ML19316A467

Annual Financial Rept 1977

ML19316A467
Person / Time
Site:	Oconee, Mcguire, Catawba, McGuire, Perkins, Cherokee
Issue date:	02/09/1978
From:	DUKE POWER CO.
To:
References
NUDOCS 7912110794
Download: ML19316A467 (47)

Text

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DUKE POWER ANNUAL REPORT 1977 1

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BE REFERRED TO FILE PERSONNEL.

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gy. t i. ga/hd9 earn.rg5 De'sna'e ?Cr bo:n years l 3 .g \\.[gf - a l -.[, f.. 8 !L were a substant.a.mprO'.ement C.e' C'e-Ced.ng ye3rs inin s Cecace your C OTD3*y w a- { {c[.'., N -(7q. y ~T '. M* su ras not earrea tr e 13 5 percent reLrn ~ on c'emmon ecu 'y a ioned by reculato'y

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i e. -e P '.4. .,p S- .. y r ag99c:e5 in Oc:n No'*n C3'C598 and bCJ!r ~[ .?.., .9 , e'n Ca'o na in the r last ra'e dec!S 095 IO Y'~ .[ ir" Drove the EarneC ' eve' o' rEtarr v.e x ,I. Y, ' ;,*. -

r. ave fred to" an increase in Cor Norin S-s

'M.,.., Caros.a reth rates and v.@ I,e for cCP-m- 4, Ee reSDOnd.ng:nCreases:n CCin ou WDCis3 9 y.-j r i.. J,. . 9 i.y %' ' 3 3,?* ?,. ra:es and Soetn Ca'o na re:al rates later J. .i 3 ; '.. in1973 7 .f / L " ' ( l [ t.. Recent improvemerts :n Ine comcas s e t. y v. v,, f.nanc:a: performance nave enan>ea us to ~.

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ncrease tne annaa c#cenc ra:e o-y j

l q ', y common stock from 5140 to $150 n s ,, Q, '4 l - f,j y

• January 1976 from 5150 to 5 ' 60 e Octooe' 1976 and from 1160 to 5; 72 i

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+ (,Q.. l 3 l ?. g,-.. m-lean years of 1969-75 daring unice tne d .. g' common d:v cena rema ned unchanged i 7,'.; ! * ', " g.; at S140 per snare ~' i .,, R( p./. s-I ..,. 7.. Trad t.onauy tn:s port <on of your annua; .e - . 'y report has oeen devcted to erp arat.ons ~ -" w n, .,. ~ of the company s f nanc.a ce fo mance i s, / * ' g. s... 1... 1..f . e /.n.)......f; j-cunng tne repo't.ng yea and to factor 3 + whicn could a'fect its future ea'n rgs Tn s Carl Horn. Jr B B Parker i year. noweser events wn ch conmouted i to our successes as we'! as our f a lures j a.ong wth ena::enges yet to be met are l d scussed in cetal in an interv-en irvoMn: ( l the entire sen:cr management c+ your [ company Ths miereew beg rs en cace 10 of in's report anc p encourage yo; to read :t l i l l l i l l 2 l 'q u ', y, te t s 4 ,a.i '.: :C "r" "e3 a CrCS C,r.g re.are Crit eneCL!,e Ctt:Cet of Ca'C' r3 F'e g"! ~ e7:rr vr,uetoCar Cg;::'"ers at '"e Carrers Cor;Crat;On to tre CLwe PC Ae'

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an j j mr 3 wero _ f rc f.e c, ts: :, C4 CCs! C"s E*e"! AJr 3 3 Card Cf C re !Crs r* a"3 tre C _ e at '1 ' 'L-7 ?"e nie;tTert of OLr ra..- f A o i.: sr CLN*g 19E Ae A9'e saCCe ed C< t e m e ._.c- ,, ;n +6rp. ' G_ J ' c 3n nede.n

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..r, .,,-.c_.- r a ecca e ~a su. CeYn Of Our C rector ang 'r end ruc scr >+ 3 r ; To.a; rav; gr:3 y ar c-3 f 9 re ; Crcug-! rt) sers Ce Cost H eM8dCa D MC N ,, Et IC Tuc0 and CCera:e t*3n T v Or#e": ;- C Cn, /a 3.+'- MMe CD d C3 DDM T N 00 ' u / ts A9 VC L"!3'"y reduced <:/ ~.i o A rm 33 m :Cos Cers ..I 3"C hCeth Carot na NrGna! 33".x //e EJ ,J * * #,' ' ' O )Cu ?.3 O Arers cf 're c f f g,c 3r.% ' ." ss n.S W'se COL"se! 'n Ja"ua'/ I97d e

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,e r F*"eest3';se ~ert D M tre 're DGdid e eCt9d IFCmas H Cars presi-e s.... - an y-D ..., eq- -.e 2 ~^ / rcrrent c' CLr ser.<Ce 3 ea pred.res Cent and tre3 Surer Of P edmont ha'Cn ,,a 2 d' 'N"' 're 0,,rrert eN rCn'renta movement 'nC to succeed Vr Peese I/r Cav s

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,e15,;urrc fd CtCre !;rs r/ reir y a "a f Cer!J"/ Cur ? rst Erv.ron-oner'se in regu.ated succ0 serwCe

r.e.,wC-C ra r,e r a or v rem-me u He3 in Ceca'tment was estacasrod Cer"p3n es,s a s<gn.f Carr asset for your

% r;r L tC " us rt.x,-1rd M'vC3! Cnd! n '~f23 ard A3s "eddeC at that I Te Dy a CCarO Cf C reCIOrs J , ir "OrLa" f O Cers rC A Oact C re3 In enys,C:an ToCay sCme 133 .'ie aca n e< cress our accrec a* on to Cur ~ - rr ": 3 + rc' ', Cf 're DC FO s !Cta: eTO C,, Aes 3re enc 3g'2d f u t me 'l gn37g Ciders Our emc eyees Our Cus- ~. m a; /,e e : + ers ya r,.ce ._r., Cnmenta. 3 t v i es rang rg ' rom tame's ard tre Corrr"at es Ae serve for

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,.-r. 2, t, e" E /,e Ye a demOCra!C COTDany I*e ~ '" a r D"e"t Cd M M ,,.e,; 3,g g,rp Cjee has t' e same bas,C 'r'.rC9 Ce etis 3s tre Ch.ef eveCut se r t C+,.,. $ ..e r,2. e 1 "^3,

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r" Cu' Ource' !"e Te j i'"G: T /!0 re a no-frfs nO-nonsense h Arin we, r.s iCCrn3:r ras ef CCr"Cary koe own no tr01 ares We own a wed,ir - ""C3"y 70 Ce5 gn 3"d Cu d "O 3 'Or"OO es l3'ger Cr more excens.ve 's C A n > "r; 3nc trarr as en t 3n tre cr Ce range of FCrd Chevrolet Carl Horn Jr eme > C:st; tran =-er 3, Cr PNmcut". Cha.rman of the Board and C-d C, Ct'er U S e ect'iC g, 3 CarCUCI Our bus ress a"a rs n a Che' EreCu!'ve Cif Cer .w...,, m n_, se n. c x, v. v, ~ .s m u, j ggg,,narrer The ma 'y s . - -res t v. enc, #- 'y

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cc :/ e, tn resceCt to CCrocrate tus. ness . m m.co. r 2.. c.n' e: cs s recr:n'ed Cn page 22 -- ma

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.- t , ~ ' arc p r C e" : er:y > / e reCC0rce t"at our most.mcortant ,n,,._, .,.g g m-. tme,3 asset s cur errc:cyees arc Ae are 1.,. i 'r / 2 pece-, rc A me rat cra, cec 3ted to tre Ceveicc<"ert Cf tr s B B Parker ,m 'escurce win eCua' occor+ur ty for al Pres. dent ard At yCur 1977 annua! mce!.no you e eCted CNet Ocerat.rg Cif.Cer JCrn L l BUCC Fra ey wCe Cna rman and Feoruary 9 197a j 1 1 n a / KILOhATTHOUR SALES J 1978 9 333 935 cc,3 s re c7;e% 2.; -e-was a re: ora ceauer tna: sessa- + Year in Review su'chsse; ! e c'egious re:C'O s#"'"e' Ga'. ora M.cv osa' sct o-August 25 975 c,916 995 Eectm Saxs ypm us. e.o.eui ana &*.e y,'Qg Q s $4,3Syy y~q e 46 8 tie;t'<; sa es :n :r,, to*'a.e; 4;' ;* CcCurrec C#:ng Der:OCs 0 ecrems 3 45 6 432 42 3 42 ,. on

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s v j ,g 11 3 SCre3.se cier, nose c,i sic ne,ygec+ Ahoogn Cont Dued !ca'd cronin :s '02 io 3 Ic e sa es ga n was 10 res.oent,a' custome~"; inc :ated by trese pears tne erent o' Se 73 to 80 w.n3 increasAd ther" usage 10 DorCet tre increases in De9 cer ane Was tem-7e 'es to Gener_, se"V.Ce Customers rose perec si tre COTp3ny S load ma*,agement 5a o v ,a v ,f9 16 7 18 4 19 2 e'gn! Dercenf. wrke sa es to 'Scusina' p'oWam OUVomers increased a 2 percent An 5 r perten! increase a'so was rOCC" Cec in DOM D9' 4 W3s set On NCrum 7 G75

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.r, w m.- w n b JM [ .. e Sees to who.esa e an0 Cher Customers wne Custome' ceTancs reacned an at W3 vv4 tm W6 1977 The encrease in sa es to res, Cent a, e @ & 9 % Q Mog2n Customers was pr:ma4y !ne resu't of extreme weatne' Cond,t.ons in tne Com-Foet Scopy pany S serwce area d#,ng botn w "ter ,q gq;,C Daiton of a nat on#0e s!' *e b, and summer W h,n tne indJstna-C' ass Ine Un.ted Sne V orkers of Amerca !ne ' sa es to non te,tde maus:r es.ncreased compane i creasec as Cor cu :nas na r 6 9 percent cunng tne yey ret e::m in 197' a"c hac anproctrcie.y 105 cays cont nued cwe's.f Cat >cn of incustry in gggg,, on nanc ener Ine sir *e regan Cr KILOWATTHOUR GENERATION the Cu e serv.Ce a'ea S.nce 970 sa'es Dece m' 6 A neuan Dure Cort nuea

• .co ro om to non-textJe incustna' Customers have to receve aDout one-tou'tn cf its Coa' increasec from 36 o percent o' tota',

recu 'emen:s from sucosers una'4e::e: cw ~ n n %,,, incastna.: sa es to 45 6_ oercent in 19 7 < cytnes:rJe Coa,inventones we e reau ed ,e Generation to acororma e y 60 cais at tre ca:e of tas raon fec uan 9 W ec Of the tota: kootatinours generated m 1977 71 percent Came from Coaht 'ec Accrow mate'y 75 percent o' Du e s coa' un::s 25 pe' Cent was generated t, nu-recarements for ersting D: ants tnrougn C!ea' un ts and four percent Came from 2000. 4 ce met tnrough long-term nycroetect'c un6ts and o:ner sources contracts W in v3ncus Coa' SUCooers Du e s use of coa! and uranium for Tne ca ance v : De provicea oy tre s f eetnC generat.on ciose'y para' e's the Company s own rmng coerat o"s or,0 x reat.oash:o of Mose fue s to rnown wo c ey open ma' met purCnases Tne commnf i energy reser es a'so nas iorg-term contracts for 95 per-v llll-}Illgsl' E can: of ts u an um reau reme~s tn'ougn r 1973 1974 197$ 19T6 1977 Genera! ng Capao"!y on DecemDer J,.

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~M "' " ~ 1977 of 12 317 000 uowa*ts was Com-mms Wougn x poaon of m s onsed of 7 622 000 Wowatts from coat uran um wt De supp! ec by Generai f.rea un:. 2 odo 000 worat:s from .a Atom c Company ;G L_ urder te'ms nuC: ear unas.. 2.000 krowatts from i3 of a sett:ernent ag'eement rea:Jec in hyarC+e-tnC un.ts and to3 000 cowa~s Decoreta 19,,.,. Tno cute. met summe" ~~~ ~' " ,,Z from Comoust<on turOnes an0 Comb;ned-from a su t Orcught Cy Du=e aga 95: u% CyC.e una,_ Tne Compa,y a'so nae ne,. in earry 1976 toPow"ng Ina: CCmD3ny s f.rm purCnase con:raCis for 129 3,, a vo. i~n ure to dA '.er Uran um to Dur.e as wat's Of generat ng Capabaty from Ctne' ~ I requ red ir a '9,,J Contra:',@Ce' tre e ectr.C Supp, ers se" emeri G A,., wu sunn", Record Peaks 5 43 m to" councs of u'an um at a case The pean demand for e'eChcty on t*e c' Ce c' S F per oca"c ine Curre~ Duxe system set a.;-t.me recorcs r 1977 ma%e: prce et uraum egescs 5JO The 1977 wnte" peak of 9 457 210 pe'pou c n kdowat:s ocCu' red on January 17 and exceeded the prev ous record w nter peak set on Janua"y 19.1976. by E56 560 knowa*ts Tne 1977 sur mer peas cf 4 __.___._m_ ._.m_ ,__._m_.. .______._m l 1 N?:

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e uaDOM dO.us!Te".ts a'e to be rnace Pretous v M UM 9 MM2** @0MD A number of s;gn1,caa! reCuia*oY eiEF!! f.s Ar3*s r,pe'* Mu.',es mortn test penoO Fww.c Sw OCcu' red in tre ccToa9y s honn Ca'o#a H am Cow 6., retad ju':sd.ct on in f 9'? Rale increases in June.1977ine N C Gene a' Assemy Cn Janua'y 30 1972 rne ccmcany fsed passec a om autnorz;ng tre inmus on in a recuest w:tn tre Noqn Carcana rate case of construct cn work in p og'ess Utit es Ccmmission to ncrease e,ectre m m ..a m m s'fect ve fo' capca! expena.tu es mace re enues f rom its retal cus. ness in tnat r a*ter Jufy 1.1979 Current:y investments state apprcx; mate 9 9 3 percer: c' $70 5 1A in new fast:es may not be :nc:uced in m@on basec on a test year ence: m m tne rate case unt I sucn facit es are Sep:emoer 30 1977 Recueststo ncrease T @ p/. 4 7 M, & I como,etec and p:acec in sen.ce Carrym; reta ' rates n Soutn Caroi na anc v.no+ A 1 cna ges on tnose investments car nc tne sa e ra*cs in oct, states are exce: tad tc 'pW ccnstructon penod are cap,tanzec aha De fJed late'in 1978 These rte increases 147J 1974 1975 1976 1977 acced to rate base when tre piant s are recu red to ne'o 0" set the e"ects of placed in se'Vice By a40 wing Constructcn

Gf.at:On s.nce 1974 the year C^ v.n.cn worn in progress ;n the rate base tne Ouve s Current rates are bas 95 and to Company wil! De able to recover cap,ta!

include :n the rate base un:t 2 of tne Be ens costs assoc.ated w;th investments in new Creek Steam Stat.on un ts 3 and 4 of ine pl ants dunng Ine perrod in when tnose Jocassee Hycroelectnc Stabon. and ctrer STEAM-FOSSIL HAT RATE costs are incurred Tn:s we resu:t.n f acd t es wncn nave been brouant in*o e Tu e, wa*r<.,e improved cash flow for tne company service s.nce 1974 in tre Nonn Ca'ctna

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u s o,.9 Cue Du.e anc reduce the amount of outs.de f nanc.

fJng the Company asked for a 15 pe'ce*! t1000 Ing reCJed in ado. ton. by recovering return on Common ecu ty CCrnparf c 10 these Charges danng tne construct.cn the 13 5 percent current;y ahowec ty tne penocs ratner inan capitahz:ng tnem as reou:atory agenc'es of Ootn states Bas ng l i pa'l of tne Construct,on Costs on whch rates on tne higher ievel of return y;ogc U M

