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{{#Wiki_filter: | {{#Wiki_filter:REGULATOINFORMATION DISTRIBUTION STEM(RIDS)ACCESSION NBR:8501040266 DOC~DATE:83/12/31NOTARIZED: | ||
NODOCKETFACIL:50-315 DonaldC,CookNuclearPowerPlant~Unit1~Indiana80500031550-316DonaldC,CookNuclearPowerPlant~Unit2~IndianaL05000316AUTH.NAMEAUTHORAFFILIATION ALEXICH,M,P, Indiana8MichiganE;lectric Co,RECIP~NAMERECIPIENT AFFILIATION DENTON,H.R, | |||
~4OfficeofNuclearReactorRegulationr Director | |||
==SUBJECT:== | ==SUBJECT:== | ||
"AnnualRept'983."N/ | "AnnualRept'983." | ||
N/1984internalcashflowprojection 8841221ltr.DISTRIBUTI NCODE:M004LCOPIESRECEIVED!LTR | |||
-gENCLgSIZE:0TITLE:AnnualFinancial ReportsNOTES:OL:10/25/74 OL:12/23/72 0500031505000316RECIPIENT IDCODE/NAME. | |||
NRRORB1BCNIGGINGTONi DCOPIESLTTRENCL1~010RECIPIENT IOCODE/NAME NRRORB1LA01COPIESLTTRENCL11INTERN:EGEXTERNAL: | |||
LPDR.NTIS04030512,21'SPNRCPDR"0211-11TOTALNUMBEROFCOPIESREQUIRED: | |||
LTTR9ENCL"7 ilfMI6nIeh(1-~~I''Ifq,,IWhfWWWII-WM'lWW,(II'I,'(W~~MetWWWI'I'ghi"~I"~PPj<Me~MheeeeP1~eIII'QMI~<<iW ATTACHMENT lTOAEP:NRC:0909 I,Q INDIANA8MICHIGANELECTRICCOMPANYP.O.BOX16631COLUMBUS, OHIO43216December21,1984AEP:NRC:0909 DonaldC.CookNuclearPlantUnitNos.1and2DocketNos.50-315and50-316LicenseNos.DPR-58andDPR-74FINANCIAL INFORMATION FORINDIANA&MICHIGANELECTRICCOMPANYMr.HaroldR.Denton,DirectorOfficeofNuclearReactorRegulation U.S.NuclearRegulatory Commission klashington, D.C.20555 | |||
==DearMr.Denton:== | ==DearMr.Denton:== | ||
Attachment 1containsthreecopiesoftheIndiana&MichiganElectricCompany's (I&MECo)AnnualReportfor1983.Attachment 2containsthreecopiesofI&MEGO'spro)ected oashflowfor1984.Thesereportsaresubmitted pursuantto10CFR50.71(b)and10CFR140.21(e). | |||
Thisdocumenthasbeenpreparedfollowing Corporate procedures whichincorporate areasonable setofcontrolstoensureitsaccuraoyandcompleteness priortosignature bytheundersigned. | |||
Verytrulyyours,~)ylMilton.Alexioh1II'ice President thAttachments cc:JohnE.DolanM.G.Smith,Jr.-BridgmanG.Bruchmann R.C.CallenG.CharnoffNRCResidentInspector | |||
<<Bridgmanper rU0 GANNUALREPORT1983AMERICANELECTRICPOWERSYSTEMS5010OOZSS S31aS1PDRADOCK05000315PDRy,b~" | |||
ContentsBackground oftheCompanyDirectors andOIIicersoftheCompanySelectedFinancial DataManagement's Discussion andAnalysisofResultsofOperations andFinancial Condition Consolidated Statements ofIncomeConsolidated BalanceSheetsConsolidated Statements ofSourcesandApplications ofFundsConsolidated Statements ofRetainedEarningsNotestoConsolidated Financial Statements Auditors'pinion Operating Statistics PriceRangeofCumulative Preferred Stock6-810-11121314-262728-2930 INDIANA&MICHIGANELECTRICCOMPANYOneSummitSquare,P.O.60,FortLVayne,Indiana46801Background oftheCompanyINDIANA&,MIcHIGANELEGTRlcCoMPANY(theCompany), | |||
asubsidiary ofAmericanElectricPowerCompany,Inc.(AEP)isengagedinthegeneration, | |||
: purchase, transmission anddistribution ofelectricpower.TheCompanywasorganized underthelawsofIndianaonFebruary21,1925,andisalsoauthorized totransactbusinessinMichiganandWestVirginia. | |||
Itsprincipal executive officesareinFortWayne,Indiana.TheCompanyhastwowhollyownedsubsidiaries; theyareBlackhawk CoalCompany,whichownscoalminesandrelatedminingassets,andPriceRiverCoalCompany,whichminescoalfromlandownedbyBlackhawk thatispurchased largelybytheCompany.TheCompanyservesapproximately 446,000customers innorthernandeasternIndianaandaportionofsouthwestern Michigan. | |||
Amongtheprincipal industries servedarestone,clay,glassandconcreteproducts, primarymetals,fabricated metalproducts, electrical andelectronic machinery andtransportation equipment. | |||
Inaddition, theCompanysupplieswholesale electricpowertootherelectricutilities, municipalities andelectriccooperatives. | |||
TheCompany's generating plantsandimportant loadcentersareinterconnected byahigh-'oltage transmission network.Thisnetworkinturnisinterconnected eitherdirectlyorindirectly withthefollowing otherAEPSystemcompanies toformasingleintegrated powersystem:Appa-lachianPowerCompany,ColumbusandSouthernOhioElectricCompany,KentuckyPowerCompany,Kingsport PowerCompany,MichiganPowerCompany,OhioPowerCompanyandWheelingElectricCompany.TheCompanyisalsointerconnected withthefollowing otherutilities: | |||
CentralIllinoisPublicServiceCompany,TheCincinnati Gas0ElectricCompany,Commonwealth EdisonCompany,Consumers PowerCompany,IllinoisPowerCompany,Indiana-Kentucky Elec-tricCorporation (asubsidiary ofOhioValleyElectricCorporation), | |||
Indianapolis PowerALightCompany,NorthernIndianaPublicServiceCompanyandPublicServiceCompanyofIndiana,Inc. | |||
Directors FRANKN.BIENW.A | |||
Revision as of 06:35, 29 June 2018
| ML17334A858 | |
| Person / Time | |
|---|---|
| Site: | Cook  |
| Issue date: | 12/31/1983 |
| From: | ALEXICH M P INDIANA MICHIGAN POWER CO. (FORMERLY INDIANA & MICHIG |
| To: | DENTON H R Office of Nuclear Reactor Regulation |
| References | |
| AEP:NRC:0909, AEP:NRC:909, NUDOCS 8501040266 | |
| Download: ML17334A858 (42) | |
Text
REGULATOINFORMATION DISTRIBUTION STEM(RIDS)ACCESSION NBR:8501040266 DOC~DATE:83/12/31NOTARIZED:
NODOCKETFACIL:50-315 DonaldC,CookNuclearPowerPlant~Unit1~Indiana80500031550-316DonaldC,CookNuclearPowerPlant~Unit2~IndianaL05000316AUTH.NAMEAUTHORAFFILIATION ALEXICH,M,P, Indiana8MichiganE;lectric Co,RECIP~NAMERECIPIENT AFFILIATION DENTON,H.R,
~4OfficeofNuclearReactorRegulationr Director
SUBJECT:
"AnnualRept'983."
N/1984internalcashflowprojection 8841221ltr.DISTRIBUTI NCODE:M004LCOPIESRECEIVED!LTR
-gENCLgSIZE:0TITLE:AnnualFinancial ReportsNOTES:OL:10/25/74 OL:12/23/72 0500031505000316RECIPIENT IDCODE/NAME.
NRRORB1BCNIGGINGTONi DCOPIESLTTRENCL1~010RECIPIENT IOCODE/NAME NRRORB1LA01COPIESLTTRENCL11INTERN:EGEXTERNAL:
LPDR.NTIS04030512,21'SPNRCPDR"0211-11TOTALNUMBEROFCOPIESREQUIRED:
LTTR9ENCL"7 ilfMI6nIeh(1-~~IIfq,,IWhfWWWII-WM'lWW,(II'I,'(W~~MetWWWI'I'ghi"~I"~PPj<Me~MheeeeP1~eIII'QMI~<<iW ATTACHMENT lTOAEP:NRC:0909 I,Q INDIANA8MICHIGANELECTRICCOMPANYP.O.BOX16631COLUMBUS, OHIO43216December21,1984AEP:NRC:0909 DonaldC.CookNuclearPlantUnitNos.1and2DocketNos.50-315and50-316LicenseNos.DPR-58andDPR-74FINANCIAL INFORMATION FORINDIANA&MICHIGANELECTRICCOMPANYMr.HaroldR.Denton,DirectorOfficeofNuclearReactorRegulation U.S.NuclearRegulatory Commission klashington, D.C.20555
DearMr.Denton:
Attachment 1containsthreecopiesoftheIndiana&MichiganElectricCompany's (I&MECo)AnnualReportfor1983.Attachment 2containsthreecopiesofI&MEGO'spro)ected oashflowfor1984.Thesereportsaresubmitted pursuantto10CFR50.71(b)and10CFR140.21(e).
Thisdocumenthasbeenpreparedfollowing Corporate procedures whichincorporate areasonable setofcontrolstoensureitsaccuraoyandcompleteness priortosignature bytheundersigned.
Verytrulyyours,~)ylMilton.Alexioh1II'ice President thAttachments cc:JohnE.DolanM.G.Smith,Jr.-BridgmanG.Bruchmann R.C.CallenG.CharnoffNRCResidentInspector
<<Bridgmanper rU0 GANNUALREPORT1983AMERICANELECTRICPOWERSYSTEMS5010OOZSS S31aS1PDRADOCK05000315PDRy,b~"
ContentsBackground oftheCompanyDirectors andOIIicersoftheCompanySelectedFinancial DataManagement's Discussion andAnalysisofResultsofOperations andFinancial Condition Consolidated Statements ofIncomeConsolidated BalanceSheetsConsolidated Statements ofSourcesandApplications ofFundsConsolidated Statements ofRetainedEarningsNotestoConsolidated Financial Statements Auditors'pinion Operating Statistics PriceRangeofCumulative Preferred Stock6-810-11121314-262728-2930 INDIANA&MICHIGANELECTRICCOMPANYOneSummitSquare,P.O.60,FortLVayne,Indiana46801Background oftheCompanyINDIANA&,MIcHIGANELEGTRlcCoMPANY(theCompany),
asubsidiary ofAmericanElectricPowerCompany,Inc.(AEP)isengagedinthegeneration,
- purchase, transmission anddistribution ofelectricpower.TheCompanywasorganized underthelawsofIndianaonFebruary21,1925,andisalsoauthorized totransactbusinessinMichiganandWestVirginia.
Itsprincipal executive officesareinFortWayne,Indiana.TheCompanyhastwowhollyownedsubsidiaries; theyareBlackhawk CoalCompany,whichownscoalminesandrelatedminingassets,andPriceRiverCoalCompany,whichminescoalfromlandownedbyBlackhawk thatispurchased largelybytheCompany.TheCompanyservesapproximately 446,000customers innorthernandeasternIndianaandaportionofsouthwestern Michigan.
Amongtheprincipal industries servedarestone,clay,glassandconcreteproducts, primarymetals,fabricated metalproducts, electrical andelectronic machinery andtransportation equipment.
Inaddition, theCompanysupplieswholesale electricpowertootherelectricutilities, municipalities andelectriccooperatives.
TheCompany's generating plantsandimportant loadcentersareinterconnected byahigh-'oltage transmission network.Thisnetworkinturnisinterconnected eitherdirectlyorindirectly withthefollowing otherAEPSystemcompanies toformasingleintegrated powersystem:Appa-lachianPowerCompany,ColumbusandSouthernOhioElectricCompany,KentuckyPowerCompany,Kingsport PowerCompany,MichiganPowerCompany,OhioPowerCompanyandWheelingElectricCompany.TheCompanyisalsointerconnected withthefollowing otherutilities:
CentralIllinoisPublicServiceCompany,TheCincinnati Gas0ElectricCompany,Commonwealth EdisonCompany,Consumers PowerCompany,IllinoisPowerCompany,Indiana-Kentucky Elec-tricCorporation (asubsidiary ofOhioValleyElectricCorporation),
Indianapolis PowerALightCompany,NorthernIndianaPublicServiceCompanyandPublicServiceCompanyofIndiana,Inc.
