ML19261E244

Annual Financial Rept 1978

ML19261E244
Person / Time
Site:	Hatch, Vogtle
Issue date:	01/31/1979
From:	GEORGIA POWER CO.
To:
Shared Package
ML19261E243	List: ML19261E242 ML19261E244
References
NUDOCS 7907050394
Download: ML19261E244 (34)

Text

_

Highi:7 ' .; 5 Georgiri Power Contr:iny 1978 1477 To Change Financial Dollars in thousands Total Operating Revenues. S 1.475.024 5 1.301.237 13.4 Total Operating Expenses. 1.231.990 1.101.384 11.4 Net income After Dividends on Preferred Stock. 136.014 111.686 21.8 Dividends on Common Stock. I19.225 104.400 00 Dividends on Preferred Stock. 30.480 30.480 -

Gross Additions to Utility Plant. 500.719 534.153 (6 3)

Net Utility Plant. 3.882.792 3.553.133 0.3 Electric Operations Kilowatt-hour Sales (millions). 44.145 43.819 Customers Served (year-end). 0.7 1.164.822 1.138.470 2.3 Average KWH Usage per Customer (residential) . 10.719 10.654 0.6 Ratios Long-Term Debt.

55.70 56.20 Preferred Stock. 10.90 11.40 Common Equity. 33.40 32.40 Embedded Cost of Bonds. 8.12 7.47 Embedded Cost of Preferred Stock. 8.15 8.15 First Alortgage Bond Cos erage* 2.37 2.43 Preferred Stock Coverage

• 1.61 1.62 Return on Common Equity / year end/. 11.60 10.28 Return on Total Capitalization (yeanendl . 8.10 7.91

• Includes revenue subject to refund

( ) Denotes decrease Contents i Ilighlights. .. .... .. ... .. .. .I Financing. . . . . . . . 14 Letter to Investors. . . . . . . . .. .2 Load Alanagement. . . ... 15 ll Effective Alanegement. . i; Corporate Review. . . . . .. 16

.. .. . . . .. .4 The Southern Connection. . 16 Rate Activities and Regulatory Affairs. . .4 Revenues and Energy Sales. . ... . .. .8 Financial Stateme ;ts. . ... . 17 Operating Costs. . . . . . . 10 Directors and rificers. .. . . . . 32 Construction. . . . . . . ... ... .. ... 12 p, '4 (' g l

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Letter to Investors tion was beginning to erode by the end of the year. As a result. late in 1978 we filed for both retail and w holesale rate increases A decision wgs

• on the retail case is anticipated in 7% May 1974 and we expect to begin p' ' billing wholesale customers f or the

/ ~~-- - O new rate subject to refund in

- 2 M "h [ July 1979.

The construction program for

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14_,ss totaled some 5500 nulhon.

% A portion of these expenditures u as A

-N/. - 9' prosided through the sale of addi-tional interests in Plants Wansley and Scherer to the Municipal Electric 1 6,, Authority of Georgia. Negotianons I ,

5 continued with the Oglethorpe Pou er Corporation ( formerly Ogiethorpe fg -

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- Electric Membership Corporation) for the construction f undine of a

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portion of the Plant Scherer units.

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future, we began discussions u ith h'~ - ,

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two of our sister companies. Gutt y # Power and Mississippi Power. abiiut h

! f i, a nt participating as co-ow ners of Plant E- '

Scherer.

s7 j Plans for a new general of fice

,N headquarteis in dou ntoun Atlanta were announced in Mas. I he neu

^ structure will bring essentially all

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general of hee employ ees toget her m Robert W. Scherer one location and impros e c!heienet.

The year 1978 saw a turnaround in which earnings began to improve Scheduled for compicuon m lu30 af ter two years of decline. the building is espected to be the This improvement was pri- state's most energ3 -ef ficient busi-marily due to a full year of retail ness structure and will serve as a rate reliet. granted September 1977. model for the utilintion of solar and a half year of uholesafe rate pow e r.

relief. In addition to earnings. there 1)urmg I"7S ue were con-were other indications the Company honted uirh ses cral serious prob-lems.We began the 3 ear in the w as strengthening its financial s itality. Moody's Investor Sers ice midst of a United Mine Workers upgraded our preferred stock to Haa strike that lasted until late March 1he pm1onged strike could hate early in the year. and both hrst mort-disi epted operations. but because gage and pollution control bonds of c.u clul planning we had obt.uned we e successfully issued. Res enues

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approached the 515 billion les el an adequate supply of coal. It 9

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allowed us to maintain sen ice for the year. u hile our Northern neighbors w eie Even with these encouraging experiencing rolling blackouts and signs. however. our financial situa-2

industrial closings.The Georgia We are committed to appealing Plan which provides direction for House of Representatives, in an to higher authority in situations actions we will take in major areas.

official resolution, commended the where we believe we has e not re- To better control cost at all levels Company's forcsight in dealing with ceived reasonable and fair treatment. of management. a responsibility the strike. Ilowever, the effect of As with fuel adjustment, we will reporting sy stem was designed in the mi,ers' wage hib. coupled with seek judicial relief whenever Com- 1978 and implemented in early 1979 transportation incuases later in mission actions threaten this Com- While the Company faces many the year, put additional cost pres- pany's ability to meet the needs of its complex problems, we are dedicated sures on producing our product. customers and investors. to the service of our investors and Apparently responding to the A major issue facing not only customers. We regret the loss of an public's lack of understanding, the Georgia Power, but the entire utility able helmsman with the retirement Georgia Public Service Commission industry, is the confli. between of Edwin 1. Hatch, chairman of the made several decisions detrimental continued demand for electricity board. We feel confident. however.

to the Company and its customers. and the ever-ircreasing prices which that based on Mr. Hatch's guidance Twice the Commission attempted to customers must pay for the product. during the past years, this Company alter the fuel adjustment clause and If economic growth and its corre- is in a position to deal with the in both cases, at our request, the sponding demand for electricity are challenges of the future.

court stayed the effectiveness of desired by the citizens of Georgia.

the Commission's order, pending we must ensure that all our publics judicial review. The Commission understand what it will take to meet g/', -

f 4/ g* CMA44/ j a'so removed its protective order on the increased demand while retain-our coal contracts This action could ing iinancial integrity. Load man-provide some suppliers with unfair agement is one course the Company Robert W. Scherer bargaining advantages and thus is actively pursuing to resolve the President and Chief Executive Officer could drive up the cost of coal conflict between growth and price January 31.1979 Also, late in the 3 car ihe Com- To prepare for the challenges mission reversed its controversial facing us. we initiated a compre-decision on the inverted rate, re- hensit e management improvement placing it with one more palatable program. A cornerstone is the imple-to electric heating customers. mentation of a long range Corporate Where Our Dollars Came From In 1978 Where Our Dollars Went In 1978 i r,vscou nmrt mvrrmC5 i

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i 1 Residential

• Fuel 35%

Resenues 27% p rchased Power 5%

. Commercial . Wages 8%

Revenues 2G

• Op ration & Maintenance 11%

• Industrial Revenues 29% l

. Depreciation 8%

• Wholesale Revenues 14% * ****

• Interest 10%

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• Other 19come including AFUDC 5%

• Preferred Dividends 2%

• Common Dividends 8% 3

• Lighting & Other Revenues 1%

• Retained Earnings 1%

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Commission considers merits of 5225.6 retail rate case. Itate Actit*itles aiul Georgia Public Sen ice Commission (GPSC) on November 20.1978 for llegtllatory Affairs $225.6 minion in retaii rate reuef.

Representing an overall 17 percent liigher operating and financing increase, the request included a 14.5 costs, the completion of a steam percent returr. on common equity gene ating unit and the near com- ar id raise the as erage resi-pletion of a new nuclear unit forced uen customer's bill by about 56 Georgia Power to file for both retail per month. The Company carefully and wholesale rate increases during examined the filing to ensure that it the last quarter of 1978. Although met the profit margin standards of earnings were up over 1977, projec- President Carter's wage and price tions indicated that earnings would guidelines.

drop below acceptable levels in Georgia Power could no longer 1979 unless the Company received absorb all of the increased costs as-additional rate relief. sociated with producing electricity.

At the time of filing. the Company Retail '

had added moie than $30m .nillion The Company filed with the for facilities that were not in service 4 ') C c J'-) U 'i l,

in 1977, when present rates were Wholesale has not been recorded as income in put into elfect. By the time this case On December 1.1978 Georgia the accompanying financial sta:e-is decided by the GPSC in the spring Power filed a request with tne Fed- ments. Since the current filing of of 1979, two new generating units eral Energy Regulatory Commission 58.4 million assumed the Company will be in service, and the costs asso- ( FERC) for an SS 4 million increase would be receiving revenues of ciated with these units are not ade- in wholesale rates. 528.2 million, the settlemem has quately reflected in current rates. The amount represents a 3.7 the effect of incre ising the Com-Plant Wansley Unit 2, near Newnan, percent increase to wholesale partial pany's request toi pproximately has been providing electricity since requirements customers who pr o- 519.9 million.

April 1978, and Plant flatch Unit 2. vide part of their own generation near Baxley, is expected to go into but also purchase electricity from Commission Decisions operation during the first quarter of Georgia Power for resale.They in. The five members of the Georgia 1979. In addition to these generat- clude the Alunicipal Electric Public Service Commission came ing units, the Company will be Authority of Georgia ( A1EAG). the under increased pressure in 1978

-instalFog the first units of a hydra City of Dalton and the Oglethorpe from consumers and specialinterest electric facility, transmission and Electric Alembership Corporation. groups w ho protested rising elec-distribution facilities plus polf urion now known as the Oglethorpe tricity prices. As a result. the control equipment. Power Corporation (OPC). Commission:

Further, financing costs, one of For the cities of Hampton and

• attempted to alter the the Company's largest expenses. Acworth, w holesale full require. Company's fuel adjustment rose dramatically during the third ments customers the filing repre. clause.

and fourth quarters of 1978.The sents a 4 percent increase. Both

• changed the inserted rate struc-prime interest rate-at approxi- cities purchase all their electricity ture that the Commission itself mately 64 percent at the time of the from Georgia Power for resale to had crea ted.

last rate filing in 1977-almost their customers.

• required that the Company's doubled by the end of 1978. The request for an increase is coal contracts be made public.

Along with the rate increase in keeping with the Company's

• saw its chairman, a 21-year request. Georgia Pow er is seeking policy of not allowing its financial veteran, lose a statewide elec-54.5 million in additional customer health to bejeopardized before seek. tion to a newcomer who prom-service charges.The request was ing higher rates.The wholesale case ised to vote against all rate identified 3eparately because such requests an overall rate of return on increases for Georgia Power.

charges affect only customers re- investment of 10.16 percent, which quirmg special services. Included includes a return on common equity rr are cha:ges for ec!inquent service of 14.5 percent.

accounts, bad checks, establishing FERC ordered the new rates to new accounts and reconnecting elec- go into effect July 1.1979. subject tricity for customers who have been to refund based on the Commission's disconnected for nonpavment. final decision.

In conjunction witii the retail rate request, a time of dav rate was filed with the Commission in early In the Company's $28.2 million wholesale rate request. filed f P*b t[j 1979. If approved, the time of day December 30.1977, a settlement  %,

agreement of $16.8 million for par-schedule would be provided on a , N' N customer request basis and restricted tial requirem;nts customers and

$133.000 for full requirements cus-

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by availability of special meters tome:s. has been filed with FERC.