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,',~.- future rates wm te based tne amount of ne:p off set tne attr,t.on o' earn.ngs v.n.cn j.[ 9cm revenues reau rea from customers cunng normany occurs cunng pe' ocs of r s n; C the hfe of p, ants will be reduced The costs T], 1 ( N C leo' stature a so removed the fa r Financing va'ue' prov.s on from the cef.n t on o' rate H tase Effectrve Ju y 1.1979 facAt,es :n F:n'ancing in i 9,e, incluced tne sa,e cj c m.Eu. m bon snares o' common stoce v in u% 1973 1974 197$ 1976 1977 serVce M De r cte ne rate base 1977u s A m a va m for Nortn Carobna retaJ rates at the.r prCceeCs of 5114 m&on 5125 m.i on o' 5 pe' cent f,rst and refundrg moq;3;e ono na' cost less deprec at.on bancs $50 mAcq of 8 20 percert cumv Six exp red or vacated seats on tne seven- !atve c'e' erred stock arc $50 moon member Norin Ca'ohnc UtAttes Com-ot 3 23 percert cumulat:ve preferred m:ssion were f,; ed by gubematona: 3:oc,. In aad.t on tne compa v tssued appo niments :n 1977 The new cna man 749 864 snares of common stocx !nro;;n is Rooert K Koger. formerly director of the Stock Purcnase-Saengs Prog'am fo' tne comm:ss:on s eng.neenng c:viston Ernpioyees !ne Ox:cend Pe:nvestment in acc tion tne stateicg:s:sture reorgan ze0 and Stock Purchase P:an. and tre tne uta ties comm ss;on to inc:uce o Emp; crees Stock Ownersh:p P an w.tn pubnc staff ' to rep esent consume" tota: proceeds of S16 mNon Necot at ors interests in rate proceedings Tts were como:eted in 1977 to ra se an ad-sta't,s neaced of Hugn A Be"s. c.t ona' 550 maon IFrough a nuc.ea' fue a*torney and former member of tne trust wdn substant.ab a" croceecs re-commwon ceved in Janua y 197a in 1977. ine vpaw mued neay 8 m W cf Procedures in Norin Ca'opna for ad.usS tenc-term ceo! inc;uc ng 540 mo on of ing rates tc re ect f;uctuat ons in fue, a a pem at hn; mongage expense v.ere mod *,ec in 1977 Pecuesu bonds vAcn matu'eo :n Septemter im 7 to'sucn ac;ustments must noa ce casen ro ng ' test oe';od m ~ on a tnremmonth enc ng two momns pr or to tSe cate such 6

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CONSTRUCTION COSTS

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i E er*c Ort d Pcce' ragere nn tn 1975 ine cmpam an^oun: 9 Orc- { na-W Da e Poe.ee the nat On s Of gram c' toa ma'a;eme-:it re: :e re i, me s:and.n; E.ectre Utm!/ or 1r7.n groern n pea cemana 'c' e sam : f y C) recogn t.on of se v ce ece' ence on nenal anc tre amo nt o' reu generat rg cara r b c' customers e-"c ovees anc sna e-Dayina' A ' te recs rea e t e we Tne [ X( h no'aers Accc'; ng to tne rna;r ne Da,e overal g;a c' mat cro;'am is to reare h w A a: e eded for tre hono" on :ne t e ;romn r pea

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r u grengin o' tne exce Sona; manne-e nowa".s by '9s_,.erca;n tre.--- .n p wmch it has ad,usted to today 5 mo'e SLmmer ceaL ine prog'am ca.e3 'O' a 4 O; anngent operatng reaJrements an e recact on in pea cema'0 0: a un s1 v-n- a ) F std. ma nta ning rugn-cual ty servce cowa's The crogram a:n=e,ed a c c - 4 f n inroughout :ts area in ma Mg tre a Aard rnen'e0 redu3on !"rcupt ina' LenCO o' j Q P at a lu"cneon en Cnanotte Mrc bge 2DE 000 k.ona'is Dure s.03 marage-i k k 6 Poze'ecacr Robe *t A L,rocome cdea me~ proaram inc'uces some 20 seca'a'e +n e me Duke s strong t.nanc.a' recover, from tne a:Naies ces gned to recute loa: grCW At a, Fuen tec f Vears Of the early 197@ :ts inroLgh the r" ore e"Ce"1 use C e eZ' C'!/ ettc.ency record and its leadersh;p.n arc ty encourag,ng Customers to sn " the deveioDment of neA techno!oC es ir, energy demancs from Dea < to o't-Deas both e e9tr.Ca! transmission and c'str:DJ-penods in a0d tior 10 d rect contact: wan tion The magaz:ne s se:ect on was mace archaects ces gners and turcers tne THE REVENUE DOLLAR-1977 by a pane! of industry exper's represent ng Cor ;3ny nas launched an edensae com WHE AE IT cAME F AOM HOW IT WAS USED the e,ertnc UMty naustry manutaCiu'er5 sume'In'orm3' on p'Ogram to erco r3?e of eectrica;(Cu pme t and endast'y h7er le<e s O'insu:at On anC Ine use o' a observers Ean er in tne year Can Horn. Cmer tnerm3 Cont'c' C'ocuct5 to reca:e 33g Aw*rmai m J' Duke ch3:rman and chief executre nea59g anc a r-concacning loacs ano to commei F w cos's 4 othCer was n3med by NnanCla W.,DC improve Ine energy e" O en;y 0 ma or magazine as Ine e*C!riC utdy Industry s nome aOplances yg wr 91 outstand.ng chief executve off:ce' Time-Of-Das Ra:es we ome,, C" "*' Nuclear Liabihte , me-otch rate; a c'.c:ng Concert uncer t es. ir Teatn. ~ Tames th ,he U S e treme CoJrt M nea' an WTh CuMomers wou:d ce Cra ge;:en i .u aDDeal by D6 e and Ine Nu3 ear Peg J:a'o'y for e ectr.c !/ Cun*g C9C05 of ow Gre'gy 9

• S fjf Comm1ss on C a fecera: estrct com t s cemand Inan ea ng n.gn-cema r

j g;- s o. _, 7,'fl'fg ru!.ng wh cn wou!d remove 'ne i m !s o' penocs are be.ng teMea as a pos s t e g 4g gp a umf s unen tne esen: of a numer mea,s o' reauc1ng t,e amou, c' ne A ... ~ sc - sm, acc. cent Under tne Pr.ce-Ance' son AM gem'atng capaovty ' eau re: to seric en3Cled by Congress :n 1957 to Drov Ce future 1032 Sta:e 'ega atory agen; es supD eTenia' nuclear jab.4 nsTanCe 03se aDC"ow0 C.a!:r'G suCP r3'95 :"!O tor IFe e'e: toc uuty ind;str, a u: gs e~ea on a, es par.me-'a vofar< cas:s ha0Aty for Camages resu i ng ' rom a s n;;e F.o, no a"C'cx ma% 1000 res Oe, a nuC,ea' ancent is % ted to 5MD m On cust mers 200 ge era "e" e;LsT'rers tne IDia' am?unt of Cove' age Cu"en', anO 50 maastr a cas"e's Tne :.ea" ava?.ao'e ' rom both pov3te and gove'r-iOrg tes' v.n On Ng.ne, n Apr? 197E i ment sources In MarCF 1977 a teCe'd Ce'erm ne i'such a Onc na r^cernve A d'stnCI CoJ'l judge in Char'otte ru ed tha: reca;e tne p03. Ceman; f o' e'en' : *, Ine t'aodly hmitaton portion of P'CG-and tre am]un c' ge e*a' ra ;303DK r, AncersOn V oh'N t"e ng*!S of dJe Dro9s rea J red to ss%9 !"+ Dea - anC e'tJa prok :'on under tne ia A a"C -rmDicyeeS decia'ed it unco niut ona',iN ru "O was made on a SU.t f. ed by an a#in'bC'e3r DJ*9 e"D 3)eeS nLTDere: 15 E 93 CF Croup CODoing Cons!!ud ou '/ DJde s bC97? E I O WF M9 f.icCurre and Cat 3 AOa nuded'sM.c5 W9T9N 09 3CY 9~O J"90 U Arguments from Doin s ces are eg+ 'ec compan, at 're en; c' 1 P ir ac0

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Energy issues: in a recennnrevea memcers :ve E : rn s ng e e<rpse evesa >.. De Du e %semanagement smmme ' w: m : wom How We See Them' vews on a numce ovooca~ esues GRIGG: Yes ass m.nc:na tre Norr a"ec:,ng your co roany ana :ne e e^*": Caro: a un 1 e5 Com5ss on con::ue; urdfy encus:ry Tne ccmments a%c" to rescond f avoran'y 1o our requests to , fo.o.v a e a pama: transcr;: c'- a -,,stthe c,rus,t u,-..a,.,p,, c., a,..

1. nte% rew here in the!" oN7 wnr05 :S Car! po.nted cut tne 9J-ca/ ag in a'.:.us*-

l wna tne management or you compa-,. ing rates to retect f.actua: ons n tue nad to sai expe'se Can resu t in a sut::anta, snr n earrings from cuerter to Sua'ter Tre about financ:3! mat:ers cnry way to overcome ina: shdt is to case Many SeCun y ana'ys:S anC s:^O urye's fuel en sense on 3 current tast penoc CT hac predec ec that Duke 5 ea n, g5 ce' on a current est mate D' Le; expense We snare for 1977 wouic be someca* rngner nage proposea to tre comrnss on tr,a: inan: nose c! 1975 ye:eam ngs for:ne we oe a towed to case :ne acprow; fue: year nere essentially t.at Wnc we e !"e cra ge on current expense. as soon as predcted hsgher earnings not actneVed' that expence is known We wofd stA nave to recover tne same amou-: o' HORN: Those precict ons were cased on monef rom customers. but wan:n an f the assumption tnat earnings per snare ean,er t.ma frame Tne og advantage of for the second ha!f of 1977 wou'c accror. mate those of the first ha:f Frankj that s such a procedu e is ina;.t woutd ei.m nate mJch o' the m.senatCn in about wnat we had aniccatec too revenues and expenre wnicn nas oee-Eam.ngs per share for tne seconc na t were considerat!y !ower inan nose o' tne aHecting our earn ngs to sucn a great e4ent fi st ha f pr.mardy cue to unscneduiec r outages and extence refuei ng per ocs In Oc:ober t w_,n tne d.aar: c? Derer:'- .t the Oconee N. t! ear Stapon v.nicn a u St" d!a e"'"T/ a^'noJn"^** a d*cI M m recu red greater procu;;;on trorn coa - in'id CJa"e' ed'D!n,os per sna'e an2 aG fired piants Ina: Caused a sgnmcant s increase in the c:vaend h.y Could!na: increase in fuet expense for ne second "v,us" w~ vo na.f p!us higher main:enance expense associated w tn the Oconee outages in PARKER: An increase in tne cor-mon our North Carohna fuel cos ad,ustment dividend can be based on tne aatcoat.on procedure which a ptes to acou: 70 o' hgher eamings as web as on acin pe' cent of our reta.! e: ectr:: sa es :nere eam,ngs Dunng nein:rd cua *er tcr

s a 9} cay tag between tne t.me n:gner examp'e our eam.ngs pe sha<e aou'c tue! expense is incurred anc ra:es can bo ha/s been cons de*ao!y hgner if we na0 adjusted to ref ect :ne a00 t cra: e(pense been a'o!e to coce:t danng tnat cuane" If rates cunng :ne second ha't naa re' e:t-al tne fue: expense tna! was rcu' red ed ine nigher f uel expense incurred cur ng Most o'in:s extense was re' etted in that penod ou earn.ngs per share wouto revenues for tne fouqq a;ar:er Tne reason tou th cuaqer earn ngs c a not have been:nhoenced upward a aoout 9 r

cen:s Our growin :n kJowat:nour sa es aopear to re$ect :hese revenues.s ma: a'so was shghty lower than we nas fcre-acd t.ona: outages were incurred a cast which a'so con:r.ou:ec to ne.oe.e-Oconee dur.ng inis cuaner aga n resa tnan expected ea n.ngs ing :n hgne' fuet ecense and anotre-sn ':.n sam:ngs HORN: I m gnt aad ina: t e Boar c' D recto s wa: ce gvec to te at e to ircrea9e tre Commo-d v cen0 n 00*- G76 anc M77 Du e snare c.cers cen* for se<en yea s cnct f: 1976 wincut am, 10

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b. ? m n .. _. :t r. .,..n I l =i - e ~ wy e,.we m m CARL HORN. JR., Cta.rr'an at tre Boarc aca C~ef Dem,r-ve Ot!cer B. B. PARKER ,n a :a, '~ rx JOHN D. HICKS. :e' or rce P'es cer* %D c A"3 r AUSTIN C THIES, Ser:Cr Vce Presiden?. =~ D- - =~ WILLIAM H. GRIGG. ~~~ :r ; :s Pres cert is;n:3 c F m'ce WILLIAM S. LEE, &&2:ve ice

=-

DOUGLAS W BOOTH. E~;

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, err T* e ; :.es reec; ;ios l nose c/ ~. 1, >.: r e ' C.. :2* C h h' Y Due e 3 COrTO^ ST CY "35 Ceen C?C N Direr s"L: r-e3 Jou g'W'n'"er!' j m , '.: $2 '. e En 5 2:eS1.e :,"3' 're M '3;O C' c'e!!':C ut ! 95 IO Ce 30 e HORN: Trere s no couct : rat r3;s rc N "O Ce ; "C"g Sc r"- ?O se ' cur E ^u compet t.e'f E nOfrer ./ ^ q o' C 3OI3i. ! Ce a C " Ct : !CGICr a i:n3 Sir es n me we,,.;_ye,'1_e., m ercyn - w a r:mes - ss ,.r 2:,a.e3Cer; e ecee m -. u"; re i ^c (F; .< j i 0 Se: e! tha: L,u'GdPC Tost . CeCe".C '399 y Cn te 'ecerai CC'.6'n-CP*' a 7 2 :es e o ne *o sei GFuGG: N e ev crr :3:'=ascr ment s eConcmc schc:es Oczcus:y i'e~e"^0us 3'"Cu'?3 C? CC'" mon Et:C < in t_1~* ^q *;, c 91 W :re c ; cenc 5 e trCer! es - EUCn 85 Mna:On of E OS '#3

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ei f e V:r"' Cub %lJe e : '

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V %'Cs: C,T"eCrcr?,'n6 r y Cee~ Se;rng Cn ;,',

• D L -,, ly C,s:3.ne's :,; try n esar: - 33*-

i C d!D3 On Ferg / Dj I' 9 LTre". dC* S-a J3690 [3 C,7 ?^e, q %:^W ' '[

• • • Cy}* ire 5 3 e C "ieg $e7.gr i e; 3*C [,

d L" D r.a.9 a' tre ere*g, r 990s s 'gl yv v p r,$rge5I m r+ ra f te nees? ng a 7 : y O' 0;r snstem Ce"$ '"9 nf f CO. 0;s y W., na.9 ?O CEDEn0 Case /C'!:sf.~2 C Ca's na tela. 5 reb ear *Pgs A !"e is:Dne's A0u Ce m :e Cn e ew A gene' ate c; Caa .Wa: a::<a-:a;s: w ce :: :: 3: :' re :ec 10 aC cu' ng tre Cons:r Ci y v 32',0c wou O De IO Cai n9 Ca"/99 I a7 ri eY DDatr and 'ess On o a90 GRIGG: Ine'e are 1wo Cas C Aaps C' - 'j3 735 M !"e aCm.rrrFOr re:D;' barCes on :"Ose W.eI!me":5 We 0 2 a nang eng ;ne Cyry 9 Cr sC aL3"*

• ze;in s ta:: ' su'e i mus: reCogn ze s*wd onnOA:rSOrOCGO M woM a T wnne.: s unce" Corst'uCLCF #e Sine

" y e;cncm.C CDices have IO Ce snaDe3 19 Ces c4 e.eC nC. y tro-me inC unas wa/ it s nOW bemg nand e0

'7' 5 IO to protCe the n Cess 3ry MvestmeII a: tre MCGu re N Ciea" Sta on wn.Cn e cad ta1Ze inese Costs ana !"e 80319em CdD Id g gg, g,,979gng793* p to ne rate base wnen ID9 C 3ns C~8200 p 74 mg ca nestmeets IO be 6 .o.. e_n., o_,. m ~. c en _a, o yra..+ c,. ma09 In tn.s D:am na Deen mC:UOe0 M s. '-w y' c

• w a' s cad 'a % re'"e_vE '

m.s m,,.,,,.e m s u ss m as _ e rd,=_A ","_Y " *,, ',,,, Doss D 9 aaer trey r,e,,,.,,,- y a,e v.y. ~' u .i + GRIGG: Ba m 194 Ine Baa'a of D' loc ratne" tran CaDia iced Ine Cos' iney 6 be nand ed 10T TweSNeT5 made cQevCe to Customers wojc hase been D %Ciors a]CD:ed a f nance DZ atter JJy 1 1979 80m OroCedJ'e5 ha e reavCed Dy 3DOut $364 mU.On dJnng Ine ces:cne: :: :merese tne comoany s adsan: ages anc C: sac.antaces a: nv eC ed vetme o' tne p a1 ! nanCa s:"3ncin anc :C gwe aC0ed untj a p! ant is COTO.ete0 Defore Cnar9Pg t ex 0, tj 13 i:s tnanC:ng proCr3rr Tne

nese cos's to Customers mea s tna:

Is t'sa e 10 Sar fna? / C0"5LiCJ, U' T, ' J,

u re~ goa s ct tnat o.an are to strenginen Cus

Orners oay :re Carry 4na Cnarges omy in progress haa DeWWey e C3 Ine ComDany s CaC!a' structure Dy 3"a.n-on taChes wn;Cn are aCtJ 3 'y O'C40 ";

3 :*La '.d es '"a! ,~ .. ~^

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r.a a m.n:Tum 37 DercerM Common C@ I/ tne,r e eCtriC sennCe Tr a mai see a ' Iw av and a m3per%m 50 Dercen! 'OnC-!Erm bd in Ine long run :t Caubes tne Cus: Cme's HORN: Nes you CCec sa'e y rna*eInr cert 1^ n;Tre tne earn'ngs Coverage of to pay mCre $ rCeInese Ca'ry n; CnargeS ass #0t On d we had oDera*ed unOe' t W Cnam% 13 af e3s!Inre9 I meS are Cap;tatZea as Ca'i Cf the p ant s COs! t 3;p q e g re stnCe 1969 85theoa~s meC G" :"e SEC meinoC of CaICu!3' on tney rema n m tne rate case fo' tne 25 to ing nave teen cua s nce tnat t me wao d ana ta ge e a e :ntemay abod G p& 30 years tne clam.s a sercCe anC r be in tre ram case tocar a: a tower Cos' mento our 10:31 C3Df 3' reCJuemeras The $nttuence rates for that entJe pero 3 6i Et as BJ, Gngg po,raec out our re,enue C' ogress :na' nas been inade toAard reCovenng inese Osts Cu%g :ne COS teCu:rements Cunng thP' perod WCJC aCh errg these oDPCtives 6 efeCted in strgC;,0q penoc they intbente ra'es for na.'s been n,gner because o' Ine Ca'ry-

ne upgra : ng o'ine ratinCs or Ou pre-Only eight to 10 years - the amou t ct r

n ing Charges of p ants uncer ConstruC: on 'e-rea stocs pre'erenCe stos and I:me it normany takes to bucd a nuC ea' Su rres toca/ and for aS ine yea's tnose cam ircia' caper Tre next s'e0 Ae piam So wnse ai owng conCtroCt on wom gams v De a sewe wou,c Ce icwe' ' Can Cor: Ne morowng m te tne

n progress in ine ra:e base causes a Construction wore m progress ha0 been up;;ran ra C' t e rd ngs on our f?s temporary mCrease ;n wta: C;s omers in :n? rate case canng :ne Cons'reDn mort;: age Donas ta cC uoe-A and we re pay for eteCtr. City ove" tre long rJ" -t gerCa nC:x 's t~

e 5 na0 Den in ine near f ure keeps tre Cost of tre7 e eCinC se' ace J .m PARKER: m a00 t.cn tC maEna Cu" C0*' u va.,.,~ e_ S.,,, ~y u. s. y g m.m- - w e tre Ca3e nc-2.e G-e 5 ea~ T sea :s mye r ysac e inese r gne HICKS: CD00nents of inis Or0000Jre ry rgs a t o te e': our share C cers an" GRIGG: Na ro:ine amoum Ct E3'^ '93 actue inat it s unta.r ter a power Com;any ratepaye',s i ne Cost Gi CaCla' 45 Ine' be*0re J s Co C e'.e0 anC Cee c.-,. - Tre C;'"ry:ng Cna"ces on OcnstruC :or 0 ma e es Cus+cmers pa, +ce a cet x<,m 1 i r w" N' m C e>Doru r1% , 0 ogrets are Currem O*:se:Cn

e. e*e 2 ', inaust'i 3"C is respOnsDe 10'

,ng c.a9 men c' in00Te Oy tNO eses tram Ih's is a m;SconceDt,CP *nat ne*0s e sh aCA3 f aDout 20 DerMN Cf Ou'ICIa reVe Je lsg cc,;ng consnce 'or ecu.1/ Jnds 10 De Cleared u; Ine money tna: s usec reau remCris venerahy o e nJ6 a roc. on Ine 0:re. s ~ ' O buld a ne A p 3nI COmeE G7 "ON c pq r * ' Ino loher he CMrea,. tre a.o A3nce for borroue: fsnes use r e n'isr ^V" n a 31CO mJ L 9 DCnd 'Esue C3'ry Cun*d "*onsIrJ CI oF. ID s 'E E TO E 3~ .,, a rc..y...o.w_m. e,. mn w-,i~~ u,n~f+ n- ~3Co~ ro w %Cn re' eC,.s,,,,. e ~ g e~ ~ " " - c-( ence Cm.ean a s.ng+ A rat ng anc ,7 g, pg aCOg".e-kra n;Ca*003vpICaIre' r"@N1 aTCunIo Ind e/ 12

r 2 c/ .1 cc A-"+ecc rv, cc is to te sM 'rorn ! me to I me :0 l l m ca:a .ercc7er-rc7 - + ~3 " +e co-mn e':un co ecc ert i c n nor- ; c rea n t e o 3 case m : m s m utisre /!e re rece'a :-a' r, ' e 'e'a s Gr c,m r"O-m! vec c"Crcs,emert ;n our f ndnC 3;

7.ce r

u : on 3ees ce +;r" rce wm rase an up Aarc in uerce _y .y ma,, crn r e a. 'r 'r m r.notro ir c-tre F dr,et cr:ce of 00 CO'"mGn s!oCe re,a. ' a-so y at f.e.,cn t te ;acec r a cos.t.on of 1-4, + r c a cr wrctose: I at te ce; toes va ue b N BOOTH: R: 1 r -s,:u i agra rcucn c: ton a drong $nanc;a: cas t,an Aou'd Y, +n9 ' N 2 n a ', 3 te e.e :P 3t car c r e tre ccrecany grea er '!ex 04.ty n / - ~ a or,cra 'n cv;<ess n me ra:e a c c ng s:xk :ssues car rg cenocs of , 7

• b mcrw
• e c 3 y at earr qs ury,cr3c e mar <et coort ons

'l@ l r v ;' te rg toc, er rgs tnat ha,e j l 3 ce re::eea u.er 25 to 30 rears :rese m ' 7.: t ranc ng crco pr-- ::rcec Dee k+ f i l

r. c. :w m e irr ngs m at ye turaec y a.p.7e,ts ccnstoc - : Orcqram anc

'r ~ Ye, a u rgr., :eres: tm eer notes.n 's I y ) GRtGG: Te u s r,qht Ertrermore 'ne ced97 ? 'reet cudd?'cnS CLrrent af TSaf E' ra ' "at ras vec cve *o prevent a Carl Horn. Jr . e, e~ :mt ur,ty 'coss upon m:s c':, m is i c.us 'a: tor tecause,t 'M C 'rence of SvU' a s taat.cc; ) m %:e rerfarcry 'ag Tr:s ~S GRIGG: /Je se tasen two recs to try to "The big problem with regu- , e d me 1:ars a rat rg age cv c'e.ent scrreming ' a e trat trcm haccen. lation-and it's a problem for j r: .y g a ccmcan; s cq 393 n One nas to esta;ogn a 1.carc,a; utilities all over the country-es Eutcern3cs Pe c ggest ^3/ can ta.rrerose our f;rarc:a strength is timing." r e.ra :n

r. na, rg cces:ruct on and '.nanang Lemony wn.ch r.e ve 3r-n c car.m a tre ra:e casa es !"a! '

a reaav d.scussea Tre C:rer was to acu q.necase casn c.9 T e Yawances rcrease our commerc.a'. Carx !.res of ( 'y ?fcs usec Lr na constr ct on wCJC crec,t 'or short-term icans We row have l ce rea re; ty casn crucn of wh cn rou:0 over 330 mson in nres of Crec.t from re r = r.stec.n c acts to recuce everra 'rese tanks more than doub-e Arat was ' n;-rm reau rerrents 3u =ac e !O us in e3ny 1974

.o

<x m as et;c e c3ne;ery abuut regulation \\ L,= a rJ; n3:To se.1 r :.;y mn S : n ' ' "; r ! *e ':ra"c: !Chie:taes ?scussec' m ,;,e:Ot'ep?o.im:e s u " "e CovCuSI/ a 1 ascenc 09 doe s , v. J r. J;, e,,a ,., y,m..-, % : v *zpr,1 r;+,, n3lars W ** p, r 3y~m r. s-n w ~e c.. y,.m~ e. e ~ an : Scu:n C3rc ina ) HORN: A S tg ser.,rg a grow "q area f a HORN:.ha oeco'e wrc requ'ata us i~ ~ a u, > a.e ! rc g rec # rem nts. nd e uncerstand the eCOncritC ' acts C Lfe as f F '" e c ' v.es3 c' r3 3 "g cdc 13: /.e n N e

• • Gy re'a'e to an e ectric utity and we

] ce N"eTe v 9 nd'u! C'ine Cacdt.23-

' et they re crecared to act -n Me tes! ' & r

• cs Et ' Grm Cu!*. rad earhe' Too i

.-~ m'erests o' coth the ratecayers anc the '"a n v i Aou d s mc y ra se Me cost of COmcan es thoy regu: ate The bg croo-ou" ' : ""CC. ace t'Crcs $0 CCmmOn ~ e m W m reg WatOn - and :t s 3 crCt'em 'Or ut t es a.i over *he Coun'ry - :s

• r" rJ :n bcth our reial junsc:ct,Cns for eta'"; 9 reCueSIs 'Cr faI9 TE :sf n3.0 to ce casec on hister'C caI3 Ey IPO ! rre ad

! e he3r#gs are ConductM and 3 cec:s Cn l l l ( i l 13 l l i

4 I 1 ( 1 I rence'ec ine rates tna1, acore,ec U:en HICKS: Any can ca:e e.no gets e e::e a'e w91 cP nd Cu"en: expenset in s.a; to e o : c't ce ce :na: so-of cram se g m Ine regC3 Ory D'oCe:s esse *! a :/ C'e-nas c0"e a trer"e"Cous a sse"ece C '"e sents a uti ty frcrn earn ng ne re*;rn on pond e ne recresen:s Io' one tnm : s l h ds sharenoce's :n.estments ina:ine a crom se ina: can t De a at Un ess a e q' \\ regJ:a:o'y age".0 es na/e Cee'ne3 fa.r 3;a'e :s W ing tc hawe a" Ina ecuate anc reasonacie e e;:nc su00 y F:On wou d 30 ersei Y' 1 3"e:t !OCs an :ncome 'ne ut Lt es HoA Can:S!s la; De Cher 0'ne' ggg-:ua' y woud have to De gran:ec ra:e5 } ~ ,\\I GRIGG: In Nor*n Caronna we re reau' rec su" c'e": to enao e tnem :0 a"ract tne i to update the test penod tnrough tne f.na' necessary capaa' for e< pans:on in tre j t day of the pucht heanng and trus has r*eantme ce aging trese neeced rate l tempered the e"ects of regf atory iag :n encreases wou c In; tease tne nteres' ,s l /k that 5:3:e to some exten! However V nat s ra:es on the ut Les DonCs ceOress tre l reaty neeceo-ano some amount of lag rnarket once of tne r common stoc PARKER: As Cari Horn pointed out a HORN: Yes. we see a very good chance respons:b,e regu'atory ccmm:ss,on not of earnmg a 13 5 percent return in fact only recognizes the need to keep e:e:mc we came sery c cse to tnat caring :ne 12 rates as icw as ocssite but a'sc t e neec months endec June 1977 The onnc:ca' of the compan.es it regu'a es !O earn a reason for tabng short of tne alov.ec fa r anc reasonab:e return on tne r share return isina cur current rates are cased ho:cers investments Those neecs ru" on 1974 cost tens anc co het inc: ace handon-hand W::nou' a fa.r and reason-tne cost of :ne second un i of ine B*ews abe return a ccrnpany has tc ses os Cree < Steam Staton nor the :n rc anc secunt es at a h!gh cost wh ch in :um fMth unas of the JoCassee H crc i j causes tne cost of e:ecincay to go up Tne Staton al of wntch were p aced ir se'oce typ.ca' consumer does not uncerstand in 1975 Coucus'y our costs toca> are .l tna: An he knows is that h>s power em much higner than in 1974 To overcome { goes up every time trere is a rate increase in.s we have recentu fued fo' a rate j And he m gn: vote for canicates wno increase in Nor:h Carchna and we D an to prom:se to ceny power compan.es :ne foe 'or :rcreases rn our ano;esa e ra:es rate mcreases they recues: rega c ess anc Soutn Ca'osna retr rates we':r of Anetrer the mcreases a'e just f ec Wfn l ina tyDe o+ regu'ai on a uinty s f.nanc a posture cou d be sesere:y camaged I ( 14 l l

i l a s., n .,c.< _ q. ; j,.. ; % mr e9 sw.a ra.e rac tre arerI, , ce C6yj y ' F m ,;3 t; re; a regu.y og rd'es.,s ng inese + Ca CGr#p3"i car 5,ata reg-m c ze, * ,2 q i 'r : ! e'. N"et y 70ec' 3 r I - e.o waarf acences arc u: t es ac cser tre j i v"y 'e s?,cy ng a c 'est rg r"ary of l .,y 7 -,, m. 1 4 <m

• e e Car:ects rgnt now T e/ maf or

....e,,. m w rci ;r%e to ce'eis t'e eut :rev i I GRIGG: N 7: a ~ i / <e c c. e w, ; a ar t te tcrcea Locn tre 3 g -> %:u n 3 1, , m ceoc e Lrtl a ' !"e ' acts are r 4 .: c.; a %..,.,.. ~., n,. z,g m...- o.,.,,,.. ,., a .I 4..o /.ren m

are casec ;n PARKER

I *r.m :n at s nrat tre Senate o

j -, c. . z. am. r.,r 7 ~ 3 a ~ - s > 'o<sA n ot :m< v*. -24 ,L'"ru, r' ' e l r, m a> ,. ? - r m.

an,9.,.x c,

, m. x .- m.e c

v. r s ead o' ' crc rg :nese concepts Lcon

'g' \\ i s c, m, ..e,,,,._-,.,a c, re s:a:es tre Sara:e c.J wou:a rave u.. r n. 2,i .,,, v i,,. m. -f r.,, m_,., i s.r"c 7 'eca rec :Pe Secretary of Erergy ~ w,, c c,.-,A_- ,, m 3 3a,.,,,.uu 4 as a n er 13:e trese Concepts an. : to recort i

• n <st.n " nea cc W Cc:t ews

" s 'a rgs arc mpe recomrrenc3: ons ,,., a. m m-e, cf v-. s..,., or, ew,.,v. .e., am H Gr g; to tre Ccrgress.; ese are two ent,re;y s.w..ase iresc._ I . s, v d Ferer' acercaCres - :he Hoose pass +ng m-s to e.<r 3 a wn Mr cur i .'erj 'sur cne r anastari eg sia: on "A major reason we asked for , e a,_.,c ra Pe %", ate were i cass,r.g eg;s a On a higherlevel of returnis to 4 +, .~ 2 ' ~r " es overcome the attntion oi 4 ._r. e'. ?: a : t..m-a.e -. ~ ~, earnings which alwrys occurs

w w ea

m :n

,,g,, - ~ m tx n EY?/ ^ - cr when rates are based on n.. _c..n > ~ :~a ~ ac, yea,, ' e historic data and are applied w' +. g w-c' m-.c y^ HICKS: essert aly tre ccn'erees moved during a period of rising costs.,, n Pe c rec: on cf :ne qenate version HICKS: I wou.a na.e *o sa, rat f.e re ,.,Pe ana ;f trat ed becomes taw.t .u, e. a ..r.y.. e n-- w ~x). .v u f wCc,d req rre the States :ns:e3d C the m.r i 0095 O'.! raine' tr/ wra' ' '2005 .-decretry of Erercy to cons;cer 1,. c.f-i - n ' aw ::e :a reso se :re r any 'erert 3;peC!3 of ra*9-mamng r"C5t ^t Cr;-. m eec'e u ! es a'c "O n 'a0.no l ~ w"~CD are a reacy teing S!UC.ed 'n our e ! C!,er ans, areC: Cn 'Or rreet rg m' r SerPC9 3r?3 and SOr"e - $UCn as COS'-of- ~ ; - e'. er':y r*- +c' b; 3 - 3 CerI3Av 3 4 s ',.',o ser."Ce Or;c ng - zn.Cn naie Ceen.n -n r.I"'..,a m 2 r. - 3.,1 $ (4 m,, c DM - M kJ =.$ .* f i isi c"ect re'e 'Cr 3 nur"De# cf ears Cr are e -.. ~. ,v,.~..,.e.n,,,2 w. ;.. a.., m.,.:,,, wmen Scre% OG TO CeCOme 9*'eCtNe Mn:n Me " e -n a t-re House Da noL.d D3se rent COUU'e Cf years e r M i, ' ~ 9 "'e L W3 Pe P StC'.C ': en :cn3 Crcr / :: regu:a e a:. ry PARKER: Ore ma or ascect of tre cr r. i ', > CC.C 3 3*c OCer 1! c95 a*C WOU'G 0"CT te DJ S ihat :t NCLic reawre l "3W es:-e^t a :y C a:Pa :".a! L*nCry a en J *'e3 wraCn nOW re'y On nabra! gas to i T'e % r3 gC,ernment Tne Hou;e accea corvert tre r tocers to use c0ai ty 1990 '#3nf ; " ager! CrcrS Ors rCi"e0L9s'ed 4 a 50 WCic prCh C.f ine Construct,On of Ci