Directors FRANKN.BIENW.A.BLAcKLAWRENCER.BRUNKE(a)P.F.CARL,JR.(b)RICHARDE.DISBROWJOHNE.DOLANWILLIAMN.D'ONOFRIO (C)M.R.HARRELL(a)G.E.LEMASTERS (b)GERALDP.MALONEYRICHARDC.MENGEJ.F.STARKBEVERLYI.STEARS(d)W.S.WHITE,JR.OfficersW.S.WHITE,JR.ChairmanoftheBoardandChiefExecutive OfficerW.A.BLAcKPresident andChiefOperating OfficerJ.F.STARKSeniorVicePresident MILTGNP.ALExlcH,Adm.USNRet.(e)VicePresident FRANKN.BIENVicePresident RICHARDE.DISBROWVicePresident JOHNE.DOLANVicePresident WILLIAMN.D'ONOFRIO (C)VicePresident A.JOSEPHDOWDVicePresident RICHARDF.HERINGVicePresident ROBERTS.HUNTER(0VicePresident GERALDP.MALONEYVicePresident RICHARDC.MENGEVicePresident BEVERLYI.STEARS(d)VicePresident PETERJ.DEMARIATreasurer JOHNR.BURTONSecretary ALLENH.STUHLMANN Assistant Secretary andAssistant Treasurer JOHNF.DILORENZO, JR.Assistant Secretary WILLIAMC.HARVEY(8)Assistant Secretary CARLJ.MOOSAssistant Secretary WILLIAME.OLSON(d)Assistant Secretary WILLIAMJ.PROCHASKA (f)Assistant Secretary JOHNB.SHINNOCK(C)Assistant Secretary JOANST.JAMESAssistant Secretary LEONARDV.ASSANTEAssistant Treasurer BRUCEM.BARBERAssistant Treasurer GERALDR.KNORRAssistant Treasurer Tltcprincipal occupation ofeachoftheabovedirectors andojficersofIndianackhfichignn ElectricCompnny,withnineexceptioris, isasanemployeeofAmericanElectricPowerServiceCorporation.
Theexceptions nreIV.A.Blnck,P.F.Carl,Jr.,IVilliamIV.D'Onofrio, G.E.Lehfasters, RichardC.hfengc,CnrlJ.hfoos,J.F.Stark,BeverlyI.Stcars,andAllenIf.Stuhhnann whoseprincipal occupations nrcasofJiccrsoremployees ofIndiana&hficlrigan ElectricCompany.(a)ResignedApril26,1983(b)ElectedApril26,1983(c)ElectedJanuaryI,1984(d)ResignedJanuaryI,1984(e)ElectedJune1,1983(1)ResignedSeptember I,1983(g)ElectedSeptember 29,1983 INDIANA&MICHIGANELECTRICCOMPANYi~jANDSUBSIDIARIES SelectedFinancial DataYearEndedDecember31,198319821981(inthousands) 19801979INCOMESTATEMENTS DATA:OPERATING REYENUEs-ELEcrRIcTOTALOPERATING EXPENSESOPERATING INCOMETOTALOTHERINCOMEANDDEDUCTIONS INCOMEBEFOREINTERESTCHARGESNETINTERESTCHARGESCQNsoLIDATED NETINcohIE-beforepreferred stockdividendrequirements
..PREFERRED STOCKDIVIDENDREQUIREMENTS EARNINGSAPPLICABLE ToCOMMONSTOCK$868,980686,237$809,803634,858$812,149634,209$742,683577,502$683,013524,800182,743174,94553,62948,725177,94029,713165,18130,541158,21329,042236,37296,496223,670102,647207,653104,313195,72299,151187,25591,475139,87628,384$111,492121,023103,34096,57195,78028,62823,62423,24219,995$92,395$79,716$73,329$75,78519831982December31,1981(inthousands) 19801979BALANCESHEETSDATA:ELECTRICUTILITYPLANTACCUhjULATED PROVISIONS FORDEPRECIATION, DEPLETION ANDAMORTIZATION NETELECTRICUTILITYPLANTTOTALASSETS2,905,934 3,343,963 2,855,325 2,745,288 3,135,884 3,035,614 2,555,608 2,826,1722,182,287 2,616,996
$3,666,823
$3,541,114
$3,356,987
$3,117,381
$2,657,930 760,889685,789611,699561,773475,643COMMONSTOCK,PREMIUMSONCAPITALSTOCKANDOTHERPAID-INCAPITALRETAINEDEARNINGSCUMULATIVE PREFERRED STOCK:NOTSUBJECTTOMANDATORY REDEMPTION SUBJEGTToMANDATQRY REDEhIPTIQN (a)LQNG-TERM DEBT(a)807,92595,616197,00099,4971,445,704 777,78391,756197,000104,4471,397,475 727,652100,170197,000105,5091,404,044
.637,287114,495197,00068,3481,264,673 587,193130,480197,00070,0001,124,255 (a)Including portionduewithinoneyear.
Management's Discussion andAnalysisofResultsofOperations andFinancial Condition
~,Thefollowing arethemoresignificant factorsbearingonthefinancial condition ofIndiana&MichiganElec-tricCompanyanditssubsidiaries asreflected intheconsolidated resultsofoperations.
Thisdiscussion re-ferstotheconsolidated financial statements thatfol-low.Operating RevenuesandExpensesConsolidated operating revenuesincreased 7.3%in1983comparedtoadecreaseof0.3%in1982.Kilowatt-hours soldincreased 1.6%in1983comparedwithan8.3%decreasein1982.Theprimaryreasonfortheincreaseinoperating revenueswasthereceiptofadditional ratereliefcoupledwithanimprovement inkwhsalesduringthesecondhalfof1983.Theimprove-mentinenergysalesreflectsthehotsummerandcolderweatherinlatefallandearlywinteraswellasthegradualrecoveryoftheeconomyintheCompany's servicearea.The1982decreaseinsalesofelectricenergyandoperating revenueswasattributable tothedepressed economicactivityandmildweatherexperi-encedthroughout most'oftheyearintheservicearea.Revenuesfromretailcustomers (residential, com-mercialandindustrial) wereup"10.6%in1983withacorresponding increaseinkwhsalesof2.7%whilein1982theserevenuesrose7.2%ona2.1%declineinkwhsales.Theincreaseinrevenueswasduetohigherrateswhichwentintoeffectduring1983.Theincreaseinkwhsalesincludesa6.5%increaseinsalestoindustrial customers asopposedtoan8.0%decreaselastyear,reflecting thechangesintheeconomyintheCompany's servicearea.Wholesale revenuesfor1983increased by5.5%fol-lowinga9.6%decreasein1982.Kwhsalestowholesale customers increased 0.6%in1983comparedtoa13.7%decreaseinthepreceding year.Theincreased revenues.weremainlytheresultofrateincreases putintoeffectduring1983andasignificant reboundinenergysalestootherutilities duringthelasthalfoftheyear.There-boundinwholesale salestomunicipalities, electriccooperatives andotherelectricutilities isexpectedtocontinueinto1984;however,muchwilldependupontheextentofimprovements intheeconomyaswellasweatherpatterns.
Purchased andinterchange powerexpenseincreased 2.8%in1983and11.2%in1982.The1983increaselargelyreflectsincreased purchases fromotherutilities anddecreased interchange transactions toobtainpowerfromotherAEPSystemcompanies.
The1982increasewasmainlytheresultofanincreaseinpurchases fromotherutilities.
- Normally, duringperiodsofpeakde-mandthatexceedtheavailable generating
- capacity, theCompanyisabletomeetitswholesale customers'e-quirements bypurchasing powerfromneighboring utilities forresaletoothersbecauseofAEP'spowerfulinterconnection andtransmission capacity.
Totaloperating expensesincreased 8.1%in1983comparedtoa0.1%increasein1982.Theincreasein1983wasprimarily duetoincreases inFederalincometaxesandfuelexpenses.
Federalincometaxesin-creased85.8%in1983duelargelytoanincreaseinpre-taxbookincome.Fuelexpensesincreased 11.9%%uoin1983asaresultofincreased generation levelsandachangeinfuelmix.In1982fuelexpensesdecreased 18.8%asaresultofdecreased kwhsalesandachangeinfuelmix.Futurefuelexpenseswillbeaffectedbygen-erationlevels,contractual agreements betweenthecoalindustryandtheUnitedMineWorkersofAmericaandthepossibility ofyetmorestringent environmental re-strictions onburningcertaintypesofcoal.Whetherornotfutureincreases infuelcostswilladversely affectearningswilldependontheCompany's continued abil-itytorecoversuchcostspromptlyinthefaceofeffortsbycertainconsumergroupsandotherstodelayorreducerateincreases andtoeliminate orreducetheextentofcoverageoffuel-adjustment clauses.Construction andFinancing ProgramExpenditures fortheCompany's construction pro-gramoverthethree-year period1984-1986 areesti-matedtobeapproximately
$597million.Substantial additional expenditures mayberequiredifexistinggenerating plantsrequiremodification oradditional facilities tocomplywithfutureenvironmental qualitystandards.
See"Environmental Matters"inNote9oftheNotestoConsolidated Financial Statements foradditional information.
Inrecentyears,theconstruc-tionprogramhasbeenaffectedbysubstantial increases inconstruction costsandtheexpenseofobtaining financing fortheprogramduetohighcostsofcapital.Theconstruction programisreviewedcontinuously andrevisedfromtimetotimeinresponsetorevisedprojections ofloadgrowthandchangesinthecostandavailability ofcapital.Inrecentyears,thesereviewshaveresultedinextending construction schedules ofanumberofprojectswiththeobjective ofreducingthelevelofannualconstruction expenditures.
However,deferrals ofconstruction projectsmayhaveanadverseeffectonthequalityoftheCompany's servicetoitscustomers inthefuture,andanyresulting reductions in INDIANAP.I~i.HIGAN ELECTRICCOMPANYANDSUBSIDIARIES currentconstruction costswill,inthelongrun,beatleastpartially offsetbygeneralinflationary trendsaswellaspossiblecancellation charges.Inaddition, whenthecompletion dateofaprojectunderconstruction issubstantially delayed,itbecomesmoreexpensive, bothbecauseoftheforegoing factorsandbecausecertaincosts,principally financing costs,continuetoaccrueuntilthefacilityisplacedincommercial operation.
Itisestimated thatalloftheCompany's projected construction expenditures for1984-1986 willbefi-nancedwithinternally generated funds.Ifanyaddi-tionalamountsareneededtheywillberaisedexter-nally,asinthepast,throughsalesofsecurities andinvestments intheCompany's commonequitybyAEP.TheCompanyinitially financescurrentconstruction expenditures inexcessofavailable internally generated fundsbyissuingunsecured short-term debt(commer-cialpaperandbankloans)andthenperiodically reducesshort-term debtwiththeproceedsofsalesoflong-term debtsecurities andpreferred stockandwithinvest-mentsintheCompany's commonequitybyAEP.Theamountsofshort-term debtwhichtheCompanymayissuearelimitedbyregulatory restrictions underthePublicUtilityHoldingCompanyActof1935andbyrestrictions initscharterandincertaindebtinstru-ments.AtDecember31,1983,theCompanyhadre-ceivedauthorizations fromtheSecurities andEx-changeCommission toissueatotalofapproximately
$135millionofshort-term debt.Note7oftheNotestoConsolidated Financial Statements containsinforma-tionontheCompany's short-term banklinesofcredit.Banklinesofcreditmaybewithdrawn atanytimebythebanksextending them,andinmostcasesthebanksrequireeitherthemaintenance ofcompensating depositbalancesorthepaymentoffeesinlieuofdeposits.
InorderfortheCompanytoissueadditional long-termdebtandpreferred stock,itisnecessary forittocomplywithearnings-coverage requirements con-tainedinitsmortgagebondanddebenture indentures andcharter.Inordertoissueadditional long-term debt(excepttorefundmaturinglong-term debt),theCom-panymusthavepre-taxearningsequaltoatleasttwicetheannualinterestchargesonlong-term debt,givingeffecttotheissuanceofthenewdebt,foraperiodof12consecutive monthswithinthe15monthsimmediately preceding thedateofthenewissue.Toissueadditional preferred stock,theCompanymusthaveafter-tax grossincomeatleastequaltooneandone-halftimesannualinterestchargesandpreferred dividends, givingeffecttotheissuanceofthenewpreferred stock,forthesameperiod.Theseprovisions donotpreventcertaintypesofpollution-control revenuebondfinancings bypublicbodiesonbehalfoftheCompany,butthelevelsofcoverageunderthemmayaffectthecostandmarketa-bilityofsuchbonds.AtDecember31,1983,thecover-agesoftheCompanyundertheseprovisions wereatleast2.01forlong-term debtand1.64forpreferred stock.Inviewoftheserestrictions ontheissuanceofaddi-tionaldebtsecurities andpreferred stock,theCompanybelievesthatitwillbepossibletomeetthecapitalrequirements ofitsconstruction programonlyiftheCompanyreceivesrateincreases overthenextseveralyearssufficient tomeettheearningslevelsrequiredtoissuethenecessary amountsoflong-term debtandpre-ferredstockandtoprovideanappropriate returnonnewequityinvestment.
