ML19031A131

Submit 1976 Annual Report by Atlantic City Electric Company

ML19031A131
Person / Time
Site:	Salem
Issue date:	05/23/1977
From:	Atlantic City Electric Co
To:	Office of Nuclear Reactor Regulation
References
Download: ML19031A131 (28)

Text

.--- - - - 1976 ANNUAL REPORT - - - - - - -

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Results of Operations 1976-1972 Atlantic City Electric Company 1976 1975 1974 1973 1972 Sales of Electricity (Billions of Kilowatt-hours) .. 4.664 4.378 4.376 4.429 4.052 Electric Operating Revenues (Millions) .. .. ... $ 212.0 $ 199.1 $ 176.6 $ 132.9 $ 114.7 Net Income (Millions) .................... $ 30.8 $ 28.3 $ 27.0 $ 22.9 $ 20.1 Earnings per Share ........ .... .. . .. . .... $ 2.60 $ 2.41 $ 2.54 $ 2.40 $ 2.26 Dividends Paid per Share .... . . .. . ........ . $ 1.56 $ 1.51 $ 1.50 $ 1.4688 $1.4144 Gross Additions to Utility Plant (Millions) . .. .. $ 41.7 $ 46.7 $ 71.2 $ 67.9 $ 58.4 Generating Capacity (Kilowatts) .. ... . .... .. 1,334,700 1,334,700 1,278,700 1,013,500 965,900 Utility System Peak Load (Kilowatts) ......... 1,030,300 1,069,400 1,004,400 1,051,400 920,400 Average Annual Residential Kilowatt-hour Use .. 7,320 7,018 6,982 7,303 7,008 Electrically Heated Dwelling Units (Year-end) .. 42,878 41,026 38,146 34,870 29,790 Customer Service Installations (Year-end) .. .. . 343,147 336,105 330,758 320,834 309,393

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' clVA C __ SER1Es '70/45 1

John D. Feeh an, President and William W. White, Chairman of the Board .

To Our Shareholders:

fuel is expected to produce 27 % of our customers' 1977 requirements. Nuclear has proven to be the most substantial way to hold down the cost of electricity in Southern The financial picture at your Company, Atlantic New Jersey.

Electric, showed considerable improvement in 1976 -The resounding support of nuclear energy in as earnings for Common Stock increased to $2.60 per 1976 by the Nation's voters was very encouraging.

average share compared with $2.41 in 1975. A During the year approximately 12 million number of notable events and accomp lishments Americans, representing seven states that contain contributed importantly to the improved overall about 20 % of the Nation's population, voted on showing. Among the highlights of the year: the nuclear energy option. Continued use of

-The strengthened financial position enabled the nuclear energy was approved by a two to one Board of Directors to increase the quarterly margin. This encouraging sign shows that when dividend rate on Common Stock from 38 1/z ¢ to the people understand the facts they strongly 401/2 ¢ effective with the dividend paid October support nuclear energy.

15, 1976. The year 1976 was the 24th -Atlantic Electric intensified its "How Can I Help consecutive year that dividends on Common You" attitude and performance standard. This Stock have been increased. was a significant component of our management

-Kilowatt-hour sales increased 6.5 % in 1976. program during 1976. The program also included This healthy increase is a sign of reviving vigor the distribution to customers of thousands of in the economy of Southern New Jersey. The brochures entitled" 104 Ways to Control Your glass products and chemical industries which are Electric Bill", "Energy Management is Your economic mainstays in Southern New Jersey Business" and "How to Save Money by Insulating paced the l 0.3 % increase in industrial kilowatt- Your Home". The program embraced County hour sales. Residential and Commercial kilowatt- Recognition Days for employee contributions hour sales increased 6.8 % and 3.4% to the welfare of their communities, Press respectively. Conferences and Science and Energy Conferences

-The total cost of fuel was reduced by 3.4 % . for students. Speakers on energy related issues This savings (which was passed on to customers) were furnished throughout the year in our efforts helped offset the impact of the rate increase. to be responsive to the needs of the people of Such savings comprise one of our major corporate Southern New Jersey. We continue to intensify goals. Use of nuclear fuel and coal, coupled with our public information program to aid better more realistic env ironmental regulations, helped understanding by customers of the many energy make this achievement possible. issues we all face.

-Nuclear fuel produced 18 % of the electric energy -We successfully financed our $34.2 million 1976 used by our customers, coal produced 47 % and construction program a nd were able to pay oil 35 % . With the completion of Unit No. 1 at for nearly all of it through internally the Salem Nuclear Generating Station, nuclear generated funds. The sale of 1,000,000 shares 2

EARNINGS and DIVfDENDS (Per Share of Common Stock)

$3.00

• EARNINGS 2.50 2.00 1.50 1.00

.50 0

1971 1972 1973 1974 1975 1976 of Common Stock in October 1976 strengthened This, together with budgetary controls of operating our capitalization structure. At year-end 1976 expenses, has helped Atlantic Electric weather some capitalization ratios were 49.7 % Debt, 13.7 % difficult times. Continuing austerity measures have Preferred Stock and 36.6 % Common Stock been adopted for 1977 as we strive to control costs Equity. The proceeds of the sale of Common and earn a fair return on the investment of share-Stock were used to repay outstanding short-term holders. The accomplishment of these goals will borrowings; no additional short-term borrowings require the cooperation, hard work, resourcefulness were made for the remainder of the year. and sacrifices of each of the 1,714 people of Atlantic

-The number of customers served increased by Electric-we know they will rise to the challenges of 7,042 during 1976 compared with an increase 1977 and future years.

of 5,347 customers in 1975. This increase should Mr. James P. Hayward, former President of the enhance prospects for future growth in kilowatt- Company, ended his active service on the Board of hour sales. We added 1,852 electrically-heated Directors of the Company on February 15 , 1977.

dwelling units in 1976. As a company which Mr. Hayward's illustrious career covered a total of experiences its peak demand for power during 51 Y2 years of active service to the Company the summer, these added electrically-heated units including 16 years as a Director.

will assist us to more fully utilize our existing The Board of Directors extends its appreciation to generating capacity. all who have participated in the Company's progress Although we consider the year 1976 was generally during the past year, including customers, employees successful, we recognize that there are many important and , of course, all who invest in the securities of challenges facing us in 1977 and in future years. the Company.

If we are to achieve satisfactory financial results in 1977, an increase in rates will be required. For the Board of Directors, Consequently we are preparing a request for a rate increase which is scheduled to be filed with the New Jersey Board of Public Utility Commissioners as this Annual Report goes to press. The effects of inflation, together with generally increased costs of W.W. White doing business, and higher taxes and depreciation have Chairman of the Board taken, and are expected to continue to take , their toll in 1977. We believe a rate increase is essential to enable the Company to continue to provide safe and adequate service to its customers. We also must attract the capital required to construct new facilities to serve President anticipated growth which will occur in Southern New Jersey, as well as replace existing plant and equipment.

The slowdown in growth during the past few years as enabled us to defer some capital expenditures.

Preventive maintenance is important to the dependable operation of our generating facilities . Pictured are employees at our Deepwater Station performing regularly scheduled maintenance.

1976: A Year of Hope The year 1976 was a year of rebound-a glimmer of hope in the long and difficult struggle against inflation. Earnings recovered in 1976 and amounted to $2.60, compared with the depressed $2.41 per share recorded for 1975.

A principal reason for this improvement was the timely rate relief granted to the Company by the New Jersey Public Utility Commission in February 1976.

This reduced the impact of regulatory lag: the effect of inflation during the period between application and approval of rate relief.

Increased kilowatt-hour sales contributed importantly to the earnings CONSTRUCTION increase. Also not to be overlooked in viewing the improved earnings is the

$100 EXPENDITURES (CASH) Company's continuing progress in its cost control programs.

90 (Millions of Dollars)

- Although we are pleased with earnings per share for 1976, it will take

- extraordinary effort to hold or increase this level in 1977. In our endeavor to provide you, the shareholder, with a fair return on your investment dollar, 80 ,..._.__ we shall continue to improve cost control policies and enhance efficiency.

However, we cannot go it alone. We need prompt, supportive action by the 70 regulatory commission on applications for rate increases and we need continued confidence and support from our shareholders.

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J!L - Higher Net Income-Higher Dividends In August, the Board of Directors increased the regular quarterly dividend to

-+/-'!. 40!/2 ¢ per share, which is equivalent to $1.62 per share on an annual basis. The

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- Company has paid cash dividends on its Common Stock in each year since 1919 and annual dividends per share have increased in each year since 1952. We are

-- 20 10 ....

proud of this fine record, and confident that it conveys a meaningful message to our shareholders and to members of the financial community-the message that over many years the management of Atlantic Electric has made strong efforts to provide a fair return to investors.

0 Total Operating Revenues reached a record $212 million in 1976, up 6.5%

1974 1975 1976 1977 1978 1979 from 1975. This increase, for the most part, is traceable to.higher energy sales in 197 6 and to rate increases received in 197 5 and in early 197 6.

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Upgrading of distribution faci liti es he lps provide additional capability and reli-abi lity of serv ice. The fac iliti es shown a rc pa rt of a n improve ment proj ect beg un in Operating expenses, notably maintenance and depreciation expenses, and 1973 and completed in 1976.

taxes rose 6.8 % over 1975 operating expenses.

The increased operati ng revenues, o nly partially offset by highe r expenses, produced $30.8 million of ne t income.

Our Market: More Customers and Increased Kilowatt-Hour Sales Kil owatt-h our sa les to residential c ustomers increased 6.8 % in 1976.

