) d i g r ce f_
n Jef $1.98;The company has ![$35, the highest since 1966 ' ratio was 1.80, up from 1.61 yppaid qsarterly dividends con- - and nearly triple the highest
- I9#
septively for_83 years * ^close 10 years earlier.The
. performance offered share-
}.
. THE Dtitolic;r Dt$0N W 19 91_' A N N U M R f f 0 4 7
, x 1 s_ ,3 ff3 , _ _ _ _ _ , _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
,,,,._.. _._. _ _ . . _ . . , - . . . . _ . . . _ . _ - . _ . . _ . _ _ _ _ . _ . _ _ _ . - ~ _
I w
i
. Common Equity 9.0 percent in 1988 to 8.0 11.513 billion kWh last year, percent in 1993. It was 9.1 while commercial salesin .
~ , Common Shareholders' eq.- percent for 1991. creaaed by 2.1 percent, reach--
2 mty was 38.4 percent of total ing 8.873 billion kWh, -
i, capitalization', up from 32.8 System Sales- compared with 8.688 billion -
percent a year earher.The k% 1ast year.
System sales in 1991 reached
' dmprovement is due largely 41.049 billion kilowatthours Industrial sales dipped 2.4
.to the company's continuing '
-(kWh), up 1.3 pemnt fmm . percent to 18.262 billion kWh s ~. actions to reduce debt. In m 1991, down from 18.707 ' .
31991, some $559 million in . 40.504 billion kWh in 1990.-
Theincrease was led by sales billion kWh in 1990. The de- 7; securities were redeemed, .
- to residential and comrner, cline was led by steel (down -
iearly, $150 million of which ,
12.9 percent) and automotive.
4 J i have been refunded through cial customers, and attrib.
uted largely to air and automotive-related busi-new financings. In total,'-
nesses (down 4.1 percent), re-more than $680 million in se. - conditioning use during a ficctm, g declining U.S. auto -
7,.
curities were redeemed'dur; . long, hot summer.
8"I"8-P :ing the year. The company's Residential salesincreased ,
. goalis to redtice its average . by 6.2 percent, rising to c embedded' cost of debt from ~ 12.222 billion kWh from
~
y19 91EM A R K ETL P RIC E -P E R S H A R E - -l O 2 l ':
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o f -
i .0&M Expenses : .S E C U R ITI E S ' R E D E E M E D D U R IN G 1.9 91 Operation and maintenance : : Principal '
- J(O&hD expenses totaled $1.8 - Amount - Interest i billion,down 5 percent from1 (Millions) Rate
$1.9 billlon a year earlier' '
Fuel and purchased power Early hdemptions i expense, thelargest single s Genemt & Refunding
' !" component of O&M costs, Mortgage Bonds was reduced some 15'penent- Series EE $ 12.5 11.875 %
of in 1991 due primarily to ~; Series SS 10.0 -10.375.
power plant efliciencies, Series AA 100.0 0.875
. which ranked among the Series 1111. 50.0 10.025
~ bestin the industry. Also Series PP. 70,0 9.875 4
contributing significantly L Series RR 70.0 9.800 Lwerejudicious fuel purt 1985 Series *A 35.0 11.900
- chases, coal contract man " - 1985 Series Il 50.0 11.250 i agement and inventory imanagement. Organizational $397.5 restructuring and attrition' . "
freduced the total dumber at. [ Pollution Contml Bonds employes to 9,357, down 3 ' c16Issuesi $150.2 5.900-12.875 %-
percent from 9,669 last year ;
iand the lowestin more than ,
' Prefernid & Pmference Stock 25 years. Since 1987, the - 9l72;A series -
$ 3.0 inumber ofemployes has been '
! reduced by nen'rly 1,900, or : 9.60% Sen. es - 3.2
?17 percent.L $2.75 Series B ' 2.5 : 11.000 %
' $2.75 Series ' 2.51 11.000-iRates '
$ 11.2 lThe fifth phsse-in andlast j Total Early Redemptions' $558.9 ischeduled rateincrease fori Mandatory Redemptions' 121.7-
' ; Fermi 2 became elTective Tdtal Redemptions : $680.6 ,
f Jani1;1992,following the ' '
f agreementin the company's .
21988 settlement with thel
' ? Michigan Public Service i N Commission and intervenorsi sion of the settlement ends Ratings The finalincrease totaled ~ - Dec. 31,1992. The Expense Luring the year, Moody's In- '
L$102.5 million 2anincrease1 1 Stabilization Procedure,1 Mf 3.3 percent for the average - vestors Service upgraded rat .
~which adjusts forinflation -
pa s
$esidentialcustomer.The '
= sattlement period ends Dec.-
and is expected to provide for-a total of $G4 million in rev-r("
- n -
sni, g I"Vestors Service upgraded .
d Fitch 31,1993, while the Power; enues in 1992lalso expires'at? .
Supply Cost Reuery provi- . the end of1992.
- 8" di ge 1 nd and -
preferred and preference stock.
- sd ostaan iodon mi umum nerons
,,3 . . ' . . ,
- . v c s 9 /, , o v t i. , ; , gr <..qx g i; 3 t .. . g , ,, n c , q si ,, .,,s gi_
-Dhn Detrsit Edlasn Company and subsiditry Companhs : .(
5 e
e
'I i t The consolidated financial statements of The Detroit The board of Directors, through its Audit
- Edieon Company and subsidiary companics have teen Committee consisting solely of outside director , meets -
fprepared by management in conformity with generally with Price Waterhouse, representatives of management taccepted accounting principles, based upon currently = and the internal auditors to review the activities of
- available facts and circumstances and management's each and to discuss accounting, auditing and fmancial-O best estimates and judgments of known conditions. It matters and the carrying out of responsibilities and Lis the responsibility of management to assure the . duties of each groupi Price Waterhouse has full and-.
$ integrity and objectivity of such financial statements free access to meet with the Audit Committee to :
E;(and to assure that these statements fairly report the discuss its audit results and opinions, without manage-
"f^ Company's financial position and the results ofits. ment representatives present, to allow for complete operations.- .
Independence.
,To meet this responsibility, management maintains a
- high standard of record keeping and an effective system
? ofinternal controls; including an extensive program of
- internal audits, veritten administrative policies and ' ' .
- procedures, and programs to assure the selection and t training ofqualified personnel.- Larry G. arberding L These financial statements have been audited by Execuwe Vice President.
' the Company's independent accountants, Price and chief FinancialOfficer (Waterhause, whose report appears on this page, Their audit was conducted in accordance with generally Maccepted auditing standardsJ Such standards include j the evaluation ofinternal accounting controls to .
" establish a batis for developing the scope of the audit, b,,e
%[MQ.
3 as well as such other procedures they deem necessary John E. l.obbla (for expressmg an opinion as to whether the financial chairrnan of the Board. President
' statements are precented fairly, and chief Executive Officer green ei .
uc e m m e t w ! Act onstan s - -
= Price Waterhouse A:
' ~
+
- , 200 RENAISSANCE CENTER 1 g., '
s s DETROIf, MICHIGAN 48243y
' January 31,1992 L O To the Board of Dire 6 tors aLi Shareholders of :
@fThe Detroit _ Edison Conipany
- J LIn 6ur opinion,~the'c6nsolidded financial' statements assurance about whether the fmancial statements are i
, / a'p pearing on pages 19 through 34 of this report : . free of material misstatementJ An audit includes i fprasent fairly, in all material respects, the financial : examining, on a test basis, evidence supporting the L position.of The Detroit Edison Company and its subsid- amounts and disclosures in the financial statementsi .
- L iary companies at December 31,1991 and 1990, and assessing the accounting principles used and'aignifi cant estimates mede by management, and evaluating;
~
? the results of their operations and their cash flows for meach of the three years in the period ended December the overali fmancial statement presentation. ..We 1 131i1991;in conformity with generally accepted ac- - believe that our audits provide a reasonable basis for ;
a counting principles. These financial statements are ' the opinion expressed above; t the responsibility of the Company's management; our f responsib_ility is to express an opinion on these finan.
!cial statements based on our auditsi We conducted our naudits of these statements in accordance with generally accepted auditing standards which require that we fplan and perform the audit 16 obtain reasonable b'^*= g g ~L ,;,_
s l\ '
4 4 THE otractT-tod oN: M a.. anuu.t neroit ne'
.q \' -
- -- m _ _ _ _ _ . _ _ ____________.m__m___ _____________._______._______1___
- - - - - _ - - - - _ _ _ _ _ _ _ _i The Detroit Edisen Company and SubsMimy Companies =
V, +
Year Ended December 31
- -1991 -1990. 1089'
' Operats g Itevenusu q Electric .- System - .
$3,458,871 $3,279,248 $3,171,45G '
- Electric -Interconnection (Note 1): 105.399 269,542 = 202,6Y4 -
, Steam ; 27,267 27,491- _ .51,575, Total Operating Revenuca $3,591,537 $3,570,281 $3,405,601 i
- O)wrating Expenses
, _ Operation .
S 758,467 $ 788,355 $- 820,765 Fuel: .
" 133,498 250,400 _344,814--
? Purchased power (No'e 1)-
' .- Other operation 58P,025 545,476 500,889 -
-: Maintenance - ' 289,670 279,528 291,365 1
Depreciation and amortization 412,253 40G,330 371,682:
s ! Deferred Fermi 2 depreciation and amortization (27,583) -(39,208) - (35,234) ..
W Taxes other than income . 238,674 250,459 225,763 -
- Income taxes - 265,054 209,931 129,626
-_p~
Total Operating Exmmses - $2,659,058 $2,697,271 $2,655 670 i f Operating Income . - $ D32,479 - $ 879,010 $ - 749,935 -
"Other1ncome and Deductiont 1 Allowance for other funds used during construction $ 1,459 :$ - $ - .---
, L Deferred Fermi 2 returni 47,5G0 _ 78,379 107,169-Other income and deductions ; (16,772)1 - (7,329) 675 Ineome taxes . _ 6,332 2,304 843 Accretionincomo . __ .
47,298 48,794 ~'60,188:
Income taxes _ disallowed plant costs and accretion income (6.480) (8,198) (17,047):
- Net Other Income and Deductions $ 79,403- $ 113,950 - $ 141.828 4
~ ~
l_ncome Before Interest Charges $1,011,882 $ - 992,960 $ ' 891,763 -
- Interest Charges
- lemg-term debt' '$ ' 437,337 .$ 472,309 - $ . 444,204 "
EAmortization of debt discount, premium and expense 4,467 4,539. 4,308 10therL . .. .
. 4,233- '4,853 - 20,980 L. Allowance for borrowed funds used during construction (credit) - (2,192) (3,260) . '(3,740) 1 Net Interest Charges: $ 443,845 t $ 478,501 $ ; 465,812,j t Net income : , . , . , .
S1 568,037; $ 514,459 $ 425,951 g Preferred and Preference Stock Dividend Requirements = -32,832 - "35,1791 37,018 '
' ? Earnings for Common Stock - 4 8 J 535,205 - $ F479,280 - 1 $ 388,933 ' _
- Common Shares Outstanding - Average 146,945,932i 146,888,809; -146,816,3631 Earnings Per Share > $3.64 $3.26 - . $2.65 =
(
- 7 s
i 4
'(See accompanying Notes b Consolidated Financial Statements.)
e
__ .e
'
- 1I' i 1HE 4 0i f t Ott E D t & Of4- 1991 ANNUAL REPORT u !s _1.___ _ n._ __ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ ___ _ _ _
~
{g \1he Detroir Edison company and subsidiary Companles :
December 31 -
-1991 1991 ASSETS:
i Utility Propertiss -
L Plant in servico .
r : Electric ' $11,859,315 . $11,621,335--
- Steam 62,937 61,773
$11,922,252 - $11,683,1081 1
iless Accumulated depreciation und amort lzation_ (3,439,635) (3,124,219)
$ 4482,817 $ 8,559,889 -
Corr ruction work hi progmsa 75,610: 66,034.-
w Net utility properties > $ 8,558,227 $ 8,624,923 -
3 Pmperty under capitalleases (less accumulated amortiza n L fof $122,917 and $127,372;respectively)> .
$ 187,118 $ 143,596 ^
"W i Nuclear fuel under capital lease (less accumulated amortization
? of $237,005 and $182,254, respectively) - 246,496 284,224 =
0 Net property under capitalleases 8 433,614- $ . 427,820 Total owned and leased properties $ 8,991,841 - $ 9,052,743 :
Other Property and Investments .
, J N:n-utility property - $ ; - 10,103 ; .- $ - .: 9,663; -
linvestments and speciali6nds 32,511' :45,558 )
Nuclear decomminioning trust funds J **102 = 15,689
$- - Gi., /16 - $- 70,910 j
. r ..
1 i CurrentAssets .
- Cash and temporary edsh investments (at cost, approximating market value) - $ :6,841 .$ 145,946 -
Customer accounts receivable and unbilled revenues (less allowance
- for uncollectible accounts of $23,000 and $10,000, respectively), ~ 215,120- 185,934 1 Other accounts receivabler 42,187-
- 33,396 f g Inventories (at average cost), .
L Fuct s . . . , .A 169,055 "176,494 -
c Materials and supplies 7 ; 16rt,716 . - 161,959 t ,
EE< l,Prepayrbents- : 7.598 ~ .8,221 j ,
$. 605,517 ! $ ~ . 711,950 - 4 m- -
e
. .. . ._ 1
- Deferred Debits" ,. ,..
LUnamortized debt expensei '$ l 48,968 ' ~$L 149,094; iAccumulated deferred income taxes ; _193,405 :208,184' sUnrecovered plant costs ' 8,433 = J: 14,561-i 4 3 Fermi 2 phase-iri plans ,.
488,163.. 424,959; ?j 0 Fermi 2 deferred amortirstion 25,383 13,4383
' 10ther? 39,1981 127,486 = s 8 ~ : 803,550 : $ 4 > 737,722 '.
^
- Total $10,463,624 , $10,573,325
. 1 q '
- (See accompanying Notes to Consolidated Financial Statements.) -
t ',.
7' A nno4emon)
E - i... *wwu.i .tvoi, l__.i i ih__.________.___im -
Q ime Detrok Edison Campany and Subeldicry Componiso December 31
'" -1990' 1991 IJABILTITES
- Capitallr.ation ' -
. Common stock $10 par value,400,000,000 and 160,000,000 shares authormd, respectively; 146,983,123 and 146,921,695 shares outstanding, respectively c (398,876 and 460,354 shares, respectively, reserved for conversion of
- preferred stock)1 .
$ 1,469,831 $ _1,469,217 Premium on common stock 553,463 552,985
- Common stock expense -
(48,150) (47,766)-
Raained earnings used in the business - 872,428- 614,016 -
. Total common sharebolders' equity - $ 2.847,572 $ 2,588,452 -
' Cu,Nintive preferred stock - $100 par value,6,741,434 and 9,000,000 shares ,
mLhorized, respectively; 3,137,540 and 3,273,477 shares outstanding.
- respectively (3,539,827 shcres unissued). . .
- Non-redeemable preferred stock 237,343- 238,414-i _
' Redeemable preferred stock .
61,709 _74,073-Cumulative preference stock - $1 par value,30,000,000 sham authorized;
' 2,580,180 and 2,980,180 shams outstanding, respectively (27,419,820 and 27,019,820 shares unissued, respectively) ~
- Non-redeemable preference stock 47,891 47,891-
- Redaemable preference stock ; 6,294 .15,805-Long-term debt : 4,218,264 4,923,999 Total Capitalization- $ 7,419,073 $ 7,888,634 .
..Other Non Current Liabilities -
' Obligations under capitalleases - S_ 170,074- '$ 126,202 i Accumulated rate refunds, with interest 3,861- 4,707:
$ 173,935- $ 130,909 iCurrent Liabilities Short-term horrowings - $ 37,994 $- :-
- Amounta due within one year
, Long-term debt . 319,074. 110,474 Preferred and preference stock' 16,750- 16,750 10bligations under capitalleases 2 -263,540- 301,618 Accounta payable ' .
, 161,915; 1149,449 ~
Property and general taxes - -45,239 56,101?
- . Income taxes ; ' 25,101- 115,570-
- Interest . ,
101,356 108,926- :
i Dividends payable _ - 77,072 -73,962 JPayrolla . 64,730 61,018
' Fermi 2 refuci g outage' 9,002 . 20,000.~
'57,142 :74,364 -
"Other '._ - 8 1,178,915 $ - 988,232 -
! Deferred Credits -. .
VAccumulated deferred income taxes - $ 1,122,430 $ 1,133,869 -
0 Accumulated deferred investment tax credits . L 390,201 376,743:
79,070 54,938
.dOther
$ 1,691,701 $ 1,565,550 j Commitmer.ts and Contingencies (Notes 2,4,10,12 and 13)
$10,463,624 - ' $10,573,325 -
Total]
<7
((See accompanying Notes to Consolidated Financial Statements.)
twe 'ottaca tonon E ies ANNunt ateost L_ _ _ = _: = s _ __-_- _ - _-__ ___-- - _ _ - _ - _
~
f the Detroit Ennen ceQNy and $ubMery compentes :
d", ,
Y, car Ended December 31 -
-1991 1990 1989 TOperatingActivities Net income - ;
$ 568,037 $ 514,459 I $ 425;9511
' Adjustments to meoncile net income to net cash from onerating activities;
?Accationincome 1 (47,298)- (48,794) (50,188)
. Depreciation and amortization ' .