SeeNote2oftheNotestoConsolidated Financial Statements regarding arecentprehearing rateorderinwhichthePublicServiceCommission ofIndianafoundthatthesecondsteppor-tionofaproposedraterequestwasnotproperlypre-sented.ThesecondstepwastocoincidewiththeDe-cember1984commercial operation dateoftheCom-pany'sRockportPlantUnit1.ThisfindingraisesaquestionastotheeffectontheCompany's netincomeandfinancial condition unlessotheralternatives underconsideration areimplemented.
NetIncomeandDividends Consolidated netincomebeforepreferred dividendrequirements increased in1983by15.6%andin1982by17.1%.Thesechangesinnetincomewereaccompanied byadecreaseinthetotalproportion ofallowance forfundsusedduringconstruction (AFUDC)reflected innetincome,85%in1983and92%in1982.AFUDCdoesnotrepresent cashincomeorareduction inactualinter-estexpense,butisanaccounting convention permitted byregulatory systemsofaccounts.
AFUDCrepresents thenet.costofborrowedfundsusedforconstruction andareasonable rateofreturnonotherfundswhensoused.Suchamountsarecapitalized asacostofcon-struction projectswithaconcurrent credittotheIn-comeStatement.
Theamountcapitalized isaddedtothecostofconstruction projectsandgenerally includedintheplantinvestment baseforsettingratesandrecov-eredthroughdepreciation chargesincludedinratesaftertheprojectisplacedincommercial operation.
IntheeventtheCompanymustmakerefundsorexperience otheradverseeffectspursuanttotheout-comeoftheissuesrelatingtotheFederalEnergyReg-ulatoryCommission investigation oftheAEPSystem's policieswithrespecttocoalpurchasing andpractices (see"Litigation" inNote9oftheNotestoConsoli-datedFinancial Statements),
thiscouldrestricttheabil-ityoftheCompanytopaydividends foraperiodoftimeonitsoutstanding CommonStocktoAEP.EffectsofInfiatlon Inrecentyearsinflation hashadaneffectontheCompany's consolidated
- revenues, expensesandnetincomethatisnotreadilyevidentinconventional finan-cialstatements.
Foradditional information ontheef-fectsofinflation, refertoNote12oftheNotestoCon-solidated Financial Statements, whichpresentsacon-solidated statement ofincomefor1983,adjustedforeffectsofinflation, andacomparison ofselectedsup-plementary dataforafive-year period,similarly ad-justed.
INDIANA&MiHIGANELECTRICCOMPANYANDSUBSIDIARIES Consolidated Statements ofIncomeOPERATING REVENUES-ELECTRICYearEndedDecember31,198119831982(inthousands)
$868,980$809,803$812,149OPERATING EXPENSES:
Operation:
FuelforElectricGeneration Purchased andInterchange Power(net)Other'aintenance Depreciation; Depletion andAmortization TaxesOtherThanFederalIncomeTaxesFederalIncomeTaxesTotalOperating ExpensesOPERATING INCOMEOTHERINCohIBANDDEDUCTIONS:
Allowance forOtherFundsUsedDuringConstruction
......Miscellaneous Nonoperating IncomeLessDeductions TotalOtherIncomeandDeductions INCOMEBEFOREINTERESTCHARGES.INTERESTCHARGES:InterestonLong-term Debt.InterestonShort-term DebtMiscellaneous InterestChargesTotalInterestChargesAllowance forBorrowedFundsUsedDuringConstruction (credit)NetInterestChargesCoNsoLIDATED NETINcohIE-beforepreferred stockdividendrequirements PREFERRED STOCKDIVIDENDREQUIREhIENTS EARNINGSAPPLICABLE ToCOMMONSTOCK159,998159,086122,12753,04983,96337,05370,961686,23718274360,588~6,95953,629236372144,4308,9981,714155,142~58,64696,496139,87628,384$111,492143,025154,683126,92256,43183,03132,56738,199634,858174,94557,889(9,164)48,725223,670142,8418,9744,258156,073(53,426)102,647121,02328,628$92,395176,074139,119101,79248,89581,45832,69854,173634,209177,94032,885(3,172)29,713207,653129,02318,0424,228151,293(46,980)104,313103,34023,624$79,716SeeiVotestoConsolidated Financial Statements.
Consolidated BalanceSheetsASSETSELECTRICUTILITYPLANT:Production
.Transmission Distribution
.GeneralandMiscellaneous (includes miningplant)Construction WorkinProgress.TotalElectricUtilityPlantLessAccumulated Provisions forDepreciation, Depletion andAmortization ElectricUtilityPlantLessProvisions December31,19831982(inthousands) 760,8892,905,934 685,7892,855,325
$1,561,791
$1,532,241 443,280441,241316,324305,528195,444186,8901149,9841,075,214 3,666,823 3,541,114 OTHERPROPERTYANDINVESTMENTS 39,69128,319CURRENTASSETS:CashSpecial,DepositsandWorkingFundsAccountsReceivable:
Customers Associated Companies Miscellaneous Accumulated Provision forUncollectible Accounts.Materials andSupplies(ataveragecostorless):Fuel.Construction andOperation Materials andSuppliesAccruedUtilityRevenuesPrepayments andOtherCurrentAssetsTotalCurrentAssets.7,2835,966113,6745,54939327(470)75,20318,13048,5505,967283,17910,0004,09856,7399,2144,148(414)72,81119,82121,8745,134203,425DEFERREDDEBITS:Unamortized DebtExpensePropertyTaxesDeferredCollection ofFuelCostsDeferredStrikeCostsOtherWorkinProgressDeferredNuclearFuelDisposalCostsOtherDeferredDebitsTotalDeferredDebitsTotal.SeehlolestoConsolidate(!
Financial Siatemenrs.
3,4152,0291,0353,25472,57532,851115,159$3,343,963 3,5701,7402152,4133,96136,91648,815$3,135,884 10 INDIANA&MICHIGANELECTRICCOMPANYANDSUBSIDIARIES CAPITALIZATION ANDLIABILITIES December31,19831982(inthousands)
CAPITALIZATION:
CommonStock-NoParValue:Authorized
-2,500,000 SharesOutstanding
-1,400,000 SharesPremiumsonCapitalStockOtherPaid-inCapital.RetainedEarningsTotalCommonShareowner's Equity.........
~.....Cumulative Preferred Stock:NotSubjecttoMandatory Redemption SubjecttoMandatory Redemption (lesssinkingfundrequirements duewithinoneyear).Long-term Debt(lessportionduewithinoneyear)TotalCapitalization (lessamountsduewithinoneyear).CURRENTLIABILITIES:
Cumulative Preferred StockSinkingFundRequirements DueWithinOneYear.Long-term DebtDueWithinOneYear.Short-term Debt:NotesPayabletoBanksCommercial Paper.AccountsPayable:General.Associated Companies Dividends Declared:
CommonStock.Cumulative Preferred StockCustomerDepositsTaxesAccruedInterestAccruedRevenueRefundsAccruedOtherCurrentLiabilities TotalCurrentLiabilities
$56,584381750,96095,616903,541197,00099,3451,358,830 2,55572615286,87439,95022550040,31855,40317,6166,9992,99014,96835,9989837,904361,770$56,584381720,81891,756869,539197,000104,0001,304,505 2,475,044 44792,97089,1503,00035,14712,5867,1402,83611,46435,12011,92125,895327,676CohthIITMBNTs ANDCoNTINGENclEs (Note9)DEFERREDCREDITSANDOPERATING RESERVES:
DeferredIncomeTaxesDeferredInvestment TaxCreditsOtherDeferredCreditsandOperating Reserves.........
TotalDeferredCreditsandOperating ReservesTotal338,35032,28752,840423,477$3,343,963 255,09835,87742,189333,164$3,135,884 Consolidated Statements ofSourcesandApplications ofFunds0'~YearEndedDecember31,SoURcEsoFFUNDs:FundsfromOperations:
Consolidated NetIncomePrincipal Non-fundCharges(Credits) toIncome:Depreciation, Depletion andAmortization Provision forDeferredIncomeTaxes(net)Deferred"Investment TaxCredits(net)Amortization ofDeferredStrikeCostsAmortization ofDeferredCollection ofFuelCostsAmortization ofDeferredNuclearFuelDisposalCostsAllowance forOtherFundsUsedDuringConstruction Other(net)TotalFundsfromOperations FundsfromContributions andFinancings:
Contributions andFinancings:
CapitalContributions fromParentCompanyCumulative Preferred StockLong-term DebtShort-term Debt(net)TotalLessRetirements ofCumulative Preferred StockandLong-term DebtNetFundsfromContributions andFinancings SalesofProperty'.,'TotalSourcesofFundsAPPLICATIONS OFFUNDS:PlantandPropertyAdditions:
GrossAdditions toUtilityPlantGrossOtherAdditions TotalGrossAdditions
.Allowance forOtherFundsUsedDuringConstruction NetPlantandPropertyAdditions Dividends onCommonStockDividends onCumulative Preferred StockDeferredStrikeCostsOtherChanges(net)IncreaseinWorkingCapital(a)TotalApplications ofFunds(a)ExcludesCumulative Preferred StockSinkingFundRequirements DueWithinOneYear,Long-term DebtDueWithinOneYearandShort-term Debtandisrepresented byincrease(decrease) asfollows:CashandCashItemsAccountsReceivable Materials andSuppliesAccruedUtilityRevenuesAccountsPayableDividends DeclaredonCommonStockTaxesAccruedRevenueRefundsAccruedOther(net).SeeNotestoConsolidated Financial Statements.
1983$139,87686,02584,296555561,3782153,092(607588)1,977261,82730,00069,239~29,70069,53998,290~28,75171,212$304,288$201,793428202,221~60,588141,633107,63228,3841790709,569$304,288$(849)52939370126,676(47,988)(17,616)(3,504)11,823~12,067895691982(inthousands)
$121,02387,45922,53325,6381,378287(57,889)1,141201,57050,00099,16738,550187,717106,99780,72077,745$360,035$267,783326268,109(57,889)210,220100,80028,628(4,103)24,490$360,035$(11,962)(22,948)24,0411,880841,12418,47911,1742,618$24,4901981$103,34085,97836,0829,2473,195287(32,885)710205,95490,00038,734158,922~92,925194,73122,019172,71240,845$419,511$307,672578308,250(32,885)275,36592,62423,6246,9862,41518,497$419,511$11,7652,405(16,505)8,1986,93610,376(6,139)15,121~13,660$18,497 INDIANAd':CHIGANELECTRICCOMPANYANDSUBSIDIARIES Consolidated Statements ofRetainedEarningsYearEndedDecember31,BalanceatBeginning ofYearConsolidated NetIncomeTotal$91,756139,87623163219831982(inthousands)
$100,170121,023221,1931981$114,495103,340217,835Deductions:
CashDividends Declared:
CommonStockCumulative Preferred Stock:4Ve%Series.4.56%Series.4.12%Series.7.08%Series7.76%Series8.68%Series.12%Series$2.15Series.$2.25Series.$2.75Series.$3.63SeriesTotalCashDividends DeclaredCapitalStockExpenseTotalDeductions BalanceatEndofYear107,632495273.1652,1242,7162,6042,8733,4403>6004,2865,808136,016136,016$95,616100,8004952731652,1242,7162,6043,0033,4403,6004,4005,808129,4289129,437$91,75692,6244952731652,1242,7162,6043,2263;4403,6004,400581116,2481,417117,665$100,170SeeNotestoConsolidated Finaneia(Statements.
NotestoConsolidated Financial Statements I.Significant Accounting Policies:
ThecommonstockoftheCompanyiswhollyownedbyAmericanElectricPowerCompany,Inc.(AEP).Theaccounting andratesoftheCompanyaresubjectincertainrespectstotherequirements ofstateregula-torybodiesandincertainrespectstotherequirements oftheFederalEnergyRegulatory Commission (FERC).Theconsolidated financial statements includetheac-countsoftheCompanyandtwowhollyownedsub-sidiaries engagedincoalmining.Significant inter-companyitemshavebeeneliminated in,consolidation.
Theconsolidated financial statements havebeenpre-paredonthebasisoftheaccountswhicharemaintained forFERCpurposes.
ElectricUtilityPlant;OtherPropertyandInvesttnents; Depreciation, Depletion andAtnortization Electricutilityplantisstatedatoriginalcost.Gener-ally,theplantoftheCompanyissubjecttofirstmortgageliens.TheCompanycapitalizes, asaconstruction cost,anallowance forfundsusedduringconstruction, anitemnotrepresenting cashincome,whichisdefinedintheapplicable regulatory systemsofaccountsasthenetcostofborrowedfundsusedforconstruction purposesandareasonable rateonotherfundswhensoused.Thecomposite ratesusedbytheCompanywere12.5%in1983,12.75%in1982and12.0%in1981appliedonasemi-annual compoundbasis.TheCompanyprovidesfordepreciation onastraight-line basisovertheestimated usefullivesoftheproperty.