• 9 A am'"it.cn f.r Cn a0L c rase new p' arts *o Dorn Cd Or Fatural gas Ih S T r.n r ec me r M 3ra._,rtreq rgig rnq.,;rernert wey.c no! 2"ect Cuae eCept F 'eO:2:a' WL C M C6en ca 3St'cCr c to :Fe den:' hat.! nGu:0 Out fur *rer

'Jr "CL.31', I"eSe r re-r"gorg preSiere on cLT.,D!e0 coa' SJCD+-es ' "rons nea.C na,e two 'crcec gCon ' ' 95 / '"Out tes!.rg a^d CF OL: ~ F, etter r"e'"RO" !C Ceterr re '*e - tre Sta',ec. "30 ref

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LSec C DLI m...++y..-...e,. a g. p -... ;.c ,y 1, i I b i 1 L t -l 1 I j I I AP l 'b

i i r, m .v i mym,. - 9 ...,y,.-,, ,,,e_ 7 _m_ m g m. n,,c_., ~ 3,.3 v a. ,,-.u. =..,- e -. ; ~ m;,e.-cs.: m. 2-~ y m PARKER:'c t~s s ccmee e, me e: - --- " ". ' ". ", '- - ' -. -, -rr v - s .-.e ,,3 -= -- _ v u, = e a,, ~,,, = - +,-~x:,,. n-, e. c ~,: .,. m.a +a.- C,n. -c e c e.. m. n.,~.nn,.a. "a5 8 P&Y:i Das5e3 very S*n"Cet* 0"c rO"- " '*- ~1 "" " ~*' '"r_ q ,. 5 : Te**3 reCu'a'. On3 /.ntOn um? :re a ~~. e.~x ' ~' ~ 3* ~. z.;""' e.- 2m ( a.Eac1 a"0 use Of CO3 a; m !" _ y '.3-, i = O 3 " g gr'" ' ' " ' O a ' a ' ^' ' 'V te ' '~ 4 / O!ner r'.anO nOW D'CCOSeS ine 12' e3 Sage , *_-, ' 'e^"5"""O'"'"'"###'^*' O' r",ye coa We re in ComD e:e a :'ee- '.nm. - n.~.e.,;p ;. -- a v,- On %....._ c - w...e.,o.p r w v,e a v.,..e um.n n e n. v-s w~ t c ~ e., fre n r. m v. rc. m .o .m [ rOOuCing Our Oepen W;e On Scar:e O 4 % '"Ce' NC T M S U L C5 "a.e s 1 3$ an0 natura gas Du". s ra"04 a wor,an e D'TO : ec a rew 0"c "O t m

er'Ca e; j

p:an t' A9 con' rue D 0 ace Sv:n t'O~ "'e 'a'e5 OM5O#e540'~ "~ res!r.Ct Ons On tne use d Cos! a^3 ruder n.' I OO Aer - Ine On.V energy SOurCei Curre"! / HICKS: Tre concect o' Me're ra:e3 g [ \\ g[

a. arac e 'n su9 c;ent cuannt es to reeme so <er oromng a Certar Ocr c-incse fue s OnIn.s issue ime Cencress o C "., o, W,. O r, G,,,, C., S,. v,.,<. d.,..,..

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2DDea's 10 be nea0eC in C?DCS *e d re: e v, m-e. a. 0.,e.n,,,, n. n nen m. v m. .v .c.- mu i Ons at the same tme ,e_ w-m,. r n. C S.nenu s ed o.

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• TO accomplish the Social 90315 935 ypg y,wgg g,,, p7,3 y,,,

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m. a,p,..e.~ v~

w. ~ aid to those who need help-e rwu "'-asana"m~"~Ofru n "= HICKS: No nOin.ng yet nas Deen cone to ~ there mUSl be a Way firSt to "a "" "a w a ' n' " " r~_ he D.Cges:

i c ' ' "o m' "'" '* '" ""

he'O US in Ine nuC;e3r fieiC i O*' cue " 5 M22'd* * 'i sdentify th0Se in need Of Such e"O-!ir in.s regra is tne Acmost ator s ,, 9 n"p,' C '~ "n '"' ""' a / "a ' * * '".u ' " ^ r a"' "' a ' aid., propcsed nuCiear hcersmo re'crr-ca nc n v n" ' *s- "p " s ' "ec-"- e that IS nOA :n its se.enth or e C*!rs crat t e 3 i re" ~'c.~ a '",v' y' '- 2.c rc ~ x","c; ; -> In.S :S a Comp ete y sed 3'a'e Dm A C^ t^e ~ - * 'P nec." 'n" ^ 7'On 'n a nr y me " ' a ^ ' ~" Acmin.stration says is ces:gned tc spee: ~" *~ " " ce'o'e O- e~ c"^mes aca m" e e ^ up anc strearnLne tne notea' LCens ra

• Ihan # 6'S'S'3N A N N #

orOcess From tne dra'ts we se seen s0 e "'w '. c 'we 'r~= ':" e'n n r" c & c " c tar we be. ewe the Dd sr reecs some ~ " '- ~~ n a' nm a'e ~' a~ *nOor Da~~ ~ "*v' r=- improveme-JS f d homes to accOmp: s-l z, c, ~,se_ m_ mw l 4 e_ ew~, ~. c~.,. _u.. ~. = a,e .., A vvd, o _.. a d. ma'ny crospe'ous oeco' e enc use s A PARKER: Tne b ggest prod:e" A in a' amour:s O' e ett'o'> TO a:cOmo r,;ne t~e ene'ge -eg s aton penc ng.c Congress soc a aca s t at al c' us enc 3rse ' a: o Inat t essent.a 'y,gnores cet comen- .s a :t,: Cse w,O nee: ne: - mer+ 0' rea energy reSOTCes Tre Ac en s a. rNs* Dc a Aaf '-4 to mrt % ose r i On anC COnOrec.S have rnesea tc Aan reE3 C" Sin a O Once hat s 079 ~ v re3 OCai.ng Ou' preSe"J reSOu':es anC td^ 9 SnCu-d De D'O.' cec tnrO A" tas IO A'ard CC059"i3* On El Inere s noin ng rece ves -,0 ev terCm a,

sm t:

in a^i O Mese DOS 10 St@u'a'e C 0a; C' O ' Se C5O'00ZIaI'933!"30CIIIOOPe f prOCL t:On Or to expa'id Ine use c' grouDO? CUSID'"e"5 Ave rea; r'rg ant!"e' nuCiear dot /er COnSer.S' On ;S an.mO 3. 9 0 D IC. Dai "O'E 13nt Ereme#! O' ary w0rka0 e energ'. D 3^ Du! COnseri3I.On a'One V ! not assfe IM j !": S na' On A; ' nave a" tre e^er0,

• reer M a^ 0 f.On sOOrer cr la*E' wr i "a.e t:

'a:e !"O reaL*y inat an.nCust9 2e0 rat 7 <O

l accut nuc: ear o';4er s " uca L'rwm +cr a : cf :re corven-c 3 reac:ces rc.v n seroce uncer .r f, * .,_.3,._ 7str c* cn or ; a-ned inrcuan :ne y.w u r i, C'" rc f:r tre:r 'e!.mes.'c:n ne ~ \\ r ee:er a cn procuces more Le+ than.* l i ~..- C -"%'"e5 *ne use'dness of Our ura"'um i I .L 1. ,.?, d '95e".% Cou O Oe eCenced to runcrecs ~ ,, ors Tre creecer must ce Ceie'Cted ' ne* ~ .~ - a 3~j a. Ce Our Concern.s that an LEE: ?.- t 7'r-x w se, e.u.cea ceq, n ce.e!ap.ng :re creecer \\ . p ,A G c Ser Cus y ! m t '.re con?ncu! On O,. ,u a r: r3; - , w ~;r-c.i -c oc g3, coagr to tre ra' cn s energy I .: n -x <, m.4e-g ccs: qs. %..

4..

f .o . n .<.m* J,- m r > = m - 3 e b +: m., t r,~ 1eA$,. e.s,hs ~, s a J' ua a 2 N ' 3 J/ ;g 2merg ; rc r na: ! HORN: Tre Pres, dent :s ococsed to the , c ;;;ta,r: c sa en 'oco ; :." creecer cecause he fees mat tre pro- } --*i - /~: : or ne e ce:t to cuctor et etuton um fuel wm contr Oute ia ~ x r.r #

c / ;;e,"crograr-tecaese o e.cr.: v ce cro.ferat on ct nuc; ear m am s Lee

/

e. c ' 3 : + n w en Corgress aas

,s.gons we tee, n,s concerns are ,., 3 s c ce.a ce' Son u : i e~ Tre U +'a.d 5:= unraterai m, y ,e "There.s no doubi that full ~ ,,' m c re c, s c a n -r , re n _ me,3,y3. + rom e**cr's to ce<eico :re utilization willhave to be made .-.,-.., 4 2.- ,.,,.,c,., creecer,vco:d do Mt:e to re eve tr.s of both our coal and uranium ..,.. ~.r. =. -.n, , r -.v.. L~ p. c.. 3.w.,r ,.,.e c:r r n,t.crs. are,,,roceea-3.s e s.:ccuar~: .a w va s c y scegc utn merosn treecer reserves toprovide allthe u a 'e ~ ~ se-as :o /,e aca.: ra,e c,ograms Sucn a cec.s.cn wou'd s.mply energy this country willneed r ec e.en.s rcc P' ce-Maerson Jecrae :n.s country of a v ta: erercy in the years ahead." ] c9 - > J' r.uc'e ir s ce;'cus eC J"c"" C scur:e 1 3 9m :nmema ami-*1. es Ou r LEE:it 3 r" cortan: to rememcer the aree ' ' /M :c :*at ut on 5 si: 're sdr"e i tr e res cent has le! Cec cCrt rua! On ci P ~ ' ~ - N 2

• re C.rcn Faer project that is crty cne of

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' c. e' U"M ec rnry t'eecer crograms terg suppc' ed

..a 1 ec w cw:e' c/ tre 'ecer3: govern' ert For f scal, ear - m.

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.gg.re Congress Ms a00rcer@d :a! -: m "r

re cc r st'a::on s recuesti some 5450

~ - ..a. ,, -e r. : on cr ccnt.nua:.on of ctrer creccer . a,. s.~ 2e.e. comer crog'ams so:ra: cnce ths .:-; n Kr en

.n3 er2' co cuest on,s 'escive: cur

_ y v. /v " -E o,,a nme tre cot.on cf proceecarg fui-sca e win me creecer LEE: 'n :: n ;u ro e cre'; c: me THIES: To put :he potent ai te e's o' re

• '.w,;u N.e r cc 3: e /, c e creecer n cerscect'.e tre energy wane av:y r. c: re 'r -re s no :o;c: *nat 'ul cf urar um ans currert y 5 cred at u: ZY cn ',

&.. 70 te m3ce G cO'n Fr Ort"9Ft 'dC.Lt es

• usec in creecer c/ :oi 3"; u ?r rr 't. eras :o cro nc9

'e3; Or5 S TcLyn y equ:va e to : rat of r v 'N e-a* )j r s Of'rf ' reec.ntre 3, g,rgwr Cea, rese,es in 9SCou tr l l r y l - n ret; 5 "'- f S? cr9ece' Tre 7-M S M. '03c', abC.e grourc ;I n3s l r 3 mer cra t.ca! use. cut as +uei tcr i c'eece" rea:icrs this ma:Or ai nas erCr-MOUS cc:erM. for cO *r:cu!.ng to 're n3t.on s erergy suce y i l i i I -~ m

• .r

t t I t I i s i l One of tr e c":ca ta: o's ir ? e un"nm:s a D'co em Tre tecnno'ocy a reacy ers:s d8d of nr+r ox e' s me aan. '; recrecen 'O'co%en nc : ~ese was:es O an ;nso oc e NI

Do~ fsc sc rna tre u N se; p m ~ 1a^

'Drm ana for 09'm3ner: y iso a' ng me" be TMc/of ec fn' 'ao'CdBCf N' 'e?. $9 f rcm *'e et rci's".! Inere 's Po r.e.e' l l Fep'mes:.ng s ccacM 07 me Pery a 00:: sai croc e~ assoc:a:ec w n l I r+:ause c TcJ n/:Ges tne pr:CJc7 " ce"T3^9n: s:Crage Cf nfewei ra0 0-l M' cWcn un W"a e^ect w:0 0 "'e acne e.asss - geSn; me fe;e'a. l l inaDN, ?D red'ccess 500"r fae nM n 90+ernrnen' to de ce LWCn memoC C' I me economcs of nuccea"00 Aer' s'orage is m:s acceciao e and wnere the w l \\ f.astes w ; be storec So wh1e tne Oc'teC3' LEE: ra !ure to reprocess ou' parta L. l u -Q. / pron em is teng worked out we ha e r w usec f ue. acuia somewna increase: e ti maJe arra"gements to store a', our sDen. l 4 'b-Cos: O' genera: Gn by nu;ea' poAe' DUI fuF o^ a teTcCra'y Das:5 a* ostown even 50 nufsar power wou a st M be more ~ ' W3 [ econom.ca: tnan any alemat.ve ava ao e to us tocay The inabity to recrocess tn*s M ~' ea"c poner cypan es have !:2 f ue. Wou0 mean :nat We Wou0 be ab.e to c '% 7P" anC !nW:O~ 's I"a NCEb' get on two-th rcs Of the energy a,alab.e y i uu " T n es D~>ap' wow"' De an 4ro"oTCa S JJ!Ce :! trom our uran,um reserves ComO3 red to ~ 1 l

1. a'F"^fo ' "~ "W"' ~"**

D e r' ' C '*' I tne energy:nese reserves wou'O DroVG9 () ~ " " oro "are C'"a'c4' ("al I""- ""aC n ~ Converting plutonium to BTU.s, w:n reprocess ng capausty q- !&it eEn nucie3' an 2 CCa is na7^n',? and thence to kilowatthours, e el",".., C2..a P2 is a far betteralternative than THiES: In acc.t.on to the unused " " ~ naving to permanentlyisolate G'B*;UT IU*!InaICOU'O OG'6CO'*(&O &' y) "np,',, at from the environment.,, througn mprocessmg :na; process is i recuired for extract ng the p u ontam t* at LEE: Our exper.ence wit-me O ones i is crea:ec in :ne f uel as a resutt o' t ssion-Nuc:sar Staton ciear:y cemons'ra:es inat l ing The nighest use of otuton.um of tocay nuriea",s mucn more eccnom ca 1 4 j cou se is as fue!for breeder reacto's Eu: inan coat ine on y f uei ava.ao e n se c a so can te con.er ed to a maed crce fic,ent auaces to meet the na on s i fue: - a comoinaton of peornum anc elec:ric reecs uran:um - and usec in conventona' i n Fcr examp:e vconee cont;nues tC save reacto's We consoously des gnec our Duke cus,omers many muons o,.,--a nuC' ear p. ants to aOCept in:s tvDe fue. in ine* e e:tnc D',!s every yea" Oa, Ahen and if :t Decomes avadab:e 4 seems est r"a'es of the futJre Cosi of Cower from 1 to me ina! Conve'Ing p'uton.um to BT U s 1 new nuclear p!aqis CCmDared to neW w_3 anc inence to Mowatthours tS a far De er O ants show tf+.,_es re atonsh p.A a:erna%e than nasing to permaneny Co,,.,,m,.e In fo_u. recen,t cha_ws in,i.e iso;au I trcm the e%'onmen' ~ federa' C.e3n A r Act wn:cr eR requ.'e hN coes Cuae D an to l'and+ CS Cn" aCOOona' DG"u: on contro! eau.pmer: a' ment ra: ea" fue We the s:ve Of re-new coa-f red 0 ants sugges: that the ora esseng remans uvesciceP gap may wraen fu ther - wnicn wou'c r maxe nuc ear poner eeen more a::ra:Ne THIES: We have :ne caosbey at our ets'.ng p' ants to store al the socn' fue' sconom cahy

nene otants wm create tvougn tre ea'3 PARKER: Tne econom> aava-tages of 1990 s anc ;f necessary ne ca-tula nuc.ea" a e cernacs esen more pro-acd i:enM storage cacaaty We are ccnf -

nouncea for Ope nar. to' mes: oine-ce-: hot.ece" tra: reprocessag w ' ce ut i,es oecause Ou-e ces gas a'd Cu as 3.-l.ac e lona te*cre Ta* as con gene'ai ng 13%:es B, ha. ng in s H:..a0%?0 "3:e s'O'a2+ N V f N?' rr 2:n.e.as es THIES. From an e c nesr ^g stenacc n-cermane-t storage o+ mese was*es :s "c: a l I l l l Ib I 1