Another indi cati o n of eco nom ic improvement in o ur service area is the increased activity in the new home market. During 1976 we added 7 ,260 new dwelling units compa red to 6,988 units added in I 975. The perce ntage of electri ca lly THE COMPANY AND heated homes wi thin the new home market dec lined in 1976 due to reduced ITS SERVICE AREA construction of apartment complexes . Nevertheless, electric heat was installed in Atlantic City E lectric Company is 1,852 homes during 1976 and we now serve 42,878 electri ca lly heated an investor-owned electric utility dwelling units. engaged in the production and sale Kilowatt-hour sa les to comm ercia l a nd industrial c ustome rs increased 3.4 % of electr ic energy in the so uthern a nd 10.3 % respectively over 1975 . We are hoping fo r a n improved economy in one-third of the State of New Jersey.

1977 wh ich , together with more realistic e nvironmental regu lati ons, w ill permit Year-round population of the area is estimated at 937 ,000. The a continuing grow th of commercial a nd indu strial energy sales.

diversified economy of our 2,700 Solar Energy and Load Management square mile service a rea is based on popular resorts, major agricultural At o ur Cape May Court Hou se Operations Center an experimental installation areas and a variety of industries.

which uses the elect ric heat pump in conjunction with a solar heating system was placed in operatio n. Further testing w ill be required before we are able to eva lu ate comp lete ly the overall efficiency a nd econo mi cs of such a system.

Our representatives conti nu e to work close ly with industrial and commercial customers in matters pertaining to load management. The concept of load ma nageme nt is to enco urage large users of e lectri city to shift th eir usage of e lectr ici ty from periods of peak de mand to pe riods of low demand so that we may more fully utilize ex isti ng system equipm ent. L oad management is also e nco uraged among residential customers. Our residential representatives work with builders to advise them of prope r insulation and other energy saving techniqu es.

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As part of the County Recognition Day program , President John D . Feehan, together with Officers and Managers of the Company, toured Atlantic Electric facilities and pre-sented citations to a total of 330 employees for their contributions to various civic and community endeavors throughout our service area .

The Construction Program Construction of new Company facilities continued at a slower pace in 197 6 in comparison to earlier years. This is consistent with our latest estimates of the rate of growth in energy demand which have been revised downward.

Expenditures in 1976 for generating capacity, transmission and distribution faci lities and other capital improvements amounted to $34.2 million. In addition, allowance for funds used during construction amounted to $7 .5 million The 1,090,000 kilowatt first unit at Salem Nuclear Generating Station was completed by year-end 197 6 and it is expected that it will be placed in full commercial operation early in 1977. We own 81,000 kilowatts of the unit's capacity. The second unit at Salem is about 61 % completed and is scheduled 1976 REVENUE DOLLAR for service in 1979 . . . our ownership interest will be 83,000 kilowatts.

Construction has started on the two Hope Creek Nuclear generating units SOURCES OF REVENUE having a combined capacity of 2,140,000 kilowatts. Our ownership in these Residential * * * * * * * * * * $ .47 units, scheduled for completion in 1984 and 1986, will total 107,000 kilowatts.

Commercia l .31 The Company also plans to participate in the construction of four additional nuclear generating units; the two Atlantic Generating Station Units and two In dustrial .17 units for which a site has not yet been selected. These four units are scheduled Other Revenue Total * .05

$1.00 to go into operation during the period 19 8 5 to 1992 and will provide an additional 460,000 kilowatts of capacity for Atlantic Electric.

With the completion of these stations, the Company will be receiving 888,000 DISPOSITION OF REVENUE kilowatts of capacity from nuclear generation.

Upgrading of the distribution system serving the Ventnor, Margate and Fuel * * * * * $.33 Longport areas was completed in 1976. Conversion of this system to 12KV Taxes .18 will provide for future growth as well as improved reliability of service in an Cost of Invested Funds .16 area where we now serve approximately 9,500 customers. As part of this conversion, a complex and time consuming project, the associated transmission Materia ls & Suppl ies .13 system was upgraded from 23KV to 69KV.

Cost of Replac ing Equ ipment .08 Labor .08 Fuel: The Crux of the Energy Problem Reinvested Funds Total * .04

$1.00 Overall fuel costs are down about 3.4 % from last year. This resulted from the continuing concentrated use in 1976 of nuclear power and coal. Also,-we were able to negotiate a reduction of 12 % in coal prices in 197 6 as well as 6

The Control Room of Salem Nuclea r Generating Station Unit No. 1.

being able to utilize less expensive, normal sulfur oil because of continued relaxation of the New Jersey Air Pollution Control Code. Because of all these factors, the Fuel Clause Adjustment applied to 1976 bills of our customers reached its lowest level since April 1974.

Also significant is the fact that 200 million gallons of oil were released for other uses because of our continued use of uranium and coal. We are convinced that nuclear energy must play an ever-increasing role in the future of Southern New Jersey and the Nation, to maximize economy and minimize our dependence on foreign oil.

Financial Structure and Rates To maintain the financial integrity of the Company, it has been necessary for us to seek rate relief four times in recent years. The latest action came when the Board of Public Utility Commissioners of the State of New Jersey approved a $9.3 million increase in rates effective February 5, 1976, just six months after the Company filed its request. This timely action has enabled the Company to delay filing for additional rate relief until now ... about eighteen months since the last request was filed.

It continues to be our policy to make timely application to the Public Utility Commission for rate relief when the need is clearly demonstrated. Obviously, we will need additional rate relief in order to earn an adequate return on Common Stock equity in 1977 and provide some assurance of long range financial health. As this Annual Report goes to press, a request for a rate increase is being prepared.

A successful sale of 1,000,000 shares of Common Stock was completed in October 197 6. The proceeds from the sale of Common Stock were used to pay outstanding short-term bank loans and commercial paper obligations incurred in connection with the Company's construction program together with the refunding of $10 million of the Company's 8 l/2 % Debentures which matured September 1, 197 6.

In December 1976, the Company issued $2.5 million principal amount of First Mortgage Bonds, 6Ys % Pollution Control Series A due 2006. These 7

F a rming, although a co nstantl y cha nging industry, continues to co ntribute significa ntl y to the eco nom y of Southern N ew Jersey.

Bonds were issued as part of the financing arrangements for the Company's share of pollution control facilities located at the Peach Bottom Atomic Power Station, Peach Bottom, Pennsylvania.

The Company also received funds for its continuing construction program in 1976 through the issuance of more than 85,000 shares of Common Stock under its Dividend Reinvestment and Stock Purchase Plan. The Plan was modified in July 1976 and made available to employees of the Company. Approximately 5,350 shareholders of Common Stock were participating in the Plan at year-end

- additionally, 350 employees were buying shares through payroll deductions.

Participants in the Plan are able to purchase additional shares of Common Stock directly from the Company at a price based on the average high and low sales prices of the Company's Common Stock on the New York Stock Exchange PERCENT OF as of the investment date. This is an attractive opportunity. Because shares are KILOWATT-HOURS purchased directly from the Company and not in the open market, there are PRODUCED FROM no brokerage fees or commissions. All administrative costs and service charges VARIO US FUELS are borne by the Company .

(1976 and projected) Cash requirements for construction are expected to amount to $51.2 million in 1977; we expect to generate about $3 l million internally through retained 100%

earnings, depreciation accruals and similar items, and about $2.2 million from the sale of Common Stock through the Dividend Reinvestment and Stock Purchase Plan . Present plans are to temporarily finance the remaining $18 75 million through short-term bank borrowings and commercial paper borrowings.

Toward year-end or early in 197 8 we expect to refinance these and the $15 million of 9.90 % Notes which mature December 15 , 1977. The securities 50 to be issued will be determined by market conditions at that time.

SOAL 25

-E_IL

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The Owners of A tlantic Electric At year-end , the Company had 42,516 owners of Commo n Stock and 2,058

~~0 ow ners of Preferred Stock . These shareholders reside in all 50 states, the D istrict

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,p of Columbia and 20 foreign countries. Active and retired employees and 0 Directors of the Company own approximate ly 175 ,000 shares of Common Stock 1976 1977 1978 1979 1980 having a current market value of about $4 million. Approximately 33 % of the

Construction of new facilities by some of our commercial customers is one sign of an improving economy in our service area. Top-Spencer Gifts, owners of Common Stock owning 32 % of the outstanding shares live in the I ne. new executive office Company's service area. This regional concentration of shareholders provides a building. Bottom-Central Square Shopping Center.

strong identification of the Company with its service area interests.

Peak Demand Reduced- A Favorable Sign Heavy use of air conditioning together with a major influx of customers to our resorts during the summer months results in the Company experiencing its peak demand during that period. The peak demand is the highest total power requirement of all of the electrical equipment in use by our customers during any one period of time. The Company must provide adequate generating capacity to meet that peak demand and still have adequate reserve capacity to meet requirements during scheduled outages of major generating equipment for maintenance and unscheduled outages caused by malfunctions. Our 1976 peak was 1,030,300 kilowatts and it occurred on August 23, 1976-this was 39,100 kilowatts lower than the 197 5 peak. The generating capacity at the time of the peak demand was J ,334,700 kilowatts. Reduction in the demand and the growth rate of the peak demand has enabled us to reduce projected construction expenditures during recent years.

Improved Productivity Employee training continued to be emphasized in 1976. Key programs were established to increase safety and productivity. One program, the Customer Service Training Program, seeks to improve customer relations and understanding by enhancing employee goodwill and knowledgeability.

This training is a logical supplement to the Company's comprehensive program to communicate with the customers through the use of monthly bill messages and other media.