Thecurrentprovisions aredetermined largelywiththeuseoffunctional composite ratesasfollows:Functional Composite ClassofAnnualPropertyRatesProduction:
Steam-Nuclear.......................
4.0%Steam-Fossil-fired
'...3.7%Transmission 2.1%Distribution 3.7%General..........................
2.8%Depreciation, depletion andamortization ofcoal-miningpropertyareprovidedinamountsestimated tobesufficient toamortizethecostsoftherelatedassets,lessanyestimated salvage(whichisnotsignificant),
overtheirusefullivesandarecalculated byuseofthefollowing methods:Description MethodMiningStructures andStraight-line method(original livesEquipment rangefrom3to31years)CoalInterests andMineUnits-of-production methodDevelopment Costs(basedonestimated recoverable tonnages; currentrateaverages$1.07perton)Substantially alloftheamountoftheprovisions fordepreciation, depletion andamortization ofcoal-mining propertyisclassified intheConsolidated Statements ofIncomeasfuelforelectricgeneration.
Operating expensesarechargedwiththecostsoflabor,materials, supervision andothercostsincurredinmaintaining theproperties.
Propertyaccountsarechargedwithcostsofbetterments andmajorreplace-mentsofpropertyandtheaccumulated provisions fordepreciation arechargedwithretirements, togetherwithremovalcostslesssalvage.Otherpropertyandinvestments aregenerally statedatcost.InconteTaxesDeferredFederalincometaxesareprovidedexceptwhereflow-through accounting forcertaintimingdif-ferencesisreflected inrevenuelevels.TheCompanynormalizes theeffectoftaxreductions resulting frominvestment taxcreditsutilizedinconnec-tionwithcurrentFederalincometaxaccrualsconsis-tentwithrate-making policies.
TheCompany's consolidated coalsubsidiaries gen-erallyusetheflow-through methodofaccounting forinvestment taxcreditsandpracticedeferredtaxac-countingfortheeffectsofcertaintimingdifferences.
PensionPlansThecompanies participate withothercompanies intheAEPSysteminanon-contributory trusteedplantoprovidepensionsforalltheiremployees whoarenotparticipants inpensionplansoftheUnitedMineWork-ersofAmerica(UMWA),subjecttocertaineligibility requirements.
PensioncostsfortheyearsendedDecember31,1983,1982and1981wereapproximately
$3,162,000,
$3,057,000 and$3,201,000, respectively.
Theamountscoverthecostsofcurrently accruingbenefitsandamor-tizationof,andintereston,unfundedprior-service costs,whicharebeingamortized over30years.Thecompanies makeannualcontributions totheplanequaltotheamountsaccruedforpensionexpense.
INDIANA8CHIGANELECTRICCOMPANYANDSUBSIDIARIESAcomparison oftheplan'saccumulated benefitsandnetassetsasofJanuary1,1983,thedateofthemostrecentactuarial study,ispresented below:JanuaryI,19831982(inthousands)
Actuarial presentvalueofaccumulated planbenefitsVestedNonvested
$51,088$46,6525,9134,830$57,001$51,482Netassetsavailable forbenefits......$88,400$76,659Theassumedrateofreturnusedbytheactuaryindetermining theactuarial presentvalueofaccruedbenefitswas8%ateachvaluation date.UnderacontractwiththeUMWA,asubsidiary isrequiredtomakepaymentsintotwomulti-employer pensionplansbasedoncoalproduction andhoursworked.Thecostoftheplanswasapproximately
$713,000in1983,$2,442,000 in1982and$1,700,000 in1981.AsofJune30,1983,theCompany's actuaryesti-mates,basedoninformation thatisavailable, thatthesubsidiary's shareoftheunfundedvestedliabilities oftheUMWApensionplansapproximates
$5,380,000.
OtherTheCompanyaccruesunbilledrevenuesforelectricservicerenderedsubsequent tothelastbillingcyclethroughmonth-end.
BlackLungBenefitsThecoal-mining subsidiaries areliableundertheFederalCoalMineHealthandSafetyActof1969(Act),asamended,topaycertainblacklungbenefitstoeligi-blepresentandformeremployees.
Thesubsidiaries provideself-insurance accrualssufficient toamortizetheactuarially computedpresentandfutureliabilities forsuchbenefitsasalevelpercentage ofpayoverthefutureworkinglifetimeoftheemployees, takingintoaccounttheremaining lifeofthemines.Suchprovisions wereapproximately
$131,000,$530,000and$398,000in1983,1982and1981,respectively.
ABlackLungBene-fitsTrustismaintained undertheInternalRevenue~Code.AsofJanuary1,1983(thelatestvaluation date),thecompanies'ctuary estimates theunfundedactuari-alvalueofmedicalandliability benefitsundertheAct,aswellascomparable statelegislation, wasapproxi-mately$876,000.Thecompanies fundtheactuarially determined liabilities atalevelwhichcurrently approx-imatestherecordedexpenseprovisions.
Miscellaneous nonoperating incomefortheyearsendedDecember31,1983,1982and1981includesgainsamounting to$274;000,$496,000and$489,000,respec-tively,oncertainlong-term debtreacquired.
Debtdiscountorpremiumanddebtexpensesarebeingamortized overthelivesoftherelateddebtissuesandtheamortization thereofisincludedwithinmiscel-laneousinterestcharges.2.Operating RevenuesandOperating Expenses:
InFebruary1982,theCompanyfiledapetitionwiththePublicServiceCommission ofIndiana(PSCI)forarateincreaseof$52,145,000 annually.
InDecember1982,thePSCIissuedanordergrantingtheCompanyanincreaseof$23,800,000
- annually, aportionofwhichwascollected subjecttorefundpendingtheoutcomeofadditional proceedings relatingtotherate-making treatment oftheCompany's coalsubsidiaries andWesterncoalproperties.
InMarch1983;inasubdocket proceeding, thePSCIgrantedtheCompanyanaddi-tionalincreaseofapproximately
$6,700,000
- annually, primarily coveringaprovision forfuturedecommis-sioningcostsoftheCompany's nuclearplant.InSep-tember1983,thePSCIissuedanorderregarding theWesterncoalissue.ThisorderrequiredtheCompanytoreduceitsratesapproximately
$3,000,000 annuallyre-troactive toDecember1982andasaresulttheCom-panyrefundedinNovember1983,approximately
$2,300,000, including
- interest, toitsIndianaretailcus-tomers.InMay1982,theCompanyfiledwiththeFERCap-plications forauthority toincreaseitsratestoitswholesale customers.
InJuly1982,theFERCau-thorizedtheincreasetotakeeffectintwosteps,subjecttorefund;thefirststeprepresenting anincreaseof$26,900,000 becameeffective July29,1982,andthesecondstepincreaseof$28,900,000 becameeffective onDecember28,1982.Settlement agreements werereachedwiththewholesale customers andinMay1983,theFERCissuedafinalorderapproving settlement ratesintheamountofapproximately
$41,000,000 onanannualbasis.InJuly1983,theCompanyfiledapetitionwiththePSCIrequesting a$160,000,000 annualrateincreasetobeimplemented intwosteps.Thefirststep,represent-ingapproximately
$44,300,000, wasrequested tobeeffective assoonaspossible.
InNovember1983,thePSCIgrantedpermission toincreaserates$28,500,000
- annually, effective November28,1983.Thesecondstep,representing approximately
$115,700,000, was.to NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Continued) coincidewiththedateofcommercial operation oftheRockportPlantUnit1,presently scheduled tobeinDecember1984.Inaprehearing orderdatedSeptember 16,1983,thePSCIfoundthatthesecondstepportionoftheraterequestmaynotproperlybepresented andreviewedaspartofthisapplication sincetheproposedtestyearistooremotefromthein-service dateoftheRockportUnit.InDecember1983,theCompanyfiledanapplication withtheMichiganPublicServiceCommission (MPSC)requesting anannualrateincreaseofapproximately
$27,600,000.
TheMPSChasscheduled aprehearing conference concerning thisrateapplication forMarch13,1984.Operating revenuesderivedfromacertainwholesale customerrepresent approximately 11%oftotaloperat-ingrevenuesfor1983,10%%uofor1982and9%%uofor1981.3.FederalIncomeTaxes:ThedetailsofFederalincometaxesasreportedareasfollows:YearEndedDecember31,198319821981(inthousands)
$(16,503)29,06425,63838,199YearEndedDecember31,Charged(Credited) toOperating Expenses:
Current(net)$(14,004)S8,672Deferred(nct)79,40936,254DeferredInvestment TaxCredits(net)5,5569,247Total...................................................................
70,96154,173Charged(Credited) toOtherIncomeandDeductions:
Current............................................................
(11,112)(890)(1,988)Deferred(net)'...........................................
4,887(6,531)(172)Total(6,225)(7,421)(2,160)TotalFederalIncomeTaxesasReportedS64,736$30,778$52,013Thefollowing
'isareconciliation ofthedifference betweentheamountofFederalincometaxescomputedbymultiplying bookincomebeforeFederalincometaxesbythestatutory taxrate,andtheamountofFederalincometaxesreportedintheConsolidated Statements ofIncome.Consolidated NetIncomeBcforcPreferred StockDividendRequirements FederalIncomeTaxesPre-taxBookIncomeFederalIncomeTaxesonPre-taxBookIncomeatStatutory Rate(46%)Increase(Decrease) inFederalIncomeTaxesResulting FromtheFollowing ItemsonWhichDeferredTaxesAreNotProvided:
ExcessofBookOverTaxDepreciation Allowance forFundsUsedDuringConstruction andMiscellaneous ItemsCapitalized ontheBooksbutDeductedforTaxPurposesMineDevelopment CostsInvestment TaxCreditsNotDeferredAmortization ofDeferredInvestment TaxCreditsOther.TotalFederalIncomeTaxesasReportedEffective FederalIncomeTaxRate1983$139,87664,736$204,612$94,1221,185(32,019)1441,144(267)427S64,73631.6%1982(inthousands)
$121,02330,778$151,801$69,8285,009(32,040)(4,771)(1,727)(931)(4,590)S30,77820.3%1981$103,34052,013$155,353S71,4621,107(19,658)311(1,799)(327)917S52,01333.5%
INDIANA&ICHIGANELECTRICCOMPANYANDSUBSIDIARIES Thefollowing aretheprincipal components ofFederalincometaxesasreported:
YearEndedDecember31,'19831982(inthousands) 1981$(4,008)(13,385)(17,393)*
Current:FederalIncomeTaxes$(26,903)$11,598Investment TaxCredits1,787(4,914)TotalCurrentFederalIncomeTaxes(net)(25,116)6,684Deferred:
Depreciation (liberalized, ADRandACRS)26,99312,44113,440Allowance forBorrowedFundsUsedDuringConstruction andMiscellaneous ItemsCapitalized
.23,98620,41018,465DeferredFuelCosts8,470(1,158)1,927Adjustments forRevenueRefunds..2,4018,3043,134NuclearFuelLeaseAdjustments (2338)40331,258SpentNuclearFuelFee31,671BookProvision forSubsidiary MineStandbyCosts.6,900(6,900)Other.~~~~~~~.:~~..'(7,321)3144,317Investment TaxCreditsApplicable toCertainDeferredIncomeTaxes(6,466)(14,911)(6,459)TotalDeferredFederalIncomeTaxes(net)84,29622,53336,082TotalDeferredInvestment TaxCredits(net)5,55625,6389,247TotalFederalIncomeTaxesasReported564,736$30.778552,013'Theconsolidated currentFederalincometaxesweresignificantly decreased in1982bythetaxlossofacoalminingsubsidiary, thetaxelfectofwhichwasnotreducedbyinvestment taxcredits.Inaddition, theCompanywasabletoutilizeinvestment taxcreditsinexcessofthestatutory limitation asaresultofthelackofavailable creditsofotherSystemcompanies withtaxableincome.Thecompanies joininthefilingofaconsolidated Federalincometaxreturnwiththeiraffiliated com-paniesintheAEPSystem.Theallocation oftheAEPSystem'sconsolidated FederalincometaxtotheSys-temcompanies isinaccordance withSecurities andExchangeCommission (SEC)rulesunderthePublicUtilityHoldingCompanyActof1935.Theserulesper-mittheallocation ofthebenefitofcurrenttaxlossestotheSystemcompanies givingrisetosuchlossesindetermining taxescurrently payable.ThetaxlossoftheSystemparentcompany,AmericanElectricPowerCompany,Inc.,isallocated toitssubsidiaries withtax-ableincome.Withtheexception ofthelossoftheparentcompany,themethodofallocation approximates aseparatereturnresultforeachcompanyintheconsoli-datedgroup.Consolidated investment taxcreditsutilizedaregenerally allocated totheSystemcom-paniesgivingrisetothem.UnusedSysteminvestment taxcreditsatDecember31,1983,aggregated approximately
$174,000,000.