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necessary for recording on-peak and ofr. peak usage.

The full amount of the request has f\M' '/ -

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Hearings on the retail rate been billed to wholesale customers since July 1978.The excess amount 4/

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request began February 21. and a will be refunded at 9 percent interest i /

4 decision is expected by Alay. upon final approval of FERC and M+ +d 1 Attorney Jim Joiner presents Company's request for a retail qg) ni9 rate increase to the PSC.

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Fuel Adjustment r+ f luice during the last half of b d M. 3 f

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1978 the Commission altered the

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^ Company's f uel adjustment clause.

S -f f and in both instances, at the request 3 h...]

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, of the Company, the court sta3 cd N p'gNY

( dad , the order.The f uel adjustment clause t* -

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• is a rnechanism u hich monthl, passes on to custamers increases

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tember 1978 The regulatory agency

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any flaw in the f uel clause or the way in which the costs for iuel w ere

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recos ered. but because of the pub-b'?

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the clause. Court intervention stas ed p -

the Commission s order and required

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• could be taken g I ollouing public hearings. the

-c y Commission again altered the f uel

. JL adjustment e'anse. It substituted a j'8 .-f ~ ~~ ' ' ' I *

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President Robert W. Scherer gjgt rate of approsimately $312 per te stifies at rate case hearings - emm - - - - - - - - --

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liarold .\1cKenrie clarifies I

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1.000 kwh to be added to the base per kwh for the first 650 kwh con- order to keep competing coal sup-rate charged for electricity.The new sumed. Ilowever, charges above pliers from having unfair bargaining amount was in addition to the $10 650 kwh decreased fram 3.19 cents advantages. It is Georgia Power's per 1,000 kwh already included for per kwh to 2.78 cents per kwh during position that such disclosure may fuelin the base rate. winter billing periods. October increase costs, which ultimately The Company, believing the fuel through May This rate will remaM in would be passed on to customers.

adjustment clause to be the most effect until new rates are approved. Although the protective order had equitable means of recovering fluc-not allowed general public dis-tuating ft.el costs, petitioned the Coal Contracts closure, the coal contracts had been court.The court issued a stay order In October the Commission available to agencies which regulate and requested the Georgia Con- voted to allow public disclosures of and audit the Company and to the sumers' Utility Counsel to present Georgia Power's coal contracts.The Consumers' Utility Counsel an alternative plan for the Commis- action reversed its 1973 protective of Georgia.

sion's consideration. The Company supported the proposed plan, how-ever, the Commission rejected it.

In early 1979 the current fuel adjust-ment clause remained m. effect, Retail Rate Case Activity 1970 to 1978 pending judicial review. Date Filed Amount Hequested Effectis e Date Amount Granted May 14.1971 545 milhon Inverted Rate December 1.1471 526 million J une 15.1472 546 million January 1.1473 One of the most controversial 517.4 milhon Mar 31.1473* S11.1 million August 13.1973 aspects of the 1977 retail rate deci- '

514 milhon J une 15.1973 586 million December 15.1973 sion was a Commission-imposed 568 million**

Nos ember 12.1974* 555 million February 6.1975 inverted rate schedule. Under the 535 milhon December 17.1974 5305 million May 24.1475 schedule. customers paid a higher 5116 million" March 18.1477 5147 6 mdhon September li 1977 rate for all electricity used above 597 6 million November 20.1978 5225 6 million 650 kwh a month. Although an in-s erted structure had been used bv **# "O "Pe"ndnCnt the Company during summer billing periods since 1971, the inverted rate \Vholesale Rate Case Activity 1970 to 1978 had never been applied to winter bilh.ng periods, thus affecting elec- Date Filed Amount Requested .

Effective Date Settlement Amount tric heating customers. \VR-6 May 20.1970 511.2 million January 1.1971 514 million The new rate came under attack \VR-7 April 30.1973 517 5 milhon December 12.1973 510.8 miHion Irom Georgia customers during the \VR-8 Oct. 31.1974 542.9 million 5312 million w inter of 1977-1978. As a result, the PR-1 June W 1975 Settled in conjunction with \VR-8 Commission voted to hold public WR 9 March 1.1476 525.9 nulho, May 1.1476 515 milhon hearings and reconsider the rate. PR-2 Merch 31.1976 514.2 million August 1.1976 57 4 million Following statewide hearings, PR 3/FR-1 the Commission in December "un- Dec. 30.1977 528 2 million J uly 1.1978 516.4 millica*

inverted" the inverted rate. Replac. P R-4 / FR-2 ing it was a rate schedule similar Dec.1.1978 58.4 million** FERC Suspended Ef fective date to to one Georgia Power had requested l"I F 31979

• Pending serrtement **

in the 1977 rate filing The new strt.c- see note 2 ture, which went into effect January 5.1979. raised the base charge to each residential customer from 52 75 to $3.50 a month.The Com-mission did not alter the 2.9 cents q

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Personnelin control center work around the clock nwnitoring Georgia Power's- Revenues and Energ*v electricalload.

Sales During 1978 total operating revenues climbed 13.4 percent to almost 51.5 billion. Despite a modest increase in kilowatt-hour usage of only 0.7 percent, customers still used a record 44.1 billion kilowatt-hours.The over-all average price per kilowatt-hour increased 12.6 percent from 2.94 cents to 3.31 cents.

The incr0ase in res enues was

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the year liigher fuel costs recos cred through the base and fuel adjust-8

ment rates and additional ku h sales As erage annual ku h use per mark of 9.631 mw. or an increase also contributed to the rise oser residential customer remained abos e of 5 percent.This peak represents 1477.These factors pushed retail rev- 10.000 kwh for the second consecu- the combined demand of the Com-enues to 51.2 billion and wholesale tis e 3 car. making 1978 only the third pany and OPC. M EAG and the Ci'y res enues to 5213.3 million for 1978. year in the Company's history where of Dalton.

Res enues f rom our residential residential usage exceeded that Projections f or future electrical customers rose to 5417.7 million, a level For 1978 the as erage use rose demand hinge upon many variables in.4 percent gain over the 5358 9 slightly -0.6 percent - to 10.714 ku h such as changes in business and million collected in 1477. A reclassi- compared with 10.654 kwh in 1977 economic conditions. Currently the heation of some industrial and com. The as erage price per kwh territorial growth rate in peah mercial customers during the 3 ear mosed upward 12.5 percent from demand usage is projected to be makes a separate growth compari. 3.43 cents per kwh in 1477 to 3.86 4.6 percent. Conservation elforts by son of these classes misleading. but cents in 1978.The increase is due customers, load mar.agement and combined revenues u ere 5814.5 mainly to higher rates being in ef fect a downturn in the economy, as well million or an increase of 14.7 percent for a full y ear and centinually as higher electricity prices, contrib-os er 1977. Wholesale customer res c. escalating fuel costs However, the uted to a louer growth rate.

nues increased to 5213 3 million. Compan3's price is still within the Company forecasting person-up 4.6 percent from last 3 car. lower 20 percent of the nation's nel u ork continuously with outside Although wholesale resenues larger cities.

consultarits in the fields of econom-were up as a result ol higher rates. A new peak demand of 10.113 ics, finance and engineering to keep ku h sales were down because OPC. megawatts ( raw) was reached on the forecast as current and timely MEAG and the City of Dahon re. . lune 28.1978 surpassing the 1977 as possible.

quired less energy due to t heir own generatmg capability. A 10 percent mcrease in street lightmg revenues pushed the 1978 total to 59 4 million GMt f/ i#

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declining 3 4 percent to 514 6 million. %7 Ch/7i cl hT h ". V -

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cent to 10.8 billion kwh. or nearlv

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/ g'$ t j 'g 4 3no million kwh over 1977 figures. - '

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up 4.2 percent, pushing the total to . ,-F m

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24.5 billion ku h, the most ever sold -w C: -

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7 o 8 8 bilhon kwh.This decline in g

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'nergy sales to M EAG arid OPC was xcaust they provided more of their W/4D.f [InFM $ !k $P f M% @ ly [p ik!M. adba % %g % [ "

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Operating expenses rose to $1.2 y 4gs .. ..~;t. e , e < 3.'.-d . .g,,lr. g c:%.. j.s.g.s. A j, .. t

? : . W -t. J? .d . ~ .'..s- . billion in 1978, up 11.9 percent from

,, .. m .. . ..

.t. . .W* ..

51.1 billion in 1977.Tu o major fac-W'# ' , 'g( d8 t .

. , , % 4 .c 'm, '/,. , ' '

• b> tors contributed to this increase.

%~~ i-- - i'.,-.,. y s M m J O Y I N .i h l. T .'* % f,$ 8 6

~ ,. One

, was the transition of Plant urp~

s Wansley Unit 2 from the construc-y

n. g

4. sL . ' ,D

' . _ ' p p Oq/r17-

., a m # e . .

g 3.g.[iRF ' tion stage to commercial operation, Inflation was the other major factor.

y..@m , f d. 8[- *.i d[@N p M 47c4dghpf,g4

~ ' ~

41 gJ:

Particularly vulnerable were fuel and coal transportation costs, areas Q 4"A,s.,y6y M.e . mg W.p;e.

2 i R;: ;Nlf m i W, u, g .<>x Q Q .4i. C .'J .,., .;' : ?! y/,,0 r-

'. . 'r. . G,, P

• i h

.s ~ ..

. , . in which the Company took several e?f/p j D d d M ,? W ? measures to minimize increases Nf " '

without jeopardizing sersice.

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=

C rgia Power's fuel costs in.

creased 4 percent. reaching 5552

--.~p'h million. compared with 5531 million K

_ .jy -

the precious year.

• y'), 3

~' Coal, which was the fuel source u

'3 h[f M'g.

3 D for 87.4 percent of the Company's r .-

[ '

generation, comprised the majority E

x 4 of this expense. or 5492.5 million.

t b, . , , < 4,-4t. Generating plants consumed 15.8 a/4h f*,,

[. million tons in 1478.The average g.j g-yr.: [% price per ton increased 12.2 percent.

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[ $l% "d rEEE:liun

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M .M . : *k "..;.- D' W going from S27.74 per ton to 531 11.

A portion of Ihe increased price p'-

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per tor of coal represented the elfeet y

y ,f &_ M ,,- L$l

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of the wage hike granted in March

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to the United Mine Workers of z.ma%,,g C.

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+ ;

America. ending a four-month strike Ny i f a2 I j that had resulted in power curtail-Coalis the Company's primarv ments and industrial shutdowns in fuel source, accounting for 87[4 c other parts of the L. .nited States.

pe cent of the Company's generation in 1978.

%[9{6p49{Y>fftT7'Q.f.,ye

j. F **J p a Georgians were spared this discom-

['- f,' -

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,6 *.3,T: ],',- 4 d g a Company had obtained sufficient D 1- fort and disruption because the

,~

, ;q '

M D '. , amounts of coalin expectation of r*'"

• 7 . I A a lengthy strike.

4 ' $. j k~

M Also, the Company's trans-p 3 /g g b f% loader at Pride. Ala.. which had V been closed early in December when

[ ,.

i

. .( angry miners threatened violence.