412,253 406,330 371,682-
? Deferred Fermi 2 depreciation, amortization and return (75,149) (117,587) (142,403)
' Deferred income taxes and investment 'ax credit - net 116,778 100,453 - 86,516' 4 Fermi 2 refueling outage-net (10,998)- 20,000 -
, = Sale of accounts receivable and unbilled revenues - - 200,000 -
.Other. -
34,241 29,538 -(713)-
2 Changes in current assets and liabilities:
Customer accounts receivable and unbilled revenues (29,186) 11,205 (30,457);
Other accounta receivable - (8,791) 25,233_ _( 27,103)-
Inventories ' . .. . . . ,
6,006 (4,004) 59,003 MPSC-ordered refunds, with interest - - (10,239)-
Accounts payableJ ' 8,773 (73,014) .34,829-Taxes payable ; (1,595) 21,972 ~ . l489 g: . Interest payable . (7,570) 2,951 3,597 Other ' (13,451) 34,676 (4,829) -
Net cash imm operating activities $ 952,110 $ 923,418 $ 916,135 q iInvesting Activities <
t Plant and equipment expenditures - $(272,121) $(230,20D , $(242,973)" '
LPurchase from Cooperative - Fermi 2 (a) L - (2,507) 7 --
L Sale of nuclear fuel - 31,846; .-
- Changes in'_ current assets and liabilities -3,137 (15,522). 3,093/
lOther (11,673) (20,735)- (18,836)
O q ~ Net cash used for investing activities - $(280,657) $(237,119) - $(258,716),
- Financing Activities '
Issuance of_ unsecured promissory notes . .
_$ - : $' 50,046
- Sale of general and refunding mortgage bonda (a) .
- - 296,460 ~
E Funds received from Trustees:: Installment sales contracts and 4 1 loan agreements 4 , , .. _ . _ . _
- 159,3011 98,679 . 228,265i d Uncrease (doerease)in short-thrm borrowings :37,994- .
.1 1(229,325);
J MRepayment oflong term debtf .
(658,129)i -(332,203) t (679,965)!
' Redemption of preferred and pmference stock ? .
. -(22,500)f (19,500) (16,250)
D. Dividends on common, preferred and prefennce stock ~ .
(305,893)t '(293,391)' (284,024)?
4 COther- (21,331) (9,602) - (10,609) ;
BNet car,h used for financing activiticai $(810,558) - $(556,0171 - $(645,402)
- g. _
1 Net Increase (Decrease) in Cash and Temporary Cash Investments . $(139,105) - ' $ 130,282 - $ L 12,017 !
/ L Cash and Temporary Cash Investments at Beginning of the Period ' ' D 145,946 . 15,664 : 3,647?
, i Cash and Temporary Cash investments at End of the Period - $ t 6,841 -- $ 145,946 : ; $ ? 15,664 : s l b Sup55ementary i Cash Flow Information ? . . .
c J c;Intenst paid (excluding interest capitalized), = $ 445,350: $ 469,372 . $ 453,7391 H
- 141,839-
, L Income taxes paid ; - , 110,359 > 59,541 :
- New capitallease obligations .79 7002 75,055 36,459 2 [ For purposes of the consolidated financial statements, the Company considers investments purchased with a maturity of three months or less to be ;
E temporary cash investments?
< U Excludes the non< ash investing and finarcing eiTects of the Company's February 1990 purrhase of the Fermi 2 ovmership interest of Wolverino -
H Power Supply Cooterative,Inc. through the issuance of $537.1 million ofits General and Refunding Mortgage Bonds.
(See accompanying Notes to Consolidated Financial Statements.) - ' l
, ~
l
- THE[DtitOlf tDISON . 1991 ANNU AL Rf TORY
m . ,, , s - - o ,
>- 1 ,
ti ro ; ; , ,.,,,. ; ,w a y q , -;y- -
no Detroit E6 eon Ccmpany and SubilSory Compenlu
-l- Premium lletnined Common Stock on - Common Earnings
'"' Stock
$10 Par Common Used in the Shares Value Stock Expense - Business B9ance at December 31,1988 ' = 146,783,212 $1,467,882 $551,907 $(47,712) $254,922
, lasuance of common stock on mnversion of convertible cumulativo preferred stocki Sh% series - . - -
76,357 764 594 (30)
- Expenso associated with pmferred and
' preference stock rtxleemed -(556) i Net income . . .
425,951-
~Cashdividendedeclared -
- Common stock - $1.fo per share (246,667)-
Cumulative preferred and preference stock * (30,945)
~ Balance at December 31,1983 - .
146,859,569 $1,468,596 $552,501 $(47,742) 8396,705-lasuance of common stock on conversion of convertible cuuulative preferred stock,-
54% series - .
62,12G 621 484 (24)
- Expense associated with preferred and e preference stock redeemed : (577)
[Netincome: 514,45W
- Cash dividenda declared ~
Common stock - $1.78 per share .
(201,478)
_. _ ; Cumulative preferred and preference stock * - (35,093)
' B:. lance at December 31,1990 ,
146,921,695 $1,469,217 $552,985 $(47,766) L $614,016 l ' Issuance of common stock on conversion of i convertible cumulative preferred stock, 5%% series u. .
61,428 614 478 (24)
- Expense associated with.an increase j in authorized number of shares
< of common stock - (360)
L Expenso associated with preferred and xpreference stock redeemed ' -(623)'
? Netincome1. . . - -
568,037-
' Cash dividends declared ,
^ Common stock ; $1.88 per share _
(276,271)-
- Cumulativo preferred and pmference stock *
(32,731)-
1 Bal:nce at Decernber 31,1991: 146,983,123- $1,469,831 1$553AG3 $(48.150) - .$872,428
~
^
1*At established rato for each series. .
s o
-g.-
(See accompanying Notes to Consolidathd Financial Statements.)
IMF DEf toff tbt$QN 19 91 ' ANNU AL a f r Qti
_-_2 2 LL ._:.__-:-_.___.L . _ _2_ - _ : _.--_:.__.____:- L _ ___.____ _ _:_.-_-_-_ _ _ - -__ _ ____ _ __ _ __ _ _ - _ _ - _ _ _ _ _ _ _ _ _ _ _ .
- i % Detroit Mum compMoS&Musii~conseMM
~
' co81 of new property installed, which replaces pmperty
= NOTE retired, is charged to pmperty accounts.
$ IGA 7FICAATACCOUNTINGFOLICIES Deferred Fermi 2 Depreciation and Return- An 1 MPSC-authorized phase-in plan for Fermi 2, which was Lindustry Segment - The Detroit Fdison Company ("Com- efh etive on January 24,1988, provides for gradual rate panf)is a replated public utihty engaged in the gener- increases in tho early years of plant operation rather than a
- ation, purchase, transmission, distribution and sale of one-time substantial rate increase which would be provided -
slectric energy, by conventional atemaking. SFAS No. 92, llegulated
. Regulatlod - The Company is suldect to regulation by the Enterprises - Accounting for Phase-in Plans," permits the i Michigan Public Service Commission ("MPSC) and the capitalization of costa deferred for future recovery under a
- Federal Energy Regulatory Commission ("FERC") with phase-in plan. In accordance with the Fermi 2 rate phase-in
- respect to accounting matten and maintains its accounts in plan, the Company reem ded non-cash income items of .
accordance with Uniform Systems of Accounts prescribed by deferred depreciation ($15.7 million, $25.8 million and $35.2 these agencies. As a regulated entity, the Company meets million in 1991,1990 and 1989, respactively) and deferred L the criteria of Statement of Financial Accounting Standards return ($47.6 million, $78.4 million and $107.2 million in
"("SFAS") No. 71, " Account!ng for the Ethects of Certain Types 1991.1990 and 1989, respectivelyL Deferred depreciation is <
c of Regulation." This accounting standard recognizes the that portion of depreciation expense not covered in current
- ratemaking process which results in differences in the rates. Deferred return is the accrual of carrying charges on
? application of generally accepted accounting principles Fermi 2 costs not covered in current rates. See Note 3.
between replated and non-regulated busineases. Such Deferred Fermi 2 Amortization- The ikcember 1988
/ differences concern mainhr the time at which various items MPSC rate order provides for the Company's February 1990
- enterinto the determination of net income in ordor to follow purchase of Woherine Power Supply Cooperative Inc.'s
- the principle of matching costs and revenuea, See Note 3. (" Cooperative") ownership interest in Fermi 2 for $513
" PrincipletApplied in Consolidation - The Consolidated million to be treated as a regulatory asset with a 19-year
" Financial Statements include the accounts of all subsidiary principal amortization and associated interest of 8't. Since L companies, all of which are wholly-ownedc the straight-line amortization of the regulatory asset exceeds : s the revenues provided for such amortization during the first
. Revenues - The Company records unbilled revenues for ten years of the recovery period, the difference is bemg
'electne and steam heating services provided after cycle deferred on the balance sheet. The Company recorded
- billings through month-end. ' .
. deferred amortization, a non-cash item ofincome, of $11.9
( Property Taxes - The Company accaunts for property . - million and $13.4 million in 1991 and 1990, respectively.
taxes so that such taxes are accrued monthly during the - See Note 3.
- fiscal period of the applicable taxing authority, '
income Taxes - Deferred income taxes are pmvided for
' c ReclassificatlovA ln accordance with FERC accounting timing differences between book and taxable income to the
) requirements, beginning in 1991 interconnection sales are extent authorized by the MPSC,' For federal incomo tax L recorded as electric intercnnnection revenues: _ Previously, purposes, the Company computes depreciation using accelete 1these sales were recorded as a reduction of purchased power ated methods and shorter depreciable lives 21nvestment tax "
Eexpense; Prior year amounts have been reclassified to ~ . credits utilized which relate to utility property are deferred
- conforn) to the current year presentation i and amortized over the estimated composite service life of -
?Prope tp, Depreciation and Amortization, Retirement. the nlated property, Investment tax credits related to Jand Maintenance- Utility properties are recorded at - disallowed Fermi 2 plant costs are recorded in other income f original cost. Ttw annual provision for depreciation is - and dedactions under the flow thmugh method when
- : calculated on the straight-line remaining life method by - utilized.- See Note 6.
3
" applying annual rates approved by the MPSC to the average Allowance for Funds Used During Construction L d
'y of year-beginning and year-ending balances of depreciable ("AFUDC") - AFUDC, a non-operating non-cash item, is :
W property by primary plant accounts.: Provision for deprecia- defined in the FERC Uniform System of Accounts to include -
f tion of Fermi 2 was 2.63% of average depreciable property "the net cost for the period of construction of borrowed funds E for 1991,1990land 1989,'except for $300 million being ' used for construction purposes and a reasonable rate on i C' ' 5 amortized over 10 years commencing in 1989 and other $513 funds when so used." AFUDC involves an accounting
^million being amortized over layears commenemg in 1990- procedure whereby the approximate interest expense and See Note 3 Provision for depreciation of all other utility the cost of other (common, preferred and preference sharem
~
-i
. plant, as a percent of average' depreciable property, was
^
holders' equity) funds applicable to the cost of construction -
c 3.3% for 1991; 1990 and 1989.iln general, the cost of are transferred from the income statement to construction -
yf operties retired in the normai cuana of business is work in progress in the balance sheet. -The cash recovery of uharged to accumulated depreciation Expenditures for AFUDC, as well as other costs of construction, occurs only (maintenance and repairs are charged to expense, and the when completed projects are placed in service and related THE D E T R Oli t itl 5 0 H $991 ANNUAL ttPORT E=a%~ ~ __ - __ _____ --_ ___-__ _ - - __ _ _____ - _ a
4
+
y Edepreciation is authorized to be twovered through customer cial operation on January 23,1988. This unit represents
' rateseThe Company capitalimd AFUDC at 9.65% in 1991, approximately 339 of total assets,10% of total operation -
L1990 and 1989, and maintenance expenses and 11% of summer net rated capability, 4 Accretion Income -In 1988, the Company adopted SFAS i No,90," Regulated Enterprises - Accounting for Abandon- In February 1990, the Company purrhased tho -
i mada ar' Dinal! owr,ntre of Plant Costs,' and recorded - Ceperative's 11.198% Fermi 2 ownership interest for $539.6_ ,
million ($513 million for plant, $23.2 million for nuclear fuel
- _ Yindirect losses for Greenwood Unit No.1, the abandoned and $3.4 million for matenals and supphes and otherb / -
Gwenwood Unit Nos. 2 and 3, and for a portion of Fermi 2 2 as a discount (reduction) of the Company's investment in payment of the purrhase prire, the Company mnde a cash is these unitsJ These net after tax losses, due to discounting. payment of $2.5 milhon and issued $537.1 milbon ofits General and Refunding biortgage Bond ( Pn,or to 1990, the
= total $198 million and such amount will be restored to net W hicame over the penod 1988-1998 us the Company records a Company purchased 100'4 of the Cooperative s Fermi 2 capacity and energy entitlement. Buyback payments to the inca cash return (accretion income) on its investment in Ceperative were $102.4 milhon in 1989.
. these units; The Company recorded $31.2 million, $32.2
&e Note 3 for a discusion of the htPSC's treatment of -
- million and $33.1 million of net after-tax accretion income in (1991,1990 and 1989, respectively. Fermi 2 pmject costs of $4M8 billion (including the pur-s chase of the Cooperative's interest in 19901
' - Capitalization - Discount, Premium and ..
Expense -The discount, premium and expense related to - Licensing, Operation and Decommissioning-The ,
Nuclear Regulatory Commission ("NRC") maintainsjun,edic- ;
4 the insinance oflong-term debt are amortized over the life of
> each issue. The discount, premium and expense related to tion over the licensing, operation and decommissioning of -
idebt redeemed without refunding are written o!T to expense Fenm 2.
L in achrdsmce with hiPSC regulations. Capital stock _ During 1991,1990, and 1989, Penn' 2 has been available I r 878 tem power generation 73.97,82.9% and 63.7% of the :
l premium a>l expense related to redeemed preferred and x preference stock are written off against retained earnings , time, respectively. The plant's capacity factor (measured by
- used in the business..
the amount of power pmduced as compared to full power -
capability) was 66.7%,77.4% and 54.6%, respectively, during
( Unrecovered Plant Costs- Amortization of unrecovered these same periods.
, plant costs mmmences when recovery of such costs i* The hfPSC regulates the mcovery of costs of decommi "authonzed by accountmg and ratemaking orders of the 1 sioning nuclear power planta. A January 1987 htPSC oroer t htPSC. No return on investment is provided for unrecov* uuthorized the establishment of a $100 million External '
femd plant costs. The Company is amortizing costs of $71.3 Trust Fund (in 1987 dollars) to finance the decommissioning .
nulhon associated with the abandoned Greenwood Unit Nos- of Fermi 2. The order appmves a decommissioning sur-42and 3 over the period 1983-1993. Tho unamortized chargo on customer bills under which the Company ir J balances at December 31,1999 and 1990 were $8.4 million collect ng approximately $3 million annually l Effecthe in -
[and $14.6 milhon, msputively.
. July 1990, an NRC rule requires duommissioning funding-T Fermi 2 Refueling Outages -The Company recognizes based upon a site specific estimate er a predetermined NRC.
Athe' cost of Fermi 2 refueling outages ovar perioda in which formula, Using the NBC's formula, the Company estimates J related revenues are recognized. Under this procedure, the that the cost of decommissioning Fenni 2 is $192 million (in ;
Company ncords a pmvision for incremental costa antici. 1991 dollarsk Although the currently authorized surcharge
- pated to be incurred during the next scheduled Fermi 2 does not provide adequate ftmding under the new NRC rule,
- refueling outage; ~ the Company believes increases in decommissioning costs will eventually be substantially recovemi in rates charged to E IAases-Ses Notild.e customers. _
fEmployed Retirement Plan and Other Postretirement . Nuclear Fuel Disposal Costs - The Company has a
- Benefits- See Note 13.
contract with the United States Department of Energy -
, . f' DOE *) for the future storage and disposal of spent nuclear ~ -
fuel fmm Fermi 2. Under the terms of the contract, the 4
t Compar y makes quarterly payments to the DOE based upon l NOTE a current fee of 1 mill per kilowatthour applied to the Fermi
- 2 electricity generated and sold. The spent nuclear fuel .
J ?fEJiMffg & disposal cost is included as a component of the Company's W nuclear fuel expense. The DOE has publicly stated that it ~
t General- Fermi 2, a nuc? ear generating unit having a will be unable te store spent nuclear fuel at a pennanent
- design electrical rating of 1,093 megawatte, began commer- repository until 2010. However, the DOE is pursuing interim storage options. The Compimy estimates that existing temporary storage capacity at Fermi 2 will be suflicient until the year 2000.
F THE Dt T R O(f L E D tIO N M 1991 ANNUAL REPOti ]
~
' The Detroit Misen Company and subsidiary Companies Insurance -The Company 5 sums Fermi 2 with pmperty through December 31,1992 and (5) provided for a five-year damage insurance pan ide.. .ry Nuclear Mutual Limited moratorium on base rate changes through December 31, i FNMlf), Nuclear Electric Insurance Limited (*NEIL*) and 1993.