Withthefilingoftheconsolidated 1982Federalin-cometaxreturn,theCompanyelectedtochangefromthedouble-declining balancemethodtothesum-of-the-years digitsmethodofdepreciation forcertainclassesofproperties.
TheSystemhasreachedasettlement withtheInter-nalRevenueService(IRS)forthemajorityofissuesfromtheauditoftheconsolidated Federalincometaxreturnsfortheyears1970-1976.
Severalissuesregard-ingthe1974-1976 returnsarenotcoveredbythesettle-mentagreement andaresubjecttofuturedisposition.
Returnsfortheyears1977and1978havebeenreviewedbytheIRS,andadditional taxesfortheseyearshavebeenproposed, someofwhichtheSystemcompanies haveprotested.
Intheopinionofmanagement, thefinalresolution ofopenmatterswillnothaveamaterialeffectontheearningsoftheCompany.4.CommonStock,PremiumsonCapitalStockandOtherPaid-inCapital:TheCompanyreceivedfromitsparentcashcapitalcontributions of$30,000,000 in1983,$50,000,000 in1982and$90,000,000 in1981.In1983,1982and1981acredittootherpaid-incapitalof$142,000,$131,000and$365,000,respectively, represented theexcessofparvalueovercostofcumulative preferred stockreac-quiredbytheCompanytomeetsinkingfundrequire-ments.Therewerenootherchangesinanyoftheaforementioned accountsin1983,1982or1981.5.RetainedEarnings:
Variousrestrictions ontheuseofretainedearningsforcashdividends oncommonstockandotherpur-posesarecontained inorresultfromcovenants inmortgageindentures, debenture andbankloanagree-ments,charterprovisions, andordersofregulatory au-thorities.
Approximately
$45,900,000 atDecember31,1983,wassorestricted.
17 NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Continued) 6.Cumulative Preferred Stock:December31,ParValueSharesOutstanding Series1983(in1982thousands)
AtDecember31,1983,authorized sharesofcumulative preferred stockwereasfollows:ParValueSharesAuthorized
$1002,250,000 2511,200,000 Thecumulative preferred stockiscallableattheoptionoftheCompanyatthepriceindicated plusaccrueddividends.
Theinvoluntary liquidation preference isparvalue.Unissuedsharesofthecumulative preferred stockmayormaynotpossessmandatory redemption characteristics uponissuance.
TheCompanyreacquired 126,200sharesofthe$2.75seriesin1983and17,940,10,620and28,395sharesofthe12%seriesin1983,1982and1981,respectively.
TheCompanyissuedandsold1,600,000 sharesofthe$3.63seriesin1981.A.Cumulative Preferred StockNotSubjecttoMandatory Redemption:
AmountRedemption Restricted Priorto416%%uo4.56%%uo4.12%7.08%7.76%8.68%$2.15$2.25..$106.125102102.728104.68105.38105.2726.6126.69$1001001001001001002525120,00060,00040,000300,000350,000300,0001,600,000 1,600,000
$12,0006,0004,00030,00035,00030,00040,00040,000$197,000S12,0006,0004,00030,00035,00030,00040,00040,000$197,000CurrentCallPriceParValueSeries(a)8.Cumulative Preferred StockSubjecttoMandatory Redemption:
Redemption Restricted PriortoSharesOutstanding AmountDecember31,19831982(inthousands)
S24,44740,00040,000IN,447447$104,000$100252510/I/8411/I/8612%(b)...........
$112226,525$22,652$2.75(c)...........
27.751,473,800 36,845$3.63(d)...........
28.631,600,000 40,00099,497LessSinkingFundRequirements DueWithinOneYear152$99,345(a)Thesinkingfundprovisions oftheseriessubjecttomandatory redemption aggregate
$152,000in1984,$2,345,000 in1985,$3,500,000 in1986and$5,500,000 in1987and1988.(b)Asinkingfundforthe12%seriesrequirestheCompanytoprovide,onorbeforeOctoberIofeachyear,forthcredemption of15,000sharesofsuchseries.Thisprovision maybesatisfied throughsharespreviously purchased orbyredemption at$100ashare.TheCompanyhastheright,oneachsinkingfunddate,toredeemanadditional 15,000shares.AtDecember31,1983,thcCompanyhadreacquired 13,475sharesinanticipation offuturesinkingfundrequirements.
Unlessallsinkingfundprovisions havebeenmet,nodistribution maybemadeonthecommonstock.(c)Acumulative sinkingfundforthe$2.75seriesrequirestheCompanytoredeem80,000sharesoneachOctober1.TheCompanyhastheoptiontocreditsharespurchased orotherwise acquiredinlieuofredeeming sharesforthesinkingfundandhasthenoncumulative optiontodoublethcnumberofsharestoberedeemedinanyyear.AtDecember31,1983,theCompanyhadacquired126200sharesinanticipation offuturesinkingfundrequirements.
(d)Acumulative sinkingfundforthe$3.63seriesrequirestheCompanytoredeem80,000sharesoneachJanuaryIcommencing onJanuaryI,1987.TheCompanyhastheoptiontocreditsharespurchased orotherwise acquiredinlieuofredeeming sharesforthesinkingfundandhasthenoncumulative optiontodoublethenumberofsharestoberedeemedinanyyearonandafterJanuaryI,1987.18 INDIANA&MCHIGANELECTRICCOMPANYANDSUBSIDIARIES FirstMortgageBondsSinkingFundDebentures Installment PurchaseContracts
.OtherLong-term DebtLessPortionDueWithinOneYearTotal1983.1982(inthousands)
$1,184,598
$1,202,904 20,16620,964159,209159,07381,73114,5341,445,704 1,397,475 86,87492,970$1,358,830
$1,304,505 Firstmortgagebondsoutstanding wereasfollows:December31.19831982(inthousands)
%RateDue3N1983-September I111983-September I381984-OctoberI10761984-DecemberI(b).101985-MarchI(c)10V41987-JanuaryI137{i1987-FebruaryI37i61988-FebruaryI4N1988-NovemberI14N1989-MarchI11K1990-JuneI15K1991-NovemberI16161992-AprilI4)81993-AugustI71998-MayI8762000-AprilI9'003-JuneI(c)8N2003-DecemberI9'008-MarchI13N2013-AugustI(a)....Unamortized Discount(net).......$15,08254,7509,75080,00055,00022,97417,557120,00080,00040,000100,00042,90235,00050,000254,00040,000100,00070,000(2,417)$13,76260,00015,08256,93810,50080,00055,00022,97417,557120,000,80,00040,000100,00042,90235,00050,000265,50040,000100,000Q,311)LessPortionDucWithinOneYearTotal1,184,598 82,0821,202,904 88,200$1,102,516
$1,114,704 (a)IssuedbytheCompanyinAugust1983.(b)Guaranteed byAmericanElectricPowerCompany,Inc.(c)Sinkingfundpaymentsarerequiredasfollows:10%seriesdue1985-$750,000annuallyonMarchl.9'%eriesdue2003-$11,500,000 annuallyonJuneI,through1991and$13,500,000 annuallyonJuneI,1992through2002withthenoncumulative optiontoredeemanadditional amountineachofthespecified yearsfromaminimumof$100,000toamaximumequaltothescheduled requirement foreachyear,butwithamaximumoptionalredemption, astoallyearsintheaggregate, of$75,000,000.
Theindentures relatingtothefirstmortgagebondscontainimprovement, maintenance andreplacement provisions requiring thedepositofcashorbondswiththetrustee,orinlieuthereof,certification ofunfundedpropertyadditions.
TheCompanyhaselectedtouseunfundedpropertyadditions tomeettheseprovisions inthepast.7.Long-term Debt,LinesofCredit,andCompensating Balances:
Long-term debtbymajorcategorywasoutstanding asfollows:December31,Sinkingfunddebentures outstanding wereasfollows:December31,19831982(inthousands) 5Vs%%uoDue1986-JuneI7V<%Due1998-MayIUnamortized PremiumLessPortionDueWithinOneYearTotal$10,02210,1232120,16622$20,144$10,10410,8293120,964$20,964Installment purchasecontracts-have beenenteredintobytheCompanyinconnection withtheissuanceofpollution controlrevenuebondsbygovqrnmental authorities asfollows:December31,19831982(inthousands)
%RateDateCityofLawrenceburg, Indiana:8'006-JulyI72006-htayI6Vs2006-htayICityofRockport, Indiana:9Vs2005-JuneI9V42010-JuncICityofSullivan, Indiana:7N2004-MayI6Vs2006-MayI7'009-MayIUnamortized DiscountTotal"$25,00040,MO12,000$25,00040,00012,0006,50033,5006,50033,500Otherlong-term debtoutstanding consisted of:December31,19831982(inthousands)
NuclearFuelDisposalCosts(a)CoalReserveObligations PayableinEqualAnnualInstallments Through1985withInterestat8%NotesPayablcdue1983Through1985,6%%uo-7%%uo LessPortionDueWithinOneYearTotal(a)SeeNote9.$71,964$-9,47529281,7314,770$76,96114,21232214,5344,770$9,764i97,0007,00025,00025,00013,00013,000(2,791)(2,927)$159,209$159,073Underthetermsofcertaininstallment purchasecon-tracts,theCompanyisrequiredtopaypurchasepriceinstallments inamountssufficient toenablethecitiestopayinterestonandtheprincipal (atstatedmaturities anduponmandatory redemption) ofrelatedpollution controlrevenuebondsissuedtofinancetheconstruc-tionofpollution controlfacilities atcertaingenerating plantsoftheCompany.
NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Continued)
Long-term debt,excluding premiumordiscount, outstanding atDecember31,1983isdueasfollows:Principal Amount(inthousands)
$86,87425,99621,000146,50052,0311,118,490
$1,450,891 19841985198619871988LaterYearsTotal8.Supplementary IncomeStatement Information andRelated-party Transactions:
Electricoperating revenuesshownintheConsoli-datedStatements ofIncomeincludesalesofenergytoAEPSystemcompanies ofapproximately
$25,000,000,
$18,800,000 and$19,100,000 fortheyearsendedDe-cember31,1983,1982and1981,respectively.
Operating expensesshownintheConsolidated Statements ofIncomeincludecertainitemsnotshownseparately, asfollows:AtDecember31,1983and1982,theprincipal amountsofdebentures reacquired inanticipation ofsinkingfundrequirements were$2,055,000 and.$2,067,000, respectively.
TheCompanymaymakead-ditionaldebenture orfirstmortgagebondsinkingfundpaymentsofupto$12,250,000 annually.
TheCompanyhadunusedshort-term banklinesofcreditofapproximately
$383,000,000 and$330,000,000 atDecember31,1983and1982,respectively, underwhichnotescouldbeissuedwithnomaturitymorethan270days.The.available linesof,creditaresubjecttowithdrawal atthebanks'ption, and$343,000,000 and$276,000,000 atDecember31,1983and1982,respec-tively,ofsuchlinesaresharedwithotherAEPSystemcompanies.
In-accordance withinformalagreements withthebanks,compensating balancedepositsofupto10%%uoorequivalent feesarerequiredtomaintainthelinesofcreditandonanyamountsactuallyborrowed, gener-allyeitheradditional compensating balancedepositsofupto10%aremaintained oradjustments ininterestratesaremade.Substantially allbankbalancesaremaintained bytheCompanytocompensate thebanksforservicesandfortheCompany's shareofbothusedandavailable linesofcredit.Purchased Power(a)Interchange Power(net):AEPSystemElectricUtilities OtherCompanies (b)TaxesOtherThanFederalIncomeTaxes:RealandPersonalPropertyTaxes.............
~..StateGrossSales,ExciseandFranchise TaxesandMiscellaneous StateandLocalTaxesStateIncomeTaxesSocialSecurityTaxesYearEndedDecember31,198319821981(inthousands)
$82,245$40,817$38,557104,271116,666100,960(27,430)(2,800)(398)$159,086$154,683$139,119$22,062$19,485$18,95811,269(193)3,915$37,0538,5677083,807$32,5679,3991,0743,267$32,6984,434FuelforElectricGeneration includeschargesrelatingtominingoperations, asfollows:Maintenance
...........
$765$3,424$3,778Depreciation, Depletion andAmortization
.....1,8264,284TaxesOtherThanFederalIncomeTaxes........1,1842,1091,336(a)Includespowerpurchased fromOhioValleyElectricCorpora-tion(OVEC)ofapproximately
$45,787,000 in1983,$20,229,000 in1982and$15,066,000 in1981.(b)Includesinterchange powersoldtoOVECofapproximately
$66,000in1983,$143,000in1982and$186,000in1981.Chargestooperating expensesforroyalties andforadvertising arelessthan1%ofgrossrevenuesineachyear.Salesandpurchases ofenergyandinterchange powertransactions areregulated bythevariouscommissions havingjurisdiction.