!Otai COrtrol cver gererEno acc ! ons a cregram inat Oenet.fs our Custorners aDout electric SUDDly ,ve y 3 30 e to crmg un.ts >rio service at For.t s only by contnbut.ng to ine eco-jn,ecent years Duke s loaa /crecasts a.onr.r c3si per Mowyt tnan Mcst ctrer nomic hea th of our customers and our rave ceen cces stently hign Why:S iPe CoToa" es 7ris creans tnat esCaa ons :n serwce area - by prCvid,ng econom: Cal ccmcary UraD.e to more accurateY tre cost c' bu eng ruc ear p' ants do not e ec:ric serece - that we can contnue to r fgygga37 ;ggg g7eg,;n 7 na e cu te tre mpac: on our sys:em as te a strcng and vracie ccmcany BOOTH: Load forecast:rg is not a sc ence treg co cn amer sys: ems it s an art. and,t a. ways wdl be because Tne Occroe Nuc, ear Staten cperated no are has yet found a sure4re way of n Li ? as DWn said here 3Cout tre te%,'ta "" ~y y977,yth a cap 3c:ty factcr of leSS ,,c !esng wnat s Go;ng to ha0 pen in tne O! tu ear Dcher !O cuStC me's in b Mw Cf + an Wercen! Are you sat:S!ed mth that future Long-range forecastng has teen try fremenCcus 3Tcunts of comTcn 'P Drf"ance) pamcdany dacu:t in recert years [rese pws to te asuea to 6carce stop tv rad same ct 1 at celo.v ocCk THIES: A:tnougn our reccrd to date at tecause of fundamental charges that gaae orecn ras a < arme ettact or Ccoree 's shgntly better than :ne nat:onal have ta<en peace in the use of energy aam eq.; - nca have the cor*pam s

• *G* * " * " # " " '

U Y #** *" " A ^ "* h arecers oenetrec t rom ines crogt am ; teing satst.ed uth the p! ant s per+or-c:rectons Because of erergysnortages. mance When we envis.oned Oconee we irf:at:en and increases in energy costs. GRIGG:if ou too< at.t str c:iy n tre short-t ac est.ma:ed inat its cacac:ty factor. as peco.e have trace s gn.ficant cnanges in y

• erm our srareno ders protao'y ha<en t a rmre case !oac piant. m:ght go as their consumotree hab'ts On the otner cW:ec from nuc! ear power But you hen as 60 percent. That est, mate was rand. : nose same factors have resuaed t.e u weep :n mira that we wout ha.e ecTns ceracN h gn industry exper ence in a gradual shift in the end uMzat:on of rac o sea common s:cc durng the nc cates trat an ach. evac:e cacact/

energj trom scarce fossd fue's such as eary '970 s e.en f we nad been bu c.n9 f actor for mature hgntwater reactors w'it on and natural gas to e'ectnc:ty generated s courea c1 ants,nsteac c nuttear p! ants se:De out scmewhere between 67 and 75 ty ccal and nuc' ear power When you Our re3<f caprta: program cur ng this percent The caoacay factor at Ocoree have ene : rend toward less e!ectnc con-per.oc remed :nat a certa n amount of was aaversety int uenced n 1977 by steam sumpton anc anotner trend toward common stock te sod to mainta n the genera:or tute 'eak s ard extended refueh greater etectnc consumpt,on. Ioad fore-ecu ty comporent of the cac,tal structure ,rg outages Whde these !eaks :nvolved a cast,ng woi te extreme!y ciff cuit untl the Of co/se me fact tnat we were tund:ng sery smal number of tuces the affected inf:uences of these two trends become rufear otants hac some int'vence on units had to ce taken out of serv:ce for 10 c' ear Our forecastng methecology has

re a-curt of stock mat nac to ce sold to 11 cays eacn time a !eak occurred necessardy become more sophistcated to necause of nuc; ear s higner f ront-end cost out t v.e nad been bulcn g Coa, ants eat is ce ng cane to cor rect the pecorems cons:cer al these factors at OCo@

tre &cact on e3m;rgs crCbatly wou!dn ! h we teen mucn a "erert THIES: We re working with the steam But iforecasts are too h:gn woni Duke ce bu ctng plants De! Ore they re rea!!y HORN. :n meary rucear power snould generaw manufacturers and wrm outs de -g teref1! rcr cenanze sharenoicers consu:tants to cetermine exactly what rew'me adowec ra:e of retum on their causec trese tubes to !eak We ha.e HORN:In most cases we can postpone ance nyestrrents.s nct.n"uerced by :ne ty pe piuggea some tutes and have had on>y construchon if actua! load growth is below cf generat.ng o' arts we ovJd tsut being cre : cent 3aO;e tube 'eak s:nce July 1977 the forecast. We ve done that a few t;mes alcaec a certa.n rate of return coesn t 8'nce :ne Oconee units have been in curng the past several years Of course. mean you 9 actuaq earn it That c,_encs serece we have been ab'e to systematicady there s very lat!e to gain by postponing a nn row e*f ciency arc economicah.y you ehm:nate orce ems as tney have artsen otant af*er.t reacnes the advanced coerateine ssstem Snce nuc ear power s Mcs: of me prottems have oeen over. stages of constructon if the forecast is ccr e and we tekeve there wdl be toc tow. it s very c:tficult to speed up cons deracly more &cncmcar man any $ :erra::se avaaac:e to us tccay' we feei sestan t ecoemem n me cacacay consum Re canger of uncWe-that these pian:s wa gse us a tetter copor. 'a:ws cf rese ums as mey connue to casvg is me possMy chnamuam mature e ectT:C sucphes. or supphes that have to tun.!) tC earn me a00wec return man any cmer type of piant we couid have cuct be obtained at a greater ccst. LEE:in me icog run our sharehoicers shou'd a ways cenet t wren we undertake 19

'l i i t E'e* LEE: Tne Eac Cree "yaroe e; ' ' Crc e:* C r ~ n '.On % + ' ' + ^ 0 3 ~ " e x.,0ve ut scme f.e* cc *, n t- : 'e;r

<.3c'rt~-

"-.3 5-w -. - - - - ~. ' C re ~ e "3 2 2 ' " ^ '....,.*.*,'3 79 C ' C 3

• Tnr ; ce:: s a reac, ':ense: ': Ae i n

---,.s a. m >r -~ _.., r u n + c n. - s e c.. a ren, 2e,. e o g l . - r...,, .v . a Ee3# e _ _/ aa :crecast a'c too ce ne 02ss :' .n.,easet'a CC^' " e e:Y 3 .2.

r.., a. c - m "- r. -

u c cr ng in

s r. cn av.c_%. -.

_a y~m e s" -~" ' C j , psmoea-sto' age cana:', or ' na e a 02 030 ta recd'e'9~L a'3 52W M6 '3CI ig j s v yea s s:ead cf n ne vers ma: :A t'ai ' "a"O"' n L~3 < 0f 3C * ~3* e 3 .M cas 0 na 9 Cn CC:n ea'.n n;" a~0 TE l te reau rea s ce haa to sta': tror" 5:rI:n c tne l censmg o'oces=. . 5 a. ~ 7.,.w,.2 .-~r~-,;.< o-, ~ - - r (,,<, !9 5 *ne co ca+< a ' i. > m a av_ "'1' !s ceccm ng more anc mcre a a- . s., _,,,.,, p - -c a n,,e, se ... w..~ ,., g, ., q. n-e + v 2,< p g.. s. n. ~. r-w-la"w -c ' ", ~ g.,,_ g, m 3rg s ,,, q., ~ r >n*"n n;w"=~V'?"6-W y m c,,';,,,gg 3 3 ;3;.g,,g.,,^a of c ase g,..,.,,.. d. v,a. a ~. er,.*.n w.. - e g a si u o. recerec to ses e We lyy" 93-,g,.g gg.g, cra*e ba3 A eWra e has :na: crog'a m &~ ,ec,.- ~. e manageme 4 "oce.e, 4 a o Doua as. Bootn BOOTH: ft has toen ve f successU The gg 0+ :nece cea.s more man ? u

o. era 4 goa of tne arccram :s to reaa:e rence tre g car. L owa-cu sa es r

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Statem:nt of incoma Duko Powcr Company g=,

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1977 1976 c .=- ECWATTHCUR S ALES :trcusarcs' 28 848 098 45 632 916 ELECT;dC RE /ENUES ' Note * $1266 974 5 t 106 353 _. e

r. a~r a ct c_oLcq CCO! On E.e: eed n e'ec ric generatcn S493 818 5399770

'Nt r:er:r'ange rc cur:rasec ocv.er (crec.ti (318) 2e 5t5' vaces t ref.ts ara ma,er a1s 139 674 ,:a 534 a mera-ce et o ant ac: t es 61 874 45369 Decre aten hcte 1; 114 974 '10 644 Gere a: taves 95.309 55215 "'ccr e axes (Nctes 1 and 5; 131 757 143 924 Tcta: e' ectr.c excenses 1 037 088 874 941 E ectr c coe at;ng income 229.886 233 4'? OTHER INCOktE INcte ti Acc /sarce for al funds usea during constructen 61 725 AJawar ;e 'cr eauw funds used cur >rg construct on 62 441 Earn;ngs of tutscar;es 8 381 4 582 Ctrer ret (ceduct cn (658) 265 incorre taxes - crec:t (hc*e 5) 26 291 22 963 Tcta; cther enccme 96 955 39 535 income tetore :nterest deduct 1ces 326 841 322 952

NTEREST CEDUCTIONS Interest on iong-term debt 152.496

'44 749 Ctrer.nterest 6 390 4 502 AJcaance fcr torroned tuncs used dur;rg ccostructon (crediti (Ncte 1) (24 394) T ta nterest deducrons 134 492 t 49 25i NE7 INCCP 'E 192 349 173 701 C s dencs en creference arc ;re' erred stocks 38 879 34990 E ARNINGS FOR CCr.!!.!ON ETCCK S 153 470 5 123 m ' CCi.1.'.'ON STOCK DATA a,erage snares outstand:ng (trousancs; 63.630 57 767 Earr.ngs per snare $2.41 5240 C,,.cenc: per snare $163 51525 4 .a -, mv 24

Stat: ment of Sourco of Funds For Plant Construction Costs Duko Powcr Company year Encee Deccter 31 1977 1976 _.r : n :wc:s 4 i UNDS FROM OPERATIONS Net income $192.349 5173.701 Non-f und :tems Deprecia::en and n c! ear Le' amort:zat:on 134.048 118 646 u De' erred income taxes and investment tax cred:t. net of amortzarcn 85.347 107.019 Ecudy com;cnent of the a"o'r,ance 'or funds used cunng ccnstruct on (common equ;ty only n 1976) (62.441) (29.702) J Other, net (4.766) f1259) Funds from coerat.ons $ 344.537 3 368 405 Drtdends paid (142.290) r122.823) j Funds retained in the bus. ness 202.247 245.582 l FUNDS FROM FINANCING-NET PROCEEDS Long-term deot 124.056 138.136 l Common stock 129.768 97.429 l Preferred stock 99.874 1 Increase (decrease) :n rctes cayabte for construction 148.095 (59 043) Retirement of !cng-term cett (79646) (30 938) Funds from f;nancing 422.147 145 584 Tota! ava !atte funds 624 394 391.166 WORKING CAPITAL REQUIREMENT (INCREASE) DECREASE Matenais and succiiss (22.739) 11.943 Investments in and advances to subs;d: anes 5.352 13 414 Citer current assets (16.817) (10.136) Omer current hab:!:t.es 1.614 23 874 Cther. ret (9 630) 15 285 Net working cac;tal recu:rement (42.220) 54 380 P! ant construct;on expend;tures 582.174 445.546 Ecuty component of tre anowance for funds used dunng construct cn (common ecu ty only in 1976) 62.441 29 702 PLANT CCNSTRUCTION COSTS $ 644.615 5 475 248

SUMMARY

CF PLANT CONSTRUCTION COSTS Production $414.845 S291.813 Transm:ssion 41.389 31.997 2 Distr out;on 61.206 70.967 Generai 12.886 1 882 Subtota: $ 530.326 5 396.659 Nuc! ear fue' 114.289 78 589 PLANT CONSTRUCTION COSTS $ 644 615 3 475 248 ) i l j iee r:c a t er: y 5:2:e~ents l l 25 I w w w .-gL w-w .i-.-a-p 4

Balanca Sheet ty Assets C " " 3' .mn. , w, y 1977 1976 ELECTP!C PLANT 16 ( At cr g;na! cost-Notes 1 3 and 4)

a E'cctnc c! ant in serace 53 761.353 53 576 654

~ Less accumu atea decrec:at;on and amort:zat on 1 068 103 939 962 E'ectnc c! ant in service. net 2.693 250 2 636 692 Construct on work in progress 1 538 521 1 083 716 Tota!e:ecinc plant net 54.231,771 53 720.408 OTHER PROPERTY AND INVESTMENTS Otrer prcoerty-at cost (less accumulated deorecat.on 1977-54 473.1976-54 109) 21.448 22.643 Investments 'n and advances to a sucsid ares (Note l' 39.947 36.354 0:rer ;nvestmer ts-at cost cr less 8.811 8 814 Tctal other property and :nvestments 70.206 67 811 CURRENT ASSETS Cash (1977 :nc!udes $16.12? in time cecos:ts; (Note 6) 18 218 21.176 Rece:vabres ('ess a lowance for losses 1977-53 053 1976-52.369) 99.708 83 017 Fuel clause revenues accruN (Note 1) 14.887 10.832 22 f.latenais and supones-at average cost 34 Coai 110.125 89.752 Ctner 51 567 49 201 Total current assets 294.505 253.978 CEFERRED DEBITS Cect excense te ng amortized over terms et re!ated cebt 11.941 11.931 11 Other 2 283 4 516 c, Tctal de'errea debits 14 224 16 447 g, TOTAL ASSETS 54.610 706 54 058 644 3 =a ,=, 7 A5 ....a,- y m;yyenem; 26

Duko Powcr Comprny Capitalization and Liabilities c*eme n (w nrs n: masanos> -1977 1976 CAPITALIZATION -- (See Statement of Capitalization) l Common stock equ;ty $1.343.315 S1.163.942 Preference and or eferred stocks 554.985 455.000 1 Long-term debt 1 948 081 1 892 505 Total cacitahzat'on $3,846.381 $3.511,447 I CURRENT LIABILITIES i Accounts payacie 76.659 87.065 Interest accrued 47.136 44.399 Taxes accrued 33.284 21.784 Other 8 698 8 276 Total 165,777 161.524 l Notes payabe for construction-1 pend:ng permanent f nancing (Note 6) 174,095 26,000 Current matunt es of iong-term debt 70 085 76,990 Total current trabbtres 409,957 264.514 j-ACCUMULATED DEFERRED INCOME TAXES l (Notes 1 and 5) 272,580 208.317 ) DEFERRED CREDITS Investment tax credit (Notes 1 and 5) 65.908 52.705 Other 15 880 21.661 Total deferred cred:ts 81,788 74.366 COMMITMENTS AND CONTINGENCIES (Note 7) TOTAL CAPITALIZATION AND LIABILITIES $4 610.706 S4 058 644 i t i -+ n::es to ? nam 3: sta:e~ents. 27 1 5----, .n,- -y , c