In another forma l emp loyee training program, the Company adopted a work procedure in which 12KV Jines are worked with rubber gloves rather than with "hot st icks" (long hand led insu lated tools). This new procedure provides the same or greater safety for the employee and at the same time results in greater efficiency and productivity.

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Serving One-third of the State of Energy M anage ment Cente rs have bee n set up at C ustomer Serv ice locatio ns to p rov ide New Jersey in form ati o n o n such matters as insul atio n techniques, effi c ient use of applia nces a nd other a reas of energy conserva tion within the home.

Cost control programs continue to play an ever increasing role within the Company's guidelines . Continuing efforts are undertaken to maintain employee awareness of the need to provide customers with reliable, efficient service at the lowest possible cost.

The Environment Over the years it has become apparent that there must be a realistic balance between environmental controls and future energy requirements. A step in the right direction was taken in 1976 when regulatory authorities in the State of New Jersey permitted a temporary relaxation in the stringent New Jersey Air Pollution Code. Not only did this permit the Company to burn more normal sulfur content fuel, but it also permitted many industries in Salem, Cumberland and Cape May Counties to utilize this less expensive fuel. This temporary relaxation, along with continued New Jersey Department of Environmental PEAK LOAD VS.

Protection consent to burn coal at our B.L. England Station, facilitated a much SYSTEM CAPABILITY needed boost for the local economy.

MILLIONS OF KILOWATTS The results from a recently established monitoring network in Southern New 2

Jersey indicate that the increased sulfur oxide emissions resulting from the I I Utility System relaxed standards have had very little effect on ambient air quality, which continues to be well within national clean air standards. It is hoped, but not 1.5 Capability _ yet assured, that these results will justify a permanent relaxation of State standards for both coal and oil.

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. system I

- During the last six years, the Company estimates it has spent approximately

$37,300,000 for capital purposes relating to improving the environment; in

\.Jtilll'i\<.Load -

?ea 1976 alone these expenditures amounted to $3,800,000. We estimate that such expenditures for 1977 and 1978 will total $15,600,000.

.5 The Community We firmly believe that good community relations are as important as good customer and shareholder relations. We are very conscious of the way the public 0

sees us and of the acceptance we receive as a progressive and supportive 1974 1975 1976 1977 1978 1979 member of the business community.

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A new training program commenced in 1976, teaches linemen to work on 12 KV lines with rubber gloves rather than hot sticks.

Our effort to maintain strong community ties has produced several key programs. One such program, the Science Energy Conference, is attended by Customer Service Repre-student and faculty member representatives from all area high schools. Designed sentatives, assisted by modern data processing equipment, to generate awareness from within the scientific and social studies leaders of can respond quickly and tomorrow, the Conference permits discussion of the latest developments in the accurately to customer electric utility industry including fuel sources, energy options of the future and inquiries .

utility economics.

Another such program is County Recognition Days. Officers and managers toured the eight counties in Southern New Jersey in 197 6, meeting with business, civic and educational leaders to discuss the interdependence of the Company with the area we serve. Each tour included special recognition of employees who have made special contributions to their respective community as detailed in the photograph caption appearing on page six.

The Company's Speakers Bureau, consisting of 36 employees, made 80 presentations to interested groups during the year.

If we are to continue to help serve the energy needs of the people of Southern New Jersey, we must rely on the understanding and cooperation of the public in such matters as energy costs, generating station locations and environmental considerations.

Our Employees Capable and efficient employees are the mainstay of our business. The Company's staff of 1,714 employees is provided with good working conditions, good wages and employee benefits and the clear understanding of the necessity of rendering a full day's work for a full day's wage.

A general wage and salary increase went into effect on December 6, 1976 following company-union negotiations. This will add an estimated $2.4 million to 1977 payroll costs. Other improvements in employee benefits were granted in the areas of hospitalization coverage and life insurance.

We are proud of our long standing reputation of being one of the more outstanding employers in the Southern New Jersey area.

11

Statements of Income and Retained Earnings Year Ended December 31 1976 1975 OPERATING REVENUES-ELECTRIC (Note 9) $212,027,442 $199,079, 150 OPERATING EXPENSES:

Fuel .... ..... .. .... ........ ..... . .. .... ............ . ........... . 69,233,774 71,644,673 Interchange . . . ..... . ... . ........ . .................. . ... . ........ . 4,819,194 2,855,059 Power Production-Operation and Maintenance ..... . ............ .. ... . . 13,497,991 J 0,267,348 Other Operation and Maintenance ... .. . .. ... . ................. . .... . . . 26,333,575 24,631,477 Depreciation (Note 1 ) ... .. .............. . ...... ...... . ... . ....... . 17,394,673 16,846,038 Taxes Other Than Federal Income Taxes . .............................. . 26,341,778 23,394, 142 Federal Income Tax Expense (Notes 1 and 6) .. . ........ . ..... .... ..... . 11,495,656 8,689,091 Total Operating Expenses ..... . . . ... . .... .. . ... . .. ... .. . ..... . 169,116,641 158,327 ,828 OPERA TING INCOME 42,910,801 40,751,322 OTHER INCOME:

Allowance for Funds Used During Construction (Note 1) ..... . . ......... . . . 7,456,612 7,229,745 Miscellaneous Non-Operating Income Less Income Deductions .............. . 385,583 516,755 Total Other Income .. . ... . . . ....... .. ............. ... .... .. . . 7,842,195 7,746,500 INCOME BEFORE INTEREST CHARGES .. .. ............... . ........ . 50,752,996 48,497,822 INTEREST CHARGES:

Interest on Long-Term Debt . . . . . ..... . . ........ . .. . .. . ... . ......... . 18,948,850 18,403,404 Amortization of Debt Expense and Premium-Net ............ . ...... . ... . 52,023 25,335 Interest on Short-Term Debt ........ .. ....... . .......... . ........... . 800,563 1,694,322 Other Interest Expense . . . ....... . .. .. . . ........ . . ... ..... . . . ...... . 155,864 95,026 Total Interest Charges . .... . .. . . . ... .. ... ... . ........ . ....... . 19,957,300 20,218,087 NET INCOME . . .... . ... .. . ...... .. .. . .......... . ...... . . . .... . .. . . 30,795,696 28 ,279,735 RETAINED EARNINGS AT BEGINNING O F YEAR ......... . . ... . .. . . . 74,165,678 65,764,596 104,961,374 94,044,331 DIVIDENDS DECLARED:

Dividends on Cumulative Preferred Stock ........ . ............ . ........ . 5,483,936 5,483,936 Dividends on Common Stock (per share 1976-$1.58, 1975-$1.52) ........ . 15,449,999 14,394,717 Total Dividends Declared .... . ... . . . .. .. . .................... . 20,933,935 j 9,878,653 RETAINED EARNINGS AT END OF YEAR ....... . .... . .. . . . . ....... . $ 84,027,439 $ 74,165,678 A VERA GE NUMBER OF COMMON SHARES OUTSTANDING .... .. .... . 9,747,012 9,470,073 EARNINGS PER SHARE OF COMMON STOCK (Note 4) ......... . .. . .. . $2.60 $2.41 See Notes to Financial Statements 12

Statements of Changes in Financial Position Y car Ended December 31 1976 1975 SOURCE OF FUNDS Funds from Operations:

Net Income ....................... . .... . ........................ . $ 30,795,696 $ 28,279,73 5 Principal Non-Cash Charges (Credits) to Income:

Depreciation . .......... . .......................... .. ...... . ... . 17,394,673 16,846,038 Allowance for Funds Used During Construction .............. .... .... . (7,456,612) (7,229,745)

Federal Income Taxes-Deferred-Net .... . ...... . .... . ..... . ...... . 4,697,375 3,962,654 Investment Tax Credit Adjustments-Net ..... . ...................... . 6,419,859 3,735,42 1 Other-Net ......... . .................. . ........ . ...... . . . . . .. . 132,117 47 L,723 Total Funds from Operations ........ . .. . ........... . ......... . 51,983,108 46,065,826 Funds from Outside Sources:

Long-Term Debt .... .. ............. . ... . .... .. ............ . .. .... . 2,500,000 51 ,500,000 Sale of Common Stock ................................... . ... .. .... . 20,790,854 Total Funds from Outside Sources* ........................... . . . 23,290,854 51,500,000 Hope Creek Transfer-Net ............ . ............ . .............. . .. . 3,262,031 Other Sources-Net ............................ . ................. .. . (126,801) (793,301)

Total Source of Funds .......................... . ....... .. . . . . $ 78,409, 192 $ 96,772,525 APPLICATION OF FUNDS Gross Additions to Utility Plant .......................... . . .. ... . .. . . . . . $ 41,701 ,515 $ 46,744,820 Allowance for Funds Used During Construction ................... ... . . . .. . (7,456,612) (7,229, 745)

Net .................. . ....... ... ... . . . ...... . . . ......... . 34,244,903 39,515 ,075 Dividends on Preferred Stock .......... ... ... . ........... . ....... . ..... . 5,483,936 5,483,936 Dividends on Common Stock ... . ............. . ..... ... .. ... .... . ... ... . 15,449,999 14,394,717 11 Retirement and Maturity of Long-Term Debt* ..................... ...... . . 10,592,000 15, 125,000 Conversion of Preferred Stock ......................................... . 25,000 Decrease in Short-Term Debt .................................. . ....... . 13,650,000 23 ,650,000 Investments in Subsidiary Companies . ...................... . ........... . 1,161,473 894,446 Decrease in Working Capital (see below) ..... ......... .. . . ........... .. . (2,198,119) (2,290,649)