,".. l ) was able to reopen several weeks O v M) E yf Operators lower fuel rods into , W_.%'W -

jT before the strike ended. Dozens of nuclear casity of IIatch Unit 2 ( semity personnel protected the V%.pi bringing the unit one st ep cioser to comrnercia! operation.

pc m I, J

,A workers and the facility so that coal from the transloader could be sup-10 q(. c)qL ) 3 ~'/

plied to generating plants.

began hearings during which the Following the end of the strike. cost of $12.7 million. including per-Company challenged the mercase.

however. Georgia Powe: had to buy centages owned by OPC, A1EAG and coal on the expensive spot market in December the ICC put a 13 Dalton A comparable amount of to replenish stoci. piles for the tra- percent railroad rate increase into effect on coal shipments in the generation at the Company's modern ditionally heavy summertime Bowen f acility would have required demand fer electricity. southern United States, an action that was expected to increase the approximately 549 million in coal.

Georgia Power's decision to annual cost of shipping coal by renuin reliant predominantly on Operation and Alaintenance approxinately 50 million. Based on large coal-fired and nuclear gen- After f uel, the second greatest erating units pros ed to be sound the belief that the rail roads nad not share of Georgia Power's operating justified a higher increase in the One of the 865.000 kw coal-fired South than in other parts of the costs consisted of operation and units at Plant Wansley. for example, country. Georgia Power filed an maintenance expenses, amoun ting required 25 percent iewer British to 5240 million in 1978. A major appeal to reduce the amount re-Thermal l' nits to produce one portion of this 7 percent increase quested. The ICC had not acted on Lw h (net generation) of electricity the appeal by mid-January ithe over 1977's $271.1 million was at-than the lom coal units totaling Company filed a petition for review tributed to the addition of Plant 160.000 kw at the smaller and older with the Fifth Circuit Court of Ap- Wansley Unit 2 to commercial opera-Plam Arku right. tion in April.

peals. It requested the portion of In 1478 the Company spent the increase exceeding 7 percent be A large portion of the mainte-

$1041 million to transport coal set aside. nance expenditures of approximately between mines md generating 5121.3 million helped improve gen-

'I he 810,000-kw nuc! ear unit at plants. To hold dow n t hese costs erating plant availability. a key Plant Hatch, near Baxley. un mued in the f uture. Georgia Power leased f actor in striving to attain a fasor-to produce some of the low est-cost 150 additional coal car:. By the able return for investors. At fossil power. a; approximately 3 mills per end of the 3 ear. Suof the cars had kw h for ft el. About 4 percent or steam units in 1478, availability been delivered. with the remainder 4.277.370 megawatt hours. of total scheduled toarrise during the first electricit3 supplied during 1978 was 1978 sources of Generation half of 1970. All would be inter- generated from the unit at a f uel mmgled w ith the 875 coal cars the Company had leased in pres ions 3 cars. In a comparison of owning the cars rather than leasiag. it was l 1978 Fuel Cost for Generation concluded that with the need under m y,y, g gj ,

ou nership to maintam. pay taxes  ! '

on and manage a coal car ilect. the I l 15-y ear les eraged lea ,e agreen.en t TioT' would result in co,t savings. r In October the Interstate Com-i

' I

/

merce Commission (ICC) granted ,

the Louistdle & hashville(L&N)  :

Railroad a 22 percent increase. ,

which the Compeny estimated l

- 19.9r  :

would adJ 522 million annually '

to coal-hauling costs. The Company  !

filed a legal protest against the 0 45~ l increase, citing that L&N's rate- - >

. linfro 3 7%

i making formula did not reflect, for '  ;

xample, the proven cronomics of '

q  ! , I

• N"'I'"' 5 l'

.scorgia Power's unit trains.

I" y n7 h I

• Oil 19%

In late January 1979 the ICC

• Gas 0 0%

Coal Gas 1

Oil Nuclear Ascrage

• Coal 87 4%

qM Dj d }

Il

[., / m t,

rose to 76.3 percent. a 6 percent was federal income tax; S14M million increase over the 72.1 percent avail- underna3 by the end of the 3 car.

ability in 1977. At the Plant Hatch was state income tax. Other taxes. To date. 5322 million, of u hich S170 including gross receipts and prop- milhon came Irom Georgia Pow er.

Unit I nuclear facility. availahility crty taxes totaled 565 4 million.

reached 71.2 percent. a 9 percent has been invested in the plant.

The continued use of deferred Georgia Power owns 50.7 percent, increase over 65.2 percent in 1977. :ases proved beneficial for both the OPC owns 30 percent. M EAG owns Purchased Power Company and customers. By apply- 17.7 percent and the City of Dahon Expenses for purchased power ng funds obtained through deferred owns 1.6 percent.

increased from $11.5 million in 1977 taxes to its construction costs. Employment at the plant Georgia Power was able to use to $79.5 million in 1978. increased to 1.200 workers during interest-free money that reduced its Reasons for the increase were: the vear and is expected to reach fewer sales to the system borrowing requirements and mini-4.000 workers et the peak construc-power pool. miz d the cost of money. which is tion period in 1981. Plant Vogtie, mcreased purchases from reDected in electric bills. As implied the largest construction project to MEAG and OPC portions of by their name. deferred taxes even-tually must be paid. be undertaken in the Southern Wansley Unit 2. ~

electric system, will have two lm estment tax credits also pro- 1.160.000-kw units.

Wages vided iunds that were used to re- Because of alterations in the duce operating cost s. with the result s Wages paid to employees rose Company's load grou th projections.

'from YP8 million in 1977 to $202.5 of lower electric bills for customers. commercial operation for Unit 2 As one of the state's largest million in 1978.The number of has been rescheduled for 1087. Unit Georgia Power employees rose from taxpayers. Georgia Pov er provided I is currently scheduled to co into local governments with funds that commercial operation in 1%4 11.485 in 1977 to 12.067 in 1978.

The greatest number of hirings oc- helped improve the quality of life Construction activity at Plant curred in the power generation de- for residents through better schools. Scherer, a coal fired facility near partment, reflecting primarily the roads and services.This money was Forsyth, jointly ou ned with MEAG addition'alemployees needed to stalf derived primarily from payment of and the City of Dalton. increased Plant Wansley Unit 2. the Company's property taxes and compared to 1977 actisity. Target in the fall of 1978 Georgia from percentages of gross receipts dates for commercial operation on sales of electricity within the Power and Local 84 of the Interna- ~

were revised to 1984 Unit 2: 1985-tional Brotherhood of Electrica' more than 400 cities. towns and Unit 3 and 1987-Unit 4. Unit 1 is Workers settled for an 8 percent communities with which Georgia currently scheduled for completion Power has franchise agreements.

wage increase, retroactive to J uly. in 1982. OPC is negotiating to pur-for the 5.500 employees covered by chase an interest in these f acilities the union. durine 1979.

Following the imposition of COnStruClion 5t the end of 1978 S206 million President Carter's voluntary federal had been spent on the plant. which In 1978 Georgia Power invested wage guidelines in October, em- has an estimated total cost of S18 playee relations officials from all 5501 million for the continuation billion. Of the S200 million. 5:75 of power plant construction and for Southern Company subsidiaries, million came from Georgia Power.

including Georgia Power. tormulate d building and upgrading of trans- Construction was 17 percent com-mission and distribution liries, sub-a plan to keep upcoming wage plete at the close of the year ,

increases for all groups of employ- stations and other service facilities. Earthwork and grouting for ces within the guidelines. The Company had six major gen-Wallace Dam, a six-unit hydroelec-erating projects in x arious stager ~

tric project near Eatonton. has been of construction-Vogtle, Scherer, Taxes completed. In January 1979 the Hatch, Wansley, Wallace Dam and The Company's ta x expense was Rocky Mountain. Company started filling Lake S192.3 million in 1978. compared Oconee, the dam's 19.050-acre Heavy construction activities h with 5177.5 million in 1977. a4 Plant Vojtle.a 52.7 billion nuclear reservoir The first units are sched-Of this amount. SI12 million uled to start operation during the facility near Waynesboro, were well latter part of 1979, and the entire 12 q&t

(_ / L (j } }

Plant Vogtle, near Mynesboro, is the largest construction project in the Southern electric system.

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2.M5Q 321.300-kw facility is expected to Unit 2. were completed in 1478. near Carrollton, went into commer-be completed in 1980. Because of licensing delays. cial operation in April.

Construction of the Rocky ir itial Iueling of the 820.000-kw in May the Company announced Mountain Project. a 675.000-kw nuclear unit at flatch did not occur plans for a 24-story general of fice hydroelectric pumped storage facil- until June. During the start-up test building to be constructed in ity near Rome. was resumed in program. the unit was shut down in Atlanta's Bedford-Pme Urban Rede-October. Ccmmitments for major December to modify the steam dryer ve;opment Area The 566.7 million equipment have been made and in an effort to avoid problems that project. scheduled for completion access roads and project offices are have occurred in similarly designed in 1980, is designed so thr.t its energy under construction. Work on the d ryers. consumption should be half that principal structure is scheduled for Although the second unit of of a typical Atlanta office complex carly 1980 and the project is to be Plant Hatch achieved 100 percent of comparable size. Consohdating completed in 1983. power during testing. the outage and the general office under one roof Two maju generating units, delays encountered in the start-up will reduce duplication of equip-Plant Hatch Unit 2-scheduled for schedule, caused commercial opera- ment and employee functions and is commercial operation the first tien to be rescheduled to early 1979 expected to save millions of dollars quarter of 1979-and Plant Wansley The 865.000-kw Plant Wansley uni over the next 20 years.

7G1 (i :D 13 L/ L-

Financing Georgia Pow er also redeemH S3 9 million in h;gh coupon. lirst During 1978 Georgia Power engaged mortgage bonds through its smking in an aggressive financing program fund and retired S101 million of to support the year's construction 3-3/8 percent bonds u hich maiured effort and to help meet future needs. in 1)ecember.

The Company's preferred stock was To assist in dealing u ith the upgraded to tha by Moody's In- mounting costs of gos ernment-vestor Service, t.ignaling a recogni- required pollution control des ices.

tion by the financial community the Company Imanced 590 6 million that Georgia You er was improving for this equipment tbrough tas-its financial posture. esempt revenue bonds Of the funds raised f rom ester- In April the development nal sources. The Southern Company contributed to Georgia Power $70 aut horities of Ilartow ( Plant Hou en ).

Bibb ( Plant Arkwright ) and I lo.s d rnillion in common equity.

( Plani llammond) counties issued The Company offered tu o first

$21.6 million in tas-esempt resenue mortgage bond issues totaling 5200 bonds.The coupon ra:e w as 6-3 8 million.The first $100 million issue percent and the cost to the Compan.s was offered in April with a coupon was 6 55 percent.

rate of 4-5/8 percent and a cost to in December the des clopment the Company of 9.82 percent.The authorities of Hartow and Putnam second $100 million issue. in

( Plants Howen and Branch) counties October. had a coupon rate of 4-3/4 issued simiLr bonds totaling 575 percent and a cost to the Company mi!! ion.These had a coupon rate of of 9.90 percent.

710 percent with a cost to the Com.

1978 Bond Sales and Retirement Cos erage Ratios Excluding rer enue suhl< ct to refimd First Mortgage Bonds Issue Amount Cost to Company October 1. 2008, 9.75?h $100 million 9.40">

May 1. 2008. 4 625"6 5100 million 9. 8 2 ";, 2.53 2.31

34 Pollution Control Obligations 2.31 issue ~ Amount Cost to Company December 1.2008, 7.10 % $75 million 7. 21"L April 1. 200S. 6.375% $216 million 6.55'i t

I 69 Bond Retirements TST ~1T I9 Sinking Fund: 53 9 million L34 Matured: 510. I million 3 38%

s 1974 1975 1976 1977 1978 D Indenture Requirements 2 0 times E Charter Requirements 15 times Maintaining coverage requirements are necessary to sell new securities.