Stat m:nt of Capitalization Duko Pow:r Company Deeme r v. r:w 1977 1976 CCf.iMON STOCK EOulTY l Note 2) Ccromon stocx no par autnonzec 100 000 000 anc 70 COO CC0 snares outstanc ng 65 429.972 anc 59179 502 snares 1977 and 1976 rescect;ve:f $1.135.416 51.002 332 Reta rec earn;ngs 207.897 161 610 Tcta; common stock ecu ty 1.343 315 1 163 942 percent of cacita!:atica 34 9% 33 % PREFE;ENCE AND PREFERRED STOCKS (Ncte 2 Shares Pate/ Seres Outstand no P e'erence sicck. 5100 par. autnonzec 1500.000 shares Convert,b.e 6M AA 499 850 49,985 50.CC0 Pre' erred stock 5100 car. autnonzec 5 000.000 shares 450?3C 350 000 35 000 35.000 5 72?e D 350.000 35.000 35 000 6 72% E 350 000 35.000 35 000 8 70?o F 600 000 60.000 60 000 8 20% G 6C0 000 60.000 60.000 7 30% H 600 COO 60.000 60 000 7 35?61 600.000 60.000 60 000 8 20?s J 500.000 50.000 8 28?6 K 500.0C0 50.000 Preferred stock A 525 par. authonzed 10 000.000 shares 10 76% 1975 2.400.000 60 000 60 C00 Tctat pre'erence anc pre'errec stoc's 554 985 455 000 Percent of capta:iza!cn 14.4% 13 0% LONG-TERM DEST (Note 3) Pre Due Frst and refuncing mortgage bords 2 65?6-11% 1977-2007 1.778.250 1.700 000 S,nr.ing furd cebentures 4 V6 1982 27.345 30.000 Term ncies 6 55%-7?6 1977-1978 60.000 37 950 13% 1979 100.000 100 000 ?o;!ut:on control ochgations 75% of Pr:me 1983 2.420 2.420 Cao !aozed leases tNote 4) 28.051 29 132 Turcine generator leases (Note 4) 22.308 19 081 Unamortizec dett c:scount anc cremium net (208) 912 Carrent matunt.es of !cng-term cact (70 085) i76 990' Totai,ong-term ceot 1 948 081 1 992 505 percent of cac ta'zat:On 50.7% 53 9's TOTAL C APITALIZATION S3 846.381 53 5'1 447 e m + ; :: w we e : e b

Stat:m nt of Rotainnd Earnings Duka Pow r Company sr E :e: ce emer r 1977 1976 2 AL ANCE-Eec rn re ct. ear S161.610 5114 521 CD %::rccTe 192 349 '73 701 P:s $353.959 S238 222 -... r. 7 a-D.. mocs C c m m e n s:ccx 103.755 27 333 P e erence ara cre'errec s:cces 38.879 34990 Cactre:cce ecense 3 428 3 769 Tc'a cact ons 146 062 126 612 E AL. A NCE-Enc ct ' yea' S207 897 $161610 .~ ,. w. - Auditors' Opinion HASKINS & SELLS Certled Pue::c Accountants LVe P u;er Corrcany / e na'.e enr*ned tne ta'ance sneets arc tne staterrents of cac.taicat.cn cf Duke Power Ccmpany as of December 2 G77 a c 1976 ara tre re!ated statements of ncome. reta;rea earn:ngs and source ct funds for piant construc-

• -~ cces tcr re. ears tren ended Our examinations were rnace in accordance mth generacy accected auc.t.ng

. a caras anc accccc nc y 'rctcea sucn tests ct tre accourt.ng records and such c:rer aua.t,ng crecedures as r . c :n derec recessary.n tre c,rcumstances

• ' ' :c r cn tre acc.e men: crec i:nanc a: statements ; resent fa:r:y :re f:nanc a! cos.t:cn of ine ccmcany at Z e:eTcer ? 197~ arc 1976 arc tre resuts of is ccerations ar.a the source of :s funcs fcr c: ant constructen ccsts cr :re years :ren ercea.n confc<r-ty a th genera :y accected acccurt:ng crnc cies acc: ed on a consistent cas:s Ccanct:e Ncrtn Carctra secruana as

,, = n - r _)

Notes ta Financial Stat: ment] Duka Power Company

1. Summary of Significant Accounting Policies A Adc.nons to Elecinc P! ant The company caoitahzes a!!

the salvage va ue and remova! costs of fuei ourned pror to construct.on-reiated crect latcr anc matena!s. as weil as such cate is under consterabon All steam generator units. retated ndirect construct on costs includ:ng general engi-includ:ng nuclear. are deprec:ated at the rate of 3 57 cercent neenng taxes anc the cost of money (a!!owance for funds (28 year hfe. net) Stud:es are in orccess to eva!uate the im-used cunng construction). The ccst of repairs and reoiace-pact of nuclear plant decommiss:oning costs ments represent og iess tnan a unit of prcperty is charged C Subsid: anes The comoany accounts forinvestments in to e;ectric ex penses. tne cost of renewais and tetterments its suosd:ar:es by the eculty method See Suosc anes cf un:ts of property is cao:tanzed The ong:nal cost of property on page 40. ret red together with removal costs less saivage. :s charged D /ncome Taxes. Tne ccmcany and its substianes fde a to accumulated deprectar,on consohcatec federai :nccme tax return income taxes are A?o.vance for funcs used cunng construction (ADC) is alocatec to each comoany based on its taxacie income an accounting procecure wnereoy the net compos.te interest orloss and ecu;tv costs of capita! f uncs used to hnance construction The company s :ncome taxes are adocated to e!ectnc ocer-are transferred f rom the statement of income to construcDon W yse and W nounc osawns mder NF work in progress in the ba:ance sheet and. according y are income The lncemetaxes-credit class:fted under C!ther capitaized in tne same manner as construct:on labor and income ~ resuits onnc:pady from tax deduct:ons for interest matenal costs This, tem is recognized as a cost of Efecinc costs datog to investments in non-utmty procertes. main ly P: ant uth ottsett:ng cred,ts to Other income and ' interest construct;on work in progress Decuct;ons. ' tecause under estabushed regulatory rate cract ces a utmty is cerm:tted to inctuce a fair return on. and The company provtes ceferred taxes uncer norrnakzation tre recovery of. these capital costs through the:r inclus:on in accounting for t.m:ng d.fferences between book and tax the rate base and in the provis.cn for depreC:at'on. Income. pnnCipa:ly resulting from acce!Gratec tax cepre-crabon. repair adowance, cost of removal and cac:!ahrec Erfective January 1.1977. the Federal Power Commission taxes and emplom beneMs-(now the Federal Energy Regu atory Comm:ss:cn) revised tne Un1 form System of Accounts to spec:fy a formu!a for Investment tax cred,t (except for amounts apphcacie to tne ceterm:ning the mammum rate for computing ADC The Empioyees' Stock Ownersn:o Plan) is teng ceferred and fcrmu'a is based on emcedded cost and permits com-amortized over the deprec:able hves of the related prop-pound,ng Th:s rev:sion also prescribed tne financ:al state-ert es At December 31.1977, the company had unused ment oresentation of ADC wn'ch now ccnsists of the

nvestment tax credit amount.ng to aoprox: mate:y Arcwance for ecutty funds used cunng construction '

$53.360.000. of wh:ch 39.360.000 wdl be avadaole fcr use nctuced in Ctner income c!us tne Anowance for thrcugh 1983, and the balance tnrough 1934 ~ carrcwed funds used dunng ccnstructon shown as a E. Petirement Flan Cost. The ccmoany has a ncn-contn-cred i n !nterest Decuctons " In conform:ty w:th sucn butory retirement plan for the benet.t of its empicyees The rev:s:on. tne company changed its presentation of ADC in company s pohcy :s to func pension costs accrued. whch the statement of source cf funds for piant construct:on costs amounted to $16.931.000in 1977 and 511.768 C.0C in 1976 The new formu!a for determ.n:ng the amount of ADC d:d T e tota! unfunded Onor service Costs of the plan increased not nave a s:gn:ficant:mpact on the 1977 financial statements to $21.024 000in 1977 from 519.600.000 in 1976 because The average ADC rate for 1977 was 3.92 percent ca:culatec of minor amencments to the plan uncer the new formula w.th semiannual compounc.ng e hM WG e W Tne company usec a current cost rate of 8 percent w:thout clanexceededtneassetsof thec:an by $7.65t000 acccrc:nc comecund ng in 19_< e i he rates in both years were net of e n awert h a acci:cacie income taxes F Fuel Clause Fevenues Accn.ea The company nas pro-B Cecreciat:onand Amornzaron. Prows:ons for decrec:ation es M me ms @twsccons to est are recorded us:ng Ine straight-kne metnod The year-end rates for fluctuateons :n fuei expense These orocedures enta.1 and 3 20 cercent for 19;,o Provis:ons for amortzaton cfcompos;te we'ghted ave age rate was a 27 occur untl trey are refiected in bWs to custcmers Tne ccm-nuc! ear fuel. wnich are :ncluded in "Fue! used in e!ectric any accrues revenues uncer such crccecures.n ant:c cat on generat on ~ are reccrced using tne un:t of crcducton cf recovenno 'ue; excense en excess of tra! n case rates in method Nuc ear fuel amortzat:cn :ncludes an estmete of tne net sa:vage value or removai costs. For fue! burnac s;nce :ts South CarcLna retad junsd:cten Juiy 1.197 a ret removai charge has teen nctuced in sucn amcrt.zaton,n v:ew of tne present unavaJabity of recrocess:ng facMes The account;ng for anc recovery of 30

2. Capital Stock in 1977. 6 249 884 snares of common stock wereissued such preference stock bemg taken at $100 for such purpose.

for 5133 070 000. and 500 000 shares of 8 20% Preferred The conversion pnce is subject to certain adjustments de-Stcck Ser es J and 500 000 shares of 8 28% Preferred signed to protect the convers:cn privilege against di!ut:on Stock Ser4es K were issued for $50.000 000 each in 1976. In 1977.150 shares were converted into 586 shares of com-5 658 234 snares of common stock were issued for men stock. 5101.218 COO The annual s:nking fund provisions through 1982 of certain At Decemoer 31.1977. certa:n shares of common stock preferred stocks (8 20% Senes J and 10 76% A,1975 Senes) were reservea for issuance as foaows recu:re redemptions cf such stock at par in the amounts of $1.500 000in 1980 and 1981 and S3.500.000in 1982 and permit ada;tional redemptions in like amounts at the com-can,ys en of D'e'e ence stock 1 955 596 pany s ophoa 5'oca Purra:e-Sa, ngs Prcgrrn for Empiovees ? 537 252 D edena se nwsrert arc Etoc< Pu crase p an 214 591 The call provisions for the outstand:ng preference and pre-r Er~fe,ees Stock Oversn p P:an T 25 504 ferred Capital stocks sDecify vanous redemption onces not 7c u-3 932 943 exceeding 111 percent of par values plus accumulated d;vidends to the redemption date. Tre outstand ng Preference Stock. 6% Convert:bte Senes None of the corrpany s reta:ned earnings at December 31, A A is convert.b^e into shares of common stock at the ad-1977 or 1976 was restncted w;th respect to the dec!arat!on

usted ccnvers:co pr!ce of $25.56 per share. each snare of or payment of dividends

3. Long-Term Debt First anc ref unc.ng mcrtgage bonds outstand;ng at Decem0er 31.1977 and 1976 were as follows (dollars in thousands).

Mr Year %r -s Da 1977 1976 Series Oue 1977 '976 (Cont nued) 2 65% '977 5 - 540 000 7% 2001 100 000 100 000 19 0 40.000 40 000 7%B 2001 40.000 40 C00 3i '99' 35 000 35 000 7% 2002 100 000 100.0C0 M 996 30.000 30 000 7MB 2002 75.000 75 000 4:

• 992 50 000 50 000 7%

2003 100 000 itu 000 aa m 50 000 50 OCO 5%B 2003 100 000

c0 000 4%

1995 40 000 40 000 9% 2004 100 000 100 000 W 997 75 000 75 000 95 - 2005 100 000 100 OCO F'A 09 75 000 '5 000 'a 1994 118.250 125 000 ~^ ' 09 75 C00 75 000 3% 2006 100.000 t 00 000 B 1999 75 000 75 000 SM 2007 125 000 3-2000 75.000 75 000 $1778 250 51 700 000 .s B 2000 100.000 100 000 Substant;a ly a!! e:ectnc plant was mortgaged at December 31,1977. Long-term cett :ncreased 549 000 000 in Januay 1978. The annual amounts of long-term debt matunttes (inc!ud<ng uoen recetot of prcceecs from a financmg thrcugh a s:nking fund recu'rements and cacita,ized : ease pnnc: pal nucl ear fuel trust and heat sucoly contract executed ;n payments) througn 1982 are $70.085.000 :n 1978. December.1977. 5150.080.000 in 1979. $9.172.000 in 1980. 345.379.000

n 1981 and $32.933.000 in 1982.

31

4. Leases Pentais incurred in 1977 and 1976. and rental commitments at December 31.1977 under f;nancing ! eases not cap:!ahzed and operating ! eases were as foi!ows (do!!ars in thousancs)-

An3nt.rg Leases Oceratrg Nct Cac ta red L e ses 7cn. Henrais !cceea 1976 i 36C03 $1534

37 543 1977 29312 1 922 31 324 Pertat Cor,m tments 1973 21439 1654 23 093 1973 f 3 731 1 729 i5520 1980 12E65 2 010 14675 1931 12 450 2.124 14574 1992 12 195 2.409

'a 604 Later years 103 243 17 532 '20 780 Rentals incurred in 1977 and 1976 include $29 248 0C0 and Leases capita!ized by the company are includec rn !ong-term $34 629.000, respective!y charged to operat:ng expenses. debt. Had the company capitahzed its rema:ning financing Substantially ailleases require the company to pay taxes and leases as recommended in the Statement of Enancia! Ac-operaton and maintenance expenses _ Rentats incurred and count;ng Standards No 13. the ong:nalcost of ~ Eectr;c rental commitments under combustion turbine generatcr plant in serv ce and ~ Long-term debt ' woulc have :ncreased ~ leases include accruais :n excess of current payments in as follows (do:lars in thousands)- amounts required to equahze annual rent expense and sat:sfy t977 1976 theochgationsof theleases netof sa!vage,attheend of the Eec:r.c cfart in sevce $ t 58100 : t 60 e00 estimated useful hfe of the generators. Such leases contain cac.tahzed : eases 5 79 800 5C0 300 opt: ens to purchase beg;nning in 1981 at thelessors un-Less current mawr:t es 8 700 20 500 recovered cost Perta!s under nuctear fuel leases are based Long-term cect s 71 100 5 7 ?00 cn usage Otner leases genera lfy contain cottons to purchase The effect of such capitahzation on expenses would not have at the lessors' unrecovered cost or fair market value been material for either 1977 or 1976. 32

5. Income Tax Expense

=rccme ta n excense s ccmpnsea c+ ine 'omcw.ng comconents (docars in tnousancsJ: 1977 1976 E:ecirc Eeperses C > rert.rcome taxes

ecera' S 37.122 S 25 927 5 tate 9.278 10 978 S 46.400*

S 36.905* De'ervJ ta<es ret (: m ng caterences) Excess tax os or teos cecrec at on 38,127 41 443 Reca r alo Aance and ccst cf remova! 7.434 4.699 Cac.taved taxes emp.cyee cenef ts. etc 12 465 9 482 58.026 55.624 In sestment tax crec t Deterred 28.949 53.372 Amort zat.on of deferments (cred.ti (1.618) (1 977) 27 331 51 395 Tota; etectr:c e<penses 131.757 143.924 Otner income r dera: {crec.t) (23.206) (20.268) e State crec;ti (3 085) (2 695) Totai ciner.nceme (26,291)* (22 963P Tcta: income tax expense S105 466 $120 961 ' Net taxes payac:e amount to $20. ;J9 000 for 1977 and S13.942.000 for 1976 However. for consolidated income tax curecses. oniy a m.nimum amount of income taxes may be payabie currently due to utthzat on of tax loss and investment tax crec.t carryovers cf tne company and certa:n sucs:d; anes. De'errec taxes ret :nc:uces stateincome taxes of 36 489.000 fcr 1977 and 56 406.000 for 1976. Incer e ta <es d.t'er troen amounts corrputed by acptymg the statutory tax rate to pretax income as fo;lcws (dollars in incucancs' 1977 1976

nccme taxes on pretax inccme at tne statutcry federal rate of 48%

S142.951 S141.438 Alusti"ents to acove at 46% Alo.vance for a.i funds used dunng construct en ( ADC) (41.681) (29.628) Amortzaron of investrrent tax cred:t deferra;s (1.618) (1,977) l Amort rat on of ruc! ear fuel toceax bas:s dif'erences (pnnc:DaHy ADC) 1.382 1.568 Ctreritems ret (2,163) 1.922 State incoTe taxes. net of federat incorre tax tene6t 6 595 7 638 Tota: inccme tax expense (see acove) 5105 466 S120 961 l i 33 ) i