Total Application of Funds ...... . ...... .. .. ..... .. .. . . ....... . $ 78,409,192 $ 96,772,525 NET INCREASE (DECREASE) IN COMPONENTS OF WORKING CAPITAL*

Current Assets:

Cash and Cash Items ...... . ............................. . ......... . $ (993,958) $ (2,812,009)

Accounts Receivable ............ .. ........ . .... .. ................. . 1,366,882 157,868 Fuel ..... . ....... .. ....... . .................................... . (2,082,246) 2,391 ,684 Materials and Supplies ............... . ........ . ............ . . . . . . . . . 68,915 (70,487)

Prepayments ..... ... .................................... . .. . .... . 134,299 207,626 Other ..... .. .... ... ... ...... . .. ....... . . . .. .. .......... . . . . ... . . 3,262,031 (2,106,348)

Total ................ . . . . . .. . ........ . .... .. .. .. ......... . 1,755,923 (2,23 1,666)

Current Liabilities:

Accounts Payable .............. . ............. . . ... ... .... ....... . . 2,526,763 ( 1,633, 447 )

Taxes Accrued .. . . .. .............................. .. ...... ... ... . . 336,836 252,268 Interest Accrued ............ . ... ... .............................. . (291,120) (32,377)

Other ........ . .. . ............................. . ................ . 1,381,563 1,472,539 Total . ........................... . ... ... ...... . ......... . . 3,954,042 58,983 Net Decrease in Working Capital .... ..... ..... . ... . .... . . . .. ....... . . . . $ (2,198,119) $ (2,290,649)

• Excludes Short-Term Debt, Notes and Debentures Maturing in 1977 and 1976.

See Notes to Financial Statements 13

Balance Sheets Assets 1976 December 31 1975 ELECTRIC UTILITY PLANT (Note l):

In Service:

Production . ........... .. ...................................... . $254,882,314 $252,255,29 I Transmission . .. .... . . . ... .. .. . . . .... ... .. . .... ... . . ........... . I 00,078,636 95,672,272 Distribution .... . ......................................... . .... . I 97,834,649 185 ,85 4,2 I 6 General . ...... ..... .. .. ........... . .......................... . 15.961,996 15,806,598 Construction Work in Progress .. .... .. . . ............................ . 133, 754,943 119,478,320 Nuclear Fuel .......... . ....................................... . . . 7.830,430 6,549,957 Total Electric Utility Plant ......................... . ... ....... ... . 710,342. 968 675,616,654 Less Accumulated Depreciation ............. .... .... . . . .. ... .... . l 37,204,449 122,9 88,944 Electric Utility Plant-Net ............ . . .... .... . . . .......... . 573, l 38,519 552,627,7 I 0 I

INVESTMENTS:

Investment in Subsidiary Companies, at Equity (Note 2) ................... . 5,538,846 4,621,320 Land Purchase Contracts .................................. . .... . .. . . 635,231 635,231 Other Investments ... .... .. .. .. ....... .. .. . . .. ........ . . . .... . ... . . 422,792 494,078 Total Investments .......... . ...... .... . ........ . ..... ...... . 6.596,869 5,750,629 CURRENT ASSETS:

Cash (Note 5) . .... . ......................... . ................... . 4,708,804 4,786,6 13 Temporary Cash Inves tments ...... . . . . . ....... ... .. ...... . .. ... .. .. . 600,000 1,800,000 Special Deposits and Working Funds .. ...... . .. . .... . ...... . ... . ...... . 466,569 182,718 Accounts Receivable:

Utility Services .. . . . . . .. ...... .... ........ .. ... . . . .. .... ....... . . 13,546,972 12,870, 557 Miscellaneous . . ... .... . ...... . . . .... . ... .... ........ . .. .. .. . .. . 2,871,963 2,411,496 Allowance for Doubtful Accounts ...... ...... .... ... . .............. . (200,000) (430,000)

Fuel (at average cost) ... ... . . ... . ...... ..... . ........ ..... .... .... . 14,882,702 16,964,948 Materials and Supplies (at average cost) .... .. . ....... . ........ . ....... . 7,267,268 7, 198,353 Prepayments ........ . ........ ...... ... . . ....... .. .......... .. ... . 1,706,797 1,572,498 Other Current Assets (Note 8) . ...... . ........ . .... .. ................ . 3,262.031 Total Current Assets .. . ................ .. .... . .......... . . .. . 49,113,106 47,357,l 83 DEFERRED DEBITS:

Unamortized Debt Expense (Note 1) ......... . .. .... . ............. . ... . 2, 150,559 2,289, I 75 Other Deferred Debits ..... . .... . ... .. . .... ....... . .. .............. . 2,058.703 l ,3 46,5 57 Total Deferred Debits . ..... ... ..... ......................... . 4.209.262 3,635,732 Total Assets ................ ....... ..... ... . .... ....... . $633,057,756 $609,37 1,254 See Notes to Fin ancial Statements 14

liabilities and Shar*holders' Equity December 31 1976 1975 SHAREHOLDERS' EQUITY (Note 3) :

Cumulative Preferred Stock .... . ...... . . .. . . . .. . ...... ... ........... . $ 80,066,045 $ 80,091,045 Common Stock, Par Value $3:

Authorized Shares, 14,000,000 Outstanding Shares 1976-10,556,372; 1975-9,470,073 . . ......... .. .. . 31,669,116 28,4 10,219 Premium on Common Stock .. . . ... .... .......................... . . 99,700,474 8 1,955 ,98 4 Total Common Stock . . . ..................... . . ... .. . . ...... . 131.369,590 110,366,203 Capital Stock Expense (not being amort ized) ............... .. .. .... . ... . (1,723,230) (1,511,187)

Retained Earnings ... .. .. ........................ . ...... . .. . . . . . . . . 84,027,439 74,165,678 Total Shareholders' Equity ......... . .. . ..... . . .... . .......... . 293, 739.844 263,11 J ,739 LONG-TERM DEBT (Note J2) ... . . .... . .................. . ....... . . . 275,635,523 288,864,954 CURRENT LIABILITIES:

Current Portion of Long-Term Debt ....... . ....... . ... ..... . . .. .. ..... . 15,000,000 10,000,000 Notes Payable to Banks (Note 5) ....... .. .... . ... .. .... . ............. . 7,1 50,000 Commercial Paper (Note 5) ..... ... . . .. ....... .... .. . . ....... . .... . . 6,500,000 Accounts Payable ..... . .. ..... ........... . .......... ... .. . . . ... . . . 4,240,643 1,713,880 Customer Deposits ............................................. .. . 2,440,353 1,648,070 Taxes Accrued . ......... ... ... .. ........ . ...... .. ...... . ..... ... . . 2,354,401 2,017,565 Interest Accrued ........... . ......................... . .. . . . . ..... . 3,528,873 3,8 19,993 Dividends Declared . . . . . . ........................................ . . 5,644,728 5,016,960 Other Current Liabilities ........ .. .. . ... . ........ ... ....... . .. ..... . 5,914,005 5,952,493 Total Current Liabilities ..................................... . 39, 123,003 43 ,818,961 DEFERRED CREDITS:

Customer Advances for Construction . .. ... ... ..... ..... ... ...... ..... . 517,448 541,977 Accumulated Deferred Investment Tax Credits (Notes I and 6) .. .......... . 12,371,454 5,951,595 Accumulated Deferred Income Taxes (N ates l and 6) ....... .. .. .. .. .. ... . 10,439,949 5,742,574 Other Deferred Credits ....... . ...... ... . . . .. .. ..... ...... ..... . ... . 230,535 175,602 Reserve for Storm Damage . ....... . ...... . .. ........ ..... . ..... ... . . 450,000 558,852 Other Reserves ..... . ........................... .. ... . .. .. ... .... . 550,000 605,000 Total Deferred Credits . ....... .. ..... ... . . .... . .. .. ... .. ... . . 24,559,386 ] 3,575,600 COMMITMENTS AND CONTINGENT LIABILITIES (Note 8)

Total Liabilities and Shareholders' Eq uity . . .... .. ....... . ........ . $633 ,057,756 $609,371,254 See Notes to Financial Statements 15

Notes to Financial Statements NOTE l: SIGNIFICANT ACCOUNTING POLICIES: PENSION PLAN-The Company and Deepwater, referred to in Note REGULATION-The accounting and rates of the Company are sub- 2, have in effect a noncontributory insured retirement annuity plan ject to the requirements of the Board of Public Utility Commis- covering all regular employees. The cost of the plan determined sioners of the State of New Jersey (PUC) and in certain respects to under the aggregate cost actuarial method for the years 1976 and the Federal Power Commission. 1975 respectively, amounted to $2,544,000 and $2,164,000 for the Company (including $582,000 and $510,000 charged to construc-ELECTRIC UTILITY PLANT-Property is stated at original cost (cost tion) and $414,000 and $362,000 for Deepwater. Based on an to the person first devoting the plant to public service). Generally actuarial study as of December 31, 1975, the fund assets were in the plant is subject to first mortgage liens. The cost of property excess of the vested benefits computed under the plan . Company additions, including replacements of units of property and better- compliance with the Employee Retirement Income Security Act of ments, is capitalized. Included in such additions is an Allowance for 1974 is not expected to have a significant impact on annual pension Funds Used During Construction which is defined in the applicable costs in future years.