AmericanElectricPowerServiceCorporation pro-videscertainservicestotheCompanyandtheaffiliated companies intheAEPSystem.Thecostsoftheservicesaredetermined bytheservicecompanyonadirectchargebasistotheextentpracticable andonreasonable basesofproration forindirectcosts.Thechargesforservicesaremadeonacostbasisandincludenocom-pensation fortheuseofequitycapital,allofwhichisfurnished totheservicecompanybyAEP.Theservicecompanyissubjecttotheregulation oftheSECunderthePublicUtilityHoldingCompanyActof1935.20 INDIANA&MICHIGANELECTRICCOMPANYtANDSUBSIDIARIES9.Commitments andContingencies:
Construction Theconstruction budgetofthecompanies fortheyear1984isestimated at$119,000,000 and,inconnec-tiontherewith, commitments havebeenmade.AEPGenerating Company(AEGCo),asubsidiary ofAEP,organized in1982,commenced inApril1982toacquirea35%interestintheCompany's 2.6millionkilowattcapacityRockportPlantcurrently undercon-struction, onabuy-inbasis.Thetotalestimated costoftheRockportPlantis$2.14billion.Itwasanticipated thatKentuckyPowerCompany(KEPCo),anoperating subsidiary ofAEP,wouldalsoacquirea15%interestintheRockportPlantonabuy-inbasis;however,inAu-gust1982theorderoftheKentuckyPublicServiceCommission (KPSC)approving theacquisition wasre-mandedbacktoitforaspecificfindingoffactwithrespecttotheAEPSysteminterconnection agreement.
InMarch1983,theKPSCissuedanordergrantingKEPCo'srequesttopurchasea15%ownership interestintheCompany's RockportPlant.Theorder,however,limitedtheamountultimately includable inKEPCo'sratebaseto$312,000,000, thethenestimated costofKEPCo'sownership
- interest, regardless ofthefinalcostoftheRockportPlant.Basedoncertaindevelop-mentsinaKEPCoratecase,theKPSChasreopenedtheproceeding regarding theapplication ofKEPCoforacertificate ofconvenience andnecessity toacquirea15%undivided ownership interestintheRockportPlant.PendingfurtherorderbytheKPSC,KEPCoceasedmakingexpenditures inconnection withtheconstruction oftheRockportPlantandAEGCoispro-vidingforallconstruction expenditures.
IntheeventthatKEPCoisultimately deniedauthority bytheKPSCtoacquireits15%ownership interestoradecisionismadethatsuchacquisition isimpractical orunlikely, AEGComayacquirealloraportionofthisinterestifregulatory approvalisreceived.
The1984estimateofconstruction costsfortheCompanyreflectstheas-sumptionbyAEGCoandKEPCooftheresponsibility ofproviding foradditional construction expenditures withrespecttotheRockportPlant,toreducetheCom-pany'sownership interestinthePlantto50%bylate1984,theestimated dateofcommercial operation ofthefirstunitofthetwo-unitPlant.OhioValleyElectricCorporation AEPandColumbusandSouthernOhioElectricCompany(C&SOE)own42.1%ofOhioValleyElectricCorporation (OVEC),whichsuppliestheU.S.Depart-mentofEnergy(DOE)withthepowerrequirements ofitsgaseousdiffusion plantnearPortsmouth, Ohio.TheproceedsfromthesalesofpowerbyOVEC,aggregat-ing$279,000,000 in1983,aredesignedtobesufficient forOVECtomeetitsoperating expensesandfixedcosts,andtoprovideforareturnonitsequitycapital.TheCompany,asasponsoring company,isentitledtoreceivefromOVEC,andisobligated topayfor,thepowernotrequiredbyDOEinproportion toitspowerparticipation ratio,whichwas31.3%inDecember1983.TheDOEpoweragreement terminates in1992.~Litigation OnApril16,1982,anactionwascommenced by29plaintiffs, almostallofwhomarelandowners, intheU.S.DistrictCourtfortheSouthernDistrictofIndianaagainsttheArmyCorpsofEngineers, theCompany,AEP,fivesubsidiaries ofAEPandtwoexecutive of-ficersofcertainoftheseSystemcompanies, inconnec-tionwiththeRockportPlantandrelatedtransmission lines.Thecomplaint contained threecounts.ThefirstcountallegedthattheCorpsofEngineers improperly issuedpermitsfortheplantandtransmission linesbe-causeofdeficiencies inanenvironmental impactstate-ment.Thesecondcountallegedthatcorporate assetshadbeendissipated byconstructing theplantandre-latedtransmission lines.Thethirdcountallegedviola-tionsofrightstodueprocess,justcompensation andequalprotection ofthelawinconnection withtheuseofcondemnation proceedings,'and soughtunspecified compensatory andexemplary damagesfromthetwoSystemexecutive officersnamedasdefendants andtheCompanyandanothersubsidiary, andinjunctive reliefertioining theinstitution ofanyfurthercondemnation proceedings.
Thecourthasdismissed allthreecountsonmotionsbythedefendants; however,theplaintiffs mayappealthedecisions.
In1978,severalretailcustomers oftheCompanycommenced anaction,individually andasrepresenta-tivesofanallegedclass,intheU.S.DistrictCourt,allegingthattheCompany's leaseofelectricutilityas-setsfromtheCityofFortWayneisinviolation ofFederalantitrust laws.Thecomplaint seekstohavetheleasedeclarednullandvoid,asksthattheCompanyberestrained fromchargingexcessive pricesforthepur-chaseofelectricpower,seekstrebledamagesinanunspecified amountinrespectofallegedly excessive chargestoresidents oftheCityofFortWayneandseekstorestorethecontroloftheelectricutilityassetsinquestiontotheCityofFortWayne.InMay,JuneandJuly,1979thecourtgrantedinpartanddeniedinparttheCompany's motiontodismissorforsummaryjudgment.
Thecourtdismissed plaintiff sallegations 21 NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Continued) concerning abuseofalegallyacquiredmonopolybutruledthatplaintiffs couldcontinuetoassertothertheoriesofviolation ofFederalantitrust lawsandcer-tifiedaclassofresidential customers whomaymaintaintheaction.ThecasewastriedinMarch1982andisawaitingdecision.
Asanoutgrowth ofaFederalPowerCommission investigation commenced in1975concerning, amongotherthings,thereasonableness andprudenceofthecoal-purchasing policiesandpractices ofcertainSys-temcompanies, FERC,onMarch18,1980,orderedanewinvestigation intotheSystem'sadministration ofcertainlong-term coal-supply contracts withunaf-filiatedsuppliers.
Inaddition, onJune10,1981andJuly29,1981,FERCissuedorderswhichincludedtermina-tionofcertainotherportionsoftheoriginalinvestiga-tionsandorderedahearing,relatingtotheprocurement ofWesterncoalfromminesoperatedbytheSysteminthelightofthepossibleavailability ofcoalfromothersources.TheFERCstafffiledproposedtestimony, onMay2,1983,claimingthattheCompany(i)overstated itscostofcoalbyvirtueofitstreatment oftaxbenefitsrelatedtocertainmine-development costs,and(ii)paidexcessive pricesforcoalfromaffiliated mines.TheFERCwitnesses allegethattherevenueeffectofthefirstactionisapproximately
$11,000,000 throughMay1982andthattheovercharges occasioned bythepur-portedlyexcessive pricestotalalmost$76,000,000 asofDecember31,1981,exclusive ofinterestandcertainotheradjustments, andthatboththeseeffectsarecon-tinuing.TheCompanyestimates thattheallegedover-charges,basedontheFERCwitnesses'heory, wouldaggregate approximately
$163,000,000 fortheSystemcompanies, inclusive ofinterestandcertainotherad-justments, asofDecember31,1983,butexcluding pos-siblesubsequent adverseeffectswhichcouldbeas-sociatedwithaprospective limitation ontheCom-pany'sabilitytorecoveraffiliated costsinrates.AFERCwitnessalsocontendsthattherefundobligation whichheclaimsflowsfromsuchallegedovercharges issharedbytheCompany,Appalachian PowerCompany,C8'cSOE,KEPCoandOhioPowerCompanyaspartiestoanAEPSysteminterconnection agreement.
TheCompanybelievesthatasmuchas78%ofarefundobligation, iffinallyorderedbyFERC,wouldbebornebytheCompany.Thiscaseisinthediscovery phase.TheCompanyterminated itscontractwithTerreHauteIndustries, Inc.(THI)onthegroundsthatTHIwasnotmeetingtheschedulefortheconstruction ofanelectro-static precipitator attheBreedPlant.THIinsti-tutedasuitforbreachofcontractagainsttheCompanyinanIndianacircuitcourtclaimingdamagesinanun-specified amount.THIalsonamedtheAmericanElec-tricPowerServiceCorporation asadefendant andre-questeddamagesfromitforinterference withTHI'scontractwiththeCompanyandforlibel.TheCompanydeniedTHI'scomplaint andcounterclaimed fordam-agesintheamountof$6,801,000 whichtheCompanyclaimsitsufferedasaresultofthedelayintheconstruc-tionwork.OnFebruary20,1981,theCompany's mo-tiontoaddaninsurance company-surety asadefendant totheCompany's counterclaim wasgranted.Thein-surancecompany-surety waslaterdismissed.
Trialofthisactionwascompleted inDecember1982.InanorderdatedJanuary9,1984,thecourtawardedcom-pensatory andpunitivedamagestoTHIintheamountsof$4,934,000 and$12,000,000, respectively, exclusive ofinterest.
Asaresultofthatjudgment, theCompanyhasrecordedaliability, including
- interest, ontheCon-solidated BalanceSheetforthecompensatory damagesand,theCompanyandtheServiceCorporation areappealing thecourtdecision.
Environmental MattersThecompanies aresubjecttoregulation byFederal,stateandlocalauthorities withregardtoair-andwater-quality controlandotherenvironmental matters,andaresubjecttozoningandotherregulation bylocalauthorities.
Althoughthecumulative, long-term effectofchangingenvironmental requirements uponthecompanies cannotbeestimated atpresent,compliance withsuchrequirements maymakeitnecessary, atcostswhichmaybesubstantial, toretrofitexistingfacilities withadditional air-pollution-control equipment; tocon-structcoolingtowersorsomeotherclosed-cycle cool-ingsystems;toundertake newmeasuresinconnection withthestorage,transportation anddisposalofby-productsandwastes;tocurtailorceaseoperations atexistingfacilities andtodelaythecommercial operation of,ormakedesignchangeswithrespectto,facilities under.construction.
Legislative proposals arependingbeforetheCon-gresswhichexpressly seektocontrolaciddeposition intheeasternportionoftheUnitedStates.Ifanyofthesebillsbecomelaw,stringent controlsupontheemissionofsulfurdioxidewouldberequiredatvariousexistingCompanygenerating plants.Thesecontrolswoulden-tailverysubstantial capitalandoperating costswhich,inturn,couldnecessitate substantial rateincreases bytheCompany.Inaddition, anumberofstateshavecommenced proceedings undertheCleanAirActseek-ingtocontroltheemissionofsulfurdioxideincertainmidwestern states.22 INDIANA&MICHIGANELECTRICCOMPANYANDSUBSIDIARIESiVuclearInsurance ThePrice-Anderson Actlimitsthepublicliability ofalicenseeofanuclearplantto$580millionforasinglenuclearincident.
TheCompanyhasinsurance coveringitstwo-unitCookNuclearPlantinthemaximumavail-ableamountof$160million,andthebalanceof$420millioniscoveredbyamandatory programofdeferredpremiumswhichwouldbeassessed, afteranuclearincident, againstallownersofnuclearreactors.
Whenthe80thnuclearpowerreactorwentintooperation onNovember15,1982,theNuclearRegulatory Commis-sion'sindemnity obligation waseliminated.
Now,aseachnewreactorislicensedtooperate,the$580millionlimitincreases byanother$5million.IntheeventofanuclearincidenttheCompanycouldbeass'essed
$5millionperincidentforeachofitstwogenerating units(subjecttoamaximumof$10millionperreactorinanyyearintheeventofmorethanoneincident).
TheCompanyalsohaspropertyinsurance fordam-agetotheCookPlantfacilities intheamountof$1.01billion.Theprimarylayerof$500millionisprovidedthroughnuclearinsurance pools.Theexcesscoverageabove$500millionisprovidedpartially throughinsur-ancepools($85million),
withthemgorityprovidedbyNuclearElectricInsurance Limited(NEIL),asde-scribedbelow.TheCompanyisamemberofNEILandhasobtainedinsurance underNEIL'stwoprograms.