") G 1 r r-3 14 I

pany of 7.21 percent. demand load, concentrated ef forts keynote speaker.

During the year the Company in both of these areas were under- Georgia Power is coordinating generated iunds internally in the taken in 1478 the project, a collectis e ef fort by the amount of 5200 million resulting As a result, participants at Company. General E!cetric. Westing-primarily from depreciation, im est- Company-sponsored w orkshops house. Sandia 1 aboratories. Ow ens-ment tax credits and deferred taxes and seminars on of f-peak rider rates Corning Fiberglas. Georgm Tech These f unds were used to help for industrial customers were able and Heery and Heery. Inc.

finance the 1978 construction pro- to reduce load by 140.000 kw in Adjacent to the Bleyle Knitucar gram and, therch >re. reduced ev 1978. In addition. many have in- manufacturing plant. the f acility w ill ternal linancing that uould have stalled load control equipment to supply electricity heating. cooling.

been required. mercase cont rol m er t he amount of water heating and process steam for in 1976 the Company sold electricity they use and. conse- the plant's operatior.s.

another 5 I percent of Plants Wans- quentl3. their electric bills. The Company's new corporate ley and Scherer to MEAG for a total Com mercial customers. such headquarters will utili/e solar col-of 538 million. M EAG had presious!y as school systems. are oflered special lectors combined with cflicient and purchased a 10 percent share of both seminars and programs to address innovative building design to allow pla n t s. their unique needs and situations. it to operate on abcut half of the Favorable financing terms we e Residential customers are bene- energy required for a similar-sized, secured in the form of a leveraged liting f rom the Good Cents Home conventional of fice building.

lease for 150 new coal cars in 1475 program u hich enjo3 ed its hnest Another application u ill be These cars u ill help moderate t he year in 1978 in terms of qualified incorporated at the South Fulton cost of transportation betw een coal homes constructed. Since residential operating headquarters where ap-mmes and generating plants. customers will account for an esti- proximately 15 percent of the total Also.af ter many 3 cars of financ- mated 4n percent of tne retail peak mg its automobilet trucks and encrp3 requiiements will be met by in 1974 the value of these energy- a photm ohaic solar energy s3 stem.

heavy equipment through a lease etlicient homes becomes es en more 'I his system com erts sunlight into arrangement. cost increases in the vital and apparent. Built to meet 10 direct current u hich can be trans-lease arrangements made ow ner' hip specihc smndards of energ3 cili- formed to ahernating current for an attracute and a less costly alter- ciency, many Good Cents Homes use in the buildmg s com entional natn e in 1978 'I hus. the Compar3 across the state have been certified elect rical sy stem.

repurchased its ennre s chicle fleet by the Comnany with many others b3s ear-end- under const action.

A two-> car test in Reynolds of of f-peak or time of day rates. re-Load Manageriierit suited in an average saving of 7 percent on electric bills by partici-Georgia Power continued its leader- pants Subsequent surveys base ship role in load management, which shown approximately 80 percent of benefits customers and the Com- our customers participating ex-pany by stabilizing bills and low er- pressed support of off-peak resi-ing demand. Research continued dential rates.

in solar energy, time of day rates and Georgia Power continued its load control equipment. commitment to solar research with Assistance to all classes of maior projects at Shenandoah and customers. enabling them to make new Company facilines. '"'

educated decisions on consers ing Groundbreaking for the world's '-?"~

or r educing their electrical load, largest commercial solar energy mmed to an all time high in 1478. pmject at Shenandoah was held in Since industrial and c >mmer- oly. U.S. Rep Mike McCormack cial customers account for more ( D-Washl. chairman of the House than half of the system's peak subcommittee on energy. was the 15

Effeetive Mariagenien1 wer e retained io do comprehensis e gether, these companics comprise anal3ses of Georgia Power. Ikith the Southern electric system, one of Top management placed major em. reviews continued into 1970 phasis in 1978 on planning for the the major insestor-owned utility Several management changes groups in the United States.

future and improving and redesign. were made during the y ear L'pon ing present Company procedures. The Sout her n Companfs com-the retnement of lidwin i Ilatch, mon stock is now the 10th most Looking tou ard the future, Georgia chief executh e of ficer and chairman uidely held comnr tock in ihe

?ow er implemented a formal, long. of the board President Robert W l'S andet range Corporate Plan, providing aes to be the most Senerer assumed t he additional widely held cicetric utiht3 eck m dir ection for actions the Company duties of chief executis e of hccr. the country. In number of sicues ol will take in ses en major areas- The Board of Directors named connnon stock outstandinp. I he em rgy management, electric sys. tu o vice presidents during the 3 ear. Southern Company ranks first in tern, finance, revenue, corporate Romne3 Scott, f ormerl3 assistant the electric utihty mdustry and communications, physical support comptroller, was elected s ice presi- 12th among all maior U.S cot-rnd human resources, dent-financial services. Richard pora t ion s The corporate pinaning ellort. Conw a3. tormerly project general x hich began in mid-1977. became an More than 340.000 stock-manager f or Plant Scherer. was holdcs, located in all 50 states and nucnal part of t' ae broad-based elected vice president generating 54 tot eign countries. ow n moie Managemem imprm ement Program plant projects.

in 1978 Under this program. in addi- than 142 million shares of 'l he to to plannin Southern Company common stock.

number of the(g for the future. a ompany's procedures The SOutliern

.I he " " ' "' 't.ompany Somhern h ' * "isi to" prm r ' "i e" '

w ere examined and streamlined. Connection equity capita: unoney supphed by I or example, a neu responsi-stockholders) to the s3 stem operat-bihty reporung sy stem was designed The Southern Company-defined- ing companies This is achtes ed durmg the y ear and implemented is an electric utility holding com. tbrough the sale of cournon stock.

in early 1u74 The ss stem prm ides pany. It " holds" the stock of Alabama management at each les el a better The Southern electric ss stem Power, Georgia Power, Gulf Power can be traced back to the mid lo20s.

tool f or controlling cost in his and Alississippi Power Companies u hen the four operating compames ow n area and the system service organization, became an interconnected s3 stem

'lu o outside consulting tirms Southern Company Services.To- under a holding company know n as Southeastern Power and I.ight.

Then. in 1930. Southeastern merged

.Ihe Southern Electric System into a holding compan> know n as Commonw eah h and Sout hern Cor-1 Alabama Power Company poration it was made up of in e Georgia Power C,ompany- --

northern companies and sis southern '

3 Gulf Power Company F '[ mn nh => d da GWm {

4.ilississippi Power Company  ; nessee Electric Power Company) was sold to 'l VA in 1935 g

e Under terms of ihe Pubhe i tilit) llolding Compan3 Act of 1935. Com-f ' nionu calth and Southern u;is dis-

/ sok ed in the emly 1940s. Ilowes er.

, four of the southern companies were e

v declared to be an integrated s3 stem r -

v T '

and were allowed to remain under common ow nership. this time under a new holding compan3 ~l ne oc )L

)r 7-)

L- Southern Company-as n is know n todav-was f ounded in lua7.

16

_ ~

Financial Statements c

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Summary of Operations In thousands ofdollars 1978 1977 1975 197 Or, crating Revenues. S 1.475.024 5 1.301.237 5 1.170.046 5 1.079.175.

Operating Expensas Operation and mamtenance. 921.465 813.987 690.953 6!5.343 Ikpreciation and amortization. I18.208 109,944 100.347 80.677 Taxes other than income taxes. 65.364 58.939 53.630 46.54:

Federal and state income taxes. 126.953 118.514 94.645 1 m.007 Total Operating Expenses. 1.231.990 1.101.384 939.575 860.575 Operatug Income. 243.034 199.853 230.471 218.600; Other Income Allowance for funds used during construction

• Debt and equity. - -

49.871 56.837 Equity. 36.774 29.792 - -

Other income less income deductions. 15.736 37.60S 12.986 18.351 Income before interest charges. 295.544 267.253 293.328 293.78S Interest charges. 161,117 150.383 144.348 136.207 Allowance for debt funds used during constructioni (32.067) (25.296) - -

Net Income. 166,494 142.166 148.980 157.581 Preferred dividends. 30.480 30.480 27.862 18.451 Net Income After Dividends on Preferred Stock. S 136.014 5 111.686 5 121.118 5 139.130

• Effective .lanuary 1,1977. FERC specified a procedure and the equity portion be credited to other income.

for determination of the rate for computing the allow-ance for funds used during construction and directed Prior to 1977 the entire allowance was credited to other income.

that thepor: ion of the allowance allocable to borrowed ( ) Denotes decrease.

funds he reported as a reduction if interest charges Management Discussion of Summary of Operations Operating Heveaues and Sales Operating revenues The territorial peak demand for energy was a increased 13.4%over last year due primarily to higher record setting 10.113.000 kw or 5% greater than last I rates resulting from rate increase requests and through year's demand. The Con.pany is actively working with the recovery of increased futi costs. Total energy sales energy consultants in the community and through during the year remained relatisely constant, increas- statcavide media exposure to encourage conservation ing only 0.7%. The 0.7"'o increase in energy sales was during peak periods. The Company recently submitted comprised of a 4% increase in retail sales (1.363.310 a proposal to the Georgia Public Service Commission mwh) and a 11% decrease in sales to wholesale cus- to implement an optional time of day rate. The Com-tomers (1.037.018 mwh). This decrease in sales was pany also continues to encourage peak demand con-the result of participants requiring less energy because servation with an inverted rate structure during of their own increased generating capability. The com- summer months when demand is highest.

bination of increased revenues and constant sales worked to push the average revenue per kwh to 3.31C Operating Expenses Total operating expenses in-from 2.94C in 1977 However, based upon national creased 11.9% over last year. Production exposes, surveys the Company's price for its product remained reflecting ir,flationary impact and the commercial op-competitively priced among the surveyed utilities. eration of Wansley 2. accounted for 73% of the 18 r nc ;3 ,

/ .