regulatory systems of accounts as the net cost, during the period of construction, of borrowed funds used for construction purposes NOTE 2: INVESTMENT IN SUBSIDIARY COMPANIES:

and a reasonable rate on other funds when so used. The rate used The Company's investment in Deepwater Operating Company (Deep-for such allowance was 8% in 1976 and 1975. water), a wholly-owned subsidiary which operates generating and process steam units owned by the Company was $2, 101,000 and DEPRECIATION AND MAINTENANCE- Th e Company provides for $1,856,000 at December 31, 1976 and 1975 respectively. Th e assets depreciation on the basis of the estimated service lives of de- of Deepwater consist almost wholly of working capital in which the preciable property on a straight-line basis. The over-all composite equity of the Company is fairly represented by its investment in rate of depreciation was approximately 3.2% for the years 1976 Deepwater. The net production costs of Deepwater (after deducting and 1975. In addition to the provision for depreciation, income is charges to E. I. duPont deNemours & Company) are charged to the charged with the cost of labor, material, supervision and other Company. These costs are included in the Company's accounts expenses incurred in making repairs and minor replacements and classified as to maintenance, taxes, etc. Also, the Company has an in maintaining the properti es in efficient condition. Accumulated investment in Overland Realty, Inc. (Overland), a wholly-owned depreciation is charged with the cost of depreciable property units subsidiary which owns land to be used as sites for the location of retired, together with removal costs less salvage. future generating stations or industrial and residential devel-opments. The Company's net investment in Overland amounted to DEBT EXPENSE AND PREMIUM-Debt issuance expense and pre- $3,437,746 and $2,765,220 at December 31, 1976 and 1975 respec-mium are being amortized over the lives of the issues to which tively. At December 31, 1976, Overland had $11,298,953 invested in they pertain. mortgages and land of which $1,780,032 is invested as a 20%

undi vided interest as tenant in common in a future generating sta-FEDERAL INCOME TAXES-Tax reductions resulting from the use of tion and industrial site. This site is subject to a mortgage of which accel erated depreciation incl uding Class Life (ADR) System for the Company is liable for the payment of $900,000 principal amount depreciable property added prior to 1974 are reflected in Federal and interest under a suretyship agreement. At December 31, 1976 income tax expense currently in accordance with the prescribed Overland had outstanding $3,757,593 in short-term mortgage notes ratemaking policy of the PUC. Deferre d Federal income taxes are payable to banks and $3,656,553 of advances from the Company provided in amounts equal to the ta x effect of the difference be- (included in the Company 's investment referred to above) which are tween tax depreciation computed on depreciable property added subordinated to the mortgage notes. The mortgage note agreement after 1973 using accelerated methods under the ADR System and requires the Company to advance to Overland any amounts neces-the straight line method using asset guideline periods. In addition, sary to maintain the real estate covered by the agreement. Carrying the Company provides deferred Federal income taxes relating to its costs of land held for resale under an agreement with a developer use of th e repair allowance provisions of ADR (See Note 6). Invest- (principally interest and property taxes) have been capitalized by ment tax credits are being deferred in a balance sheet account and the subsidiary through July 31, 1976 and amounted to approxi-are being restored to income over the life of the related property. mately $445,000. Effective August 1, 1976 such capitalization was discontinued (see Note 8). The combined assets of the subsidiaries were approximately 2% of the Company's assets at December 31 ,

1976 and 1975 and their net income or loss for those years is not significant.

16

NOTE 3: CAPITAL STOCK:

CUMULATIVE PREFERRED STOCK, Par Value $100 (authorized 799,979 shares in 1976 and 1,200,000 shares in 1975) Current Refunding December 31 Redemption Restricted 1976 1975 Price Per Share Prior to (A)

Issued and Outstanding Series:

4% Series-77,000 Shares $ 7,700,000 $ 7,700,000 $105.50 4.10% Series- 72,000 Shares 7,200,000 7,200,000 101.00 4.35% Series- 15,000 Shares 1,500,000 1,500,000 101.00 4.35% 2nd Series- 36,000 Shares 3,600,000 3,600,000 101.00 4.75% Series- 50,000 Shares 5,000,000 5,000,000 101.00 5% Series- 50,000 Shares 5,000,000 5,000,000 100.00 5 ~a % Convertible Series-99,729 Shares (1976) 99,979 Shares (1975) (B) 9,972,900 9,997,900 104.50 7.52% Series-100,000 Shares 10,000,000 10,000,000 108.65 April 1, 1977 8.40% Series- 100,000 Shares (C) 10,000,000 10,000,000 115.00 Feb. 1, 1979 9.96 % Series-200,000 Shares (D) 20,000,000 20,000,000 109.61 Aug. 1, 1984 79,972,900 79,997,900 Premium on Preferred Stock 93,145 93,145 Total Cumulative Preferred Stock $80,066,045 $80,091,045 Preferred Stock, no par, 2,000,000 Shares authorized, none outstanding Preference Stock, without par value, 3,000,000 Shares authorized, none outstanding On April 13, 1976, the shareholders of the Company approved a reduction in the number of authorized shares of the existing class of Cumulative Preferred Stock, Par Va lue $100, from 1,200,000 to 799,979.

(A) Prior to the date specified, no shares may be redeemed through certain refunding operations.

(8) The 5 ~a % Convertible Series is convertible (subject to adjustment in certain events) into Common Stock at the rate of 3.5 shares of Common Stock for each share of the Preferred (349,052 shares of authorized Common Stock are reserved for the conversion of the Series).

(C) On February 1, 1985, and annually thereafter, 4,000 shares must be redeemed through the operation of a sinking fund at a redemption price of $100.00 per share, plus at the option of the Company, an additional 4,000 shares may be redeemed on any sinking fund date, without premium, up to 32,000 shares in the aggregate.

(D) On August 1, 1979, and annually thereafter, 8,000 shares of the 9.96% Series must be redeemed through the operation of a sink-ing fund at a redemption price of $100.00 per share, plus, at the option of the Company, an additional 8,000 shares may be redeemed on any sinking fund date, without premium, up to 40,000 shares in the aggregate.

COMMON STOCK-Issues of capital stock in 1976 consist of the following:

Shares Sa le of Common in October 1,000,000 Dividend Reinvestment 85,424 Conversion of Preferred 875 Total 1,086,299 Premium on Common Stock was credited in 1976 with the amount of $17,744,490 representing the excess of proceeds over the par value of shares of Common Stock issued, sold and converted. The Company has reserved 200,000 shares of Common Stock under its Dividend Reinvestment and Stock Purchase Plan which became effective in 1976.

17

Notes to Financial Statements NOTE 4: EARNINGS PER SHARE: Federal income tax expense is comprised of the following:

Earnings per share of Common Stock has been computed by divid-ing net income net of applicable preferred stock dividend require- Federal Income Tax . .. .. ......... $ 378,422 $ 991,016 ments ($5,483,936 in 1976 and 1975) by the average common shares Deferred Taxes (as below) . . ...... 4,697,375 3,962,654 outstanding during the year.

Investment Tax Credit-Earned .... 6,708,741 4,161,768 NOTE 5: SHORT-TERM BORROWINGS AND Investment Tax Credit-Used .. ... (288,882) (426,347)

COMPENSATING BALANCES: Federal Income Tax Expense ..... . 11,495,656 8,689,091 The Company had arrangements for short-term borrowings as follows: Federal Income Tax- Other Income . 329,095 82,640 1976 1975 Total Federal Income Tax Expense .. $11,824,751 $ 8,771,731 Maximum amount of short-term borrowings outstanding at any month end during the year $19,300,000 $41,200,000 The provision for Deferred Federal income taxes, net, results from the follo wi ng timi ng differences:

Average amount outstanding during the year $11 ,629,000 $18,500,000 Liberalized Depreciation . ... .. .... $ 3,264,227 $ 2,256,100 Average interest rate Repair Allowance . .... .. .. ...... 1,920,000 1,845,016 on above 6.3% 8.8%

Acce lera ted Amortization ..... . . . . (161,852) (110,507)

Weighted average interest rate on short-term borrowings outstanding Amortization- Repair Allowance ... (85,000) (27,955) at year end: Claims Reserve ***.********* .

• t. (240,000)

Notes Payable to Banks 7.2% 7.9% $ 4,697,375 $ 3,962,654 Commercial Paper 5.5% 5.6% At December 31, 1975, Investment Tax Credits of approximately

$1 ,198,000 were available for carryforward. All available credits The unused lines of credit available at December 31 , 1976 and have been utilized in 1976. Federal income tax returns have been 1975 were $50,000,000 and $36,350,000, respectively. Demand settled through 1971.

deposits are maintained with lending banks certain of which are As a result of the Internal Revenue Service modifying the use of deemed to constitute comp2nsating balances which are not legally the Repair Allowance provisions in 1976, through the issuance of restricted. Based on lines of credit and loans outstanding at Revenue Procedure 72-10, the Company in December, 1976 filed an December 31, 1976 and 1975 respectively, such compensating amended 1975 Federal Income Tax return to reflect the new pro-balances approximated $2,530,000 and $3,300,000. visions. For book purposes, the Company normalizes the timing dif-NOTE 6: FEDERAL INCOME TAXES: ference resulting from its use of the Repair Allowance arid accord-Federal income tax expense applicable to current operations is less ingly there was no impact on the reported 1975 Federal Income Tax than the amount computed by applying the statutory rate on book expense or net income. However, the components of Federal Income income subject to tax for the following reasons: Tax expense for 1975 have been reclassified as follows; Investment Tax Credits, net, and Federal Income Taxes decreased by $1,687,000 Year Ended December 31 , and $44,000 respectively and Federal Income Taxes deferred in-1976 1975 creased by $1,731,000.