6. Short-Term Borrowings Tne company has nnes cf cred t witn 60 comrrercial banks batances of accroximateiy S18 068 000 and S19 518 000.

rescect.ve y The remaining knes of crea:t (pnnc.caly non-r and uses inese Enes cius tne safe of commerc:a1 pacer. to

f. nance its current casn recu:rements Bank loans are for 90 datly cecository accounts) were on a fee basis calcu:ated days or !ess in generaltoec;uatetotheva!ueof baiances Borrowings At Decemoer 31 1977 and December 31.1976.

am pnncica!!y at the.ending bank s commercial pnme in-terest rate Certa:n of tne company s bank kne arrangements 5202 590 000 anc S195177.000 of the comcany s bank may recuire add 4tional ba!ances equal to 10 percent of the Lnes of cred,t recuired average annual compensating borrowings on an annual average A summary of information relating to short-term borrowings is as fofows (co!lars in thousands): 1977 1976 Amount outstand:rg at end of year Bank tcans-7h% and 6M rescectively 5 16,000 S 26.000 Commercial paper-average rate of 6 74% S158.095 $174.095 5102 043 Maomum amount outstand:ng dunng the year S 37.8 t 2 $ 44.984 A verage amount outstand:ng dunng tne year $260.090 S252.677 L.nes of crea t at end of year We:ghted average interest rate for the year-computed on a daily bas:s 6.43% 6 20%

7. Commitments and Contingencies The company is engaged in a long-range construct:on pro-inc: dent invoiv:ng any bcensed facihty in the nation and up to gram for which substant:ai commitments have Deen made S 10 mdhon a year for each of its licensed reactors in the event Costs for the years 1978 tnrougn 1980 are currently of more tnan one incident. The company has three hcensed eshmated at $2 2 bilkon for the construction program and reactors See Nuclear L:abihty" cact:on on page 8 for infor-

$429 m@on for nuclear fuel mat:on relating to htigation with respect to the const:tutionahty ohhelmitatonof hacihtyprovis:onsof the Pnce-Ancerson Act. The ccmpany s pubhc habihty for claims result:ng from nu-c: ear rnc; cents is hm.ted to $560 mahon under provisions Property damage coverage for the company s nuc! ear facih-cf tne Pnce-Ancerson Act enacted by Congress in 1957 t es is prov:ded through mamoership in Nuclear Mutua! Sh.ch a!so prcvdes supp!ementa! nuclear habihty insurance Lim:ted (NML). If NML s losses were to exceed its reserves. Lo to that amount for the electnc ut:hty :ndustry Under the company wou!d be hab!e for acc;tiona! assessments of Nuc~ ear Regu!atory Commission regu ations effective August uo to acprox:mately S27 000.000. represent:ng 14 times 1.1977. the company cou!d be assessed up to $5 milhon the company s current annua! premium to NML for each of its hcensed reactors in connect:en with a nuclear O 34

8. Quarterly Financial Data (Unaudited)

A sumrrary of cuarter.y f;nanc'a! data for 1977 and 1976 is as fo, lows (Collars in thousands exceot per share data) E!ectric E ectnc Operating Net Earnings per Pevenues income income Common Share '977 cy Cuarters* Fourth S330.163 $58 282 $50 393 $0 60 inird 329.948 47 559 40.854 0 47 Second 276.113 50.140 40.062 0 46 F rst 328.750 73.905 61.0*0 0 88 1976 by Quarters

• Fourth

$283.451 $55.229 $43 525 S0 59 7hrd 289.114 64.748 50.965 0 72 Seccnd 258.414 50 522 34.274 0 42 First 277 379 62.918 44.937 0 67 'Ouarteriy earn ngs generally f* actuate w:th seasonal weather condit:ons. the t: ming of rate increases Oncluding fuel c!ause acjustments-see graph on page 37) and schedu!ed and unschedu!ed maintenance of electnc generating units. especially nuc! ear-fueled units.

9. Current Replacement Cost (Unaudited)

Because of.nt;ation and env:ronmental and regu!atory re-ref ect. under present reguiatory procedures, the higner cuirements the cost of rectacing the company s p'antin depreciation expense assoc!ated with such investments. cerv'ce today wou!d significantly exceed the amounts Peplacement cost data requ: red by the Securities and a:!ualiy spent for such fac:!ities and reported in the company's Excnange Commission is included in the company's annual f:nanc:al statements it is ant c;cated that as the replacement recort (Form 10-K) fi!ed with the Commission-costs of 'ac.l.t.es are incurred in the future electnc rates will 35

Fin:ncirl R;vi;w and Manag: ment's Analysis for the Years Ended December 31,1977 and 1976 AVERAGE KWH CONSUMPTION Pate Matte's Fuel Usedin Sectnc Generatica PER RESIDEN7tAL CUSTOMER in au three junsd:ct;on5 tne CCmpany s Fue! excense rose 24 percent in 1977 12 m e ecinc rate schedu!es t otner than fuel ref>ec:.r.g tre cont.nued esca aton n fue! ad;ustment) were last increased in Orces pus mreased generation from t2 mo mid 1975 cider ess e'feent foss:i-fue:ed stat ors anc musw we unas De gree The company contnues to adjust ra:es m Wouacrour gevaren W swim in a:::hree junsdicticns to re ect itctua-r t ons in fue! expense Trese prccedures Womam Oy fosheed statons. amougn ncear generaton for G77 was a - W', ' entad 60 to 90-day !ags from ine date s[. changes in fuel expense occur unt.I!ney @ght;y acove 1976. j 2-j

• C are ref!ected in customers oms Totai Tne 1976 ;ncrease in fue' experse cf 4 4@.pl<N i

revenues under such proc ?:1ures amcunt-18 cercent renecteo 'ncreased overal; '0 " ed to 3119 900.000 in 1977 and gereration resuiting n n grer fuel recutre-M HA

f. ;4 s

,srT tir ? sis . I 557.800 000 in 1976 rents coup.ed with a 15 pe cent decnne 1 ~

2. s sir IGlowatthour Sales m mcw gm t: n. Unantc:ca:ed ma.nterance recu,rements crevented the increases in ki!owat:nour sa:es for 1977 Company s Cconee Nuc! ear Sta::on from were pnrnanly due to weather cond.tions operat>ng at tre 1975 ! eve!

AVERAGE KWH CONSUMPTION .n tre company s serwce area as ind cated PER GENERAL SERVICE CUSTOMER by tre,ncrease in the a terage Howa't-hiet Interchange and Purchased Power hou consumo!'on per customer. pan:cu-e0000 larly the resicential and gener al service in 1977. the ccmcany made fewer energy customers. The 1976 increase :n dowatt. sa'es to :ts ne.ghtonng utat es tnan :t nad 37 w hour sa:es was due pnmanly to tre effects in the two prececir g yea s Less power cf the area s econom:c recovery was ava lacie for sa e to these c her . J, . 33 mo utut:es as a resu.t of tre company s 7'.g ng;p Cther factors contnbut.ng to tne increases e' tens to ma,nta:n aceauate cost inven-ca p 52 sm in kitowaitnour sa:es were tre cont'nu.ng. t. Wv tones to meet the increas;ng demaTs s ,Am %,. w a h i$:Qq but mocerate. increases in tne tota! num-m C aced on its Coa!-fired stations. Coupled i l S - t "4 v. + 2.*oY 2e

f <Mf$.q ter cf customers together with sor"e b

.v:th Coal procurement probsms Caused 1 M,4 i a., e ggk 4 sDecial sa es 1.-., wkp. h. by severe weatner and straes in aad.t on. ,% p i J RW D?t M b due to the scnecu'ec refuehng of the 7 bu. JQ @ M nucrear urats dur:ng tre summer montns vers 9 74 ters 197e 1917 E:ectnc revenues for 1977 increased la and unschedu.ed outages of generatng percent over 1976 refect.ng a seven per-un ts dunng tre year. tre comcany 0"1 cent increase in k! Iowa'thour sa!es ard not have the generating capacinty avasade AVERAGE KWH CONSUMPTION the cOliect.on of higner revenues through to make energy sales to ciner utet.es PER INDUSTRIALCUSTOMER fuel cost aciustment crocedures E ectr:: Other Operation, Maintenance and revenues for 19 e o increased 19 ;ercent Depreciation &penses j comparad to 197o. Th.s increase ret'ected p. Ctner ccerat:en expenses increased 18 H the fu:1 impact of rate increases imo,e_ Z DMhp% g mented in mid-1975. an e cht percent percent :n 1977 and 12 percent in 1976 ..5 MD$[D4 increase in kilowa':ncur saIes and the due to increases in generat.cn numcer W@f TiA U $l.1 gat % f[#k i con:inuation of revenue coiiect.ons under Cf 9mDl0' vees and sa anes. wages and 2om " X $M M W@%@M@W f tuei cost ad,ustment procedures benef'ts..ncluding nigher ret:rement p:an y costs resu.! ng from vorunta y irrcrove- '( HK 9n.A? ??

&g N

ments as weil as compi:ance um the a ~ D; gi s:% - th.~.yN w m - 4, t ocoom i ur .[ E , %g %yp, ..*4

2. 2s

%p- ~ q.w-d' d2 &D6:@1 @n ~ smi Maassd L ah ^ 1 1973 1974 1975 1976 '977 Y

E-r; y,w et reme~ irccme Secu if CN /r cme FUEL EXPENSE VS. FUEL BILLED r co s e.c w mur t 2n ,o. "..<. .,r.2_., . 4 m e t rcre 2se -n ,rer mcome rcse n 19,,,i and 1976 cue ute. y u m 1 "+ c re c.cerfe er 977.vas c,,,.y,, j to.ncreates :n :ne COwance w B.o e ca w ' 1 4 d t 'n .,r.3, ,., a ~ rm..mCr a..- -w#_ r', reca.rs .;,,. tec. zec cur og construct.on g m i .ADC' _and sucscary earmngs Tota: ] .y ca cor : N st > cns to e :enced 'e rc CU yes it '"e CCC'e9 N;c e3r 1 10X0 ,w . e eGu...,/ v,or00nent m,LS the 6 v 4

• . - - - -,a,., n.. < ~_.:.. y. re,,. r ta_ v a nc_ e 3,

i m. gg,ro.M CorDonet >nctucec under .g - I ,...,,,m.p.,.-. ; ~3. y... n,r., -f. s. g,,.g.pu

cterest Ce0 Jct cns ' :ncreasec 41 Oer-I

~'j q m ~ -m -r... m. e n o_. ;,-. ~n, m.., c.3.af T. rp 4 w , p, 7ggg,_, n' tre,rcrease in s

• 4 y,m g

s J. 4 >} 3 n m r'ao r r. co w ct ? gu " ~ - - - ~

ens:ru;:On acr< in proc /ess(C nPs t

1 j 5 ' 'v! < _ P^t a y Cue to me sarre 7 e serre :rr.estment :n CWIP in-I

i. 1 1

4 l D 7# creas+; 45 Cercent.n 1977 and 16 per-I l' k 'er! n ' T6 arge:y teCause no generat.ng ..,..e r : c,. C creCro e, cense for h -- ~ ~ i- + -- + ora crep.eted and placed in ' ' ~ g g))" "Ye

• ea : e rv, nim : ac; Crs a

. v: " w.(e a r rg tre 3e3r re.v 3

4 3 2 3 4 or, i 4 76 luf7 W5 ' c'eEe n cecm:zon eAC@n56 ! cn aM as30C atea fuei represented 90 .yo,m c3,cs,a go,ma ra,m na 2;y w~. a, u,. u yam-w, c,y x-. g ,., d C iP at DeCemter 31 1977 y . - ! c 0. t e tic er; i me< eteam sa: oi. EamrCs et sucsd ar as increased .., - werc a :vce.n Te ' 9, _, n i e,, ; arc.n 19, o. prirraray as 3 resL:t 7FEGeme a' ct sa es cy Crescert Land & T mter G. < t w .m.v: - 2 Cercent.n Car; EARNINGS PER SHARE BY CUARTER -- r .x. m m r _ c. ~ a r, P~ ' ' inte? e;; Ceaur:t;ons and Preference and ~ - ~ ,. o r. r c~'.N-ne e w-';. . r m.u, gu a -.,n 1r ~ p(gyg,g g,,cqqgg i cc vec arc r ^rer cayrCs'aes esat.ng 88 i' a Ce !3 COntinu.ng Construct lCn rw a.,rrer %~cer ;f em;'c,ees and r < m 3.er ace :cr a seen me s Tre Orognm re cornoany issuec ada t:cnai w 0 cerce-t Ecrew:e n 1076 zas due to an es n octn 1977 ano 1976 (see 72 .7 F nanc ngs i v.h cn r su:ed in :ncreases a g g e cc'e3a cross +:e cts t 3 <es. _.., in '"'ere5' 3nd Creierrod d videndS Cf O r c ,t r- . orre3 % reggp Sever De# cent fGr 1977 3nd !WO Oercent 4j 47 46 7,, :t n,4 e e...., m t s, w ':r l e,o Utrer nierestegenSe decreased c Ie ; cer:cri cecrease n t3!31 :rCCme p ; g,;gr;.q.976 CeCause Of a lower

3x e

.me ?J 97' ret eC!ed 'C'.'.er perg a ev9' Of SPCr!'erm deO! OLI-l CCr<

• v rCcr e ce*C'e FCOrre ta<es M31 rg CM AC WC 'CWer SnCrt-term I

i ~ "i. ' 9 D. cre3ces n ' e-70 !"a r ,.g,g 7ea 1 y j y t e ~ 0 --: f Tr.e ' 9~6 mceesse c' Y C r:J-t r-Su tec Cr.rea", from n arer 2 3 4 1 2 3 4 C'-s m6 m7 wars rc.,v.es crccu:ed cy r3*e 'nCred595 C L Y*er:. eirn'ngS generady I'UCiuate #3 1:e2 en :ect n m d

• 375 yeaiGr3: Aeatrer CONC t.OnS In t'Oth y

1 I 3 C ' 976. Guarter:/ earn;ng3 also .V9ee 3NC:Od Oy V8r/tnQ fuel expense rew: rg : om cr'anges :n generat,on mix NJ: 93' Cenerat'On decre3 Sed and f0SS.1-Se ed 09rer3!.On nCre3 Sed durTg CenOCS O' r9'J :'? 4"C nuC. ear C ant Td n-

• e a":e Cuir:^ny e3rnings were affeC!cd

'M er Oy t e aq irrerer n revenue CArg prCrecures aCDeCaCie !O fuel eiCense I 1 I e I i A9

Financing 70 meet its cap tal requ:rements. the company has financed extens:vely ath dett and ecu:ty secunt:es and has ra sed add.: ona: caottat inrcugn other types cf f:nanc:ngs (douars in tnousanas) 1977 1976 Pnce Per Gross Net Gross Net Share Proceads Proceecs Prcceacs Procecd_; Common stock Puthc ca:es (5 500 000 snares March 29) 321 25 5116.875 5113.573 (5 000 000 shares March 16) 17 625 5 88.125 5 84 336 Stock Purcnase-Sav:rgs Prcgram for Emp.:oyees f 443 471 snares) 21 67* 9.610 9.610 (418 563 shares) 19 69* 8 241 6241 D,v:cend Fe nvestment and Stock Purcnase P!an (191 781 shares) 21 74* 4.170 4.170 (179 807 shares) 20 08* 3 611 3.611 Ernpicyees Stock Ownership Plan (114 632 snares) 21.07* 2.415 2.415 (59 864 shares) 20 73* 1 241 1 241 Total common clock 133 070 129,768 101 218 97 429 Preferred stock Preferred stock. 8 20?; Senes J. $100 par (500 000 shares: March 29 and June 16) 50.000 49.702 Preferred stock. 8 28% Senes K. 5100 par (600 000 shares. September 14) 50 000 50.172 Tctai preferred stock 100 000 99 874 Long-term ceot First rnortgage borcs 8% Senes Due 2007 (Septemter 1) 125.000 1230"6 11% Senes Due 1994 (January 13) 19.250 19 160 SY6 Senes Due 2006 (Octocer 21) 101000 99.169 Poduton control obtgations (June 8) 2 420 2 364 Total debt securit.es 125.000 123 056 121 670 120 693 C'trer f.nancings Nuc: ear fue! trust (December 30) 1.000 1.000 Capitahzed real estate leases (March 29) 17 700 17 443 Total other f:nancings 1 000 1 000 17 700 17 443 Total long-term dect 126 000 124 056 139 370 138 136 Totai $359.070 $353 698 S240 588 5235 563 ' Average Stock Market Information At Decemter 31.1977 and 1976. the company had approxirnate:y 90.800 and 83.300 hNders of common stock, rescect:yety Cur,ng 1977 approx: mate:y 10.033.C00 shares of common stock were traded as comNred to 9 563.000 dunng the prev:ous year D:v;dend Stock Price Parcs Ccmmon Stock Per Share High Low 1977 by Quarter Fourth 50 43 522% 3204 Tn:rd 0 40 234 20% Second 0 40 23% 1 976 First 0 40 22N 20% 1976 by Quarter Fourin 30 40 523M $19% Thirc 0 375 22h 19 Second 0375 19% 16N First 0375 20b 17b 38