Georgia (Hwcr Company 1974 1973 1972 1971 1970 l69 1908 5 787.919 5 603.116 5 511.361 5 429.414 5 379.529 5 334.242 5 294.978 515.497 338.966 287.370 246.993 203.285 16L 447 147.435 80.087 68.552 57,041 49.403 42.502 38.957 35.037 37.203 30.806 27.154 26.304 23 5'.0 20.935 18.263 8.213 33.:45 29.421 20.870 31.092 38.590 33.997 641.000 471.469 400.986 343.570 300.689 264.929 234.732 146.419 131.647 110.375 83.844 78.840 69.313 60.246 63.683 45.867 31.053 19,469 13.902 7.070 3.414 l.048 2.072 1.882 2.624 2.831 2.200 2.062 212.550 179.586 143.110 107.937 95.573 78.583 65.722 126.655 91.525 67.866 52.070 38.942 28.863 24.178 85.885 88.061 75.444 55.667 56.631 49.720 41.544 17.I90 17.I _90 12.299 10.95* 8.131 6.396 5.556

$ 68.695 5 70.E71 5 63.145 5 44.913 5 48.500 5 43.324 5 35.988 5130.606.000 increase in e rating expenses. With the chased power is primarily the result of two factors.

addition of over 26.000 new customers and the con- First. energy sales were less to the System power pool. i tinued expansion of service to present customers. op- When these lo ter sales are netted against purchases. .

eration and maintenance expenses that include such the result is an overall increase in purchased power activities as customer accounting. energy services. etc.. expense. Second v Company purchased energy from accounted for another 9% of the increase. The addition OPC and M EAG . .n their porti .n of the new Wansley i f of a new generating plant was the primary cause for Unit 2 facility. Other major factors contributing to in-the increase in depreciation expense and taxes other creased production costs were the start-up during the than income taxes. year of new base load gene ating units and the increased cost of coal. i Production Expenses The largest single factor con-tributing to increased productica expenses was pur- Depreciation and Amortization increases in depre-chased power. As part of the Southern system. Georgia ciation each year are due principally to increased Power participates in the exchange of energy among depreciable plant in-service. The composite straight- ,

sister operating companies based upon the lowest cost line depreciation rates were approximately 3 4% in generation available. The 568.004.000 increase in pur- 1974. 3.5% in 1975. 3.2% in 1976. 3.3% in 1977 and 9qq ,E L <% \  :')

}9

P _ -

3.6%in 1978. The Company has propcsed to the Geor- However, return on common equity peaked in October gia Public Service Comniission that the depreciation 1978 (12 months ending, end of period) at 12.2% and rate be changed to 3.75% to reflect the findings of a has since deteriorated to 11.6% by December 31.1978.

recent study of depreciable plant. To forestall this crosion in earnings the Company Iiled on November 20. 1978 with the Georgia Public Serv-Taxes other than Income Taxes Taxes other than in- ice Commission for 5225.6 million in additional come taxes increased 10.9% primarily as a result of revenues. A decision is expected in May 1979. In gross receipt taxes on increased revenues, property addition to the retail rate increase request, the Com-taxes on increased plant investment and increased pany filed on December 1,1978 an 58.4 million increase payroll taxes. Over the last 5 years these taxes have in revenues with FERC for wholesale / partial increased 76% with the result being that Georgia Power requirement customers.

is one of the largest taxpayers in the state.

Income Taxes The variations in income taxes from year toyear are primarily a result of changes in taxable income. Deferred taxes and investment tax credits nre used as a source of funds to produce cost benefits re-flected in our customers' electric bills. Under current regulatory practice, accumulated deferred taxes are deducted from rate base and investment tax credits are reflected over the life of the asset as a reduction in the cost to serve. Georgia regulation allows nor-malization of income taxes which permits the distri-bution of tax benefits to all customers over the useful life of the asset generating the tax deferral or credit.

Other Income Other income decreased 514,890.000, 22.1% over last year due primarily to fewer sales of property to participants. Allowance for equity funds used during construction increased 56.982,000 (23.4%).

reflecting the equity cost to finance the construction program needed to meet projected demand growth.

Trend of Taxes Interest Expense Increased interest costs during the 1" " "3 N ""

year resulted primarily from the Company's sale of two $100 million issues of first mortgage bonds at a cost to the Company of 9.82% and 9.9% respectively, and additional pollution control bond obligations from ,192.3 sales by Georgia development authorities of 575 mil- 177.3 , -

lion at a cost of 721% and $21.6 million at a cost of /

6.55% Also during the year, 53.8 million in high cou-pon rate bonds were retired through the annual sink- 15p5, ' - ' , '

ing fund requirement, and a 59.6 million issue at a i 148 2 118.5 126 9 cost of 3-3/8% was paid at maturity. Of course, the ,' 109 expense was also increased through reflecting a full i year of interest on prior year issues. e 94.6

/

- 63.4 Net Income After Dividends on Preferred Stock Net 43 4 / 3, income increased 524,328.000. 21.8 % over last year 37.2 " 46.5 53 6 reflecting a full 12-month impact of the retail rate in-crease granted in September 1977, and a settlen.ent 82 amount of revenues from our PR-3 wholesale case, 1974 1975 1976 1977 1978 billed s kject to refund, for much of the year. (The inco, . xes large percentage and dollar increase represents the Taxes her Than income comparison to last year's two-year low in earnings.) ---

Total Taxes 9 Oft '

() F7

( i.

20

l I

i i

1978 Electric Operation and Maintenance Expenses -

Megawatt-Hour Sales ,

in Afilhans of Afegawatt-Hours 3 c

1 44 44 1

41 ,

39 38 39 j 35 "34~

32 30 r 30 30 2

' 27 D >

24 ~E p

! ' 22_ /

{ P70~' /

j (

l I

, , . . y 4+9 "]f" 9,

,J5 6 67

' l ,

j 1 Customer Accounting 2.0%

f -

l -! l } " Transmission 1.1%

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 " Distribution 3.5%

o Administration & General 8.6%

C Tot 2! " Energy Senices 0.6%

D Retail Sales o Customer Service & Information 0.3%

B Wholesale Sales " Production 83.9%

Total System Peak Demand Fuel and Purchased Power for Generation in Afdhons of Kilowatts in Attlhons of Dollars N 631

%~3T s43 P ss2 1 E ~~

I 5 31 I Tf45 N j

~

49 '

4212' . 446 436 376

- - - - -MO -

~

7609 b4a _ _,

29I f:

g 1974 1975 1976 1977 1978 e

O Total Fuel and Purchased Ibwer 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 D FuelCost Includes peak demand of OPC, MEAG and Dalton. 9OI

{. i L. fi' I) 1 21

l Electric Operating Statistics 1978 1977 197b 197T

~

Electric Customers end of period Residential. 1,025.914 997.864 974.048 945.635 Commercial. 125.324 128.297 133.410 129.931 Industrial. 12.096 10.860 2.786 3.244

. Other. 1.488 1.449 1.819 1.733 Total Electric Customers. _ l.164.822 1.138.470 1.112.063 1.033 645

~

3 Electric Sales thousands o/kwh

' Residential. 10.829.488 10.470.674 9.512.592 9.260.034 i

Commercial. 8.827.281 10.278.012 9,712.599 8.795.738 Industrial. 15.682.025 13.236.290 12.629.263 11.654.106 Municipal street lighting. 226.113 216.621 213.058 204.0@

Sales for resale. 8.580.211 9.617.229 9.262.454 4.0953s i Total Territorial Electric Sales. 44.145.118 43.818.826 41.329.966 39 009.515 Sales to utilities outside territory. ~~"

Total Electric Sales. 44.145.I18 43.81S.826 41.329.9n6 39 009 518 Electric Revenues thousands Residential. 5 417.696 5 358.933 5 315.226 5 301.541 Commercial. 369.508 385.889 355.405 317.874

, Industrial. 449.719 328.407 290.983 275.501

, Municipal street lighting. 9.856 8.957 8.542 8.012 j Sales for resale. 213.319 20 J 14 191.I10 166.777

Total Territorial Electric Sales. 1.460,398 1.286.100 1.161.266 1.069.600 i Revenues from sales to utilitics outside territory. - - - -

Total Revenues from Electric Sales. 1,460.398 1.286.100 1.161.266 1.069.800 Other electric revenues. 14.626 15.137 8.760 9.375 Total Electric Revenues. 5 1.475.024 5 1.301.237 5 1.170.046 5 1.079.175 i

Average Use per Residential Customer kwh.

Ascrage Res enue per Kwh residentialsales-c.

10 19 10.654 9.5 9.817 3.86 3 43 3 31 3 2e i Average Revenue per Kwh totalsaics-c. 3.31 2.94 2.81 2.74 i

Electric Energy Generated and Received thousands of kwh Generated-after station loss and use:

Fuel . 40.380.035 38,736.551 41.761.207 32.288.305 ilydro. 1.540.014 1.696.374 1.979.727 2.116.597 Purchased and interchange (Net ). 4.902.837 2.842.631 3.575.959 7.561.453 Total. 46.300.212 46.822.853 44.292.237 41.966.360 Cost of Energy Generated and Purchased thousands Generation - Fuel 5 551.971 5 531.384 5 435.551 5 359.54;

- Other. 131.847 125.840 96.474 57.193 l

liydro. 4.153 3.556 3.736 3.010 Purchased and interchange (Net ). 79.470 11.166 33.542 86.5s0 Other production expenses. 5.346 5.204 4.622 3.875 i Total Cost of Energy Generated and Purchased. $_ 772.787 677,450 5 573.925 510.207 5_ 5 IncomeTaxes Cl.arged to Electric Operations thousands Federal. 5 (12.310) 13,600 5 $ (19) 5 ,

! State. 5.946 7.035 5.211 4.513' Deferred -Federal. 85.146 78.554 53.258 60.241

-State. I1.322 10.446 7.0S2 8.958 Deferred in prior years (credit)-Federal. (17.971) (24.602) (8.527) (4.830)

- State. (2.329) (3.211) (1.007) (524)

Investment tax credits. 57.149 36.692 38.647 40.649 Total income Taxes. 5 118.514 94.645 100.007 5 __126.953_ 5 5 Allowance for Funds Used during Construction thousands. 5 68.841 5 55.088 5 49.871 5 56 837

') Cp @ F, g 22

Georgia Power Company 5 1974 1973 1972 1971 1970 1969 1968

~_

942.804 916.156 886.292 860,195 853.932 838.476 814.791 1l 130.438 130.792 127.785 123.804 119.749 116.547 113.353 3.282 3.25S 3.026 2.591 2.544 2.459 2.355 1.649 1.636 1.581 1.556 1.498 1.394 1.306 p 1.078.223 1.051.842 1.018 684 988.146 977.723 958.876 931.805 9.013.966 9.147.452 8.193.456 7.773.967 7.403.431 6.569.322 5.783,174

, 8.508.118 8.506.755 7.686.139 6.924.334 6.407.297 5.647.680 4.912.200 12.246.202 12.270.130 11.390.884 10.432.550 9.740.259 9.247.359 8.584.815 197.065 184.263 175.388 168.651 160.040 151.741 141.863 1 8.590.045 8.305.948 7.146.068 6.297.499 5.886.650 5.111.087 4.467.052 33.605.39b 38.414.548 34.591.935 31.597.001 29.597.677 26.727.189 23.889.104 157.013 211.246 548.773 105.484 88.570 38.605.396 38.414.548 34.748.948 31.808.247 30.146.450 26.832.673 23.977.674 5 223.417 5 185.171 5 155.614 5 134.534 5 121.896 5 108.168 5 94.757 233.342 187.624 158.709 132.932 117.969 104.589 91.420 194.462 143.129 121.132 102.470 88.226 80.202 72.596 6.688 6.327 5.689 5.002 4 670 4.400 3.991 122.316 74.527 61.938 47.764 37.960 32.938 28.720 780.725 596.778 503.082 422.702 370.721 330.297 291.484 2.977 1.813 4.375 862 740 780.725 596.778 506.059 424.515 375.096 331.159 292.224 7.194 6.338 5.302 4 849 4.433 3.083 2.754 5 787.919 5 603.116 5 511.361 5 429.414 5 379.529 5 334.242 5 294.978 9.677 10.142 9.395 9.140 8.732 7.940 7.208 2.48 2.02 1.90 1.73 1.65 1.65 1.64 2.02 1.55 1.46 1.33 1.24 1.23 1.22 31.998.279 29.733.077 28.303.645 24.5S6.893 22.360.236 20.436.115 17.628.179 1.875.116 2.205.114 1.785.048 1.807.115 1,336.695 1.669.588 1.672.845 7.812.592 9.580.615 7.641.043 8.045.268 8.930.434 7.149.193 6.838.640 41.685.987 41.518.806 37.729.786 34.489.276 32.627.365 29.254.896 26.139.664 5 292.238 5 157.767 5 132.879 5 I10.966 5 82.878 5 63.646 5 52.537 39.007 26.730 20.916 16.632 12.889 12.712 11.097 3.402 2.725 2.171 2.227 1.944 2.757 1.857 i 84.I28 73.794 66.741 58.361 53.728 40.415 37.681 3.236 975 559 488 406 2..d 262 T 5 422.011 5 261.9m 5 223.266 5 188.674 5 151.845 _

$ 119.849 5 103.434 5 (24.992) 5 (1,806) 5 1.826 5 (1.957) $ 18.158 5 24.234 5 20.748 (2.435) 844 1.208 785 2.630 3.387 2.555 35.321 25.680 19.I S4 14.327 8.909 7.852 7.I13 3.744 3.415 2.551 1.905 1.147 955 708

) (3.121) (2.969) (2.060) (1.587) (1.203) (1.063) (994)

)j (304) (252) (193) (149) (110) (91) (81) 8.233 6.905 7.546 1.561 3.316 3.948 8.213 5 33.145 5 29.421 5 20.870 5 31.092 5 38.590 5 33.997 5 63.683 5 45.867 5 31.053 5 19.469 5 13.902 5 7.070 $ 3.414 nr}

w u.