American Nuclear Insurers ("ANI"). The NML and NEIL Exceptions to the moratorium were allowed for previously 1 insurance policies provide $500 million of composite primary authorized rate increases (the Fermi 2 phase-in plan) and
[ Lcaverage and $1.250 billion of excess coverage, respectively, for federal income tax law or regulation changes, new rjd 6 ' for decontamination costs, debris removal and repair ancFor rain legislatien and new cogeneration legislation thr.i would replacement of propedy. Under the NML and NEIL policies, increase or decrease costs by $5 million (1988 dollars a@ust-the Company couht be liable for maximum retrospective ed by the Consumer Prico Index, " CPI"> or more annually.
assesaments of up to approximately $19 million per loss, if An erpense stabilization pmcedure, applicable to appmxi.
any one loss should exc*d the accumulated fuads available mately $750 million of Company or ration and maintenance to NML or NEIL. An additional $765 million of excess expenses, permitted rates to be a@usted thmugh 1992 for 4 - coverage is provided by ANI for which the Company pays an the effects ofinflation. The annual revenues pmvided by
' unnual premium and is not liable for retrospective asseas- each surcharge are approximately $27 million, $55 million ments. Accordingly, the combined limits provide total and $64 million for 1990,1991 and 1992, respectively.
property damage insurance of $2315' billion. The Company Set forth below is a summary of the Company's scheduled is also insured by NEIL for replacement power costs associ- rate increases and other rate changes for the period 1988-ated with accidental plant outages.- 1994, excluding surcharges. This summary includes the As required by federallaw, the Company maintains $200 increases authorized as part of the Fermi 2 phase-in plan.
million of public liability insurance for a nuclear incident. .
Further, under the Prico-Andersan Arnendments Act of 1988, Authorized Other ~ htal ,,_
J deferred premium charges of $63 million may be levied Ilanc Rate Rate AnnuaT cumulaine .
Year increases Changea Amounts Amounts against each licensed nuclear facility, but not more than $10 Emillion per year per facility. On December 31,1991, there **#=1 were 115 licensed nuclear fahilitics
.Thus, deferred premium charges m,amount in theofUnited $" States. d 8}3j 8]j ,33o , 8$
the aggregate 1993 .. 39.1 39.1 r>02.1
.approximately $7.2 billion could be levied against all owners 1994 m s.7 m m
' oflicensed nuclear facilities in the event of a nuclear incl- (al tJnder the MPSC's December 19M order, $70A milhon required under dent. Accordingly, public liability for a single nuclear the Fermi e phase-in plan will t included as a cost oraervice
' incident is currently limited to approximately $7.4 billion. component in the detarmination of the rate adjustment in 1994 and beyond, so that all amounta deferred are recovered during the period ending nolater than December 31,1998.
. During the Fermi 2 phase-in period, the Company is b NOTE mcording derermd depreciation and deferred return, non-eash items ofincome, totaling $506.5 million ($488.2 million .
r RATEMA7TERS thmugh 1931 and $18.3 million in 1992), with these deferred b -
. . - amounts amortized to operating expense as the cash recovery
,The Company is subject to th'e general regulatoryj. unsdiction
{ of the MPSC, which, from time to time, issues its orders of the deferred amounts is realized thmugh revenues during '
the years 1993-1998?
pertammg to the Company's conditions of service, rates and The "90 purchase by the Company of the Cooperativ(s recovery of certain costa meluding the costs of generatmg g . facilities, owneral. interest in Fermi 2 ($513 million)is tmated as a -
regulatory asset with a 19-year principal amortization and pl - On December 19,1991, the MPSC directed the Company -
associated interest at 81 The debt incurred in connection
[ to_ file a general rate case by June 3,1992 *Iycause it is m
_the pubhc mterest for the Commtssma to be m a positmn t with this purchase and the associated interest are to be '
excluded f om the calculation of the Company's overall .
q[ / detennme that Detroit Edison a rates on January 1,1994 return on areinvestment. Since the straight line amortlzation
[ just and nasonable, of the regulatory uset emeds the revenues pmvided for .
(j A December 1988 MPSC order approved a settlement such amortization during the first ten years of the recovery
. agreement among the Company, MPSC Staff, Michigan period, the Company is recording deferred amortization, a
( non cash item of income, totaling $67.2 million through
- h. Attorney together withGeneral ("AG a previous April ) and 1986 MPSCother mtervenors, order (1) estab- wbich 1998 The deferred amounts will be amortized to operating lished expense2as the cash recovery is realized thmugh revenues providedafor seven-year rate phase-m plan foratFernu 2,(2)Fenni both direct and indirect disallowances during the years 2000 through 2008.
plant costs, (3) excluded the Company's investment m its 79a During the period January 1989 through December 2003,
- memwatt Greenwood umt from rate base through December the order established (1) a cap on Fenni 2 capital additions
, - 31,1993, (4) suspended the Power Supply Cost Recovery of $25 million per year cumulative, a4usted by the CPI, (2) a
("PER") Clause for the four-year penod January 1,1989 cap on Fermi 2 non-fuel operation and maintenance ex-t f
L g
m omon ,o- sann - mm 4
L
lpenses,' adjusted by the CPI and (3) a capacity factor perfor.
mance standard based on a three-year rollieg average NOTE
- Leommencing in 199L Under the capacity performance g g g g g ,g g p g 7, standard, elfective January 1,1993, a disallowance of net-
' incremental replacement power cost will be imposed for the "" e Company's portion ofjointly-owned utility plant is as amount by which the Fermi 2 three-year rolling average follows:
capacity factor is less than the greater of either the average of the top 50% of.U.S. boiling water reactors or 50%, For a Ludington
- capital investment of $200 million or more, the Company PumPod must obtain prior MPSC appmval to be included in rate
- * "i "' *"F-hage, In-service date 1984-1985 1973 ndnt de *"
- The Con'pany has and believes it will continue to operate e nt (mi Plntmst g(92H $ 9 tmder the terms of the order with no significant adverse Accumulated depaciation (milhons) $ 219.1 $ 6t.0 efTecta es a result of any cost recovery mstrictions contained therein,
- The Omrp av's undivided ownership intereat is 62.7N% in Unit No.1,81194 of the portion of the facilities apphcable to Belle hr Under the order, if nuclear operations at fermi 2 perma, used jointly by the Alle River and St. Clair Power Plants,49.59% in nently ceaar the remam. ing net rate base investment .. certain transmission hnes and at least 709 in facilities used in common J amount shall be removed from rate base af td amortized in with Unit No. 2.
rates, without return, over ten years with such amortization notQ exced $290 million per yet.r, In this event, unamor- Belle River- The Michigan Public Power Agency ("MPPA")
tized amounts of deferred depreciation and deferred return, has an undivided ownership interest in Belle River Unit No.
recorded in the balance sheet under the phase-in plan prior 1 and certain other related facilities. MPPA is entitled to to the removal of Fermi 2 from rate base, will continue to be 18.61% of the capacity and energy of the entire plant and is amortized, with a full return on such unamortized balances, responsible for the same percentage of the plant's operation
. so that all amounts deferred am recovered during the period and maintenance expenses and capital improvements. .The ending no later than December 31,1998. Also, amonization Company is obligated to provide MPPA with backup power
- in rates of the $300 million and $513 million investments in when either unit is out of service.
Fermi 2, shown in the table below, would continue. In 1984, following commercial operation of Belle River
. A summary of the ratemaking treatment of the Com- Unit No.1, the Company began contractual purchases of .
~ pany's Fermi 2 project costs (including the purchase of the 100% of MPPA's capacity and energy entitlement. Such
- Cooperative's interest in 1990) is as follows; punhases continued at 100% through 1990 and were 90%
for 1991, with the amounts declining therenner through renn12 Proj.xt Coats 1994 The cost for the buyback of power is baeed on MPPA's mmm plant related investment, interest costa incurred by MPPA
'In rate base, with recovery and return ~ $3,018 on their original pmject financing plus 2.5%, and certain Amortixed ovee 10 years with no retura (recovery other costs such as depreciation and operation and mainte-tmginnig Anuary 1989) - 300 nance expenses. Buyback payments to MPPA were $71.3
- Amartiaed over 19 ) care, with associated intereat . million, $70.3 million and $58.1 million for 1989,1990 and NEn7f$ytEr Uy in $327 malion 1991, respectively, and are currently estimated at $51,1 e disa%wed in MPsc order or April 1986 and 8700 million, $12.3 milhon and $6.0 million for 1992,1993 and .
I- ~million disallowed in MPSC order of Neen:ber 1988) 1.027 1994, respectively, l- = Total' $4Ma Ludington Pumped Storage - Operation, maintenance and other expenses of the Ludington Pumped Storage Plant
("Ludington") are shared by the Company and Consumers Power Company (" Consumers")in proportion to their respective interesta in the plant. See Note 12.
On February 8,1991 and April 24,1991, the necessary approvals were received from the FERC to lease one-sixth of the Company's Ludington generating capability to The Toledo Edison Company. The lease went into elTect on May 1,1991 and will extend through December 31,1993.
s THE Ofi40ff EDISON 1991 ANNUA 4 RfPORT
~
,," canpenydsurQtgo
+-
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, a ,. .>. :
7 . - (; - .
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a ,1 (p " ,
[ga p, ,-
r
[ ,I i x i - , "
$$5l2,$l l
~
+
- MNOTE[ ^ ' DmPonents ofineme taxes were applicable to the follow-ing
p(MOFACCOUNISRECEHMBLEAND! .--
1881 1990' 2889
@ ?(INBILMDREVENf/ES .
- (Thousands)
[% l L -~ -In Febriiary,1989,' the Comphny entered intoOperating a five year: expene .
.. ~ . .
4 (program for the. sale of $200 million of the Company's t current ' ' $173,s53 $137,020 $ 61,811: ,
M amounts receivable and unbilled revenuest The sale was N f* " d - "'t
"" " P
] [ accomplished by an assignment of an undivided ownemhlp (AF - (1,081) (12,611)) 1(24,181)? s T interest in the Company'8 Customer accounta Weivable'and ' Depreciation and amortization 72,814 76,261 ' 90,456 i w sunbilled revenuesJ At December 31,1991 and 1990, cus. Property taxes (3,822) . (5,308) ! J 3,851 -
^ itomer accounts receivable and unbilled revenues on the Unhilled revenues . :- (10,922); (10,922)l
- Alt ***"" *l"i""* *** - 438 " - 10 s32 <
yJc:m!Co.nso Fermi 2 capitalized labor and -
milh.
ocl.idated Balance Sheet havewithbeen the reduced by $200 reflecting the sale. All costs associated expen e . .
- (1,692) (1,6921 - (1,943) l
@ pmgram are being charged to other operation expense in the indirect con truction coete - (1,288) (1,864) - (1,977) :-
^ ] Consolidated Statement ofIncome,' " s Unwilectibinecante (4,420) 1,084 L (3,422r .
W < - Contributions in aid of =
@ 9 , construction - (3,548)' - ~ (4,952) - (4,115) =
i Fermi 2 refuehng outage .. 3,740 (6,800) : ~ :-i -
- y. 9e W ,'
g n@r ,
Michigan Single Business Tax 6,324 _( 6,324) '
y Shareholder value improvemerit plan ; (2,899) c (2,232) - 6?y nif 7 PSCR property tax refund . 5,563 . .(5,563); ::'
k; INCOME TAXESt coal cetract buymts ' '
((7731- 4,996 ' 1-p ;~my -. . ., . . . - - Other -(806) ;
n RTotalincome tax expense. as a percent'ofincome before tax . : 68,1a2 : ' 2o,771 (3,72D ? 53,48e J t5,093)i g was less than the. statutory ' '
federal income tax rate for the Investment tax credit -net
. Utilized . 36,408 : . J 64,468 y 'J24,892 ( p
{J " e:!following reasons;Q
~'
+
Amortired = (13,3391" - (12,328) m (10,583)1 NM' 23,069 = 52,140 14,3EF gr;<>1 +
g , 4: : Percent ofIncome Before Tax z Total ; 265,054 209,931. 129,62Ch dq '~' s i19911 <1990 -1989- Other income and deductions .
hi8tatutoryincome tax rate 1 :;34.0% ; J34.0% 34.0 1 ' . Cunent1 (5,305) ' (1,566) L L(460)( <
k $ Deferred Ferm12 depreciations " . . c Deferred - net._ :(1,027) :(738)= -(383)c
- (6,332) - 12,304 F
~
h'4 f and returu : - 1. ' (2.111 E(4.0) ' +
(6.8) - .
.: Total . , . (843) s
- f0.1) 1 . (1.7) : f (4.2) - Dinallowed plant costs and E
@#fJInvestment IAFUDC E i tax creditX .
m.?Vw '
H1816 ((2.8) ! i (1.8) t , accretion income . ..
J.
. i.
.!? Ikpreciation; " J '~1 38.3( i4.41 - 5.9 m f CurrentJ - l(20,125);~ (20,08 O ; 4(2,036 @ *
' D@N@ilOtherfnetC. s . SM WO.5)l 10.3)S .- (1.6) v ' Deferred. net x.
) Disallowed plant costsJ '
./ 20,135 2 -120,088 7 "23.9711
.,J abetiveincone tax rated 7 :318% : 29.6% # 25.5% :
r -- '16,591?) ?17,064T-y4 - % '
LAccretionincomei c 16,0614 hhy,
- , . E Alternative minimom tax 3 , /4' Qf J(21,952)?%o C 4
ya s & / Investment tax crediti 19,61 0
- Total ~ - 6.480 '
- (R,400) 8,198 - -1(7,047 ~
},%f,f
.y n ,
- Totalincome taxes J . $265.202 4215,825 - $145,830 -
s d
b) Nh~ [i T s .i n..
' . +,,
m
. , . . 7 .
- In accordance with MPSC requirements, deferred ineome M
~
- 4 s .
1, e n tax accounting was not followed for the borrowed funds)
N , component of AFUDC and indirect construction costs relata +
n" _
'E '
ing to Fermi 2, nor is it followed for interest on nuclear fuel :
M,N[4m ],
= fmancing (see Note'10) and certain other current income tax i
- deductions... . ? .. ,.
~~
.. Wp Q
' In 1985, the MPSC ordered that, for accounting and L ' M
~*.
M(f1l(@;.
~
ratemaking purposes, the accumulated deferred inemnet <
t
.," taxes related to induect construction costs and the borrowed :
2it ~Q^ ~
fimds component of AFUDC for Belle River. Unit No.- 1 nnd 0 LP <
common plant be amethed to income over a five-year per;
%' w* , iod rather than over the life of the plant.=. Such credits to)
'> , income amounted to $12 million for 1990 and $24 mil.lioni d e < ,
' for 1989, b -
,p 1 h.h^l
~i ., -., . . . . .- .,
hN
:
i O
k i The Fermi 2 phase-in plan requires the Company to balances. Commitment fees incurred in 1991 for bank Imes
, ; record additional deferred income tax expense related to of emlit were approximately $0.8 million. The Company (deferred depreciation totaling $33.5 million ($11.8 million in uses bank lines of credit it support the issuance of commer-r : 1988, $9.4 million in 1989, $0.9 million in 1990, $4.2 million cial paper and bank loans. All borrowings are at prevauing lin 1991 and $1.2 million in 1992), with these amounts - money market rates which are below the banks' prime .
amortired to income over the period ending December 31, lending rates.
1998J _ _
The Company has a nuclear fuel financing arrangement The cumulative net amounts ofincome tax timing differ. with Renaissance Energy Company t" Renaissance"), an p ( ences for which deferred taxes have not been provided a' unaffiliated company, Renaissance may issue commercial
' December 31,1991 and 1990 are $2.0 billion and $2.1 billion, paper or borrow frora participating banks on the basis of
' respectively< The tax etTect of these amounts not provided pn miasory r.ates. To the extent the maximum amount of for currently will be recorded when such taxes become funds available to Renaissance (currently $400 million)is
[ ? payable and are recovered from customers. _
not needed by Renaissance to purchase nucleer fuel, such .
Remaining investment tax credit carryforwards of funds may be loaned to the Company for general corporate L
<approximately $30 million were utilized in 1991. purposes pursuant to a separate Loan Agreement. At
- ~ - As authorized by the MPSC, deferred income taxes are December 31,1991, $133.1 million was available to the recorded for tax credits generated under the Alternative Company under such Loan Agreement. See Note 10.
3 Minimum Tax (*AMT*) system created by the federal Tax
[ Reform Act of 1986. The Company has an AMT creditcarryforward of approximately $79 million a L 1199L The AMT credits, which can be carried forward p Eindermitely, can be used to reduce agular tax liabilities NOTE
?1$iTrnY19Y t?c'$$$Standarda. COnih10NSMCKAADNONREDEEMARLE fBoard ("FASB*) issued SFAS No. 96, ." Accounting for Income CUJfUIATIVEPREFERREDAND:
E 2 Taxes,* for which the effective date was deferred to 1993. PREFERENCESMCA -
' JAS No. 96 requires an asset r.nd hability approach for Non redeemable Cumulative Preferred and Preference Stock .