NEIL'sextra-expenseprogramprovidesinsurance tocoverextracostsofreplacement powerresulting fromaprolonged accidental outageofanuclearunit.TheCompany's policyinsuresagainstsuchincreased costsupto$2.5millionperweek(starting 26weeksaftertheoutage)foroneyearand$1.25millionperweekforthesecondyear;or80%%uoofthoseamountsperunitifbothunitsaredownforthesamereason.TheCompanywouldbesubjecttoaretrospective premiumofupto$7,387,000 forUnit1and$7,373,000 forUnit2(fivetimesannualpremium)ifNEIL'slossesexceeditsaccumulated funds.Addition-ally,theCompanyhasalsojoinedNEIL'sexcessprop-ertyinsurance programwhichpresently provides$425millionincoverage.
Themaximumassessment underthisprogramcouldbe$9,341,000 (sevenandone-halftimestheannualpremiumona100%%uocoveragebasis).DisposalofSpentNuclearFuelandNuclearDeconunissioning TheNuclearWastePolicyActof1982establishes Federalresponsibility forthepermanent disposalofspentnuclearfuel.Disposalcostsarepaidbyfeesas-sessedagainstownersofnuclearplantsanddeposited intotheNuclearWasteFundcreatedbytheAct.ForthedisposalofnuclearfuelconsumedafterApril6,1983bytheCompany's CookNuclearPlant,theCompanymustpaytothefundafeeofonemillperkilowatthour, whichtheCompanyiscurrently recovering fromits.customers InJune1983,theCompanyenteredintoacontractwithDOEforthedisposalofspentnuclearfuel.UndertermsofthecontracttheCompanymustpaytotheU.S.Treasuryafeeestimated atapproxi-mately$71,964,000, exclusive of'interest, forthedis-posalofnuclearfuelconsumedpriortoApril7,1983.ApprovalbyDOEofthecalculation ofthefeeiscur-rentlypending.TheCompanyhasdeferredthe$71,964,000 onitsbalancesheetpendingrecoverythroughtherate-makingprocess.TheCompanyhasreceivedregulatory approvalincertainofitsjurisdictions fortherecoveryofaportionofthisamountandhasbeguntoreducetheamountdeferredasitisbeingrecovered.
Withrespecttodecommissioning, thePublicServiceCommission ofIndianaheldinanorderdatedDe-cember22,1982that"areasonable estimateforthecostsofdecommissioning the(CookPlant),whenmea-suredin1982dollars,shouldbesetat$155,000,000."
Incertain'of itsjurisdictions, theCompanyiscurrently recovering, throughinclusion initscurrentchargestocustomers, aportionofthefuturecostsassociated withdecommissioning.
Fundsrecovered throughtherate-making processfordisposalofspentnuclearfuelconsumedpriortoApril7,1983andfornucleardecommissioning generally havebeendeposited ineitherexternaltrustfundsorinternalspecialfundsforthefuturepaymentofsuchcosts.TheCompanywillattempttoobtaininallitsjurisdictions regulatory approvalfortherecoveryoftheremainder ofsuchfuturecosts.10.Leases:-Thecompanies, aspartoftheiroperations, leaseproperty, plantandequipment underleasesranginginlengthfrom3to35years.Mostoftheleasesrequirethecompanies topayrelatedpropertytaxes,maintenance costsandothercostsofoperation.
Thecompanies ex-pectthatinthenormalcourseofbusiness, leaseswillgenerally berenewedorreplacedbyotherleases.Themajorityofthevariousrentalsareincludedinleaseshavingpurchaseoptionsorrenewaloptionsforsub-.stantially alloftheeconomiclivesoftheproperties.
23 NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Continued)
Rentalsareanalyzedasfollows:YearEndedDecember31,198319821981(inthousands)
GrossRentalsLessRentalRecoveries (including subleaserentals)(a)NetRentals(b)...~.~~"~~~~~~$92,000$96,000$95,0003,000$89,0003,000$93,0003,000$92,000(a)Includesamountspaidfororreimbursed byassociated companies.
(b)Classified as:Operating ExpensesClearingandMiscellaneous Accounts(portions ofwhicharechargedtoincome).....$82,000$88,000$87,0007,0005,0005,000$89,000$93,000$92,000Futureminimumleasepayments, byyearandintheaggregate, ofthecompanies'apital leasesandnoncan-celableoperating leasesconsisted ofthefollowing atDecember31,1983:CapitalOperating Leases(a)Leases(inthousands) 19841985198619871988LaterYearsTotalFutureMinimumLeasePayments.$12,00010,0008,0007,0006,00057,000100,000$11,00012,00012,00012,00012,000179,000$238,000LessEstimated InterestElementIncludedTherein(b)..............
46,000Estimated PresentValueofFutureMinimumLeasePayments.........
$54,000(a)Excludesleasesofnuclearfuel,allofwhicharecapitalleases.Nuclearfuelrentalscomprisetheunamortized balanceofthelessor'scost(approximately
$142,000,000at December31,1983),lesssalvagevalue,ifany,tobepaidinproportion toheatproduced, andcarryingchargesonthelessor'sunrecovered cost.Itiscontemplated thatportionsofthepresently leasedmaterialwillbereplenished byaddi-tionalleasedmaterial.
(b)Interestratesusedrangefrom7.1%to13.5%.Thefollowing isaproformaanalysisofproperties undercapitalleasesandrelatedobligations assumingthatsuchleasesarecapitalized:
December31,19831982(inthousands) 28,00019,00012,00013,000357,00011.Unaudited Quarterly Financial Information:
Thefollowing consolidated quarterly financial infor-mationisunaudited but,intheopinionoftheCompany,includesalladjustments (consisting ofonlynormalre-curringaccruals) necessary forafairpresentation oftheamountsshown:Quarterly PeriodsEndedOperating Operating RevenuesIncome(inthousands)
NetIncome'983-Mar.31June30Sept.30Dec.311982-Mar.31June30Sept.30Dec.31'Beforepreferred
$197,685191,193235,221244,881$47,32343,19943,95948,262241,51352,967183,21243,628202,37235,882182,70642,468stockdividendrequirements.
$32,33830,14238,95538,44138,91030,47225,33126,310NuclearFuel$285,000$253,000Coal.miningandCoal-transportation Equipment OtherTransportation Equipment RealEstateElectricDistribution SystemProperty...GrossProperties underCapitalLeasesLessAccumulated Provision forAmortization...............
162,000153,000NetProperties underCapitalLeases....$195,000$167,000Obligations underCapitalLeasesiai....01960000776000(a)Including anestimated
$69,000,000 and$60,000,000 atDe-cember31,1983and1982,respectively, duewithinoneyear.Arecentaccounting standardwillrequirethecom-paniestocapitalize leasesbeginning in1984forallcap-italleasesenteredintoafterDecember31,1982andallearlierleasesbeginning in1987.ThiswillnothaveanyeffectontheConsolidated Statements ofIncome.Includedintheaboveanalysisoffutureminimumleasepaymentsandofproperties undercapitalleasesandrelatedobligations arecertainleasesastowhichportionsoftherelatedrentalsarepaidfororreimbursed byassociated companies intheAEPSystembasedontheirusageoftheleasedproperty.
Thecompanies can-notpredicttheextenttowhichorproportion inwhichtheassociated companies willutilizetheproperties undersuchleasesinthefuture.12.Unaudited Information OnInflation andChangingPrices:Thesupplementary information inthestatements belowispresented incompliance withtherequirements 24 INDIANA&MICHIGANEI.ECTRIC COMPANYANDSUBSIDIARIES suchassetswereacquiredtothepresent,anddifferfromconstantdollaramountstotheextentthatspecifltc priceshaverisenatadifferent ratethanthegeneralinflation rateasmeasuredbytheCPI-U.Thecurrentcostofproperty, plantandequipment represents theapproximate costofreplacing suchresources andin-cludesutilityplantinservice,construction workinprogress, land,landrightsandotherpropertyandin-vestments.
Currentcostamountsweredetermined primarily byapplyingappropriate indexesfromtheHandy-Whitman IndexofPublicUtilityConstruction Costs.~AdjustedforChangesinSpeciTicPrices(currentcost)AdjustedforGeneralInflation (constant dollar)YearEndedDecember31,1983oftheFinancial Accounting Standards Board(FASB).Theinformation isintendedtodisclosetheeffectsofbothgeneralinflation andchangingprices;however,theamountsshouldbeconsidered approximations ofsucheffectsratherthanprecisemeasuressinceanum-berofsubjective judgments andestimating techniques wereemployedindeveloping theinformation.
Constantdollaramountsrepresent historical costsstatedintermsofdollarsofequalpurchasing powerasmeasuredbytheaveragelevelofthe1983ConsumerPriceIndexforAllUrbanCustomers (CPI-U).Currentcostamountsreflectthechangesinspecificpricesofproperty, plantandequipment fromthedateConsolidated Statement ofIncomeAdjustedforEffectsofChangingPricesAsStatedinthePrimaryFinancial Statements Operating RevenuesOperating Expenses:
Operation:
FuelforElectricGeneration (a)Purchased andInterchange Power(net)OtherMaintenance Depreciation, Depletion andAmortization (a)TaxesOtherThanFederalIncomeTaxes.....FederalIncomeTaxes.TotalOperating ExpensesOperating IncomeOtherIncomeandDeductions
.NetInterestChargesPreferred StockDividendRequirements EarningsApplicable toCommonStock(b)$868,980159,998159,086122,12753,04983,96337,05370,961686,237182,74353,629(96,496)(28,384)$111,492(inthousands)
$869,000161,000159,000122,00053,000188,00037,00071,000791,00078,00054,000(97,000)(28,000)$7,0008869,000161,000159,000122,00053,000194,00037,00071,000'797,00072,00054,000(97,000)(28,000)$1,000IncreaseinSpecificPrices(currentcost)ofProperty, PlantandEquipment HeldDuringtheYear(c)..............
Reduction toNetRecoverable Cost(d)EffectofIncreaseinGeneralPriceLevel.............;.......
ExcessofIncreaseinSpeciTicPricesafterReduction toNetRecoverable CostoverIncreaseinGeneralPriceLevelGainfromDeclineinPurchasing PowerofNetAmountsOwed(e).Net$249,000(24,000)(215,000)
$(5,000)10,00068,00068,000$63,000$78,000(a)Asprescribed bytheFASB,theitemsintheConsolidated Statement ofIncomethaihaecbeenadjustedaredepredation, depledonandamortization (including portionsclassified asfuelforelectricgeneration andotherincomeanddeductions).
Depreciation, depletion andamortization chargeswerecomputedbyapplyingcurrentaccrualratestothevariousplantaccounts(production, transmission, distribution, generalandmiscellaneous) afteradjusting suchaccountsfortheeffectsofchangingprices.(b)Including thereduction tonetrecoverable cost,theincome(loss)fromoperations onaconstantdollarbasisandcurrentcostbasiswould.havebeen$2,000,000 and$(23,000,000),
respectively.
(c)AtDecember31,1983,currentcostofproperty, plantandequipment netofaccumulated depreciation, depletion andamortization was$5,803,000,000 whilehistorical costornetcostrecoverable throughdepreciation, depletion andamortization was$2,908,000,000.
(d)Thereduction tonetrecoverable costofproperty, plantandequipment (asexpressed intermsofinflation.
adjustedcost)tohistorical costrecognizes thattherate-making processlimitstheCompanytorecoveryofthehistorical costofthesubjectassets.(e)Toreflectproperlytheeconomics ofrateregulation intheConsolidated Statement ofIncomeAdjustedforEffectsofChangingPrices,thereduction tonetrecoverable costshouldbeoffsetbythegainthatresultsfromthedeclineinpurchasing powerofthenetamounts'owed bytheCompany.Duringaperiodofinflation, holdersofmonetaryassetssuchascashandreceivables sufferalossofgeneralpurchasing powerwhileholdersofmonetaryliabilities, generally long-term debt,experience again(becausedebtwillberepaidindollarshavinglesspurchasing power).TheCompany's gainfromthedeclineinpurchasing powerofitsnetamountsowedisprimarily attributable tothesubstantial amountofdebtandcumulative preferred stocksubjecttomandatory redemption whichhasbeenusedtofinanceutilityplant.25 NOTESTOCONSOLIDATED FINANCIAL STATEMENTS (Concluded)
Five-Year Comparison ofSelectedSupplementary DataAdjustedforEffectsofChangingPrices(dollaramountsareexpressed intermsofaverage1983dollars)YearEndedDecember31,1983198219811980(inthousands, exceptindexdata)1979$938,000$836,000$890,000$(10,000)$(21,000)$(5,000)$28,000$1,084,000
$1,088,000
$1,098,000
$1,189,000
$(9,000)$10,000$1,082,000
$(127,000)
$1,088,000
$(326,000)
$(262,000)
$1,098,000
$1,189,000
$76,000289.2$220,000246.8Operating Revenues$869,000$898,000Historical CostIttformation At(t'itstedforGeneralIttflation Income(Loss)fromOperations (excluding reduction tonetrecoverable cost)$7,000NetAssetsatYear-endatNetRecoverable Cost....$1,082,000 CarrentCostIttfonnation Income(Loss)fromOperations (excluding reduction tonetrecoverable cost).............