4 1'

, 23

Balance Sheets in thousanas acorgia power company J9ecenzber 31 1978 1977 Assets Utility Plant Plant in service, at original cost. 53,861,928 53,535,461 Less-Accumulated provision for depreciatiou. 890,394 778.114 2,971,534 2,757,347 Nuclear fuel, at amortized cost. 49,583 41,162 Construction work in progress (Note 3). 861,675 754,624 3,882,792 3.553,133 Other Property and Investments Southern Electric Generating Company (Note 4). 16,400 16,400 Nonutility property, at cost. 3,251 3,302 19,651 19,702 Current Assets Cash.

6,395 8,409 Temporary cash in vestmen ts, at cost. 241,902 218,136 Receivables, less accumulated provision for uncolicetible accounts of $1,220,000in 1978 and $1,283,000in 1977. 135,535 119,456 Fossil fuel stock, at average cost. 198,894 211,496 Materials and supplies, at average cost. 21,985 18,846 Prepayments. 2,173 1.568

_ 606,884 577,911 Deferred Charges Debt expense, being amortized. 6,574 5,983 Miscellaneous. 8,514 10,059 15,088 16.042 54,524.415 $4.166.788 Capitalization and Liabilities Capitalization (see accompanying statements)

Common stock equity. 51,173,036 51,086,247 Preferred stock. 382,844 382,844 long-term debt. 1,953,553 1,880,798 3,509,433 3,349,889 Current Liabilities long term debt due within one year. 133,977 21,232 Accounts payable.

125.025 117,421 Revenues to be refunded (Note 2). 6,999 Customer deposits. 13.433 24,464 21,672 Taxes accrued -

Fedcral and state income. I1,095 56,196 t Other. 26,338 22,900 Interest accrued. 49,685 ,

45,348 Miscellaneous. I1,441 l 10.702 Deferred Credits, etc. 389,024 308,904 Accumulated deferred income taxes. 438,885 370,604 Accumulated deferred investment tax credits. 181,962 130,844 Miscellaneous. 5,111 6,547 625,958 507,995 Commitments and Contingent Matters (Notes 2,3 and 4).

54,524,415 54.166.788 The accompanying notes are an integralpart of these statements. ,.

24

Statements of Capitalization inthousanas ceorgia power company December 31 1978  % of Total 1977 To of Total Common Stock Equity Common stock (without par value)-

authorized 15,000,000 shares, outstanding 7,761,500 shares. 5 344,250 1 344,250 Other paid-in capital. 627.800 557,800 Premium on preferred stock. 889 889 Ihrnings retained in the business q;

, ( 530.047,000 restricted against

] payment of cash common dividends). 200.097 183.308 Total common stocls equity. 1,173.036 33.4"o 1.086.247 32.4To Cumulative Pre' erred Stock, without par value, authorized 17,000.000 shares Class 5100 stated Value-54.60 to 56.60. I17,844 117,844

$7.72 to 57.80. 105,000 105.000 58.20 to 59.08. 35,000 35,000 525 stated Value-52.75 Class A. 75,000 75,000

$2.52 Class A. 50,000 50.000 Total preferred stock (annual dividend requiremen t - 530,4SO,000). 382.844 10.9"o 382.844 l l .4To Long-Term Debt First mortgage bonds-Maturity Interest Rates December 1,1978. .33 6. -

10,122 August 1,1979. I t ro. 127,400 128,700 April 1,1980. . 2 I 6. 15,000 15,000 1981. . 3 Ifo to 3 5 ro. 20,857 20,894 J uly 1,1982. . 3 3 ro. 20,000 20,000 1CS3. . 3 3 Fo to 3 ? 6. 9,258 9,309 1984-1988. . 31it"o to 3 LCo 68,869 68,908 1989-1993. . 4 3 fo to 4 7ro 75,000 75,000 1994-1998. . 4 5 6 to 6 5 6. 209,868 209,868 1999-2003. . 7 3 6 to 115 6. 874,757 875,757 2004-2008. . 8 5 fo to 113 Co. 497,500 299.000 Total first mortgage bonds. 1,918,509 1,732,558 Other long-term debt ( Note 6). 181,673 179.075 Unamortized debt premium (discount ), net. (12,652) (9.603)

Total long-term debt (annual interest requirement $174,566.000). 2,087,530 1,902.030 Less amount due within one year. 133,977 21.232 long-term debt, excluding amount due within one year. 1,953,553 55.7 % 1.880.798 56.2 %

Total capitalization. 53,509.433 100.0"a 53.349,889 100 0 %

The 52.75 Class A preferred stock is subject to a cumu- The annual first mortgage bond sinking fund re-lative sinking fund to retire. at stated value. 150.000 quirement (1% of the bonds authenticated prior to shares annually on or before November 1, commencing January 1,1979) due on or beforr June 1,1979, amounts in 1980. Also the Company's First Mortgage Ibnds to $23,312,880, which may be satisfied by use of bonds 1156 Series due August 1, 2000, is subject to a man- specifically authenticated for such purposes against datory sinking fund in the annual amount of 55,000,000 unfunded property additions equal tg 166hTo of such commencing August 1,1981. requirement. O O 'lL {'

L The accompanying notes are an integralpart of these statements 25

Statements of Income in thousands ceorgia rower company Years Ended December 31 1978 1977 Operating Revenues.

_S1.475,0_24

. 51.301.237 Operating Expens. .

Operation -

Fuel. 551,971 531.384 Purchased and interchanged power net. 79.470 11,466 Other. 168,761 151.680 Maintenance. 121,263 119.457 Depreciation and amortization. I18,205 100.944 Taxes other than income taxes. 65,364 58.939 Federal and state income taxes (Note 5). 126.953 118.514 Total operating expenses. 1,231,990 1.101.384 Operating Income. 243.034 199,853 Other Income Allowance for equity funds used during construction. 36,774 24.792 Gain on sale of facilities (Note 4). 4.421 52.817 Interest income. 18,336 16.463 Other. net.

2.473 1.846 Income taxes applicable to other income.

(9.494) (33.518)

Income before interest charges. 295.544 267.253 Interest Charges Interest on long-term debt. 158,460 146.633 Allowance for debt funds used during construction. (32.067) (25,296) i Other interest expense.

2.657 3.750

! Net interest charges. 12h,050 125.087 l Net income.

! 166.494 142,166 Dividends on Preferred Stock. 30.480

' 30.480 Net Income after Dividends on Preferred Stock. S 136.014 5 111.686 i

Statements of Earnings Retained in the Business /nthousands Years Ended December 31 1978 1977 Balance, beginning of period. S 183,308 5 181,022 Add (deduct):

Net income after dividend s on preferred stock. I36.014 111.686 Cash dividends paid on common stock.

~~ (l19.225) (109.400)

Balance, end of period (restricted as indicated on ^ ~~

statements of capitalization). S 200.097 _5 _183.30_S Statements of Other Paid-In Capital inthousands Years Ended December 31 1978 1977 Balance, beginning of period. S 557,800 5 512.800 Cash contribution to capital by parent company. 70.000 45.000 Balance, end of period.

S 627.800 5 557.800 The accompanying notes are an integralpart of these state ments.

}.} C)} O i!

Statements of Sources of Funds for Gross Property Additions inthousanas ccorgia power company Years Ended December 31 1978 1977 Sources of Funds for Gross Property Additions:

Net income. $166,494 5142,166 less-Dividends on common stock. I19,225 109,400 Dividends on preferred stock. 30.480 30,480 149,705 139,880 16,789 2,286 Principal noncash items-Depreciation and amortization. 132,925 116,341 Deferred income taxes, net. 77,909 68,955 Investment tax credits. 57,220 36,735 Allowance fordebt and equity funds used during construction . (68,841) (55,088) 216,002 169.229 Decrease (increase) in net current assets, excluding long-term debt due within one year-Cash and short-term investments. (21,752) (99,036)

Receivables. (16,079) 12.298 Fossil fuel stock. 12,602 (73,067)

Materials and supplies. (3,139) (2,099)

Revenues to be refunded. (6,434) (760)

Accounts payable. 7,604 18,382 Accrued taxes. (41.663) 51,142 Accrued interest. 4,337 987 Other, net. 2,926 4,370 (61.598) (87,783)

Other, net, including allowance for debt and equity funds used during construction. 55,269 30,206 Total funds from internal sources. 209,673 111,652 Sale of securities-First mortgage bonds. 200,000 -

Bonds retired. (14,049) (13,108) 185,951 (13,108) i Capital contribution by parent company. 70,000 45,000 Increase in other long term debt. 2,598 77,492 Sale of facilities, net book value. 32,497 313,117 Total funds from external sources. 291,046 422,501 Gross Property Additions. 5500,719 5534,153 1

t

[ll ;l The accompanying notes are an integralpart of these statements.

27

Notes to Financial Statements vecember31,197 sand 1977

1. Summary of Significant Accounting Policies:

General. The Company is a wholly owned subsidiary 58,480.000 in 1977 were charged to operating expenses of The Southecn Company which is the parent com- and the balance was charged to construction and other pany of four operating companies and a system service accounts. The pension fund assets are expected to company. The operating companies are engaged in the exceed the actuarially computed value of vested bene-business of providing electric utility service in four fits at December 31,1978. The unfunded prior service southeastern states. Operating contracts among the cost under the plan and supplemental contracts i

companies, covering interconnection arrangements, amounted to approximately $20,800,000 at December l 31, 1978, interchange of electric power and joint ownership of and is being amortized over a period of ap-l proximately 15 years.

i generating facilities,are subject to regulation by the Federal Energy Regulatory Commission (FERC) and/

or the Securities and Exchange Commission. The sys- Depreciation. Depreciation is provided on the original i

tem service company provides, at cost, technical and cost of depreciable utility plant in service, principally other specialized services to the parent company and on a straight-line basis over the estimated composite l to each of the subsidiary operating companies. service life of the property. Such provisions for de-The parent company is registered as a holding preciation approximated 3.6% and 3.3% of the average company under the Public Utility Holding Company cost of depreciable utility plant during 1978 and 1977, i

Act of 1935 and it and its subsidiaries are subject to respectively, and include a factor to provide for ex-the regulatory provisions of the Act. The Company is pected cost of decommissioning nuclear facilities. The also subject to regulation by the FERC and the Georgia Company's portion of the cost of decommissioning Public Service Commission (GPSC) and follows these thelevels and jointly owned facilities, based on current price accounting policies and practices prescribed by the decommissioning promptly after the unit is respective commissions. taken out of service, is estimated at approximately

$25,000,000 per unit at Plant Hatch. This estimate Utility Plant. Utility plant is stated at original cost. will be adjusted periodically to reflect changing price Such cost includes applicable administrative and gen- levels and technology. When property subject to de-eral costs. payroll-related costs such as pensions, taxes preciation is retired or o+herwise disposed of, its cost, and other fringe berefits and the estimated cost of together with its cost of removal less salvage, is func s used during construction. charged to the accumulated provision for depreciation.