- financ2al accounting and reporting for income taxes. It outstanding at December 31 was
requires the Company to recompute its tax liability at the -
6 ! then current tax rate and adjust the Accumtdated Deferred
. Income Tax asset and liability amounts in the Consolidated [l;5"lf
- Balance Sheet. sin additionat req ~ ires the Company to r differences record additional defermd not previously recogmzedincome taxesthe (includmg for$2.
tempwary '0Non. Redeemable Preferred Stock su convertible series,70,969 '
billion discussed above) and all other existing differences . and 8t,897 shares, respectively Oct; 1967 $ : 7,096 $ 8,190 9m series,499,080 Shares Oct.19'o 49,908 40,908 mfi d that will result in taxable or deductible amounts in future
- 7 m uries,500.000 shares - Mar.19'. . : 50,000 50,000
- [yeamJ the extent that SFAS Noi96deferred such additional mquires income
- asaociated with probable future mvenue from customersc In -
the recognition taxes are 7Q"j of an asset@
- jl ",[.
to t(fQ $$ Q-Non. redeemable preferred CJune 1991; the FASB issued a' proposed statement, " Account- ntock expense .
-(4,6610 14.c84):
t iing for Income Taxes,* which is expected to supersede SPAS TotalNon-Redeemde 01Noc06.1 A final statemeht is ' anticipated in the first quarter Preferma stock 52a7w $238A14..
K ! of 1992 The Company expects that the final statement; f when adoptediwill _not have a material effect on net income. . NowRedeemable Preference Stock . .
P- -
$2.28 series,2,000,000 shares . Dec.1977 $ 2,000 E $ 2,000 M Premium on non redeemable M pwference stock . 48,000 48.000 h
Non-redeemable prefmnce .
n.grg ' stock expense . .
(2,109) (2.109) '
N R UM Total Non Redeemable
.r- ... ,. -
. Preference Stock $ ' 47,891 $ 47,8912
' $HORT4ERMCREDITARTMNGEMENTSAND a lBORROWINGS The Convertible CumulatWe Preferred Stock,5 IfM
- As described bckw, at December 31,1991, the Company had Series, is convertible into Cmamon Stock.- The conversion -
L total short-term credit arrangements of $333,1 million under price was $17.79 per share at December 31,1991. The whfch $38 million was outstanding.. number of shares converted during 1991,1990 and 1989 was :
The Company had bank lines of credit of $200 million all . 10,937,11,060 and 13,592, respectively, -The number of '
. of phich had commitment fees in lieu of compensating >
iTHE DfiROli (Ol5 0N 1991 ANNU At' #E PORI
, i
W CQQ e ,,
y^'
3 h
s i shame of Common Stock mserved for issuance upon conver-
' sion knd the conversion price are subject to further adjust-NOTh
- ment in cenaln events; This Series may be redeemed at any REDEEUABLE CUMULATIVEPREFERRED
- tune in whole or m part at the opt >on of the Company at $100 - jyg pgggggggggg7pgg.
. per share, plus accrued dividends.
' The Company's 9.32% Series,7.68% Series,7,45% Series Redeemable Cumulative Preferred and Preference Stock -
i and 7.36% Series Preferred Stock are redeemable solely at ' outstanding at December 31 was:
p the option of the Company at,a per share redemption price of r; m $101, plus accrued dividends. ..
mte of i The Company's $2.28 Series Preference Stock is redeem- lauance 1991 1990 N able solely at the option of the Company at the stated per _
(m,ar.dd 1 share redemption price of $25.75, plus accrued dividends, : Redeemable Preferred Stuk
- prior to January 15,1993 and $25.25 per share, plus accrued 9.725 .eries,300,000 and W [ dividends, on and after January 15,1993,.
% N In 1991; following shareholder approval, the Company's 93 $ * ,*, g j "I J N' 1878 830
- 835' "
70,000 shares, nspectively Jan.1979 6.000 7,000 i Restated Articles ofIncorporation were amended to increase 9.60% series, 195,250 and
"' : the number of authorized shares of common stock from '
- e. 230,750 sharea, respectively . Oct.1979 19,525 23,075 '
160,000,000 to 400,000,000 and to decrease the number of 8 60* *"i,162,250 and
' *# *~ '
d[mabIe*p"re'i'"
qj. authorized shares of preferred stock from 9,000,000 to ' k fo6,747,484; .. , .. . .. .
he within one year < (0,250) (9.250C
' - Q Apart from MPSC approval and the requirement that Redeemable preferred stock L Common, Prefermd and Preference Stock be sold for at least expense (7918 '(927)!
m par value, there are nolegal rests.ictions on the issuance of Total Redeemable u ndsw $st,m ' $74,073 -
b~ 3 additional authorized shares 'of such stock.
ka t 4 Redeemable Preference Stock
+
' $2.75 series,180,160 and
- , ... 380,t80 sharea, respectively' July 1975 $ .180
- -- $ -' 380 ;
"E $2.75 series B,400,000 and .
l 600,000 shares, respectively - D e 1975 -400 600t
. Premium on redeemable i< preference stock 13,924 23,524-
- Redeemsble preference stock J due within one year (7,500) ' (7,600) ?
Redeemable preference stock .
expense ~( 710) (1,199) '
~
Total Redeemable 4o ' Preference Stock - $ G.294 ' $15,805 -
The following redeemable series of Preferred and Prefer :
ence Stock are entitled to the benefit of sinking funds C (provided that no dividend arrtarages exist) providing foh the annual redemption of shares at stated per share prices,i m , plus accrued dividends:
2i; f[%
b '% . . . . .
Non Cumulative .
-Option to :
. Redeem >
& Annual : Price : : Additional ,
% g Number Per- / Sharea ino D
~
Redeemable Series _ _ ofShares ~ Share Any Year .
N '._)" ., Pnferred Stock h tb 9.72% 30,000 $100 30,000 n 9.60% 1 - 32,500 , ~ . '100 32,500*
Preference Stock
$2.75 : 100,000 '25 100,000 ~
$2.75 Series B 100,000 25 1 100,000
'Not to exceed 220,000 cumulative additional shares.
l
- l
- g. .m einomioison - mi muu meer j i . .
Q'><@ ' ' ~ ' ~'
t 4 -
[e ' {W l;
k, ,
) .
~ ~
q ._ . , , ,. .
. , Toe following numbers of shares wen pun: hared for . -aram3 grimwn yapplicatian L ""
to sinking fund requimmentan 1992 1993 0 00 110 1995 1996 W>57>
y 1
s1991- 1990 1989 - 1994 86 . Hemaining years -225' l
[ Prefernd Stak,9.72% Beries r 00.000 i 30,000.. 30,000 - Tot *3 ' M8 '
m J Pntwr,d Stock,9.60% Series ; , 65,000'. 65.000 , 32,500 a O? Profwence Stack, $2,75 Series . f 200.000 c ;~ 200,000" 200,000 0 Praference Stock, $2.75 Senes B - 200,000 200,000 - 200.000 The Company has a heat purchase contract with Renais<
sance whidi provides for the purchase by Renaissance for d, , On the event that a payment du under requirements of a ' the Company of up to $400 million of nudear fuel, subject to -
i ainking fund for any series ofndeemable Pmferred or the continued availability of funds to Renaissance to pur W Preference Stock is not made, no dividend shall be paid chase such fuel. Title to the nucloar fuelis held by Renaist :;
, g(other than a dividend paid injunior stock) or dedared or sanco, The Company makes quaderly payments under the other distribution made upon any junior stock (Consnon and heat prehase contract based on the consumption of nudear i
@D Preference Stock in the case of Preferred Stock, fueland for theCom-generation of electricity, Renaissanco's invest-s mon Stock in the case of Preference Stock) until such
~ ment in nuclear fuel was $246 millian and $284 million at : '
y' paymentis made.
.. Denmber 31,1991 and 1990, respectively. The decrease in 1 a 4 The followhig series of Preferred and Preference Stock,=; 1991 from 1990 of $38 million includes additions of $17-
^ Which are redeemable pursuant to sinking fund require ' million (purchases of $7 million and capitalized interest of - i 1 ments, may also be redeemed at the option of the Company $10 million) less $55 million for the amortization of nuclear .
.M stated per share redemption prices, plus accrued divi-
' " ~
fuel consumed in 1991i M dendai - Under SFAS No. 71, amortization ofleased assets is modified so that the total ofinterest on the obligation and ( , ;;
- D,cruainr . prior , on and ~ - amortization of the leased asset is equal to the rental 2 '
j bloemable Hsies Frwn ' ' To . , To ' < Aher - p
< expense allowed for ratemaking purposes. For ratemaking ;
- s Prefermi 8t=> ' purposes, the MPSC has treated all leases as operating . '
l 9,72K ' $102.90 ? '14544; 11544 m - In00 < i101544 . $101.00 .101.00 - l !10-1544leases.) Net income is not affected by capitalization ofleases, Hental expenses for both capital and operating leases'.
were $106 million (induding $67 million for nuclear fuel),..
xf35 7 4 j 25.25 . L711540 G75n Ss. ,ies B . i' t m.- 25.25 " 14541: $124 million (including $80 million for nuclear fuel) and .
, $106 million (induding $58 million for nudear fuel) for 1991,}
, " YThe comlEried aggregate annual amounts of redemption 1990 and 1989, respectively.l
. r requirements at December 31,1991 for all series of redeem . 1
@able Preferred and Preference Stock are $17 million, $10 : . W
$ million and $9 million for 1992i1993 and 1994, respectively. - ' '
jand $6.million for each of the years 1995 and 1996,z -
m l NOTE ?
m-ix a .
h LONG TERMDERT hi
" TE? ; The Company a 1924 Mortgage ana Deea of Trust ( Morth gage"), the lien of which covers substantially all of the . y 7 gg+n s
4
& ; Company's properties,'provides for the issuance of additional?
' bonds ~ At December 31,11991, approximately $2.4 billion L
$Futurejninimunilease payments under long-tefm noncan< i principal amount'of Mortgage Bonds could have been issuedh M callable leases, consisting of nuclear fuel ($320 million . 4 on the basis of propedy additions, combined with an earn-1 i icomputed on a projected units of production basis), lake -
E inga. test provision, assuming an interest rate of 8.75% on ? .. :i jyeesels ($66 pillion), locomotives and coal cars ($190 ; any such additional Mortgage BendsJ An additional $563.9i
- million principal amount of Mortgage Bonds could have been n
]n Imillion), office space ($37 million) and computers, vehicles t Wand other equipment ($45 million) at December 31,' 1991 issued on the basis of bond retirements, ,
r Yare as followr ' '
- W pp . ,
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, e , ikHt:0tTRoti E0floN. Ut998 ANNUAL af f 0t f -
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.c ! \ g 1 s ., ' ; .L
g i h meeren r edeen compeny and subewiery compenses e y ,'
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debt outstanding at December 31 was: in, ,,t 1991- 1990:
Y{J - Hate * -
M , ' Jt 11ntercat . (Thousands)
W Rete * - -1991-.. 1990 Unwcured -
"# e (Thousands) Installment Sales
( General'end llefundlng e h"1[2' 12/1/19 - 9S54 8 387,360 . $ 428,460 .
Lp , Ertgage Bonds '
less: Amount due within , ,
a > Series R, due 12/L96J :6 ' % 8 100,000 i : $ .100,000 1 om pn - -IM) (2 'q -
pJ m f Series S,due IW1SS < 6.4 150,000 150,000 7 kW Series T, due 12/1/99 ; ;9 .
75,000 75,C00.
I*"" ^8 * * '"t8-b '* 8 # b '.
! M Series U, due 7/1/00 - ' 9.15 l ~ 75,000 : ' 75,000
$ . 51,210 100,000 i due 2/1594 8/15/10 - 8.40 $. - 94,925;.
i . / Series Vs dus 12/19001 8.15. -200,000 lesc Amount due withm, E
, - Series X, due 6/1901 >
84: -100,000- 100,000 60,000 one par. W)
- .e Series Y, dm 11/1&01 ' 7%- 60,000.- '
$ 49,810 $ 94,ica ;
^ @i J Series Z, dw 1/1593 l 74 100,000 - 100,000 p' #
$ Series AA,due U1104 .
W " ? Series EE, due 12/1&96" 9%-
- 11h -
- 100,000
'15,000: ' Unsecured Pmmissory Notes
$ 993,6M % 987.640'
% L Series Hil, due 7/15/06 ' 10 %i -1 50,000 Variable interent rates -- 8 - J$ 45,000 ,
,J n Series PP,due W1M)B '9%K % 70,000 ' Fixed interest rates.
r Series RR, due IW1598 , f 9.8 , - - o 70,000 due U12/02 1/1&93 9.49 100,000 L 115,000 '
J B, D Seried BS, due S/1597 ! M10% ? 00,000 - 80,000 less: Amount due within 31960 Series B, due 4/1/975 -12%> > 33,500 . ~ 40,150 ~ . one year - _( 30,000) (60,000) p,Si 31985 Series A,due 5/1/92 J11.9 ; . . n 35,000 3 70,000 - $ 100,0E;; "
Y fl985 Serien B, due 6/1/02 -
Q1980 Series A, due 4/15/16 ?
11.25 0%J L 200,000 -
-A . 50,000 J
- 200,000 Total Long-Term Delt - ' 1TJ18,264 ~ $4,923,999
$s1986 Series B, due 8/1$/16 e - 9%T '100.000.- -.100,000 -.
- Welyted average interest rate at December 31,1091 for "ab 4 t 200,000 ; : 200,000 ; - E' empt Revenue Bond Obligations and Unsecured Promlaury'- 4
$ , y1986 /1987 Series Series A, C,due due 2/1W17? 12/15/164 9i < (94 ( 300,0002 300,000 p 3tes, =
=
P 'J1987 Series B, due 4/1597 ? i 8U ? 175,000 L ! 175,000 -
6 y 61987 Serics C,due 4/15/14 - ;9% !
R 225,000 ' 225,000 - Long Term Debt Maturities-In 1992,1993,'1994,1995:
i t1987 Series D, due 8/1&92 : t9% 250,000' 250.000 and 1996, long-term debt maturities consist of $319 million,1 :
" - 1987 Series E, due 8/1596 . - 10Hf 150,000 (150.000 = $308 million, $37 million, $33 million a'nd $287 million,
' 00,000 c1987 Serire F, due 6/15/93' 9% 200,000 - -
r E J1989 Series A, due 7/1/19 i L9%t 0300,00A J 300,0001 "8PCClIV8Ia 7 a J1990 Series A, due 3/31/20, "7.9041 182,0?! ; 388,370 d 7 - 247,416--
%y ' [01990Seri e ,
s0 due3J31/14 1990 Series 7% due 3/31/16;- . 7.9W ' 237,900-e 8.357- - 78,657 82,056- .- . ..
a: Wp ; lese,Unamortised net ' ' NOTE ~
CLN 1 disemmt A . .-- (11,883)i ~ (13,269)[
=<,
i e . in W ?y _ : Amount
, J onena: due within 1 ce5,8ew 138,36c ' COMMIlMEN7 SAND CONTINGENCIES:
qvgg W ,'L.. ' . . . . .- .
~
- $3,154,381 ' -$3,M 8.359s
,. . ~ . . .
MtsYEAemptReNlu$ B$d} l Commitments The Company has entered into purchase L .
- -'..L~ , ; comnutments of approxtmately $458 million 'at December 31e i
^ 1991/The Company has also entered into substantial longi :
W[7 e ' obligationawM. fSecured by corresponding 1 ,
term fuel supply commitments?
O ' ? ?He amounts ding & of General and "
rtgagei' ~ Combustion Engineering, IneMCombustion") has con-1 x * $ Insta11meniSaleh ' structed the Detroit Resource Recovery Facility FFacility") L .
M i Contracts, due 3 m 1 in the City of Detroit.Jne Facility, which began commerciali .
$a
^
@l5,92 v5/1/R2 e u . . ' 8.63. : $ ' 367,410.t $ . 477,235: - - operation in 1989, is fueled by municipal solid waste, and is f g *
, a Less: Unamortized net" -
producing 6 team and electricity, The Company entered into;
? a 20-year Energy Purchase Agreement with Combustiori fori bd ' m e [' Ffade abepoend 1 i with Trustee . (138); (454). c the purchase of steam and electncity from the Facility? On -
"e .
' October 23,' 1991, the parties executed an Amended and L , o h[p g yd'*;one fAmountduewithin years c
. : (810V tv,970f Restated Energy Purchase Agreement fAgreement*) whicht p q _Y5$$1/21" '
. ~ .
- Fass.3sa .s .466,395 ' - Settled BeVeral default i38ues claimed by the Company,k . ' ,<
b< e7
- i ins: Fund 4 on deposit..