Net Income . . . . . . . . . . . . . . . . . . . . $30,795,696 $28,279,735 Federal Income Tax Expense NOTE 7: LEASES:

(as below) . . .... ....... ..... . 11,824,751 8,771,731 Rentals incurred in 1976 and 1975 were approximately $2,675,000 and $2,552,000 respectively.

Book Income Subject to Tax ..... . $42,620,447 $37,051,466 Minimum rental commitments under noncancelable leases (prin-Income Tax at Statutory Rate (48%) $20,457,815 $17,784,703 cipally noncapitalized financing leases) as of December 31, 1976 Less: are approximately as follows:

Excess of Tax over Book Deprecia- 1977-$2,343,000 1982-1986-$9,264,000 tion (flow-through portion) ... . 3,655,710 3,844,262 1978- 2,239,000 1987-199 1- 7,962,000 Allowance for Funds Used During 1979- 2,178,000 1992-1996-6,990,000 Construction . . ....... .. ... . 3,579,174 3,470,278 1980- 2,134,000 After 1996- 2,538,000 Capitalized Overheads . ... . . .. . 729,801 744,889 1981- 2,018,000 Investment Tax Credits-Used .. 288,882 426,347 The total minimum rental commitments as of December 31, 1976 Accelerated Amortization- are applicable to combustion turbine generating units (69%), fuel Deferred Taxes . . . . ....... . . 161,852 110,507 transportation and storage facilities (14%), real estate (12%), and Amortization- Repair Allowance .. 85,000 27,955 other (5%).

Claims Reserve .. . . .......... . 240,000 The present value of future noncancelable lease commitments at Other ........ . ..... ... .... . . (107,355) 388,734 December 31, 1976 and 1975 is less than 5% of capitalization in each case. If all noncapitalized financing leases were capitalized, Total Federal Income Tax the impact on net income for 1976 and 1975 would be less than 3%

Expense .. .. .. . .. .. .. .. $11,824,751 $ 8,771,731 of the average net income for the most recent three years.

18

NOTE 8: COMMiTMENTS AND CONTINGENT LIABILITIES: NOTE 10: QUARTERLY FINANCIAL RESULTS (UNAUDITED):

Construction expenditures, excluding production plant, are esti- Quarterly financial data (not examined by independent certified mated at $35,000,000 for 1977. Commitments for the construction public acountants) which reflect all adjustments (which consist of of production plant amount to approximately $101,000,000 of which only normal recurring accruals) necessary in the opinion of the it is estimated that $17,000,000 will be expended in 1977. Company for a fair presentation of such amounts are as follows:

In connection with a long-term agreement for the purchase of Earnings Earnings fuel oil the Company has a commitment for use of terminal facilities Operating Operating Net For Common Per for a fifteen-year period from May 27, 1971 at a minimum annual Quarter Revenues Income Income Stock Share amount of approximately $1,300,000. The amounts paid under the (-Thousands of Dollars-)

above agreement are a part of the cost of fuel and are recoverable 1975 under the fuel clause surcharge in the Company's tariff schedules. 1st $ 49,809 $ 9,182 $ 6,102 $ 4,731 $ .50 Nuclear fuel requirements for Peach Bottom Units No. 2 and 3 2nd 42,997 7,689 4,422 3,051 .32 are being provided by the operating company for Peach Bottom 3rd 58,744 13,173 9,973 8,602 .91 through a fuel purchase contract. The Company is responsible for 4th 47,529 10,707 7,783 6,412 .68 payment of its proportionate interest (7.51 %) of the cost of the $199,079 $40,751 $28,280 $22,796 $2.41 fuel burned and of certain operating costs and interest expense 1976 during the term of the contract. 1st $ 51,074 $ 9,752 $ 6,673 $ 5,302 $ .56 In July, 1976, the Company reached agreement with Public Service 2nd 48,861 9,130 6,063 4,692 .49 Electric and Gas Company (Public Service) to reduce the Company's 3rd 61,739 15,363 12,104 10,733 1.13 participation in the Hope Creek Nuclear Generating Station (Hope 4th 50,353 8,665 5,956 4,585 .44 Creek) from 10% to 5%. As a result of the change in participation,

$ 212,027 $42,910 $30,796 $25,312 $2.60*

amounts paid to Public Service for Hope Creek and included in Con-struction Work in Progress, were transferred to Other Current The revenues of the Company are subject to seasonal fluctua-Assets. The balance, at December 31, 1976, amounting to $3,262,031 tions due to increased sales and higher residential rates during the will be applied to the Company's 1977 share of the Hope Creek summer months.

project costs.

• The individual quarters do not add to the total, due to the dilutive In 1976, a real estate developer challenged an agreement dated impact of the Company's sale of 1,000,000 shares of Common Stock March 3, 1969 between Overland Realty, Inc. (Overla nd), a Company in October 1976.

subsidiary, and such developer, wherein the developer had con-tracted to purchase certain realty from Overland over a period end-NOTE 11: REPLACEMENT COSTS (UNAUDITED):

ing in 1979. Overland is presently in the process of attempting to The impact of the rate of inflation experienced in recent years has negotiate a settlement of the dispute over the contract and at the resulted in replacement costs of productive capacity that are sig-same time has been preparing to litigate the matter in the event nificantly greater than the historical costs of such assets reported that such negotiations fail. Effective August 1, 1976, Overland dis-in the Company's financial Statements. Th2 Company's ability to continued the capitalization of carrying costs (principally interest maintain its productive capacity in the future will be contingent and property taxes) incurred on this real estate. The Company's upon its ability to finance the needed additions. This, in turn, will obligation to advance to Overland amounts necessary to maintain depend on the Company's ability to obtain adequate and timely rate this real estate will continue. The Company cannot predict the out-relief. In compliance with reporting requirements, estimated re-come of this controversy, but it does not expect the outcome to placement cost information is disclosed in the Company's annual have a materially adverse effect on the Company's operations.

report to the Securities and Exchange Commission on Form 12-K.

NOTE 9: RATE INCREASES:

Effective July 3, 1975 the PUC granted the Company an increase in rates which would have the effect of increasing the annual revenues of the Company by about $10.7 million, or 6%, when applied to the billing determinants for 1974, the test year.

Effective February 5, 1976 the PUC granted the Company an increase in rates which would have the effect of increasing the annual revenues of the Company by about $9.3 million, or 4.7%,

when applied to the billing determinants for 1975, the test year.

19

Notes to Financial Statements December 31 NOTE 12: LONG-TERM DEBT: 1976 1975 First Mortgage Bonds:

2?/s % Series due (June 1) 1979 ......... .. . _ ...................... . $ 3,000,000 $ 3,000,000 2¥.i % Series due (July 1) 1980 ................................... . 4,600,000 4,600,000 2?/s % Series A due (Nov. 1) 1980 ..... . .. . ........... . . . .... . .... . . 18,400,000 18,400,000 3 01 % Series due (March 1) 1982 ................................. . 4,620,000 4,620,000 3114 % Series due (Jan. 1) 1983 . . . .... . ........................ . .. . 4,050,000 4,050,000 9 1/i % Series due (May 1) J 983 ........... . ....................... . 35,000,000 35,000,000 3 % Series due (March l) 1984 .. ...... . ....... . .. ... ........... .. . 5,000,000 5,000,000 31;4 % Series due (March I) 1985 ....... . ............... . .... . .... . 10,000,000 10,000,000 4 112 % Series due (Jan . 1) I 987 .......... . ........ . ............... . 10,000,000 10,000,000 3 ?Is% Series due (April J) J 988 .... . .... ... ... .... ... . . . ...... . .. . 10,000,000 10,000,000 4Y2 % Series due (April 1) 1989 ................ . ... . . . ......... . . . 5,000,000 5,000,000 41h % Series due (March J) 1991 .... .... . .. . ..... ..... .. .. ...... . . 10,000,000 J0,000,000 4 112 % Series due (July 1) 1992 .. . ... . .. ... ... ..... . ... . ........ . . . 15,000,000 15 ,000,000 4 3/s % Series due (March I) 1993 ... . ..... . ....... ..... ..... . ..... . 15,000,000 15,000,000 5 1/s % Series due (Feb. 1) 1996 ......... .. ........ .. . . . ...... . . .. . . 10,000,000 10,000,000 8?/s % Series due (Sept. l) 2000 .................. .. .... . ... . . . .... . 20,000,000 20,000,000 8 % Series due (May 1) 2001 ....... ... .. ..... ... ... . ... ........ .. . 27,000,000 27,000,000 7 Y2 % Series due (April I) 2002 .... ........... . ...... .. .......... . 20,000,000 20,000,000 7¥.i % Series due (June J) 2003 ................ . .................. . 30,000,000 30,000,000 75/s % Pollution Control Series due (Jan . 1) 2005 ........... .. ....... . . 6,500,000 6,500,000 6% % Pollution Control Series due (Dec. 1) 2006 ... .. ... .... . .. . ..... . 2,500,000 Debentures:

265,670,000 263, 170,000 5% % Sinking Fund Debentures due (Feb. 1) 1996 ........ ... ........ . . 3,901,000 4,299,000 701 % Sinking Fund Debentures due (May 1) 1998 .. ... .......... ..... . 4,361,000 4,555,000 Notes:

9.90% Notes due (Dec. 15) 1977 ...... ....... . ... ...... ... ... ... . . J 5,000,000 273,932 ,000 287,024,000 Add: Unamortized Premium (Note 1) ...... . .. . ..... . ................ . 1,703 ,523 J ,840,954

$275,635,523 $288,864,954 Deposits in sinking funds for retirement of debentures are re- quired and cancelled $496,000 principal a111ount of the 514 %

quired on February I of each yea r, fro111 1977 throu gh 1995 for debentures and $214.000 principal a111ou nt o f the 7~ % de be n-the 5 ~ % debentures, and on May l of each year from 1977 to tures toward it s require111ents for 1977 and subsequent periods.