Maintenance. The cost of maintenance, repairs, at d Revenues. Revenues are included in income as billed to customers on a cycle basis. replacement of minor items of property is charged to maintenance expense accounts. The cost of replace-ments of property (exclusive of minor items of prop-Fuel Costs. Fuel costs are expensed as the fuel is con- ertv)is charged to the utility plant accounts.

sumed The Company's electric rates include fuel and net purchased energy adjustment clauses under which Income Taxes. The Company has received regulatory fuel and net purchased energy costs.above or below appmvals to follow deferred income tax accounting

~

certain base levels.are billed or credited to customers n current basis. for substantially all of its income tax timing differences. The Chmpany is included in the consoli-The cost of nuclear fuel is amortized to fuel ex- dateu federal income tax return filed bv The South pense based on the quantity of heat produced for the Company. See Note 5 for further information regarding generation of electric energy. Such amortization was income taxes.

$6,358.000 in 1978 and $5,889,000 in 1977. Final dis-position of spent nuclear fuel may require future Allowance for Funds Used During Construction. The adjustments to fuel expense. Pending ultimate dis- allowance for funds used during construction repre-position, sufficient storage capacity for spent fuel is sents the estimated debt and equity cost of all capital available at Plant llatch through 1985. funds which are applicable to utility plant while under construction. The composite rate used by the Company Pension Costs. The Company has a trusteed and non. to capitalize the cost of such funds was 7.5 percent in 1978 and 1977 as directed by GPSC.

contributory pension plan which covers substantially all regular employees. The polic3 of the Company is The Company accounts for the income tax effect to fund each year's accrued pension costs which of capitalized debt cost as a charge to income tax ex-amounted to 512,958,000, in 1978 and $12,140.000 in pense associated with operations with a corresponding 1977. Oi these amounts, 58,856,000 in 1978 and credit to allowance for debt funds used during construction.

7 0," <1 28 n/L lli q

2. Rate Proceedings: At the beginning of 1979. the Company had Net income includes the effect of increased revenues, S445,000,000 of unused lines of credit. 5400,000,000 subject to possible refund, less taxes, of $5,156.000 of that amount in revolving credit for a period of three for the twelve months ended December,1978 resulting years under agreements with several non-territorial from revised wholesale rates placed into effect July banks and 545,000.000 in lines of credit subject to 1,1978. The Compan" has reached an agreement con- annual review from territorial banks.

cerning this rate proceeding with its wholesale To supply a portion of the fuel requirements of its customers. subject to final approval from the FERC. generating plants, the Company has entered into var-Under the settlement agreement. the Company would ious long-term commitments for the procurement of retain on an annual basis, approximately $16.9 million fossil and nuclear fuel. Contracts with vendors for of the 528.2 million originally requested. In recogni- coal supplies generally contain provisions for price tion of this settlement agreement, the Company has increases based on the suppliers' costs. To help ensure excluded through December 31,1978. 56,999,000 from adequate supplies, in certain cases the Company has cevenues for anticipated refund in 1979. agreed to pay for certain fixed levels of coal produc-On November 20. 1978, the Company filed new tion or has made other commitments. Such commit-retail rate schedules with the Georgia Public Service ments are customary and have been entered into in Commission to increase annual retail revenues $225.6 the normal course of business. Additional commit-million. The commission suspended the effectiveness meats for coal and for nuclear fuel will be required of the new rate until May 20. 1979. Hearings began in the future to supply the Company's fuel needs.

February 21,1979.

On December 1,1978, the Company filed with the 4. Facility Sales and Joint Ownership Agreements:

FERC new rates designed to increase annual whole- Through December 31, 1978, the Company has sold sale revenues by approximately SS.400.000 which undivided interests in Plant Hatch, Wansley. Vogtle together with the amount excluded from the agreement and Scherer in varying amounts, together with trans-mentioned above would amount to $19.9 million. The mission and substation facilities to Oglethorpe Power FERC suspended the effectiveness of the new rates Corporation (OPC), a cooperative of electric member-until July 1,1979. ship corporations in Georgia, the Municipal Electric Authority of Georgia (MEAG), a public corporation

3. Construction Program, Financing and and an instrumentality of the State of Georgia and to Fuel Commitments: the City of Dalton, Georgia (Dalton). As a result of The Company is engaged in a continuous construction these sales, net income was increased by 5375.000 in program and presently estimates cor.struction addi- 1978 and 58.989.000 in 1977. In addition to these sales, tions to be $665.100,000 for 1979 and additional the Company is negotiating to sell interest in Plant amounts of $777.000,000 for 1980 and SS35,800.000 Scherer to OPC (30%) and to affiliated companies, Gulf for 1981.These additions include capitalized allowance and Mississippi Power (26.75%). At December 31,1978.

for funds used during construction and exclude Georgia Power Company's percentage ownership and amounts applicable to portions of facilities sold or pro- investment in these joint owned facilities is as follows:

posed to be sold (see Note 4). The construction pro-gram is subject to periodic review and revision. and actual construction costs to be incurred may vary .ra from such estimates because of various factors such Mega, att Percent Piant in const ruction as revised load estimates the availability and cost of _

capacity ownership service wmk in Progress h" 'hous ado capital and the granting of timely and adequate rate relief by appropriate commissions. ' [^7,h 3 r Plant 1.630 50 1 % 520ml 5244.072 The Company's construction additions are A w vogde expected to be financed from the sales of first mort. s wicar Plant 2.320 50 7 -

i70.287

" 3s '

gage bonds and preferred stock to the public, fro,n the pOn"l UIn*1 ~

[27j g3 5 27: 5 sale of pollution control revenue bonds by public authorities, from notes payable from the receipt of common equity contributions from The Southern Com- The Company provides for its own construction pany and from internal sources. There w's no short- financing and includes its proportionate share of plant term debt outstanding at any month-end during 1978 operating expenses in the corresponding operating or 1977. Except for daily working funds and like items, expense in its statemsnts of income. The Company is substantially all cash of the Company reor-sents com- committed to comp!& those plants still under con-pensating balances which are not legally restricted. struction and acts as agent with respect to operating and ,;.

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and maintaining the plants. Deferred 11.675 ti.3ns In connection with these sales, the Company has De' erred m Pr'"r ) e rs (cred) (2477) ' i 22' )

entered into agreements whereby the Company is re- '6 " * ""_i quired to pachare declining fractions of OPC's and [ 'g c, , nc,,, , , ,,, ,n c ,ug,g ,, ,, ,,, , nc,m, Qj,7 , y,{

MEAG's capacity and energy of the respective gen- r,a,,,i ,nasi,,,i,com ,,,,,,

erating units during a period of up to eight years charged to operations 5126.953 511R ;14 following commercial operations, such purchases to be made whether or not any capacity or energy is available. The cost of such capacity and energy is a investment tax credits are deferred and are function of each entity's carrving and operating costs amortized over the average life of the property which and is included in purchased power in the statements gate rise to the credits. Such amortization is applied of income. as a credit to reduce depreciation in the statements of The Company and one of its affiliates. Alabama income and amounted to 54.610.000 in 1978 and Power, own equally all of the outstanding capital 53.362.000 in 1977.

stock of Southern Electric Generating Company The provision for deferred income taxes results (SEGCO) which owns an electric generating plant from the Company's deduction for accelerated methods with a total rated capacity of 1.019.6S0 kilowatts, of depreciation and other write-offs of property costs, together with associated transmission facilities. The as provided for by the income tax laws, being signif-capacity of the plant has been sold equally to the icantly greater than the book depreciation of such Company and Alabama Power under a contract expir- costs. Income taxes deferred in prior years are credited ing in 1944 which in substance, requires payments to income when the book depreciation of those prop-sufficient to provide for the operating expenses. taxes erty costs exceeds the related tax deducti s and debt service including a return on investment. The total provision for federal income tax as a whether or not SEGCO has any power and energy percent of income before federal income tax. amounted available. The Company's share of such amounts to- to 41.9% and 4S.3% for 1978 and 1977, respectisely.

taled 551.210.000 and 551.939.000 in 1978 and 1977 The difference between these rates and the federal respectively. and are included in purchased power in statutory rate of 48% was due primarily in 1977 to the statements of income. In addition. Alabama Power timing differences not provided for in prior years has guaranteed unconditionally the obligations of (4.8%). of fset by the exclusion of the allowance for SEGCO under an installment sale agreement relating equity funds used during construction from taxable to S17.400.000 principal amount of pollution control income (5.2%). In 1978 the only significant difference revenue bonds. The Company has agreed to reimburse is the exclusion of that allowance (6.2%).

Alabama Pouer for the pro rata portion of such obli-gation corresponding to the Company's then propor- 6. Other Long-Term Debt:

tionate ownership of stock of SEGCO if Alabama Details of other long-term delt are as follows:

Power is called upon to make such payment under its guaranty. 1978 1977 At December 31.1478.thecapitalization of SEGCO Obhganons incurred in connection with the Im thousands) consisted of 532.800.000 of equity and $52.499.000 of sale be pubhc authonnes of tax exempt long-term debt on which the annual interest require- P""t;" c73'

, g " >l * "d '"d " "a ' d e 'e '"P me "'

ment is 53.316,000. Through December 31. 1978.