'- 6.93' : $ 268,540 i - 8 '
- Under the Agreement, the Company will pun
- hase steam 7
'l thmugh the year 2008 and electricity through June 30,20245 E 1' ; with Trustee K ~ (77,1851 - - As part of the negotiations surrounding the Agreement, the / :
F191,355_$ - : Company will also serve new City of Detroit' electric load.' l
{'g 9
'rhe annual purchase commitment is approximately $19. 3r
- 14 million for 1992 and 1993, $21 million for 1994 and 1995 and L o $23 million for 1996, y < x.e See Note 4 for discussior. tbuyback commitments.
g; N* '
- . THE pt it oit t oisoN . E 1991 ANNU L '# E P O R 'T <
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m-dmtingencies -In September 1986, the AG and the The Company's policy is to fund pension cost calculated p . Michigan Natural Resources Conunission filed a lawsuit under the pmjected unit crmlit actuarial cost method, W against the Company and Consumers as co-owners of provided that this amount is at least equal to the minimum f f Ludington. The Companyis a 49% co o'wner of Ludington. funding requirement of the Employee Retirement Income b Th sait, which alleges vmlations of the Michigan Environ- Security Act of 1974, as amended, and is not greater than I " mental Protection Act and the common law for claimed the maximum amount deductible for federal income tax h aquatic losses, seeks past damages (including interest) of purposes. The Company was operating under the IRS full F qappmximately $148 million and future damages (fmm the funding limitation and, therefore, did not make a contribu-time of the filing of the lawsuit)in the amount of approxi- tion to the Plan in 1989,1990 and 1991, but does expect to 1
mately $89,500 per day (of which 494 would be applicable to make a contribution to the Plan in 1992.
1 the Company). On November 9,1990, the Court granted the Net pension cost included the following components:
Company's motion seeking dismissal of the case. On Novem-ber 28,1990, a claim of appeal was filed by the AG.
- I* 1888 i In 1986, two environmental organitations requested (Th""*and.)
- FERC to withdraw the Ludington license or provide some service cost - benefits earned
- mhigation for fish mortality. In April 1989, Consumers and during ow period $ 18,058 $ 17,886 $ 15.142 the Company were ordered by the FERC to install a tempo- I","jt ok""io
- P"l**"d 65,487 61,950 $9,581 h rary barrier net around the plant to protect fish on an Actual nturn on Plan amets 08o,225) 0 8,150) 0 50,708)
F interim basis until permanent measures could be developed. Net deferral and amoruzation:
Ihrerral of net gain coa)
{ At this time, a net has been in operation for three seasons' d and the companies hav k[ ~ of the permanent solutm,e gnji,7o'njuThized f
- n. The Company isproposed unable to that it beprior utilized as part nice co t tis 4 838 3,4 k determine what the total cost of the permanent measures Amortization of unrenignized b , will be, however, pending a decision by the FERC, the net suet resulting from companica intend to Continue to operate the seasonal net at initial applicauon K507) K507) R5071, an estimated annual cost of $3 million. . -
Net pension cost 8 4,773 $ 3,o68 $ 1/M9 o - In Jamtary 1989, the Emironmental Protection Agency
" fEPA9) issued an administiative order under the Compre- Assumptions used in determining net pension cost are as
. hensive Environmental Response, Compensation and follows:
1 Liability Act ordering the Company and 23 other potentially , 3ggg g p 'i responsible parties ("PRP's") to begin removal activities at -
the Carter Industrials superfund site. On January 27,1992, Dia"u"trat' ' 8 5* 855 85*
{ ; the Company. along'with certain other PRP's, executed a . "
h[ : letter agreeing +o implement the required clean-up ' rI"M" l]"N*((rE "[uI plan anett method 9.5 ' D.5 9.5 b s chosen by the EPA. The Company has recorded $10 million
[ ' as its anticipated cost of the clean-up. .. .
The following table reconciles the funded status of the 4
L in addition to the matters reported herein, the Company. Plan to the liability reconled in the Company's Consolidated is invoh ed in litigation dealing with the numerous aspects of Balance Sheet:
- its business operations. The Company believes that such December 31 -
? litisation and the matters discussed above will not have a
~ ? material effect rm its financial position or results of opera- 1991 1990 tions. . (Thousands) .
1 See Note 2 for a discussion of contingencies related to . Plan assets at fair value, piimarily equity k .c Fermi 2.- - securities $950.000 saas.000 b Ins actuarial present value of benefit k i obligation:
b Accumulated benefit obligation, including k'm'rnrpp~ , vested benefits of $755.515,000 and EMVA n $664.810.000 773.380 680,520 C. .. .. . . . Increase in future compensation levels 120.158 :108,564' iEMPLOYES' RETIREMENT 1LINAND Projected benefit obliga' an 4 ..
893.538 799.084 OTHER POSTRETIREMENTBENEF1TS n=" = ~ t'in ~ " c'v' s ct'a h'"h
,. obligation 56,462 . 45,916
( 1 Employes' Rethement Plan-The Company has a U"','g'd
,p "t ***t nsaung fmm iniual 8,809) m1,316) '
h tru5 teed and non contributory defined benefit retirement Unrecognized net gain (41,222) (22,162)
[ plan fPlan') covering all eligible employes who have Unrecognized prior service cost 14.880- 1rn640
{ completed six months of service, The Plan provides retire- 1.iabiUty recorded as Other Deferred Credits in the Consolidated llalance Sheet $ (16,689) $(11,916 p
- ment benc!its based on the employe's years of benefit semce, average final compensation and age at retirement.
T til DE f tOli EDtSON 1991 ANNUAL ttPOR Y I
QQe neeren Benen gompany enV_Wy companien _
v 3%, ~ ' ' '
't g I
4
% ,\ . w: .-_ -a . . .
Ansumptions n' sed in determining ths pryjected bsnefit - The i npact on net income of the incremental expense
_ obligation are as follows;
+
E resulting fmm the adoption of SFAS No.' 106 is dependent -
g upon the ratemaking treatment, %e MPSC is conducting a :
4
> . 41 Decemhor 31 generic proceeding to examine the accamting and ratemak-
- 1991 1990 ing tnatment of the implementation of SFAS No.106 by 4
., Discountlete ' , ,- .
8.0% ~ 8M Michigan utilities, i A { lucrease in future compensation levels - 5.0 - 5,0
&_ m . .
-u
% %e unmcognized net asset at date ofinitial application 1 A t is being amortized ever approximatcly 15.4 years, which NOTE .
i
? 1,? 19 T SUPPLEMENTARYquARTERLYFIN4NCIAV g< f In addition to the Plan; the Company has several supple. JNFORMATION(UAAUl>1TED)- ,
{S$ f benefitmental plans for non-qualifiedinon<ontributory, certain management employes,'
unfunded retirement 1991 Quarter Ended -
n
- Other Poet:wilresuem; Benefits ne u Company pmvides Mar. 31 June 30 ' Sept. 30 : Dec. 311 ,
k< iariain postretirement health care and life insurance g7,wan,emptpr.w d '
Operating Revenues (a) - - $864,697 $8r,8,561 $970344 ? $b69,835 -:'-
4w-, Compan'y's " benefits for retired employesJ eligible for suchSubstan. tially all of the employes will become benefits if Operating income 224,812 ~ 227,356 - 258,799 L 221,512 ;
1 i they reach retirement age while still working for the Com- Net income (b) ' 133,093. 135,625 163,483 < 135.936 t - '
s Tpanychese benefits, as well as similar benefits for active Earnings for Common Stock 124,749 .127,186 155,352 ? 127,918
- n (employeslare'pmvided principally through insurance Earnings Wr Simm - R&5 : R87 W A87i -
% icompanies and other organizations whose premiums aref '!
hamed on the benefits paid during the year,3 The Company 1990 Quarter Endd ^
& . recognises the cost of pmviding these benefits as the premk _
- g,,,33- June 30 sept. 30 , Dee. 31 t hum 6 are paid. .
, 3 - . , > <
( tThousands empt per shore amountaf ;
Operating Revenues (a) 4905,703 $879,008 $952,254 : $841,4161' "
1991' 1990s =1989 7 - Operating locome 233,964 . 210,099 234,634- 200,313 ;
. ,s < 4 (7'hoa wndal : Net income - . .
136,548 117,763. - 149.145 ' L 111,003 IM 1Oces tit)$$mpany of pr6viding; Earnings for Common Stock. 127.624 , .- 108,879 : : 140,384 . 302,396 f +
T lhealth care sadlife insurancen : Eamings hr Sham R87 474 > 0.96 . s 0.70 1 tbenefits to employesi < .
. EActive employes ; "," i$45,0289 620 - $41,323 la) Operating revenues indude the rodassification ofinterconnection1 b ' ' - 0 Retired employes 6 l 22,695' 066 - 15,694 - revenues. See Note 1.1
- %7,723 E e i,686 . $57,017 ' ~
b y ;, (T8%*II ^
, ! (b) Net income for thi quarter en'ded December 31,1991 lucibdea $12.3 -;
million (40.08 per share) resulting from the reversal of a liability for a-W O .. ' , , W , mr . , , .
the Michigan Single Business Tax Capital Acquisition Deduction J WO F _ % In December 1990, ths FASB issued SFAS No.106,t. -*pplicable to the year ended Decerober 31,1990. z -
p M* Employers' Accounting for Postretirement Benefits other; -- . - . -
',4 SFAS No.106 establishes fmancial ac ' Earm. .ngs per share amounts for.each quarter am re-i MM f Than countingPensions." and re sorting standards for employers that offer
- quired to be computed 3- and, therefore, may ;.
independently ,,
M postretirement benefits other than pensions, Most employ . < not equal the amount computed for the total yeard g f gers, including the Company; have accounted for such benefits - ,
1 Moncpay-as-you-goIcash) basis, SFASNo.106lrequiresthe '
o awrual of postretimment benefits during the active service o
s yperiods of emplojeu to the"date they attain full eligibility for
(> , benefita! De Company plans to adopt the provisions;of J _
a gSFAS No; 106'in 1993 as requiredJ Preliminary estimetes of -- M
~;
Mlthe
%y $600transition million to $675 obligation million; Thelowsr at the time wouldi estimate of adoption range from
- p. j require certain plan revisions,)The transition obligation is .
W expected to be amortized over 20 years as permitted by J <
" SSFAS Nol106. The Company's incremental cost upon: -.
M / adoption of the new standard is estimated to range from $55 J million to $70 million for 1993 depending upon the level of ' ~
3the trani, tion obligationf
~'
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- THt. otitoit itDiSON -
9.: , <
1991 ANNU AL ttPORY
-- 2 ..
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y u 7 y ee ,.src r m m e ,
4 7
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< i
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9 f Thisiiacuulon and analysia should be read in co:Vunctlon with Kilowatthour Niales .-
4 Kilowatthour asles increaand (decreased) as follows:
g^ tewevto,containedherein"the Cunnohdated Financial Statenwnts and amompanying Notes 1991 1990-h 2)
M; C i bidendd. on mire :
Cc,mnwrcial 3.1 14l MtESULTSOFOP2 RAT 10NS soa=w' a<v **r -
,;, Totall4ystem 1.3 M4) '
[In lII, the Corganfa earnings for cominon stick were $535.2 Intmenneeum 234) - 27.8- .l (II'II 4b I"i"I t i millke, or $3.64 pet share, an increneo of i1.7% frem the $479.3 -
i < million, or $3.96 per sham earned in 1990 %e earnings increane . yggr .
Asr the year was due to higher operating revenues, continulog n' Residential and commercial sales increamed due primarily to '
~
y ductios in fuel and ptirchased power expenses and internt warmer weather during the somnd and third quarters resulting in , '
m envinan ananciated witn the early redemption and refinancing of increased air conditioning and coolingarlatal kada, cooler -
' ' 1 highwat debt, partially oNeet bysu increaw in ot)we operatha weather in the fomth quader tesulting in irmased intinite- '
t and realntenance expenecac The increase in operating revemies led loads and growth in the number of customers Induetdal 49 )suhed 11pm previously appsvved rate incanes and higher ey'* nW decreased primarily as a result of lower sales to steel and aus j ice salg v6stantially otee t by lover intermnoection sah- tomotive customen, reftwilag receanionary enoditions and MH At December 81i1991, the book nlue of the t.kempanfs common - competitivo pressures on the automotive industry, .i stock was $19.32 per share, an increase of 10% since Decemler 31, 18W0 '9 4" i 1990. Wirn on average total common ohnteholders' equity was The decreane in residential sah was due to redumd air condi. .
, ; 3% in 1941,19.1% in 1990 and 16M in IMO. tioning une during the summer months and reda ed heating loeS y The eatio of earnings to Caed okarges for 1H1,l1990dort.g andmilder 129 winter weather, partiaUy oficet by Ihe e8wt of as.e i
. Unuoi gmwth in the number of cuetomera. %e biename in . l 9y$m 2.74;2.42 ud.14, $.pectivelyc ne ratlo of earrings to fmed charge and pmferred and preference stock dividend sequire- commercial sales was due primarily to centinuedi n,wth in the ?
r4 umber of customers < he decrease in indstrial sales was due to . a Q} rupectivelyd 4
nonts for 1991,1990 ' 4 W and !M9 was 230,121 andlower 1.95imalec to automotive mm) steel customers.. "1 MOPERNI'INGREVENUEL - <
. , Interconsiectiosi . - .
. ce . . . -
UTutal operating revenues increapd (decreassj) due to the fol. In needance with the Federal Erwrgy Regulatory Commtwinn f ,
(*FEltC") accounting requirements, leginning in 1541 intertonJ-
~
Gewing fadors.
O' . nection anlee are remrded as ele:tric4ntertonnection reventea.D ,
-- Pnniously, these sab were recorded me a seduction of purebased' 198I;4 A WE power espanseJ Prior year amounts have been rec.laasifbd % con.
%e-, Raw Chanses! , . . .- : form to the current year presentatione .,
p Ymai 2 pheme lu plan ? J , ~ $ son- ' $ 79 - . . -Interconnection s~.les and rmnum inuensed significantiy in p?
pM*4 Espanw stabellrathn precedunf 28 _ 26 ' f 1990 due to higher sales to Ontario Hydm, and decM signifth
%K ' f & -1W 106' - cantly in 1991 due to lower sales to Ontario liydm. These ruanges 3 ,l in nvenues are 6Keet by corresponding changes in purchased . ,.
N Iy'nte'm' AnlMolume n' rid anix ! - - 73 : 11 T (1640 ' 67 -
per en}es.ne, w% no effect m twt inonne, , ,,
iyl1L!nhilled Arconnect( mg qunmale
^
' i -
.9 '5)i l. Eneng Transasisalcadervice >
. . . . . m . ~:p
% $ Energy transmineinu service O 1 21)' 22 Energy transmission service revenues represent fees for the 1 _
kProviaion #e rehl to customers c 1 12 - (IDL franarnisolon of electricity for other udlith over the Compan/s 1 3 transmission lit,es; The demand for this service has deemand -- '
3C Other. netW 1 > >
1
-(17)-
OE yotal3 jap 6 la ,$17 o c imm the higher levels operimeed in 1990c ,-
- g. sc 4: --
4 twieless for bhand to Custosmers .- -s . . . ,
4g 4 , in 1990, the Gimpany established a pmviaton for refund to cus :
b A December 1W8 Michigad Public Service Comminion tmers of prbr years' PSCR costa due to a mfund to the CompanyJ h, of proPersy tames on the Michigan Public Power Agency's i !
MPMlW') rate onter, issued as a result of a acttlement agreement, -
M provided for a Fernd 2 pime-in plan and granted $527.1 million of f . ( MPPA ) ownership interest in the llelle her Power Plant. This ' ;
decrease in operating revenues was oftwt by a decreawe in puro Nrate increase and other rate changes for Fermi 2 to be phaned in M our the seveeyear period 12819% The order ab provides for - chased penspense.
g moratorium on other base rate changes for the five year period / ,
W1989 INS, an t xpense stabilisation procedure which permita' . ._ ,
pratest be a4usted annually for the years 19901992 ($8 million i J $e fd 1992 and $61 million etunulative) for the effects ofinflation -nd a suspension of the Power Supply .
" ) Clause for the ibut+ period IM91992. Revenues collected un-
? der the expense 'linalon procwiure will espire for service . :
? rendered on and after Jamary li1993T 4 l' , ;
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i .[
OPEMilNGEXPENSES 1990 haaintenanm npense decreased due reimanly to lower nuclear Fuel and Purchased Power
, Fuel and punhaned powe expenas decrewed due to the follow. . plant maintenanw c1 pense and expenditures incurred in the prior ingfactors, year for the first achedukd refueling and maintenance outap at Fermi 2. Partially 0% citing these decreases was an accrun! 8nt 1991 Iwo the 1991 nfueling outage at Fermi L W'll * > Depreciaticn and Amortitation Net system outtut $4164) $.49 1991 tsnd 1990 Average mut co (44) (1701 Deprociation and amortitation expense inemased due to in-Other W -
creates in plant in wnice, induding the Coupany's purchase of '
Total t' 1 M) $t121) the Cooprative's ownmhip internt in Fenni 2 in February 1WO.
~
Deferird Fermi 2 Depreciation and Amortir.ation Net rystem output and average unit costs were as follows: 1991 and '990 apal two 1989 Deferred Fenni 2 depn ciation, a non rash item ofinanne, was mmu.ande r/Megau atthour,j rmrded beginning with the implemantation of the Fenni 2 rate
- Power plah g= eneratta .
phase in plan in January IDE The annual amount deferred de-
- Fusstl 40,243 40J 42 - 41,181 creanes each year thmugh 1992. Deferred Fermi 2 amortiution, Nuclear 6.167- 7.090 4 612 also a non cah item of inmme, was rmrded bek1nning with the Purdmaed power - 3.133 7.821 7.212 Company's purchase of the Cooperative's ownership interest in -
Fenni 2 in Febnmry 1990. The annual amount defemd decreaws Het system output - 49.M3 M.au MJM
_.:n each year through 1999.