1997 for the 7V<t % debentures, in a111ounts in each case sufficient Sinking fund require111ents of $1,246,700 required in con-to redee111 $ 100,000 principa l a mount plus, a t the e lection of the nec tion wi th certain first mor tgage bonds ou tst andin g are being Company, up to an additional $ 100,000 princ ipa l amount in sa tisfied by cer tificat ion of prope rty ndd ition as p rovided for in each year. Prior to Dece mber 31 , 1976 the Company had reac- the rel a ted mortgage indentures.

Accountants' Opinion Haskins & Sells 550 Broad Street Certified Public Accountants Newark, New Jersey 07102 Atlantic City Electric Company:

We have examined the balance sheets of Atlantic City Electric Company as of December 31 , J 976 and 1975 and the related statements of income and retained earnings and changes in financial position for the years th en ended.

Our examination was made in accordance with generally accepted auditing standards and accordin gly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying financial statements present fairly the financial position of the Company at December 3 1, 1976 and 1975 and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

February 3, 1977 20

Managements Discussion and Analysis of the Statements of Income The Statements of Income reflects the results of past OTHER OPERATION AND MAINTENANCE-operations and is not intended as any representation as to Increases in 1976 and 1975 are due principally to higher results of operations for any future period. distribution and administration and general costs. The The following Summary reflects the year-to-year increased charges result from continuing inflationary pres-changes, increase or (decrease). in the principal items sures, including higher costs of material, supplies and wages.

of the Statements of Jncome.

DEPREClA TI ON-The increase in 1975 is principally due to the addition of three major generating units during Comparison of* the latter half of 1974 and an increase in the depreciation 1976 and 1975 1975 and 1974 rates effective January J, 1975. The 1976 increase reflects Operating Revenues ...... . $12,948 6.5% $22,468 12.7% the growth in the Company's Electric Plant in Service.

Fuel ................... . (2,411) (3.4) (1,522) (2.1)

TAXES-Taxes other than income taxes, principally Interchange ............ . 1,964 68.8 (3,007) (51.3)

New Jersey tax on gross receipts increased in 1976 and Power Production-Operation 1975 as a direct result of increases in operating revenues.

and Maintenance ...... . 3,230 31.5 (1,094) (9.6)

Other Operations and FEDERAL INCOME TAX EXPENSE-The increases Maintenance . . . ..... . . . 1,702 6.9 2,902 13.3 in 197 6 and 197 5 are due principally to increased tax Depreciation ............ . 549 3.2 3,899 30.l deferrals relating to accelerated depreciation and the repair Taxes Other Than Federal allowance. Investment tax credits also increased, reflecting Income Tax Expense ... . 2,948 12.6 5,561 31.2 the higher availability of such credits. (See Notes 1 and 6 Federal Income Tax Expense 2,807 32.3 10,319 633.0 of Notes to Financial Statements.)

Other Income ........... . 96 (3,009) (28.0)

OTHER INCOME-Other Income (principally Allowance Interest Charges ... . .. .. . (261) (1.2) 1,130 5.9 for Funds Used During Construction) decreased in 1975 Preferred Dividends ...... . 1,012 22.6 primarily as a result of the Company's decreased con-

• Amounts stated in thousands. struction program, and has remained relatively constant in 1976.

OPERATING REVENUES-Increases are principally attributable to increases in energy sales in 197 6 and rate INTEREST CHARGES-Interest charges decreased in increases in 197 5 and 197 6. 1976 as a result of lower interest rates and a reduction in short-term debt. Such charges increased in 1975 due to FUEL--Stabilization of fuel prices together with the the sale of long-term debt and higher interest rates.

availability of nuclear energy has resulted in lower fuel costs in 1976 and 1975. Fuel cost changes are reflected in PREFERRED DIVIDENDS-The increase in 1975 fuel clause revenues two months later. reflects the sale of preferred stock.

INTERCHANGE-Increases in interchange reflect the Company's ability to acquire (import) interchange energy at a lower cost than if the Company had generated such energy while decreases (exports) reflect the opposite cost generation conditions .

POWER PRODUCTION-The increase in 1976 is attributable to increased operational charges and major maintenance at our jointly owned facilities, and to a lesser extent moderately higher operational and maintenance costs at our wholly owned facilities. The decrease in 1975 compared to 1974 reflects the leveling of customer usage, lower charges at our jointly owned facilities and reduced operational and maintenance costs at our wholly owned facilities.

21

Statistical Review and Summary of Operations 1976-1966 1976 1975 1974 Facilities for Service I Total Utility Plant (Thousands) . .. .. ............ ........ ..... $ 7 l 0,343 $ 675,617 $ 637,25~

Gross Additions to Uti lity Plant (Thousands) ...... . . ..... .... . . $ 41,702 $ 46,745 $ 71 ,22)

Pole Miles of Transmission and Distribution Lines .... .. .... ... . . 6,696 6,645 6,58 Generating Capacity (Kilowatts) <*> .......... ....... .......... 1,334,700 1,334,700 1,278,701 Maximum Utility System Demand-Kw . .. ... ..... .. . ... . ....... 1,030,300 1,069,400 1,004,40 Source of Energy (Thousands of Kwh)

Net Generation ..... .... . ................. .... . . ... .... .. 4,918,906 4,715 ,357 4,651 ,33 Purchased and fnterchanged-Net . .......... . . . .... ..... ..... 324,196 190,8 52 229,19 Total ....... .. ............................ .. ..... 5,243,102 4,906,209 4,880,53 Electric Sales (Thousands of Kwh)

Residential .. .... .. . ..................................... 2,070,766 1,938,724 1,882,56 Commercial ............ . ........ .. ... .... .... .... . . . .. .. 1,392,029 1,346,216 1,298,85 Industrial . .......... . ..... . . .... .. . .... .... ...... .. ..... 1,143,170 1,036,755 l,136,9 3 All Others . . ...... .... ...... .. ............. .. .... ... .... 57,667 56,465 57,47 Total . . ....... ..... ... ...... .. ........... .. ...... 4,663,632 4,378,160 4,375 ,83 Gross Revenue (Thousands of Dollars)

Energy Sales Residential . . . .......... . ........ .. ............ ........ $ 98,904 $ 90,956 $ 78,51 Commercial .... . .................... ..... .. . . ......... 66,354 63,544 55,7 l Industrial .. . ............ .... . ..... ..... ... .. ..... ..... 36,438 34,974 33,56 All Others .. . .......... ... .... . ................. . ..... 5,406 4,881 4,20 Total . .. . ... .. ... .. . ............... ... .......... . 207, 102 194,355 l 7 l ,9S Other Electric Revenue ... . . .......... . ................. .. . 4,925 4,72 4 4,61 Total .. .......... ... ... . ..... .... ........ ... . ... . $ 212,027 $ 199,079 $ 176,61 Residential Electric Service (Average per Customer)

Amount of Electricity used during the year (Kwh) ... ..... ....... . 7,320 7,018 6,9E Amount paid for a year's service ........ ...... ... . . .. ..... .. . $ 349.64 $ 329 .25 $ 291.2 Price paid per Kilowatt-hour ...... .. .. . ....... .. . . .... . .... . 4.78¢ 4.69¢ 4.1 Customer Service Locations-Electric (Year-End) ................ . 343, 147 336, 105 330,7~

Population Served .. .. ... ........ ... .... ........... ... ... . 937,000 915,000 894,0C Summary of Operations (Thousands of Dollars)

Operating Revenu es-Electric .. ... . . . .... .. ..... .... ....... . $ 212,027 $ 199,079 $ 176,61 Operating Expenses Fuel . .................. , .. ........ .. ............ .... . 69,234 71,645 73,H Interchange ..... . ..... ... .. .... . ............. .... .... . 4,819 2,855 5,8(

Power Production . ..... . ... ...... .. .. .. . .. ... .. . ... .. . . 13,498 10,2 67 J l,3(

Other Operating and Maintenance Expenses ................. . 26,334 24,632 21,T Depreciation ......................................... . 17,395 J 6,846 12,9, Taxes ..... ...... .. . . .. .. . ............... ..... . .. .. .. . 37,837 32,083 16,2(

Total Operating Expenses .. ....... . ... ....... ....... . 169, 117 158,328 141,2(

Operating Income ... . .................. . .. , ... .. . 42,911 40,751 35,3<

Other Income and Deductions-Net . . .................. . .. .. . 7,842 7,747 10,7' Income before interest charges ...................... . 50,753 48,498 46,o<

Interest Charges .................................. . ...... . 19,957 20,218 19,0l Net Income .. ......... .. ..... . . ..... ..... ... ... . 30,796 28,280 27,0 Dividends Paid or Accrued on Preferred Stock .................. . 5,484 5,484 4,2 Earnings for Common Stock ... .. ... .. . . .. ......... . . $ 25,312 $ 22,796 $ 22,7 Average Shares of Common Stock Outstanding .. ........ .... ..... . 9,747,012 9,470,073 8,973,4(

Earnings Per Share of Common Stock .......... ... ............ . . . $2.60 $2.41 $2.

Dividends Declared Per Share of Common Stock ... ..... .......... . $1.58 $1.52 $1.

Dividends Paid on Common Stock (Cash) . . . ...... .. ....... .. ... . $1.56 $1.51 $1.

(a) Exc ludes capacity allocated to a large industrial customer.