5 95s due sosember i 2003 5 4i ooo s 4 tooo SEGCO has paid dividends equal to its net income. 9 oo e due september i. 2005 30 000 30 oixi 6 7 5'b due Nos ember 1. 2006 40 M 40E10

5. Income Taxes: 6 m du 3une i. 20 7 2t um 2( t oo 6 375% due Apni 1. 20% 21.hoo A detail of the federal and state income tax provisions 7 tosdue axember 1. 200s 75 000 -

is set forth as follows Un thousands): 232.500 i 35soo less funds on deposit with Trustee 78 13; o06 Total proWion for income tases " ' -

gg 1ransportanon equipment -

25ons h

Currently paphie $ (5.674) $ 35 424 20 eI 1U12 Deterred 87.793 6eo 85.466 Deferred in prior p ars icredit 1 (19 082) (24.678) 5181 673 $179 07s Insestment tax crec its 57.220 36 735 120 257 132.967 s,,,, The Company has authenticated and delivered to Currentiv pay able 5 6 992 5 10.918 the Trustee an aggregate of $232.500.000 of its first 30 - i <> 3 t t

mortgage bonds which are pledged as security for its pollution control equipment required under current obligations under pollution control and industrial environmental regulations. The replacement cost of development contracts. No interest on the first mort- hydro capacity, transmission, distribution and general gage bonds is payable unless and until a default occurs plant was determined by applying appropriate indices on the installment purchase agreements. No principal to the original cost for the various categories of prop-payments are due on the contracts prior to 1988. erty. Nuclear fuel is excluded from replacement cost Effective December 31,1977, the Company elected information because variations from base cost are to capitalize ccrtain leases as required in Financial reflected in revenue through the operation of the Accounting Standards Board Statement No.13. Ac- energy adjustment clause.

cordingly. the net book value of utility plant in service The related accumulated depreciation based o,.

has been increased by $27,158,000 at December 31, replacement cost was determined by applying the 1978 and the related obligation has been classified as historical book depreciation reserve ratio to gross other long term debt. The current portion of the capi- replacement cost for each functional class of plant.

talic .1 tease obligations for each year through 1983 is Replacement cost depreciation expense was de-as follows: 51,632,000 in 1979; St.802.000 in 1980; termined by applying the current composite rate for

$1.965,000 in 1981; S2,144.000 in 19S2; and 52,341,000 each functional classification of plant to the average in 1983. replacement cost of each functional class of plant.

The replacement of plant wil! take place over

7. Certain Replacement Cost Information (Unaudited): many years and it is not possible to predict the effects The following sets forth the estimated replacement that such replacement will have on future operations.

cost of the productive capacity of the Company as Under the current ratemaking process, the increased required by the Securities and Exchange Commission. capital investment actually incurred and changes in The replacement cost information does not purport to operating cost e~els will form the basis for regula-represent the current value or reproduction cost of rocv authorities ia determine f uture allowable revenues existing assets or the amounts which could be realized and rates of return.

if the assets were to be sold. In addition, the informa-tion should not be interpreted to indicate that future l

replacement would take place in the form and manner 8 Quarterly Finaraial Data (Unaudited):

assumed in developing these estimates. It must be Summarized quarterly financial infccmation for 1978 recognized that, by nature, this replacement cost in- and 19771s as follows (in thousands):

formation is imprecise and predicated upon certain assumptions and subjective judgements of manage- x,, income ment, some of which are described below. The replace- Operat mg Opera tng Af ter Dmdends ment cost information presemed below is for informa. Ou rter Ended Res en ues Income on Preferred simk tion purposes only and should not be used to adjust March 31.1977 s299.206 s31078 s23 Os0 June 30.1977 29%103 42.064 23.366 the historical fm.ancial statements. september 30.1977 3705 66 319 38 65*

Decem ber31.1977. 328.577 53.394 26.612 Hntorical Cost as Marcn 31.1978 364.145 56.331 30.739 Estimated Reported in t he June 30.1978 344.539 47.97o 21 845 R placement cost Fmancial statements Se pte mber 30.1978 439 464 82.244 54 221 December 31 1978 1977 1978 1977 Decem ber 31.1978 326.876 56.477 29.209 hn m.llwns) l'tihty Plant in Seruce. 511.170 $10.030 5 3. ' 6( a ) 5 3. 503( a )

less Accumulated de precia t ion. 2.630 2.280 F90 778 Net l'tihty Plant. $ 8340 5 7.750 12.916t a ) $2 725f a)

Depreciar ton espense $ 338 5 310 $

_ 131 5 114 U.) Excis % non-depreciable land and plant he:d for f uture use with a hnsorica; cost of $16 000.000 in 1978 and $33.000.000 in 1977.

The replacement cost of exis ing generating ca-pacity, other than hydro, was determ9d by applying engineeringestimates of the current cost per megawatt of each type of generation to the respective types of 94; >

' 'i [; '7 '

generating capacity based on the anticipated genera-tion mix. The estimated replacement cost provides for 31

i =~ - - -

Auditors' Report DIRECTORS To the Board of Directors of Georgia Power Company: WALTER G. AUTREY We have examined the balance sheets and statements IVesident -

of capitalization of Georgia Power Company (a Georgia llamilton Turpentine Co., Inc.

corporation and a wholly owned subsidiary of The (navalstores), Gldosta,1972 Southern Company) as of December 31,1978 and 1977, **N. N. BURNES. JR.

and the related statements of income, earnings re- rice Chairman tained in the business, other paid-in capital and Rome Afanufacturing Co.

sources of funds for gross property additions for the (textiles), Rome,1%5 years then ended. Our examinations were made in **GEO RGE S. CRAIT accordance with generally accepted auuiting standards gj,yy,g,7,y,, cg,pyyy g7g,g,gfy and, accordingly, included such tests of the account- (banking), Atlanta,1965 ing records and such other auditing procedures as we considered necessary in the circumstances. WILLIAM E. EliRENSPERGER in our opinion, the financial statements referred SC"i '.Vice President 6#" " C#"

to above present fairly the financial position of Georgia 3,7,'#'", hy3 Power Company as of December 31,1978 and 1977, .

and the results of its operations and the sources of WILLIAM A. FICKLING.JR.

Chairman of the Board ]

funds for gross property additions for the years then

~

Charter Afedical Corp.

ended, in conformity with generally accepted account-ing principles applied on a consistent basis. (medicalfacuitics), Afacon,1973 J. A. GANTT ~

Senior Vice President I Arthur Andersen & Co. Georgia Power Co.,

Atlanta, Georgia, Atlanta,1976 February 16,1979. L. G. IIARDMAN, JR.

Chairman and Treasurer b Harmony Grove Afills, Inc.

(textiles), Commerce,1957 (retired 7/5/78)

EDWIN 1. HATCH Chairman of the Board Georgia hwer Co., l A tlanta,1%2 (retired: 3/31/78) }.

RICil ARD L. KATTEL The Audit Committee of the Board of Ditectors Kartel Enterprises, Inc.

maintains on-going communications between the Board and the Company's independent auditors, in- N""'S'*'"'5l'A'l""'">1973 ternal auditors and memberc of financial management.

• llA ROLD C. McKENZIE, JR.

The Audit Committee is composed of three out. Executive Vice President side directors: George S. Craf t, chairman; N.N. Georgia hwer Co.,

Atlanta,1972 Burnes Jr., anc E. D. Smith. During 1978 the audit committee held three meetings which involved review-

• JAMES li. MILLER. JR.

ing the financial affairs of the Company, including Executive Vice President internal accounting procedures and controls; review. Georgia Ibwer Co ,

Atlanta,1975 irig the proposed scope of the annual year-end audit with the independent auditors;and assuring that the WILLIAM S. MORRIS III auditors were not restricted in performing their President examinations. Aforris Communications Corp.

(publishing), Augusta,1%7 _

• WILLIAM A. PARKER. JR.

\

9 L/yL :\ ' f ' }

Chairman of the Board Cherokee investment Co.

(realestate & investments),

Atlanta.1%5 32

-c -

~ . ~ ,

• H G. PATTILLO J. A. GANTl JOHN A. ROBERTS C. L RATTERREE

. Pattillo Construction Co., Inc. Senior tice dresident lice President Assistant Secretary (construction), Decatur,1972 Division Operations Energy Services Age: 3b

.g 9 .

• ROBERT W SCHERER ROMNEY E. SCOTT As sistant Secretary and Years of Service: 30 President and Chief Executive 1 ice President Assistant Treasurer Officer ALLEN lt WILS0N Financial Scr viccs Semor 1 ace Presidem E. RAY PERRY Georgia Power Co., (clected 5 '17/ 781 Atlanta' 1970 Finance Asshtant San tary ani,, t ROBERT B SYMONETTE Assistant Ircasmcr

" EDWARD D. SMITH s / Service: 43 #". Preside nt JON M. JETMORE Hansell. I'ost. Brandon & Dorsey Legislative Affairs. State (attorneys), Atlanta.1960 5 WARREN Y. JOBE J. W TAREL J R.

WILLIAM B TURNER '" #S' #"'"" *"T""N" 17cc President Division Officers President 1. S. MITCHELL 1II Arca Devclopment BEN I1. W1LLI AMS i W C. Bradley Co. nce President and Sccrclary  % Pn%!cnt t ggy;y y y993gg,3 g_

Iindustrialists). Columbus.1965 ^ ' I* " ' O" "

W L WESTBROON tice President ALVIN W VOGTLE. J R. 17cc President and Leasurcr CHARLES E WHITMER g 7,. y nf Tli o hern Co.. .- " 'e "I

\: ice Presidem Atlanta Division r Atlanta.1908 Engineerin~o 7

Gent rating Plant Projects B W RAINWATER S

' ALLEN lt WILSON (clccred 10'1S 781 3(\CK K. WIDENER.JR- 17cc President Senior \1ce President-Finance \ ice President 'gHMW y&"

, 979g97 g g9g_zg9g yg. pcguya,u,r ,7(a,,s

Georgia Power Co. ~

g 7y. Picsi&m ANDREW L SPEED t

Atlanta 1974 '#

Public Affairs \ ice President Assistantceb.bUMYNIN President Columbus Divnion HONORARY DIRECTORS R P. H EAD. J R (r etir ed 10 '3/ / TS 1 q JOE B BROWDER " "' #"'

hmployce Relations C/!ARLES R. il/NORS B S MOSS 7 A tlanta.1976 Assistant Vice President yice presi,ycnt Ldor R 'Imo d EDWIN 1. HATCH Information Scrvices Macon Division

' W D. DeBARDELEBEN. J R.

A tlanta.197S

, iclected d 'I ' 78) c_c.Josgs y;c, p,cgfgcu, Assistant Conipno!!cr related 9 2778)

Y UD'W Lia h aufent Nh n*"I a" alt a Rome Dn ision r GENERAL OFFICERS J. A. PAR RA'.10R E J R. . .

ROBERT W SCHERER RICHARD J. KELLY Assistant Compnoller

{;

President and Chief Executive l ice President IL M HUGHES %Idosta Division Officer Pinver Generan.on Assistam Secrewry  :

Age: 53 J.WYMAN LAMB "

Years of Service: 32 Vice Presidem t H AROLD C. McKENZIE. J R. Risk Md"aRement *Esecunte Cornmittee Board of Direc crs Exccurit e lice President r D L McCRARY "Auda Commhtee Ibard of Directors 1 A ge: 47 (resigned 10'18'78) General Oflices Years of Service: 21 ,

C. IL McMANUS. JR .70 Peachtree St reet JAMES H. MILLER. J R. 17cc President P.O. Ibs 4545 l

Executive lice President Electric 0;>crations N'I""G' '9 5"30302 A ge: 36 d<

Rars o/Scrvice: 32 WADE S. M ANNING F. r additional information.

L' ice Picsident contact 1. S. Mitchell.111 H G. BAKER, JR. 404-522-6060 Land y Senior Lice President Power Deliverv E G. MITCHELL JR. REGISTRAR A c:49 hcc President Trust Company Bank. Atlanta '

Generati ig Plant Construction All Preferred Stock - c)u '

Y rs of Service: 28 , 9e Q,

' ' ~

W E. EHRENSPERGER L L. PITTS TRANSFER AGENTS- I Senior tice President 17cc President Officc of the Company. Atlanta Power Supply Power Generation Engineering All Preferred Stock

~

Age:56 (retired 9'30/73) Trust Company Banx. Atlanta Years of Servicc: 36 Only 57.72. 5730. and ai! Class A Preferred

a F- $ %z- -

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