$1,000$(11,000)$(21,000)$8,000Excess(Deficit) ofIncreaseinSpecificPricesafterReduction toNetRecoverable CostoverIncreaseinGeneralPriceLevel$(9,000)NetAssetsatYear-endatNetRecoverable Cost....$1,084,000 GeneralFinancial DataGainfromDeclineinPurchasing PowerofNetAmountsOwed$68,000$158,000$237,000AverageConsumerPriceIndex298.4272.1217.5Generalinformation onhfiningOperations ProvenandProbableCoalReservesatEndofYear(thousands oftons)(Note)414,207411,377412,546413,964415,023.TonsofCoalMined(thousands)
..-.................
3601,1687791,059669AverageMarketPrice(atcurrentcostperton)......$84.66$50.89$65.95$63.78$63.10Note:Proven'reserves
-Theestimated quantities ofcommercially recoverable reservesthat,onthebasisofgeological, geophysical and'ngineering data,canbedemonstrated withareasonably highdegreeofcertainty toberecoverable inthefuturefromknown,mineraldepositsbyeitherprimaryorimprovedmethods.Probablerese'rves
-Thcestimated quantities ofcommercially recoverable reservesthatarelesswelldefinedthanprovenreservesandthatmaybeestimated orindicated toexistonthebasisofgeological, geophysical andengineering data.26 INDIANA&MHIGANELECTRICCOMPANYANDSUBSIDIARIES Auditors'pinion DsloitteHaskiss+sells 155EastBroadStreetColumbus.
Ohio43215(614)221~1000CableOEHANOSTotheShareowners andBoardofDirectors ofIndianaandMichiganElectricCompany:Wehaveexaminedtheconsolidated balancesheetsofIndianaSMichiganElectricCompanyand'itssubsidiaries asofDecember31,1983and1982andtherelatedconsolidated statements ofincome,retainedearningsandsourcesandapplications offundsforeachofthethreeyearsintheperiodendedDecember31,1983.Ourexaminations weremadeinaccordance withgenerally acceptedauditingstandards and,accordingly, includedsuchtestsoftheaccounting recordsandsuchotherauditingprocedures asweconsidered necessary inthecircumstances.
Asdiscussed inthethirdparagraph underthecaption"Litigation" inNote9ofNotestoConsolidated Financial Statements, theFederalEnergyRegulatory Commission staffhasclaimedthattheCompanyhaspaidexcessive prices,forcoalfromaffiliated minesresulting inovercharges tocustomers whichmayhavetoberefunded'he Companyestimates thattheallegedovercharges wouldaggregate atleast$163,000,000, inclusive ofinterestandcertainotheradjustments atDecember31,1983.TheCompanycannotassesstheultimateoutcomeofthisproceeding, ifany,ontheCompany's financial positionorresultsofoperations.
Inouropinion,subjecttotheeffectsontheconsolidated financial statements ofsuchadjustments, ifany,asmighthavebeenrequiredhadtheoutcomeoftheuncertainty referredtointhepreceding paragraph beenknown,suchconsolidated financial statements presentfairlythefinancial positionoftheCompanyanditssubsidiaries atDecember31,1983and1982andtheresultsoftheiroperations andtheirsourcesandapplications offundsforeachofthethreeyearsintheperiodendedDecember31,1983,inconformity withgenerally acceptedaccounting principles appliedonaconsistent basis.February21,198427 Operating Statistics 19831982198119801979ELEGTRlcOPERATING REYENUEs(inthousands):
FromKilowatt-hour Sales:Retail:Residential:
WithoutElectricHeatingWithElectricHeatingTotalResidential
...............
Commercial Industrial Miscellaneous TotalRetailWholesale (salesforresale)TotalfromKilowatt-hour Sales..OtherOperating Revenues..............
TotalElectricOperating Revenues.
$125,79868,793$116,34059,826$144,37070,851$106,48854,277$102,54355,4582157221137,616154,7518,696194,591127,470137,1527,568176,166117,725134,5196,953158,001106,151127,8156,099160,765108,764116,1656,150398,066280,639516,284343,427391,844346,513435,363360,096466,781325,468859,7119269792,24917,554738,3574,326795,45916,690678,7054,308$868,980$809,803$812,149$742,683$683,013SQURcEsANDSALEsQFENERGY(inmillionsofkilowatt-hours):
Sources:NetGenerated
-Steam:FossilFuelNuclearFuelNetGenerated
-Hydroelectric
.SubtotalPurchased
..NetInterchange TotalSourcesLess:Losses,CompanyUse,Etc.NetSourcesSales:Retail:Residential:
WithoutElectricHeatingWithElectricHeatingTotalResidential
.........
Commercial Industrial Miscellaneous TotalRetailWholesale (salesforresale)TotalSales5,68412,3015518,0404,88157323,4941,44122,0532,5961,4584,0542,8073,94120411,00611,04722,0534,58712,3497717,0132,1543,77522,9421,24321,6992,4721,5404,0122,8033,70119710,71310,98621,6996,37313,1679819,6381,5703,70424,9121,23923,6732,4671,5133,9802,7484,02119910,94812,72523,6736,71913,1538519,9571,8833,66925,5091,42624,0832,4931,5494,0422,7163,93219510,88513,19824,0836,44311,6147918,1368115,38924,3361,38622,9502,3891,6194,0082,6294,38019411,21111,73922,95028 INDIANA&MICHIGANELECTRICCOMPANYtANDSUBSIDIARIESOPERATING STATISTICS (Concluded) 19831982198119801979ANNUALCosTOFFUELCONsUMED(incents):(a)CentsperMillionBtu:CoalNuclearOverallCentsperKilowatt-hour Generated:
CoalNuclearOverall183.9754.3791.991.76.59.96189.59187.1349.5549.9084.8591.351.851.81.53.54.89.95164.4948.4484.951.59.52'.89151.9137.8276.251.52.41.81RESIDENTIAL SERvlcE-AYERAGES:
AnnualKwhUseperCustomer:
TotalWithElectricHeatingAnnualElectricBill:TotalWithElectricHeatingPriceperKwh(incents):TotalWithElectricHeating-............
10,18718,780$541$9125.314.8610,08419,99010,00819,866$489"$443$893$7854.854.434.473.9510,20620,58410,21021,611$406$402$721$7403.983.943.503.43NUMBERQFELEcTRIcCUSTQMERS:
Year-End:
Retail:Residential:
WithoutElectricHeatingWithElectricHeatingTotalResidential
...........
Commercial Industrial Miscellaneous TotalRetailWholesale (salesforresale)TotalElectricCustomers 320,65578311398,96642,5523,2531,571446,342106446,448320,09777,335397,43242,2333,2491,458444,372105444,477321,85077,002398,85242,9572,8731,440446,122104446,226321,43275,618397,05042,7582,8021,424444,034105444,139319,47775,606395,08342,5632,7481,373441,767103441,870(a)Excludeseffectofdeferredcollection offuelcosts.29 PriceRangeofCumulative Preferred StockByQuarters(1983anti1982)1983-Quarters1982-QuartersCumulative Preferred Stock1st2nd3rd4th1st2nd3rd4th($100ParValue)4Ve%SeriesDividends PaidPerShareMarketPrice-$PerShare(MSE)-High-Low4.56%SeriesDividends PaidPerShareMarketPrice-$PcrShare(OTC)Ask(high/low)
Bid(high/low) 4.12%SeriesDividends PaidPerShareMarketPrice-$PerShare(OTC)Ask(high/low)
Bid(high/low)
7.0 8FoSeriesDividends
PaidPerShareMarketPrice-$PerShare(NYSE)-High-Low7.76%SeriesDividends PaidPerShareMarketPrice-$PerShare(NYSE)-High-Low8.68%SeriesDividends PaidPcr.ShareMarketPrice'$PerShare(NYSE)=High-Low12%SeriesDividends PaidPerShare,MarketPrice-$PerShare(NYSE)-High-Low($25ParValue)$2.15SeriesDividends PaidPerShareMarketPrice-$PerShare(NYSE)-High-Low$2.25SeriesDividends PaidPerShareMarketPrice-$PcrShare(NYSE)-High-Low$2.75SeriesDividends PaidPerShareMarketPrice-$PerShare(NYSE)-High-Low$3.63SeriesDividends PaidPerShareMarketPrice-$PcrShare(NYSE)-High-Low30275929V430Ye29th55Vi30$1.14$1.14$1.14$1.14$1.14$1.14$1.14$1.14$1.03$1.03$1.03$1.03$1.03$1.03$1.03$1.03$1.77$1.77$1.77$1.77$1.77$1.77$1.77$1.775852th59~h54Ye5551th5649Ys46N42th474450445548$1.94$1.94$1.94$1.94$1.94$1.94$1.94$1.9462Y~5764%57th615661%5450Yi45Yi52,56th47Ve4861th52Y4$2.17$2.17$2.17$2.17$2.17$2.17$2.17$2.177063th73%65th70Fs65%7060Y45550N58th5259N57th6757Fa$3.00$3.00$3.00$3.00$3.00$3.00$3.00$3.00100hh94103th99103Y497101N96'1th77th86k79Yi9479Y~98th89$0.5375$0.5375$0.5375$0.5375$0.5375$0.5375$0.5375$0.537517Fe15N18'6'7th15N17'4N14h1515Fs13Ye13'3Y~17Ve15Ye$0.5625$0.5625$0.5625$0.5625$0.5625$0.5625$0.5625$0.562518Ve16th18Y416'815h14'5%1&%13th13th14V18Y4les$0.6875$0.6875$0.6875$0.6875$0.6875$0.6875$0.6875.$0.687523N21N2523Ve2423Ye242318V418%2017V18%16th2120$0.9075$0.9075$0.9075$0.9075$0.63$0.9075$0.9075$0.9075297'6N30Ye27N28N.2728N26K25%26N22N232%625th$1.03125$1.03125$1.03125$1.03125$1.03125$1.03125$1.03125.$1.03125MSE-MidwestStockExchangeOTC-Over-the-Counter NYSE-NewYorkStockExchangeNote-Theabovebidandaskedquotations represent pricesbetweendealersanddoMarketquotations providedbyNationalQuotation Bureau,Inc.Dashindicates quotation notavailable.
rnotrepresent actualtransactions.
30 TheCompany's AnnualReport(Form10-K)totheSecurities andExchangeCommission willbeavailable onoraboutMarch31,1984toshareowners uponwrittenrequestandatnocost.Pleaseaddresssuchrequeststo:Mr.T.P.BowmanAmericanElectricPowerServiceCorporation 1Riverside PlazaColumbus, Ohio43215TransferAgentandRegistrar ofCumulative Preferred StockMorganGuarantyTrustCompanyofNewYork30WestBroadway, NewYork,N.Y.10007 eSeasonHortsstrI~(IHSI.Joseph'~~~I,.SoresHeronwsos\waarscwscattorsOosOKokmocoofCrro~ct,
>>agNICIGANIRRILNRI~NSa+In4wasosswsownssooswac>>wwyINRRANJockson0SPISeewsawosOOICcswwIrhksvil4wOsaloeaweewwFortW,QJINDIAALafayette
~vncowswIs'kKokomoOY~~wpjaM~osonMoatponloartHonf>>dGlysOHI0~ooooooVnksnGtywaworwee>>rosslowsswc>>rwr'ndionopo ilLynnwor<<wacreweesCsewnCaranrvrsnREEDas>>wowsower~swco0SLoIooo0~~aaRStmn SSO0'bTANNERSCREEKIIsocrew4~~eecseccern>>IIIraCincinnoti
%%OJ5%%~iiti~L KENTUCKYINDIANA8MICHIGANELECTRICCOMPANYROCKPORTQssww.lrssootsws QsrwssaIsllsssoanws PnroeIaaarsws~4ws~ssuon>>vsasletwwweeeswnIewwswSsswSnawCaa.~a>>4le0IIIOoaessesrearoetaletalteaoaassssaasoaa Iuotaeatoalaolavsolooatoauma sanlaenltsal4oossmao4oao ATTACHMENT 2TOAEP:NRC:0909 Iit.l(P'Ik 1984InternalCashFlowProjection-forDonaldC.CookNuclearPlant(Millions)
Actual1983Projected 1984NetincomeaftertaxesLessdividends paidRetainedearnings139.9136.03.915514114Adjustments:
Depreciation andamortization Deferredincometaxesandinvestment taxcreditsAFUDC.*'.To&al'adjustmen<s..:.:::
'6.089.8(119.2):...5616":.'8130(116)Internalcashflow.Averagequarterly cashflow60.515.111629Averagecashbalancesandshort-terminvestments 13.540Total28.6690Ownership inalloperating nuclearunits:Unit.1andUnit,2-1005o"MaximumTotalContingent Liability
-$20.0million(2units) tlr