22

0 ~~,~~!~~ER~!!;.g!t~

1973 1972 1971 1970 1969 1968 1967 1966 572,555 $ 511,274 $ 455,956 $ 404,364 $ 357,863 $ 324,561 $ 300,435 $ 284,957 67,864 $ 58,434 $ 54, 151 $ 48,200 $ 35,306 $ 25,406 $ 17,063 $ 15,841 6,506 6,408 6,333 6,252 6,187 6,109 6,038 5,945 1,013,500 965,900 897,600 821,400 757,800 700,800 678,500 636,500 1,051,400 920,400 829,300 755,500 721 ,800 671,600 563,900 542,000 4,236,08 3 4,071,225 4,262,062 4,294,352 4,227,315 3,929,222 3,598,43 l 3,323,888 665,558 458,050 - 74,395 -358,203 -566,932 -615,766 -574,707 -475,760

~.901,641 4,529,275 4,187,667 3,936, 149 3,660,383 3,313,456 3,023,724 2,848,l 28

,899,122 1,741,895 1,624,793 1,520,939 1,375,546 1,253,772 1,140,797 1,038,428

,35 L,974 l ,183,668 1,059,498 977,210 879,916 821,538 742,486 689,245

,119,478 1,061,932 990,363 954,11 L 911,138 801,664 755,624 746,996 58,129 64,531 88,963 101,703 116,021 91,467 81,966 73,616

~.428,703 4,052,026 3,763,617 3,553,963 3,282,621 2,968,441 2,720,873 2,548,285 59,856 $ 51,544 $ 42,623 $ 36,979 $ 32,672 $ 29,850 $ 27,673 $ 25,709 42,804 35,868 28,648 23,933 20,584 18,912 17,345 16,335 22,008 19,350 16,529 13,036 J 1,303 9,738 9,225 9,011 3,861 3,763 3,919 3,795 3,753 3,302 3,054 2,848 J28,529 110,525 91 ,719 77,743 68,312 61,802 57,297 53,903 4,365 4,128 3,687 3,648 3,731 3,688 3,737 3,694 132,894 $ l 14,653 $ 95,406 $ 81,391 $ 72,043 $ 65,490 $ 61,034 $ 57,597 7,303 7,008 6,793 6,542 6,072 5,685 5,313 4,959 230.19 $ 207.37 $ 178.19 $ 159.06 $ 144.22 $ 135.34 $ l 28.88 $ 122.78 3.15 ¢ 2.96¢ 2.62¢ 2.43¢ 2.38¢ 2.38¢ 2.43¢ 2.48¢ 320,834 309,393 297,437 288,538 282,274 279,976 274,360 268,739 865,000 828,000 796,000 773,000 753,000 733,000 714,000 697,000 132,894 $ 114,653 $ 95,406 $ 81,391 $ 72,043 $ 65,490 $ 61,034 $ 57,597 37,144 29,944 28,705 22,457 15,691 13,057 11,928 10,297 8,155 3,979 (815) (2,941) (3,165) (3,130) (2,742) (2,302) 8,810 8,060 6,686 5,111 5,074 3,971 3,301 3,283 21,119 19,388 17,462 15,692 14,194 13,123 12,176 11,746 11,749 11,190 10,355 9,632 9,043 7,892 7,479 7,129 16,6 16 15,359 10,603 11, 129 12,292 12,748 11,935 11,300 103,593 87,920 72,996 61,080 53,129 47,661 44,077 41,453 29,301 26,733 22,410 20,311 18,914 17,829 16,957 16,144 8,745 6,647 5,164 3,520 1,773 1,097 450 306 38,046 33,380 27,574 23,831 20,687 18,926 17,407 16,450 15,129 13,297 11,641 9,276 6,302 6,226 5,700 5,129 22,917 20,083 15,933 14,555 14,385 12,700 11,707 11,321 2,652 2,456 1,900 1,900 1,900 1,672 1,313 1,313 20,265 $ 17,627 $ 14,033 $ 12,655 $ 12,485 $ 11,028 $ 10,394 $ 10,008 453,400 7,810,073 7,436,740 6,920,073 6,817,083 6,270,000 6,270,000 6,270,000

$2.40 $2.26 $1.89 $1.83 $1.83 $1.76 $1.66 $1.60

$1.4766 $1.4316 $1.37 $1.345 $1.31 $1.27 $1.23 $1.1 6

$1.4688 $1.4144 $1.36 $1.34 $1.30 $1.26 $1.22 $1.1 4 This Annual Report has been prepared for the purpose of providing general and statistical information concerning the Company and not in connection with any sale, offer for sale or solicitation of an offer to buy any securities.

23 PR INTED IN U.S.A.

1-Price Range of Stock and Dividends Paid on Stock Common Stock The Common Stock of the Company is traded on the New York Stock Exchange (principal market) and the Philadelphia Stock Exchange. The reported high and low sales prices of the Common Stock on the New York Stock Exchange for each quarterly period during 1975 and 1976 are listed below.

Low 1976 1975 1976 1975 First Quarter ............... .. ........ . $19.75 $17.75 $17.125 $12.625 Second Quarter ...... ...... . . ... .. ... . . 18.875 19.50 17.125 15.00 Third Quarter .................... . ... . 20.25 19.00 18.50 15.75 Fourth Quarter ... ........ .... . . ...... . 24.375 18.50 20.00 16.25 Cumulative Preferred Stock The 5Ys % Cumulative Convertible Preferred Stock (par value $100) of the Company is traded on the New York Stock Exchange. The reported high and low sales prices of such Preferred Stock for each quarterly period during 1975 and 1976 are listed below. No other series of Cumulative Preferred Stock is listed on a Stock Exchange.

Hioh Low 1976

-"'- 1975 1976 1975 First Quarter ......................... . $72.00 $62.00 $67.25 $58.25 Second Quarter ....................... . 71 .50 70.00 64.00 64.50 Third Quarter ................... .... . . 73.00 69 .50 69.50 62.00 Fourth Quarter . ...................... . 83.50 69.00 72.50 60.50 Common Stock The Company has paid cash dividends on its Common Stock in each year since 1919. The quarterly cash dividends paid per share was 371/2 ¢ for the first three quarters of 1975 and 38 1/2¢ for the fourth quarter of 1975, 38 1/2¢ for the first three quarters of 1976 and 401/2 ¢for the fourth quarter of 1976.

Cumulative Preferred Stock During 1975 and 1976 the Company paid quarterly cash dividends on each series of Cumulative Preferred Stock as listed below:

1976 1975 Series Quarterly Rate Quarterly Rate 4% $1.00 $1.00 4.10% 1.025 1.025 4.35% 1.0875 1.0875 4.75% 1.1875 1.1875 5% 1.25 1.25 5Ys% 1.46875 1.46875 7.52% 1.88 1.88 8.40% 2.10 2.10 9.96% 2.49 2.49 TRANSFER AGENTS REGISTRARS SHARE LISTINGS For Common Stock For Common Stock Common Stock of the Company is listed on the New York Stock Irving Trust Company Morgan Guaranty Trust Company Exchange and the Philadelphia 1 Wall Street of New York Stock Exchange. T he 5% % Cumu-New York, N.Y. 10015 New York, N.Y. 10015 lative Convertible Preferred Stock First National Bank of South Jersey Guarantee Bank of the Company is listed on the Atlantic City, N .J. 08404 Atlantic City, N.J. 08404 New York Stock Exchange.

For Cumulative Preferred Stock For Cumulative Preferred Stock Chemical Bank Irving Trust Company 20 Pine Street New York, N.Y. 10015 New York, N.Y. 10015 For Cumulative Convertible For Cumulative Convertible Preferred Stock Preferred Stock Morgan Guaranty Trust Company Irving Trust Company of New York New York, N.Y. 10015 New York, N.Y. 10015 2

Directors Officers Eleanor S. Daniel John D. Feehan Self employed. Former Assistant Vice President and Director President o[ the Mutual Life Insurance Company of New York (Senior Economic William S. Cowart, Jr.

Adviser) . Senior Vice President Richard M. Dicke Richard M. Wilson Counselor at Law. Senior Partner Senior Vice President of the law firm of Simpson Thacher

& Bartlett. Charles F. Morgan Vice Presi dent, John D. Feehan Secretary and Treasurer President and Chief Executive Officer of the Company. David V. Boney James P. Hayward Vice Prcsident-Customer and Community Services Retired. Former President of the Company. John F. Born Mack C. Jones Vice President-Consulting Engineer Electric Operations Former President of Radette Company.

Frank J. Ficadenti Alfred C. Linkletter Vice President-Senior Vice President of The Engineering, Research and Development Prudential Insurance Company of America. Edwin L. Gerber Vice Presideot-John M. Miner Personnel and Public Relations Senior Executive Vice President of The Fidelity Bank. Ernest D. Huggard Vice President-Frank H. Wheaton, Jr. Production President of Wheaton Industries.

Manufacturer of glass and plastic Frederick Lange containers. Vice President-William W. White Control Chairman of the Board of Directors Michael A. Jarrett of the Company.

Assistant Vice President-Chairman of the Board of Allied Corporate Services Power and Light Company.

Jerrold L. Jacobs Assistant Treasurer Martin R. Meyer Assistant Secretary and Assistant Treasurer

• ~~N~!!~~R~!~wg!t~

1600 PACIFIC AVE .,

ATLANTIC CITY, N.J. 08404

~* ... , , *. r".;'. .

• !~:*. ~ '. J

• A new underwater cab le was insta lled in I 976 to im prove service rel iability a nd to provide for load grow th in the Ocea n City area.