- Avetage met cost (8%tegawatthour) . lin 94 $17.M Nog Tames Other Than income Taaes 1991 The decreases in average unit cost reflect decilning fuel price' Tuses other than income taxes decreased due primarily to die dwi to great 6 use of lower-cost M estern low.aulfur coal and, for n vmd of a liability for the Michigan Single 11unincas Tax Capital-Ilhlt, lower purchnace of energy fmm other utilities. The decrease in 1990 also reflects lower buyback expeme as a result of the Apb.uirition hi r property and Deduction applicable to 1990, partially obet by payroll taxes.
, dortgany's purchue, effective January 1,1990, of the Wolverine 1990 Power Supply Cooperative, Inc.'# Cooperative") ownmhip inter. Taxes other than income f axes increawd due primarily to -
. est in Fermi 2 and as a result of a refund of propedy taxes on the higher Michigan Single liuniness Tax and property taxes.
- M1 PA's ownership interent in the Belle River Power Plant, Be-a cause market ronditions have changed and the Company is able to incorne Taacs .
parthase coal at prices lower than somn existing long-tenn con. 1891 and 1990 -
' tracts, the Compsmy is buying out fuel supply contracts whenever income taxes inenaed due primarily to higher pretas income .
it is prudent and emnomic, and increues in the chetive income tan rate to 31.8% in 1991 fmm 29.0% in It*0 and 25.6% in 1989.
1 Other Operation '
,yppy< Deferred Ferial 2 Iteturn
- Other oparation expesu o incrused due primarily to higher 1991 and 1990
. uncubetible ($33 million in 1991 compared to $20 milhon in Defern d Fermi 2 return, a non-coh item af income, was m. -
- 1990), employo insurance, environmental, consultant and icJuries corded beginning with the implementation of the Fermi 2 rate
' and :lamages expenws. These inerenacs were pr.dially olkt by -
phase in plan in January 1983 The annual amount deferred de -
. lower nuclear platit pmduction expenses. The Omnpany increased enames each year thmugh 1992.
Its abwance for uncollectible accounts from $10 million to $23 Other Income and Deductions million during 1991 due to the continuing poor emnomic mndi- 1991 Ltions in the Company's service area.
Other income aml ckductions decreased due primarily to premi-1990 .
ums and expenses unociated with the early redemption of
. Other operation expense increr.med due primarily to employe Morignge Bonda and a contribution to a charitable foundation, .
incentive award expenses related to a shareholder value improve. partially offset by the cut of establishing a decommisdening famd -
ment plan, higher expenses related to an arrangement which - for Fermi 1 in 1990, pmvides for the voluntary separution from service of certain em- 1990
' ployen, higher uncohetible, consultant and employe pension and Other income and deductions decrtased due primarily to pnmi-
- benefit expames and an accrual for the 1991 nfueling outage at mns and expennen anociated with the early redemption of Fermi 2, which recognizes the cost of the nfueling outage over pe- Mortgap thmds and the crat of establishing a decomminletting -
. rkwls in which related revenues am mwnimd These increases fund for Fermi 1, an experimental nuclear unit that has been shut -
were partially obet by the expenditures incurred in the prior year down since 1972, partially offset by higher interest income on tur y for the first scheduled nfuchng and maintenance outage at porary ensh investmants. e c termi 2c Accretion income Maintenance 1991 and 1990 1991 .
- Accretion income, a non-cash item cfincome, was meorded be-Maintenance expense increased due primanry to higher miclear ginning in January MS in order to rectore to income, over the plant maintenance,line clearance and stonn expensos, partially perirxl 198M998, losses recorded due to discounting indirect dia-ofkt by lower fosail plant maintenance expenso.
TH( D114 0!! $ 0tlON . 1991 ANNVAt ifroll a_________ ______n.__1___________._._________.__.___________________________________..____________
3
- n ahowances of plant mets The leve of accretion income roemded Net cah from operating auivities, which is the Cwnpany's pri-
will decavane earh year thmugh IlM mary sourm ofliquidity, we 4910 milhon in 1989,6923 million in luterest Charges IWO und $952 million in 199L Net ruh fmm oprathig nctivities, jpgj enduding changa in current asi.ets r.nd habilition,increwed due f rdermt expme on king-tenn debt decreamd due to the early primanly to higher net income and higher non cAnh charges to in-redemption of highest swur ties, the redempthm of maturing s, come (depreddon, arw*ation and defened incon,e :awat
. eurities and the afmancing of tax-exempt Md. Induded in 1989 was the male of acmunts mceivable and unbilled
V*"""**
1990 Net cash used for investing aethities increastd in 1991 due to Interwt expense on long4erm debt increased due primarily to
< the louance of $537.1 million of Mortgsge Ibnds to purchase the Wher npenditures for plant and equipment. Net caah used for investing activities decreased in 1990 due to the February IWO .
ECeperative's ownership intermt in Fenni 2, partially ofleet by the sale to Henaiuance Energy Conpany of nudoar suel acquired in
- iefunding of matunng encurities and the early repayment of wr, 1 annecti n with the purchase of the Cmperative e ownership inter-
< te.in securities. Other intemet cape decreased due primarily to e 2 h wer levels of short4enu borrowmgs, es)
I referred and Petterence fHock Dividend Requiremento completion Debt rmancingof in the 1989Conpany's through 1991power plant was used construction for options and preIram.
11991 and1990 mandatory redemption of high cost king 4erm debt and preferred s Preferred and preference stuck dividend nyulroments de* and preference simk. Assuming favmable economic conditionsc
, crea9ed due to opdonal and mandatory ndomptions of the Congmny eitpcets that it will continue to tennance, when eco-outstanding ahmra nomic, existmg high cost debt and equity securitiesL An MPSC order permits the Company to lasue peurities to tennance debt l4IWII)I71eMD CAPl7ML,. and equity when costs are iO2 or above. in addition, a 199o
' RESOURCES "*"'"n*l nance optmna or mr.ndstmy rtdemptions of tax exempt debt""*"h*'""**""
J The Company'a' liquidity has improved since the 1988 conuner, lasued prior to December 31,1989.
1 c.ict operr. tion of Fermi 2, a nuclear generating unit mmprising cash requimments to mm4 optional and mandatory long4cnn 33% of the Corr; pan /a assets, as a result of scheduled rate in, debt and preferred and prefem.:e stock redemptions were $681 cmases in acmrdance with the Conpanfa 1988 rate enne z million during 199L Cash requirements for scheduled lon; term aettlement and lower levels of capital *xpenditures. debt and preferred and preference stock redemptions are expected -
to be $336 mi!! ion, $318 million, $46 million, $44 millinn and $293 Wrd2- " "" N #' N ' # " d E "' M *D' sThe commercial oltration of Fermi 2 templeted the Companfs Effective April 16,1990 and 1991,"the qua'rterly common stock
' power plant mnstruction programn The Conpany hus no current ' -
plans for additional pnerating planta. As a result, the Conpany dQnd was inemased Innn W2 pn sham W M5 pr sham y and from $0.415 per share to $0,47 per share wpectively.
J expats that its liquidity will continue to improve, llowever, own-Cash nquirements for capital expenditures wem $2054 million
' enhip of an operating nudoar generating unit such as Formi 2 in 1991 and are expected to be approximately $13 billion from
> ruldects the Company to sigidficant additional dska Nuclear 1992-1990. Environmental espnnditures are expected to approxi-
! plants are highly regultted by a number of gavernmental agencies mate $25 million over this period, exduding intential expendh
- concerned with public health and safety as well as the environ-tuma k Nn Ak An comphanenequinants, not yet detn .
- ment,9d consequently, an oulfect to greater risks and scrutiny mined. See Environmental Mattein? In 1992, cash requimmenta
= than conventional fossibfueled plantC
~
for capital expenditures are estimated at $373 ruilhon.
m At December 31; W91, Fernd 2 was insured for probierty riam, The Conpany a internal cash Feneration is expected to be sutil-hge in the amount of $2.515 billion and the Company ad
. cient to meet cash requirements for capital expenditums as well available $7.4 billion in public liability Arnurance. To the extent.
as scheduWeg4enn debt and prefernd r.nd prefmnce stock that incurable rialms for replacement power, propcMy damage, de-redemption requirements. When economic,long-term debt will be '
{ expenues coottainadon, repal+ "U " and .
arMng from nuclear and incidentreplacement at fermi 2 exceed and the" other costs gg! mler 31,1991, cash and temporary cash ihver*menta y pulicy Emits ofinsurance, or to the extent that such insurance be. totahd $7 million. The Company had short-term credit arrange-comes unavailable in the future, the Company will retain the nok ofloss. Although the Omnpany has no reason to antici wie a serl+ men.ts of $333.1 m. illion at December 31,1991, under which $38 :
i icus nuclear incident at /enni 2,if such an incident di happen h "E#" *N"9ngs were outstandmg.
could have a material but presently undeterminable adverse kn; Capitalleation -
- pact on the Companfo liquidity and financial posithm. TI.e Companfs oldective is to aehlev eummon 6hareholders' L in February 1990, the Conpany purchased the Cmperative's equity in eveens of 40% The Company's capital viructure ratios -
= lt19f4 Fenni 2 ownerahlp intemat for $539.6 milliou ($513 mig (excluding an'onnts oflong-tarm debt and preferred and prefer-N.lon for plant, $23.2 rnillian for nuclear fuel and $3,4 million for ence stock due within one 3 ear) were an (calews: 1 E' materials and suppbs and other). As payment of the purchase Ikcember al price, the Conpany made a cash payment of $2.5 milbn and is- ne91 1990 1pI
? sued $537,1 million of 1990 Series A, B and C Mortgage Bonds.
olders'1%uity nu% 32 8% 32 n
( Cash Generation and Cash Itequirrtnents Preterred and Preferme Stock 4.8 4.8 6.6 1 The Conpany generates substantial cash flows from operstm.g leg Term Debt 50.8 cu 62.2
? activities as showr. in the Consolidated Statement of Cash Flows. g3
' TH: pittoit s pisoN ' 1996 AN% Al titOtf
> , he Detroh Idison Company and Subsidiery Cwpenhos. _ - _ _ - - _ - _ _ _ _ _ _ _
he Company expects to attain its mromon shareholden' e.quity cogeneration and independent power pnduction inan customers oldedive with future earnings and the redunption of netain del 4 and mgulatory agencies. Current laws require tie Compny, as a
, securities prior to scheduled maturity when economic, public utility, to pun hase the electrical output of nrtain non utill-Although the Company has no plans to issue additional shares ties at the Coupany's avoided mit. Current and proposed FERC, ol'ita mmmtm stock ($10 par valuet in 1991, following sheholder MPSC and legislative acudties would further encourage the de-appmval, the Compan/a liestated Articles ofinwrporatL were vdonment of generat ng facilities by independent twer ruwnded to merrase the number of authorized chares of common producera. While ilectric energy pnduced by these other sources stuk from 100,000,000 to 400,000,000. %e authorized inenase in ceuld result in displacement or has of sales made by the Company, common stuk pmides the Company with additlunal finibihty 4n this energy may provide neated future capacity.
' Anz xial mattars. A new inuance of common stock would regul'e inflation prior MPSC approval. %e Restated Artides ofinwrporation . Inflation is a measure of the purchadng power of the dollar, were also amended in 1991 to decrease the nnmler of authoritei For the years 1990 and 1991, the Comumer Price Indca increced th2ns of pmfened stock imm 9,000,000 to 0,747,4S4. This at the rate of 6.4% and 42%, rerpectively. liowever, as a result of amendment recognized that redeemed preferred stock carmot be the expenne stabilization pnadure utablished by the Decemtwr mi: sued- 1988 MPSC eMer, the Company has not experienced a loss in pur+
Coupetition chasing power when compared to prior periods.
An electric public utility must compete with other energy suP- Regulation and Hates
. pliers to meet its customers energy emds, Perious issues facing ne December 19S8 MPSC order, which approved a settlement
- th entire electric utility industry indude deregulation, munidpal* agreement for the Company's rates, was designed to permit the
' tration, cogeneration, independent power production and open Company to recover from the effects of a mayor construction pr*
access to transmission. Utility customers have the option of self- gram and the write-off of certain plant costa. While the onter J generation or cogeneration and, depending on the extent of future provided for a moratorium on most base rate changes, the order demgvlation, may be able to enter into mntracts with other power permitted %e Company to adjust rates for the offects of intiation
. cupphers. In the future, rather than bdng solely a supplier of on operatic., and maintenance expenses through an expensa stabi.
- electricity, electrie utilities may be required to offer a combination liration procodore l'ES19. In addition, the suspension of the of praluets and services to meet the nends of customers. PSCR Clause has allowed the Company to immediately malize the in February 1991, the United States Department of Energy benefits ofimpromt system performance and cost cutting efYusta publbhed a National Energy Strategy Report (* Report") intended during the moratorium period.
L to 1:y the foundation for a mom ellicient,less vulnerable, and en- The suspension of the PScit Clause is scheduled to end Decem-
- vironmentally sustainable energy future. Among other things, the ber 31,1992. As a result ofimpmved performance of Ferm12, the.
E Report indudes a number of pmposals to modify various regula- increased use oflowercut Westem coal, market conditions and -
tory statutes and ndes whis govern the curmnt structure and tb renegotiauon of a number of fuel contracts, the Company's fuel
- opor: tion of the electric utUity industry. Several b!!!s have tan ~ costs have decreased from the level established in the settloment introduced in Congress to beider implernentation of measures agreement. For this reason,the resumption of the PSCR Clause
~ identifled in the Report And mlated issues, including modification as of January 1,1993 is expected to result in a reduction in the of certain pnwisions of the Federal Power Act and the Public Util. Company's revenues to reflect fuel economics achieved during the ity11olding Company Act of 1935. Additimtallegislative proposals suspension period; are e pected to be introduced. The extent,if any,to which the %e ESP allowe} tates to partially reflect the effects ofinflation -
pmpoW regulatory modificathis, if enacted, would affect Com- during the period 19901992. Bis procedum terminates at the
- pany operations cannot be determined at this time. The Company end of 1932, The ESP resulted in a surcharge for talendar years -
12 actively partidpating in Congressional and mgulatory agency ' 1990,1991 and 1992. The 1992 sarcharge is expoeted to puvide E conalderation of the vanous nroposals- revenues in the amount of $G4 million, an $8 million increase frotn 4 : Meeting Energy Demands 1991, he surtharge is scheduled to terminate for se vice on and '
( During the past 15 years, average sales growth was 1.0 percent after January 1,1993 and, as a result, rates will be reduced by the ;
'and sverage peak demand growth was 2.0 percent, While system amount of the curmnt $64 million annual surcharge,
" sales and demand had been expected to grow at an average rate of . In December 1991, the MPSC issued its opinion and order ap-
' t.hout 1.0 to 1.5 jercent per year for the next 15 years, the con. proving rate schedules asnociated with the fifth year of the Fermi timeng recension and expected and possible automotive and - 2 phase in plan. In the opinion and order, the h1PSC directed the -
eutomotivervlated plant closings may decrease future sales Company to prepati and file a general rate case by no later than .
- gnruth. ; June 3,1992 *Because it is in the public interest for the Commis-S
- les to the non-manufacturing segment, which include custom- sion to be in a position to determine that Detroit Edison's rates on
' era auch as agribusineas, grocery stores, restaurants and January 1,1991 arejust and reasonable? The Omapany is pre .
goernment, are projected to grow at the strongest pace in the paring such a filing and anticipates that the MPSC will le in a .
next 15 ynn, an average increase of 1.5 to 2.0 percent per year. position to revise rates followir.g the expiration of the moratorium
- This projected increase indicates the Company's customer base is period, December 31,1993. .
1 becoming more diverse and lens dependent on the manufacturing ~ In 1993, as a result of the termination of certain provisions of
? segment. -
the 1988 MPSC order, discusaed above, the Company's rates uill The Company is meeting near term demand for energy by the be reduced. The Company expects to continue its stringent cost
. return to service, sulject to environmental regulations, of planta reduction program while preparing for the anticipated rate redoc-currently in extended cald standby and economy reserve units tions. Although cost savings are vigomu/y being pursued, system when energy demand and consumption requirements provide em investment, customer service improverr.ents and the scheduled nomic justificatioric bever, there is continuing interest in rate reductions will lower earnings in 1993.
rH( DfitOff IDISON E 4 991 ANNU AL ttf ott m.E _h_i .
I Accentuting lasues ured boilers, to determine wh(ther regulations are required. Until
' in ikcemler 1987, the Pinancial Accounting Standards Itoani such studies are completed and resulting regulations,if any, are FFASil')lasued Statement of Financial Accounting Standards promulgsted, the impact on the Company is indetenninate.