Summaiycf Operati ns Duko P w;rCompany 1977 1976 1975 t974 W/S CC'.CEi.5ED STATEMENT C INCCME (trousands: E ecP c re.er es u Pes cent x $ 424 081 5 372 348 i 324.437 3 269 105 5 212 213 Cerera nce 256 439 227 e67 200 292 156 562 122 7e8 N'r 1 402.003 361 310 3t5 256 254 999 189 879 ' c ea e arc ctr.-r ene<w u es 173 83? 149 094 124 692 98493 e6 274 C*rer re, eses 10 619 '2 261; .' 323) 39644 3 172 Tc*r e ecinc re,erves 1 266 974 1 109 358 9?0 384 913803 594 326 E ec*r c eorms E aec.c e e P c cerery.cn 493 818 399 770 338024 333 399 191 861 .-t c'er:nange ard purcnava ocwer :crea t' (318) (28 815) (11 568) 8495 23 575 C" r cce at cn anc rn a ricance 201.548 164 203 145e58 126 259 107466 e3,e micn 114 974 110 644 100 995 83 914 70459 r Grera tw:s 95 309 35 215 75 757 64 710 49176 rr cwo 'aies 131 757 143 924 G2 542 55 390 34 ~293 77a' e' ectr c encerses 1 037 088 874 941 742 589 672 157 482 430 E.e:!nc opera';ng income 229 886 233 417 197 796 146 646 111 896 Cmer nccre A'cwce 'cr al funds used cu ng construct,on 62.441* 61.725 54.794 62.159 59 459 r O!ner rcome ret ~decuct on) 8 223 4 847 il 469) 5086 1 093 i-ccme ta es-crea i 26 291 22 963 21 789 16 094 15 406

nterest c+1.ct ons (134 492)*

c149 251: '145 767) (127.182) r91535) '.et nccme 192.349 173 701 117 143 102 803 96 313 Ou c arcs on cre'erence arc preferred s*cc ear end $20 53 519 67 518 98 S1947 , $20 48 Uanet 'sa:ue-n an ow $23%-19% $23 %-16% $19%-10% $203c10

23+1o

,ek enc $22 S22

519,

$10% $17h ELECm0 AND OTHER STATIST 4CS U ?*rcur sa es (rrimCnS' p 12 462 11 327 10 606 10 325 10.150 cy, mm-fa, seroce 8 623 7 987 7.567 7 053 7.287 .y 19 188 18 417 16 736 17 881 le 848 ,,, :E e ard c:rer energy sates N 8 575 ' 902 7 029 7 Oe5 6 938 TcTa; Howarnour saes 48 948 45 633 42 138 42 344 43159 Nur cer of customers -- year end Pes: cent;at 1.024 712 989 501 969863 951 459 931.020 OP'e' 168 351 161 464 156 396 154 22' 152 132 Tota' cusicrrers 1 193 063 1 150 965 1 126 259 1 105 650 1093 t52 Reccert ai custorrer data A.er3ge annua. KWH use 12.260 11 523 11 237 10 927 11 072 ge re.an e t. 'ed cer KWH 3.400 3 29c 3 C00 2 61c 2 08C 4e u Numcer et emp:o,ees - year era Ccarat g and rra nienarce 8 816 8 367 8 077 8.103 7 938 Generai c' ant construction anc eng'reenrg 6.782 4.916 3.729 4 240 5.125 Source of enercy (meons et KWH) Gare rea-Coat 37.184 35 87r 28 202 34 810 37 036 - Nucear 13 008 12 973 15 290 6361 2.402 ,cro 1.852 1.961 2.736 2.220 2377 -O, arc gas 303 13 57 1 236 2 218 Net -ter:ranga anc curchased gewer 31 (t6561 (776) 503 2469 System aserace reat ra'e 9.743 9 616 9 777 o 750 9713 S<s:ern tca facter 62 0% 64 % 61 6 % 64 1% 6.2%

• Sea Nc e Utem A Adc nors to E ectnc P art : ci rctes 'o f:ranca: statements for 1977 cranges in f.nanc:al statement preseraanons 29

' Subsidiaries ^ p'o*m3te'/ t 900 000 tons ct wai l %ere racervec by Duke from the Eastover races rn 1977 represent og acout t 2 Crescent Land d Timoer Corp percent of CuLe s total coai reau remems. In tne ccurse of Ouying orcoerty fcr oc Aer ccrrearec to 2 250 000 tons or 17 pe - cevetcaments t ;s.revitac.e trat land cert in 1976 Atrougn Orccuct.on iese:s at sorre mmes snowed marked rnprove-not recessary or use'u' n utnty coera'.cns a>so w.4 be accu: red Cser the years r ent cver tre preeous yea

• osera1 procacion for tre Eastoser mines cec! ired Du<e and att i;ated corocrat,ons nase from tre 1976 te et cue to tabor c:sputes.

acau red some 270 000 acres of sucn evers:ve f'cocirc in tne Acca;ach an non-uM.tv lancs :n its serv.ce area Crescent Lanc & T.rroer Corp. was reg;cn car og re sonng mcrths, and organized ;n 1969 to manage these prco-9'treme y coic weather ert.es wrten cons.st onmanty of farm anc t.mcer 1ancs ac;oin:ng Dune s nyCro-Mal-Po 'er Sucoty Company e>ectnc f aciht>es men e:ectnc-ty f rst came to tne P edmont Timber narvest:ng and reforestat on Carchnas.n 1904 many ot !ne area s cont nue to te the pnmary funct>cn of in s tee.'e r-as could not use this new suoscary in 1977 Crescent harvested energy form tecause the r mrcninery 26 5 mlhon board feet of t.meer anc was cruen by otner sources of power. 45 527 corcs of pu!pwood More than 49 primanty water Mdl-Power Supp'y

m. mon seechrgs have teen pianted on Corroany was organ;zec in 1910 to o.er 70 000 acres of company lancs OrcvideIne wires cabes transformers.

s.nce the reforestation program began in motors and o:ner e ectncat ecu:pment 1939 Crescer.t is currently stanting rew needed to convert tnese mis to e' ectr.c-ty trees at tre rate of 13 mchon per year Today Mm-Power is tre autnonzed d s-Much of Crescent s takesice propert es tr.cutor for many cf the largest has teen leased !o inciv:cuals for recrea-manufacturers of e!ectnCai ecu.pment in t,onal homesites In 1975. Crescent tegan tne coumy and is the targest. s.ng e-se hng trese s:tes. based cn tre:r ncuse e'ectncal ecu:cment c:str:butor.n appra sed va:ue to cuanf ted easenoiders tre Scutreast in adc4on to selbng items The Eastover Companies to Dune anc others as a who:esa e c!strD-utor. tnis sucs.crary serves as purcnas:rg Eastover M n.ng Company and Eastover ace 't 'or virtua1y att sucches. ecu pment Land Company were crganized.n the and f;ei recured by Duse eary 1970 s to teip assure Duke an IO he's of' set a s:oucewn in e. ectr cal acecaate succiy of !ow-sulfur coal fcr.ts construct,cn anc increased compet I;on coaared generatng units The Onmary funct;on cf Eastover Land Company :s 'n :ne e ectncal ecu Oment market a to hcia tre to coat reserves in tne nurrber of market.ng innovat.ons were Appa:achian renon the actuai mining of 'n trated :n 1977 to create sa es to inese resen,es :s accomplisnec by customers previously not served by tn:s Eastover M.ning Comcany subs c.ary On Cecemoer 31 1977 Eastever Lanc Ccmoany owneo or nad controhng 'nterest in coal reserves utn an est; mated 243.000 000 tons of recoverac'e coa! Those reser/es are !ocated n eastern Kentucxy and western %rg.nia i 4. 40

i h Subsidiary investments e x e,er u 1977 1976 n cs n rwsarcs! 1 Prcoerty and investments - at cost i Peal estate. recreat,onal and land development $ 32.126 $ 31.702 Coa: mining 109.051 103.293 Net current assets. pnncipally i receivabies and inventories 9.543 9 350 l Total assets $150.720 3144.345 Long term notes (33.977) (31.309) Ccal product,on comm.tments (45.472) (51.520) Deferred income taxes (31.324) (25 162) Total habil.t'es (110 773) (107 991) Parent company investments and advances 39.947 36.354 i Net advances to (from) parent 474 (4 245) Net assets of subsid: aries S 40 421 S 32.109 4, ) i I l s 3 4 s a no i 41 l r .... ~,,

Board of Directors -JOHN D H'CKS

PEECE A OVEOCASH Sen cr V ce Pres dent Pres cent Puo-c Aff a rs Assoc ates Ccrocrat cn :f

+CAPL HOPN JR Co e Pcwer Ccmcany Nortn A rera w

Cha rmar and Cn et Executae

HOWA,D HOLDERF. cts f.nanco rcreuw~r me' rc r

-- ~ ~ c,.. sr cornmorc a. 'erc ng a^d " -~ c a e p.. y n,,,,,ar9. na rman cf tne Scard r a vc y m v..- .nsurancm ve"erson PJot Lorporton

• DP NAOMI G ALBANESE Dean Scheci cf Home

HECMAN W LAY

+B B PAPKER Econcr.cs Cha rman of the Execu!Te Pres.dert and Chef Unsers:ty of Ncrtn Caroona Ccmm.itee Oceratng CScer

3. Greensdcro Peps:Co inc Duke Pov.er Corncany Jmfg and d st ct soft dr nus.

+COUGLAS W BOOTH srack foods socr! ng goods ~ ,,S E3ecut.ve V.ce Pres cent Honorary Cna.rman of trustees w,nes and transecrtat on e Duke Endov. ment Dur e Pc Aer Comcany serv:ces) b

• THOMAS H DAVIS

+WILUAM S LEE P'es cent and Treasu'er Executve V:ce President

• 3 den P edment Av at ca !nc Duke Power Comoany 9 #37,# # #

Duxe rov.er i cmpany DP POBERT C EDWAPDS EUCK MiCKEL D P'e5 dent Cha rman of the Boarc $w^"ns'"Vanc4er. Km.en Cemsco Unners tv Dantel Internatcna Corporat ca "* 3* * #

• JCHN L FRALEY Ondustnai anc commerc:ai Gac e & Gray Vce Cha.rman and Ch:ef constructon; Execut.ve Off cer Carctna Fre:ght Carners

..je m .g.. 7.; Corecrat on

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-W!LLIAM H GPIGG Ser'cr Vice Pres: dent Lega! and Finance Duke Power Company

• PAUL H HENSON Cha rrran of tre Board Un.!ed Teieccmmun:ca!.cns lnc

' Mage"ert Cna"ges Mair.enance and Construction to Ass.s-The comcany v.as saucered cy me ce3tr Tre favow ng management changes were tant Vrce Pres cent. Transm:ss.on en Ma cn 6 '977 of Frarz W Eejer r ade conrg 1977 SuCstatons and E Bruce Shu'er from Vice Pres: dent System P: ann.ng and cy Jcnn D H.cks ' rom Vice Pres. cent f.tarager Transrnssion L nes to Ass:stant the ceatn on Jaruary 10 t973 of A Ccrcera'e A'f 3 rs to Senrer V:ce Pres; cert Vice res. dent Trarsm:ss on Lres Eds:q f/ed Doo?!tte V.ce Cre3. cent Distreut:cr pu %c Af%rs Str.e C Gnthin Jr frcm C Powe:I Ass.stant Vice Pres, cent Eng:neer.rc Corstruc:.cn and Cce'atces Gerara! Cmew' te Vice Pres cent anc Prcoucton ard Transm ss:cns retred At.ts January 3 '979 eetrg tre Gerera' Counsei Rovt J Ashmore W T Pocecson Jr. was nar"ed Pres. cert Ecard of c rectc's e eqec E N Meccece:t frc - Ass stant to the Sen er Vce cf W-PowerSuce'y Companv succeed:ng y.o y ;g p,e3.cen. g 3.r. cut.cn Ekce Pres cent Leq;3 anc P: nance. to Ass. star! TncmasJ Garrett ano e:1 red A:so . seer ro cces.,ueon 3.,3 c;e,3; o,~3 V:ce Pres cert. P nance Acmm.straton retrng :n 1977 v.as Car! J B' aces V ce 3,c;gectng y, cocce a c ;3j u Accer*L Henson from Manager E'ectnca; Pres cent. Peal Estate > 3ne ;r to (:e pres ce-t Ccerat cn. sucrec ng L:cyc P Jma9 Aho retrec e 12

m Officers PC6EpiL CICK GECRGE W FERGUSON. JR I Suosca es Vee P'es: cent Secretary and l l r"es,centNAN H WEM Construct,on Ceputy Genera! Counse. CARL HCAN JR ! Crescent Lanc & T.mcer Corp STEVE C GAlFFITH JR PICHAPDC RANSON Cr a rman of t e Board and l _CEtRT M MOOrc V ce Pres cent and T eaver n On e Emsu:c.e C"cm l Pres: cent r Gereral Counsei WILUAM R STIMART 8 8 PARKER PCRTER A HAUSER Cortro: er Eastoser Lanc Company p.egggr. 3ng V:Ce Prestcent .w i F nance Acm n straton RCBERT J ASHMORE NORMANYAPEORC' UGH c*,6. n era. ng C., cer Ass:stant V,ce Prestent Prescent CCUGLAS W BCOTH 7 tug _ TEETH aR F nance Admin:stration Eastoser Min;rg Company -.c Erecet s e V.ce Pres. cent V ce -res cer t RCBERT L HENSON W I ROEERTSON. JR WLLI AM S LEE D str not:en Eng neenng. AS3'stant V ce Prescent Prescent E>ecuNe V,ce Pres: cent Constructon and Coeratons Transmissecn Substatens M4 Power Succly Company W'LUAM H GR:GG FRANK A JENKINS Ser' or V.ce Pres. cent V:ce Prescent SAMUEL T LATTIMORE Leg 3i anc F rance Transm ss4cn Ass stant V ce Prescent Comcuter Sereces J LgeLEY LEW,ie-JOHN D H!CKg V ce Prescent RICHARD R PIERCE Semor V ce pres. der! Dvs on Coeratcrs Ass!stant Vice Pres' cent pac A.t3 73 Corporate Communications ^E S, AJOn JR ,n J AUSTIN C THiES V1ce Pres! cent E BRUCE SHULER Sen cr V.ce Pres cent Personre: Ass:stant V:ce Pres. dent orocuct cn and Transm,ss.cn Transm.ss:cn Lees JOSEPH G MANN gg;Ts Aatgggg V,ce Pres: cent LEWIS F CAMP V ce Prc cent Nor*nern Des;on Asscant Secretary and neste,- cy 3.cn Ass c: te General Counsel PAUL H M ANN. JR THOMAS C BERRY V'ce P'es: cent JOHNC GOODMAN JR / ce pres ceat -Operat:on Ass.stant Secretary sou:ner-D es on , Ace]eresicert WA ENH OWEN DCROTHEA B STRCUPE MLUA'.J BURTON Ass.stant Secretary V ce P e9 cent U*S'On Eng neenrg Ccrocree Commur cat.cns 'MLUAM O PAAKER JR Ass. star + Treasurer "ENav L CPANFORD V ce Pres: cert RICHAPD W HOLMES on mentrai Dn.sion Ass.stant Controlier THOMAS M PATRICK JR DCNALD H DENTON JR V,ce Pres cert KENNETH C STONEERAKER pce Prescent E stern Desion Ass;stant Controher Market.ng I i l s 43 a

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