PSFAS') No. it3,'Acmunting for income Taxcal which is to be ef- Title IV, Acid Deposition Control, requires a two. phased rulue-foctive in 1993. SFAS Na 96 requir4 an nuet and liabihty - tion in sulfur dioxide (*SOA emissions fmm 1980 levels by the epproach for nnancial accounting and reporting for income taxes, year 2000, ne Company already meets Phne i SO, eminion re-It requires the Conpany to retxnnpute its tax liability at the then quirementa. Phase 11 legins in the year 2000 and provides that electric utility unita greater than 25 megawat.s will te held to to-current tax rate and a$ust the Accumulatal Deferred Income Tax anet and liability amounts in the Consolidated llalance Sheet, in tal annual 80, emissions based on a formula. h Conpany additian, it nyuires die Company to record additional deferrod in- currently burns low sulfur coal (less than one percent sulfur) at all
> $me taxes for temporary dillemnces not previously recognized ofits coal Gred units and leheves it can meet tb Phase 11 S0, and all other existing di&nnece that will result in taxable or de- emission requirements through additional blending of coals. The
, ductible amounts in future years. SFAS No. 90 requires the additional blending could sesult in inerened annual fuel coste of
. recognition of an asset to the extent that audi additional defmed $40 million per year. Additional capital crpanditures are expected income tases are suociated with prvbsble future revenue from to be minimal.
. customers. In June 1991, the FASIl luued a propt.ed statement, The amendments provide for the purchase and sale of SO, emis-
' Accounting for incorne Taxes,' whleh is expected to supersede alon allowances, it is therefore passible that the Company may be
, SFAS No. 90. A final staten,ent is anticipated in the first quarter able to buy or sell emiolon allowances which could reduce the
' of 1992. W Company expects that the fmal statement, when costs of compliance. Ilowcver, it is stiP unknown how and to what adopted, will not have a material obet on net income. .
extent the eminion allowance system willle included in the regu-
, Ir December 1990, the FASil inued SFAS No.100.
- Employers' lations implementing the amendments.
- Aa punting for P>tatirement lienefits Other Than Pensions? The Co npany is not abcted by Phase i nitmgen oxides CNOx*)
SFAS No.100 establishes financial aucunting and reporting stan- emissions requirementa under Title IV, The Phase 11 NOx emis-1 dartis for employers that offer postretirement benefsta other than sions reductions may require the installation oflow-NOx burners
. pensions. Most employers, including the Company, have ae. on most Company units by the year 2000, llowever, there are ame
- counted for such tenefits on a pay.as you go(cash) basis. SFAS - biguities in the amentkwnt which, under provisions of Title 1,
' N% 1] naquires the weerual sf postretimment benefita during the inny requim the initiation ofinstallation oflow.NOx burners by-
_' active service period 4 of employes to the date they attain full eligt. May 1995. Capital expenditures, estimated at approximately bility for tenefits. The Company plans to adopt the provisions of $160 million, may be incerred to comply with there maulnmentac
'. SFAS No.106 in 1993 as wguired. Preliminary estimates of thn Estimates are subject to change as regulations are developed
! transition obligatitm at the time of adoption range from $600 mil. and implementert lion O $675 million. The lower estimate would nquire certain Title V. Permits, established an operating permit program com-p!nn revisions. The trainition obligation is expected to be amor. ~ rneneing in 199& The permits will be valid for a persed of up to
- tirul over 20 years as permitted by SFAS No.106 The Compar s five years, and are then subject to reinuance, incremental coat upon adoption of the new standard is estimat4 The Company believes that substantially all of the costs of com-to range frorn $f,5 million to $70 million for 1993 dr pendity upon plisoce will be recovered through the ratemaking procesa.
the level of the tramition oblignthat. The impact on net income of Other onvironmental twies whkh may impset the Company in -
1ihe incremental expense resulting from the adoption of SFAS No, the future include global climate change and ela utmagnetic
~ 106 d dependent upon the ratemakmg treatment. The MlYiG is fields fElWa"). The global climate change hue is based on the l conducting a ge,nerk prweating to examine the nemunting and : theory that human activities are changing (warming) the global -
- ratemaking treatment of the implementation of SFAS No.106 by climate by increasing the atmospheric concentrations of various
- Michigan utilities, fgremimune* gues that retain solar heat. Carlen dioxide is one Ernhnmental Matters .
of the *gnenhouse* gases,'and la prwiueed naturally and by burn-
. o Protecting the envirunment from damage, as well as correcting - ing fouil fuels for power generation and transportation, Although
- pas) environmental damage, continues to be the focus of stata and some scientists believe global temperatmes to be more related to
' federal regulators. The Envimnmental Pmtection Agency PEPA j sunspot activity, efforts are underway in the United States and and the Micidgan Department of Netural Resources have aggre,. within the United Nations to limit the emission of carton dioxide alve programs regarding the cleanup of containinated property, and other "greenhoune* gases. Such efibria, if succeuful, could The Company anticipates that it will be periodically included in have a serious impact upon all industry, induding the electrie
~ these types of environmental roceedings. Further, additional en. utility industry. EMF's are produced wherever them is electric vinamental expenditures wil be necessary as the Company power, such as around power lines, wiring in homes and work- 4 perpares to comply with the 1990 Amendments to the federal Pl ace $,' and all electrical appliances. A long-standing and still Clean Air Act; unresolved usue is whether exposure to EMPs may result in
- Of aleven titles in the Clean Air Act amendmenta, Titles Ill,Iy irmaned hea'th risks or damage to the environment. The ekie-and Von liarardous Air Pollutants, Acid Deposition Control and tric utility industry may b affected abould EMF regulationn be
. Perrnits, respectively, will have the most direct impact on the implemented,
- Company. Title I, Provisions far Attainment and Maintenance of National Ambient Air Quality Standards may have an impact on
" the Companyc
> Title 111, llaxardous Air Pollutants, requires the EPA to conduct a three year study on tax.ie air emissions from utihty boilers, as well as a four-year study of mercury eminions from fouil fuel-1HR 0 519 0l+ (Di&ON 1991 ANNUA ttfott
{ WOetrelt $eStNCompanyd5uSMiery Compenlen V
1991 1990 1989 1948-g
? Opersting Elecide - System - -
$%458,871 $3,279.248 $3.171,656 $3,070,724 Revenues 105,399 269,542 202,674 133,618 Jlcetric-Intenonnection' 31,675 pteam 27,267 21 491 312448 Total Operating Revenues $3,591,537 83,57tl.241 $3,405,605 $3,235,690 M '
Operating Opration .
Espenses - Fuel $ 758,467 $ 788,355 8 820,765 $ 646,078 P4rchaned power
- 133,498 250,400 344,814 280,291
. Other operation 589,025 645,476 f,00,889 614,024
' Maintename 2H9/170 279,f228 291.3G5 ' 27b,610 Depredation and amortirathm 412.253 400.330 871,682 332,651 Deferred Termi 2 depicciation and annartization (27,583) (39,208) (35,234) - (44,143)
. Taxes other than income 238,674 250,459 225,763 212,656 265,054 209,931 129.626 89p44_
gme terce >
Total Operatag Expenace $2,650,058 $2,697,271 $2.655,670 _ $2,607,611 4
q>erating income - 8 932,479 $ H79,010 $ 749,935 $ 728,070 Other income Allowance for other funds used dnring
- and Deductions - construction $ 1.459 - $ - $ -
$ 1,063 .
Doferred Termi 2 return 47,56a 78,379 107,169 134,264 O$er income and deductions (16,772) (7,829) 675 (789)
Income Taxes 6,332- 2,304 843 (769)l Disallowed plant costs - - - - (87%,872)
Accrethe income - . . 47.298 : 48,794 50,1M 25,866 Income taxes - disallowed plant costs and accretion incur:e . (634801- (R,1981 _( 17,047) 225171 2
Net Other Income and Deductions S 79,403 $ 113,950 $ 141,828 - $ (499,906)
Ircome Before Interent Chargco - $1,011,882 $ 992,960 - 8 M91,763 $ 238,113 Intercat Charges - lemg-term debt _ ,
. $ 437,337 $ . 472,369 ' $ 444,204 4 451,416:
Amonisation cf debt discount, premium and evpense s 4,467 ' 4,639 4,368 _ 14,693 Other l . . . . , - -
- 4,233 4.853 20,VB0 ' .
20,663
' Allowance fot borraed funds used during . .
,constniction (credat; (2,1P2)= (3,2001 (3,740) (3.224)
~$ 405,812
~
Net interest Chargeu $ 443,845 8 478,f>01 $ 473,447 income (1 mss) Before Cumulative E&ct of Accounting Chant;ee ~ $ 50R,037 $ 614,459 8 425,951 ' $ (235,334)
Cumuletive E&ct for Years Prior to 19MH of Accounting
. Changen for; 4 Disallowed plant'coets and abandonments inet ofincome taxes of $111. 257) . .
- - (344,147)
Unbilled revenues (net ofincome tamen of-
- $40,912) - . . .
- - - 61,307-Property tasca (net ofincome taxes of $101,300) --- ' - 139,288
' Net income (Lenal .
'$ 568,n37. ' 6 514,459 8 .425,951 . $ (378,826) l
.( : Prefestwl and Preference Stock Dividend hquirements
~
32,832 ' 35,179- 37,018 ' 49,757 'l 1 Earnings (lees) for Common Etock $ 535,205 = $ 479,2M $ 388,933 - $ (428,683) l
- Common Sharce Outstanding - Average ' 146,945,932 146,888,80D 146,816,363 - 146,761,458-Earnings (Ime) Per Share - . .
- Before curuulative e%ct of accounting changes 83,64 - $3.26 $2.65 $(1,951 1
= Cumulative e&ct for pents pdor to 1988
' of accounting changes fort Disallowed plant costa and abandonments $i -$.. $ -
$(2.341f Unbilled revenues 8 -- $ - $ -- $ 0.42 :
- . , Property taxes s 8
- - $ - $ - $ R95-Earnings (less) Por Share . .' .
$3,64 --
' *$1,88
$3.26 $2f5 ' $@,92h
. $ 1,6') L
? Dividends Declared Per Share of Common Stock $1.79 $1.68
' J Ratio of Earnings to Fiaed Charges (SEC liasis) 2.74 = 2.42- ' 2,14 0.05 = R i Hatto of Earnings to Fiaed Chargos and Preferred and Preference Qtock Dividend Requirements GEC Basis)" 2.50 2.21 1 . 9 81 0 04'
' *intervant;ectica revenues'reclanified for 13fil,$$. See Note i oiNotes to Connelidated Finnndal Statements. ,
-tHE estaoit-toison 1991 ANNUAL #1F011
= - _ _ = . - _ _ _ _ - _ _ - _ - -
O
] D' l--
1987 1986 1185 l'.64 1983 , _ 1_982 1981
- $2,625,910 82,832,945 $2,738,356 $2,439,k35 $2,260,021 $2,078,985 $ 2,011.217 128,473 78,041 77,916 76.h56 70,014 12%,270 61,550 30,821 8tl,339 49,801 fa,370 49,637 44M9 42,840
$2.985,304 $2,947,325 $ 2,N,6,073 $ 2,673,061 82,379,672 $2,245,524 91,116,607
$ 813.376 $ 741,206 $ 785.110 0 700,789 $ (176,409 A 71N/131 $ 689,165 176,267 209,167 274,8'14 261,596 198,935 1N,924 201,531 441,046 459.534 422,133 403.616 874,161 872,767 333,440' 245,730 25H,655 250,798 203,945 187,769 170,974 164)7'e 237/25 232,240 218.602 190,420 171,940 161,430 150,240 Yf -179,308- 177,381 175,556 144,471 142,743 118.s,537 117,224-159,4M 113,598 124,939 181,459 145,659 96,912 64,388
$2,252,f,00 - $2.25i579 82,25i~,H1 $2,03ti,296 1,097 A19 $1,835,975 $1.720,906
$ 732,638 $ CA2.540 $ 614,201 6, 53R,765 $ 482,153 $ 409,549 $ 394,641 4 136,402 - $ 117,069 $ 118,225 $ 130,350 $ 92,750 $ 47,W5 $ 39,398
' (3,435) (10,809) (5,240) 1,829 7,877 (4,820) (9A01)
. 04 3 - 8,827 1,042 (112) (5,4876 1,155 4,771
^
8 133,680 $ 109,027 $ 109,627 8 132,067 8 95,140 $ ~ 44,330 $ 34,6 %
6 577,293 l- 8 f,60,318 -8 791,573 $ 723 928 $ 670,832 $ 453,879 $ 429.3
$ 417.474 ' $ 309,420 - 8 401,272 8 399,448 $ 351,854 4 831,469 ' $ 290,045
. 3.t!20 . 2,721 = 2A02 2,191 2,131 2,000 1,853 --
' 23,459 41,410 16,642 30,592 5!s,088 59,779 87,025-(183,215) (129.082)- '(133,103) (183,336) (194,402) (194,076) (133,967)
$ 311,344 $ 314,478 8 280,313 $ 208,895 $ 212,671 $ 199,178 $ 194,D56
$ 654,974 $ 477,095 8 437,515 $ 401,037 $ 864,622 $ 254,701 8 234,853 Ig. .
. $ 654,974 . $ 477,005 $ 437,516 .$ 401,937 $ 364,622 $ 254,701 $ ' 234,353 -
'78,240 DR,803 103,264- 104,159 08,614 73,245 57,506 S' 476,734' - $ 378,292 6 334,251 $ 297.778 8 206.J08 - 8 181,456 $ 176,787 -
,, s146,729,292 14 %643,377 143,183,133 135,230,827 120,274,2fi9 103,585,915 87,473,581 -
< - $3.25 .$158 $2,33 $2 20 $2.21 $1.75 $2.02 l 9 $-.i 18_ ~ _ $ . $ - 8 . $ .
'$125= = $2.58 $2.33 $2 20 $2.21 81,75 ' $2.02 '-
$1.68 . $168 $1.68 $1.68 $1,68 $1.68 4 $ 1,64 .-
1 2.54 2.29 2.28 2.19 2.22 - 1,85 1,64 2.09' 1,R1 1.75 1.07 1.67 1.49' ~
1.53 L I __
I- _-A----.- m-m._i._ -___________uam _.m _m-,__a-. ,,__m m . m _ . m mmm.. ,
MW5erI@empenyindCbbe&ty &mhnd _
1991 , 1990 1989 1988 Operating ' haldantial -. A 1,154,440 $ 1,045,091 8 1,013.677 $ 984 f>89
- hvenure Commenial 915,078 M7,317 82R.100 760,040 ffhousandal Industrial 1.219,6 4 1,201,254 1,111,Me 1,139,778 Other 197,006 193,087 I ft9,8'd 217fA5
~
Di$ta[Efs. tem $8,4idiiH $ E 806,iH9 $3.253[031 $ 3,102,172 Interronnwtion 105,398 269.542 202,574 133.518
~~~~~
~ Gab - $ 1,691,537 T8352iil $ 3,405,005 N ial690
. Males t iteedential 12.229 11,613 11,626 11,723 (Muhons of kWh) Commercial 8,N73 8,fth8 8,552 8,810 Industrial - 18,502 t 16,707 18,762 19/m0 Other 1,002 1396 1,646 2,031
~%IGFyltem 4f,6is ~% 11,M7 5i ~ 4SE4 4Uit Interrannnthm ' 5,834 9.301 GE71 g" ~
46,f5 63~391 "49,985 47,815 Electrie ( smere beidential I,770,859 1 757,878 1,738.494 1,719,835 -
(Year Endl Comrnertial 166,314 164.910 162,255 158,850 Industrial , 2,055 2,739 2,671 2,592 Other 1,968 1,939 1,934 1,926-3 g3 -t- -~ ~~~T,U 1,696 '1,927,475 1,905,354 1,882.203
- Average Annual Use Per HeeldentialCustomerikWw 4,929 6,583 6f68 6,866 Average Annual Di'l ISr Residential Cuetomer $654,54 $597.51 - $586 50 $$76.70 '
Average lleveinue Resitkntial 9.45r 9.08r 8.80v 8.40s-Per kWh Commercial 10J1 9.98 9 68 9.15 Industrial ' , 6.88 e "I 624 5.97 Cepitalisation - long Term Ik t t . $ 4,218,268 . 5 4,923,4 . 8 4,561,005 $ 4.238,536 (Thousands) - . Prrferred'Prefe ence Std 853,237 376,183 394,188 416,212 -
- Common Sharehnidors' Eq inty 2,847,479 7,588.482 2,370,000 2,226,949 -
~ ~%dal _
TV.TliM3 ITE5Ef54 $ 7,33F275~ . $ C85i~697-Cepitalisation c leng Term Debt 56A 62.4 62.2 61.6 iPercent) Preferred' Preference Stock 4Jl .42 5.5 6.0 '
Common Shareholders' Equity 3R,4 32 8 32.3 32.4-
" Total ~ MU ' 7 503 100.0 1MF -
'. Omnmon Stock Earnings hu)l'er Ehure $3.64 $3.26 $2.62 ' $(2.92)
Data Dividend Paid Per fihare $1,855 $1.755 $1SS $1.68 Payout 51 % 54% 63% 4 Shares Outst.anding Average 148.945,932 ' 148,hR8,809 146,816,363- .146,761,458 ._
blurn on Average Common Equity 19.55% ~ 19.11 % 16.75% (15.91)%
Ikmk Value Per fihare $19.82 *17.56 ' $16 07 $15.10 Market Prtce;lligh $S5% $30% $25% $17%:
low $27% $23% $17% $12-Miscellaneous Averats Interent Itate on long-Term Debt 9.1% . 9.2% 9.5% 9.6% c Financial Data Averaga Disidend Hate on Preferred!
Prefnence Stock .
8.8% B.7% 8.8% 8.9%
long Term Debt and Redeemahle Preferred / ;
- Preference Stock (Thousanda) $ 4,900,020 $ 5,300,962 . $ 5,028,961 $ 5,148.498 Total Aenete(Thousands) $10,483,624 - $10,573.3125 $ D,949,599 $10,060,0931 Omu Utihty Plant (Thousands) $11,W7,882 $11,749,142 , $11,024,368 - $10,766,755 -
' Net Utihty Plant (TWusanda) $ 8,658,227 $ B,624,923 " $ 8,236,553 $ 8,303,644 Capltal Expenditures CThousands) $ 272,121 $ 230,201 8 242,973 $ 235,127
~
- Mlacellaneous > .
Bystem capabihty at Year End-MW 10,2'67 10,130 10,081 10,004 Operating Data Bystem capahihty at Time of Peak-MW 10,121 9.953 9,942 - 10.038 -
' Bystem Peak Demand-MW 8,980 9,032 8,704 9,133
, iteserve Margin at Time of Peak 12,7% 10.2% 14.2% 9.9% '
- System led Factor 53,9 % 54.9 % 57,3 % . 55.2% '
Heat Rate $tu par kWh 9,980 0,940 __ 9,940 9,990 FuelCoat-f FerMillion11tu- 153.Se 155.8g 169.2s 173.8g '
Numier of Employee at Year End 9,357 9,669 10,254 10,614
'Inturonnection revenues and sales reclassified for 1981-90, See Note 1 of Notes to Consolidated Financial Statements, the salton toi
- -- - - _ _ - -- .m_ ..__.________________.__.___..,mm__.___ _ _ _ _ _ _ _ . _ _ _ _ . _ _ _ _
, ,__y _
If487 1909 1945 !W4 19A3 1982 1981 4 0,305 5 758,124 8 741,399 R 676,370 $ 642,301 hF '
4- 905/J04 f- 4 tW ,210
-701lt!5 MI,C'il 651,f49 570,082 518,293 473,498 436A68 1/MM6 1,0G3,5f.1 1,034,374 919,490 818,660 7M,238 763,167 AL3 M2 .
232 1457 . 275,014 _
250,f,09 236,307 29,148 211,721 -
t 2,M 6,731 $ 2,669,2M $ 2,788.157 $2.498,205 . $2,309,658 $2,123.254 $2,054,057 128,473 78,041 77,916 76,856 70.014 122.270 61,550
^ ^
$lii415f5 $ 2,866,073 82,575.061 $2.319,672 82,245,524 e,115,607
( $IEE[4 e 11,134 10,492 10,077 10,160 10.256 9,940 10,134 7,873 7,501 7.130 6,850 6,47D 6,252 6.310 7
18,225 17.240 16.613 16,324 15,162 13,751 15,471 R
2,200 2,807 2,875 2.563 2,402 2,052 2,107 74 39,4fil '3XIif 3,152 36 Fin 2,870
~ ~ 3ENii 2.797
'347299 3,406 31~9?d 4,078 34,62f~ -
2.178 6.665 46,157 41,292 39,565 84,684 37,705 36,073 36,20 I 1,697,326 1,664,226 1,642,981 ly29,668 1,621,172 1,619,369 1,624,161 155 216 s
148,987- 144.942 142,395 140,403 139,376- 138 S30 2,507 2,$M 2,314 - 2,246 2,253 2.239 2,305
/
.i 1,928 -1,905 1,892 1,894 1,886 1,835 1,829
~
7,856,977 1,817,502 1,7P2.129 1,776,203 1,765,714 1,762,819 1,767.125
. 6,635 6,350 6,165 6.253 6,332 6,133 6,243 l* ' trJ9.44 -- $532.74 $506.06 $467.03 $457,74 $417.33 $395 66
- 8.13e 8.39f 8.21t 7.47s 7.23e 6A0v 6.34f
. 8.91 9.24 9.14 8.32 7.92 7.57 6.92 5.80 6.17 6.23 5.63 5 40 5.49 4.93 -
$ 4,693,687 8 3,656,569 $ 3,770,863 - $3,845,272 - - $3,542,438 $3,218,649 $2,753,978 -
$21,894 - 742,273' 879,497 894,168' 907,505 802,423 603,161'
-F . 2,919,985-- 2,716,403 2,588,025' 2,379,998 - 2,135,361 1,872,181 1,675,385
~
$5,031524
~
i 8,135,f,66 $ 7.115,245 $ 7,238,385 $7.119,438 - T6V4T304 85.89,s.253 57,7 51.4 52.1 54.0 53.3 54.6 54.7 6.4 10 4 12.1 12.6 - 13.7 13.6 12.0
~ .35.9 38.2 35.8 33 4 33.0 31.8 33.3 105'6' . 166h !MO ltB 100.0 E6.0 100.0
. $3.25 : $2 5B $2.33 $2.20 ' $2.21 $1.75 $2.02 4
$1.68 - $1.68 $1.68 ' $1.68 $1.68 $168 ' $1.62 i 52 % , 65 % 72%~ . 76% . 76% . 90% B0%
146,729.292 .. ; 146,643,377 143,183.133 135,230,827 130,274,269 _ 103,585,915 67,473,581 16.69% 14.09% 13,31% 12.87 % 13.03 % 10.14 % 11.12%
y;
$19.75 < (18.34 V 7.47 $16.91 $16.63 $16.60 $17.47 '
$19 . $19%. $17% $16%. $16 $13%: $12% .
'$12%'
$15% -$14 $11% $13 '$11 $10%
- 9.5% ' D.2% 9.9% ' 9.9% 9.5% 9.5% 9.4%
- 10.7% 11 5 % 11.6 % 11.0% 11.6% 11.3 % 9.8%
- $ 5,232,662 - ' $ 4,774,495 $ 4,731,589
- $4,460,381 $4,155,829 $3,792,982 $3,182,033 -
$11,158,214 $10,377,125 $ 9,863,700 $9,276.614 $1,477,218 $7,645,856 $6,617,903
$11,893,418 ' $11.062.449 $10,466,039 $9,752,346 $8,M5,770 $8,252,570 $7,139,790
$ 9,r82.875 $ 9,034,716 8 8,612,890 $8,076,168 $7,320,570 $6,824,058 = $5,842,997
. $ ~ 109,084 8 645,196 -$ 710,699 - $ 938,004 - $1.014,569 - $1,135,045 8 964,261 9,164 0,070 9,296 8,898 8,102 7,762 8,221
'9s020 - 9,199 l 9,367 9,271 7,810 8,569 - 8,458 -
8,427 .. 8,050 ' 7,172 7,350 7,063 . 6,394 7,171 7.0%1 .14.3% , 30.6% ' 26.1% 10.6% 340% 17.9 %
W 57,4% 57.9 % 63.3% 60.2% 60.2% 61.7% 58,4%
10,060- . 10,090- 9,990 9,000 10,040 10,060 10,000 372.9f 189.2f 202.0c 100.6e 190.2e - 193SW 190.5# .
11.221 10,967 11,086 11,136 11,152 11,208 11,024 IHE D t it Oli (DISON M io,i awwuai is,Oer
_mua _
l- m wear men company H- .
t.
L Ma' r ket for the Company's Common Etguity and - Distribution of Ownership of
?Rel:ted Shareholder Matters Detroit Edison Common Stock The Company's Common Stock is listed on the New York (December 31,199D
, Stock Exdiaage, which in the principal market for such stock, and the Midwest Stock Exchange. The following Type of owner dable indicates the regiorted high and low sales prices of Ownera Sharea i the Company's Conanon Stock on the composite tape of Individuals 107 20.550.J29 the New York Stock Exchange and dividendu paid pm Joint Aw unta 82',014 75 26.039,353
- share for each quarterly period during the past two yeare: Wust Anunts 8,843 5.009,064 NonArs 90 82,339,534 Dividends Institukons and Foundations 208 97,030 Prico Range l' aid Brokers and Security Dealero 14 10,255-IUgh - Low Per Share Others 997 .12,936.958
' Calmdar ~ Qaarter Total T67,933 146,983,123 Itr>0 First- - $20% - $234 $042 Second 27% ' 24% 0.445 Third 29% - 25% 0.445 State and Country:
Fourth L 30% 24%. 0.445 Owners Shares Michigan 79,927 37,711,952 o d' .
11,741 4,680,320 -
' Third '31% 28% ' O.47 Florida Caliform,a 9.817 3,142,009-Fourth - 35%- 31% 0.47 New York - 8.241 83,248,464-'
2 2
( At Doecmber 31,1991,146,983,123 sharea of the ' [I O*'I' [[73 Company's Common Stock were outstanding. These 44 other states 44.323 13,60s,835 - '
- : shares were held by a total of167,933 shamholders, yoreign Countrha -649 193,992 3 The amount of future dividends will depend upon the . Total: I5{933 146,983,123 Company's earnings, financial condition and other factora.
( Annual Meeting of Sharbholders -Independent Accountants 4 The 1992 Annual Meeting of Shareholders will be held at Price Waterhouse .
10 a.m. Detmit tirao Monday, April 27, at The Detmit 203 Renninanco Center, Detroit, Michigan 48243 -
- Edison Company General Oflices,2000 Second Avenue, Form lok Detroit. Shareholders will be asked to (1) elect members Copies of Form 10.K, Securities and Exchange
- of the Board of Directors, and (2) ratify the appointment - Commisalon Annual Report, are nyallable, A (of Price Wr.terhouse as independent.a(countants. .
Requests should be directed to:
eat the April 22,1091 Annual Meeting of Shareholders,15 i Susan M, Beato i directors,Lall of whom were incumbente, were elected. Corporato Secretary Vin addition to the election of dirwtors and ratification of - The Detroit Edison Company -
(the appointment ofindependent accountants, the holders - 2000 Second Ave,nue, Detroit, Michigan 48226
. of Common Stock approved amendments to the Com' TransferAgents pany's By Laws to reorganize thn Board of Directors into L The Detroit Edison Company
- three classes with staggered terms endmg on the first, 2000 Second Avenue, Detmit, Michigan 48226 second or third succeeding annual meeting of sharehold.
Lcrs of the Company. Susan M. Deale . Vianessa Y. Lurry l Ronald J. Gdowski Janet A. Scullen Sliareholders also a roved amendments to the Com. Elaine M. Godfrey Jack L Somers
, ?l number hany's Restated Arde$es ofIncorhmration to increase the of authothed shares of ommon Stock from 160 Sophie J. Konatek Glona A. Williams
- million to 400 million, to modify provisions limiting the Registrar of Stock personal liability of directors of the Company, and tof The Detroit Edison Company - . .
L allow the Company to provide indemnification to direc. 2000 Second Avenue, Detroit, Michigan 48226 -
J tors, officers, employes and agents to th0 full extent (Preferred, Preference and Common Stock)-
permitted bylaw,l Common Stock
' Corpor' ate Address , Listed on the New York Stock Exchange and the l'he Detroit Edison Company .
Midwest Stock Exchange.
2000 Second Avenue, Detroit, Michigan 48220 Symbol DTE TTelephoneN313) 237-dOOO 1HE D t 1 t Oli tDISON M i..i an~u u ieoit L./ ./ .m _ _. ..- _
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h i , A R li ()I 1) l Rl( l U R ', -
the Darroit Edison Company l
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1g 1 '. (k bh h)3 1 b .. nMn Members of the Detroit Edison Board of Dire < tors ore, seated, from left: David M. Gates, John E. Lobbia l Chairman),
Dean are, from E. lefts Richardson, Otis M.
Patrl<ia $honts longeSmith.AlanEugene A. Miller, E. Schwarts, WalterTerente J. McCartE. Adderley,hy, Jr., Larry G, Garberding, Theodore 5. William Wegner a Leipprandt, Lillian Bauder and Wendell W. Anderson, Jr.
Terence E. Adderley I) avid St. Gates lican E. Itichardson l' resident and Chief Lwcutive l'rofes or ofIlotany, Universi'y of itetired Chairman of the lloard, Ollicer, Kelly Services, Inc. 51ichigan (not standing (br re- 51anufacturers National Corpora-(A provider of temporary help, election) tion and retired Chairman of the hu iness services and hom" Ewcutive Committee of care serviceo Tliendore S 1 ellspiandt 3;geting gg.c;nist, 51anutactun rs National llank Wendell W. Anderson,Jr. Cooperative Elevator Company of !)ct roit lletired Chairman of the lloard (handling the marketing of dry Alan E. Schwartz and Chief Executive Ollicer, beans in the Thumb m eni Partner, lionigman A1 iller ilundy Corporation (51anufac- John E. Isshbin Schwartz and Cohn turer of steel t uhmg, llexible ho<e Chairman, l' resident and Chief (attorneys at hovi and engineered pla tic prodactsi Executive OHicer, The l>etroit Otis St. Smith I,illian llauder Edison Company of Counsel to lewis, White und l'n sident and Chief Ewcutive giahicia Shontz 1,onge Clav inttornevs at lawi a,nd 00;cco tranbrook Educational retired \gre hesident. (.eneral Ecmmmim Seninir Partnen The hiotors ( orporatmn t not standing t amanity 1,onge Coinpany t An en onomic thivid lling
~
consulting and investment firmi for n +h ctioni Chairman, iting S:s ei, Ine, Walter J. 31cCm thy, Ji . WIIII"* WCM""I (A steel service cent er) Consultant Owner of %,-5,qnmed.
itetired Chmrman of the lloard and Chief Ewcutiw Ollicer, The I"C ' A.C"nsulting firm engaged m I,arry G.Garberding$nt and i ' ''' "
Executive Vice Presid I)etroit Edison Company ft si ii i i l tii tli oden menend Onicer. eg ,,3. 3,iii ,. g.,mmem,,
fhe I)ctrmt Edison ( ompany Chairman, Pn Ment and Chief Ewcatne Ollicer, Comerica incorporated and j Comerien llank
,,o >: r it. 4 E , # o .. u et" ,,
B () ARD UI D i R t -L 1 O R 5 '( OMMillli5 the Detroit Edison Company Audit Energy itemoun ceu lhecutis e l'imitice Otis M Sniith I'lanning John 11 Inbhu lican 11 Itirinnl on lathan llandei Ilas al M Gates Tenmee E Adderle3 l'atnua Shonti 1,onge
!) avid Ihng Wendell W. Andt :wn. Jr. lallun llander Tescore 11 Addeile3 The,nion. S. leippiandt llaud Umg 1.a rr3 G. Garhenh ng laihanllauder l'at rina Shonty longo Theodore S lappranih lican 1; llu hardwn I. airy G Gar henhng llean E ltu hant on Walter J Md'aith 3. dr. Alan 11 Sdnun tr Engene A Milk r Wdh.un Wegner Alan 1:. Sdnun t z Nominating Nuclear Iteview Organisation und itetirement l'usul Alan 11 Sdas arty Wdham Wegner Conil" nsation lies icw 11 add M, Gate, Woubt W Ander-on.Jn pan n ia Shont e longe Wendell W. Andet son. .lr.
ILnid M. Gates l'an ina Shonte longe Ten nce E. Addeac3 Wendell W Aiuh mon.Jr.
l'atricia Shont71,onge Walta r J. McCar t h3 . .ir. Engene A Mdler I.arry G. Garbenling Waher J. McCarthy. Jr. 1)ean E lin har dson Itn al M. Gate-Ote. M Smith Al"" U Sd"'"rt/ t ni- M Snuth 5
Director itetirements chainnon vue chmouan 1)r.1) avid M. Gates, a director since April 1950, and Mr. Otis M. Smith, a director since April 1981, will not stand for re-election at the 1942 Annual Meeting because of the lly laws age restriction.
OF FIC E R S
.lohn E.1,obbia Chairman of the Malcolm G. D.ule. .lr. Vice l' resident -
lloard, l' resident and lluman iterources Chief Executive Ollicer Ilonald M ( resens .
\, ice l' rem. dent and Larry G Garberding Executive Vice 1* resident Controller and Chief Financial I'esh.e I 1,oonuins \. .ice l'res.i dent and Ollic r I n asurer Iron S. Cohan Senior Vice 1 :esident S,. Mart in .I,ayinr h. .ee l'resu. lent -
and (,eneral
. (,ounsel
(,ommon.ly l and Frank E. Ago%ti Ser c Vice l' resident Governmental AfTairs William S Orser Senior Vice l' resident Saul .i. Wald man Vice l' resident -
llohert .1. Iluckler Vice l' resident - I'"hlic ^III' irs Ihvisions Susan M. Ileale Corporate Secretary Stanley G. Cutola Vice l' resident - Frederick S. Karwacki G"oeral Auditor Nuclear Engineering and Services l
Officer lletirements Willard it, llolland. Senior Vice l' resident, retired liohert V. Nicol on. Vice l' resident and Manager -
September 1,1991, aller more than 25 years of Fuel Supply, retired .luly 1,1991, aller nuire than Company service. 40 years of Company service.
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