ML19322B930

Annual Financial Rept 1978

ML19322B930
Person / Time
Site:	Comanche Peak
Issue date:	12/31/1978
From:	TEXAS POWER & LIGHT CO.
To:
Shared Package
ML19322B927	List: ML19322B926 ML19322B928 ML19322B929 ML19322B930
References
NUDOCS 7912180425
Download: ML19322B930 (30)

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1978 Anhual Report MyeMrg"ft.v4?'~.w B~xas P'*o'<r.. r (,k t';4'ohttomoany

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1978 Report to Stockholders Texas Power & Light Company Subsidiary of Texas Utilities Company 1978 at a Glance Per Cent 1978 1977 Increase Operating Revenues $743,308,139 $645,203,708 15.2%

Operating Expenses $581,865,904 $506,570,719 14.9 Fuel Cost per Million 8TU's 107.8c 110.3c (2.3)

Construction Expenditures $305,095,208 $278,075,368 9.7 Electric Plant (End of Year) $2,376,984,975 $2,078,257,258 14.4 PlantInvestment per Customer $3,634 $3,339 8.8 Peak Demand (Kilowatts) 5,242,000 4,754,000 10.3 Electric Energy Sales (Megawatt-hours) 23,985,678 21,808,796 10.0 Number of Customers (End of Year) 654,097 622,408 5.1 Residential (Average):

Annual Kwh Usage per Customer 12,435 11,863 4.8 Cost to Customer per Kwh 3.87c 3.81c 1.6 Contents Management's Message to Stockholders .1 Fuels .

.2-3 Construction . 4 -5 Operating and Financing Costs .5-6 Financing System Expansion .,6 Rates and Regulation . .7-8 Service toCustomers and Area Growth .8-9 PublicAffairs . .9-10 Employees . .10 Research and Development . .10-11 The Revenue Dollar . 11 Comparative Growth and Statistics .

.12-13  !

Balance Sheet . 14-15 l Statements of income and Retained Earnings . .16 Statement of Source of Funds for Const, uction . .17 Notes to FinancialStatements . .18-19 Accountants *0 pinion . .

.19 System Map . . .20 Directors, Officers, Executive Committee, Facts About The Company . . Inside Back Cover '

The Cover The 3,700 men and women of Texas Power & Ught Company apply dedication and hundreds of special skills and talents to thejobs involved in producing and supplying electric power and in carrying out related support functions. Cn the cover and in I following pages of this report are photographs of some of the members of the TP&L Family. COVER (clockwise from top left): District Manager Boyd Williams, McKinney; Sr.

Uneman Pedro "Pete" Ortiz, Garland; Dispatcher Leonard R. Hooker, Dallas; PBX Operator Ruth Snellgrove, Dallas; Sr. Service Representative Jim Flangin, Farmers Branch; and Meter Reader George Miksovsky, Irving.

To the Stockholders of The Company's construction expenditures to-Texas Power & Light Company taled $305,000.000 in 1978 and are expected to be approximately $344,000.000 in 1979, approx-In highlight form on the preceding page and imately $302.000,000 in 1980 and approximately in detailed presentations throughout this report $336.000,000 in 1981.

you will see evidence of the Company's A rate increase of about 7 per cent was effec-successful operations and sound growth tivein midyear. Details of granting of the in-during 1978. crease by the Public Utility Commission of Texas The number of customers at year-end was 5 and its implementation will be found in the Rates per cent greater than at the end of 1977. Total and Regulation section of this report.

electric energy sales were 10 per cent higher Despite the effect of the rate increase on cus-than in 1977 and operating revenues were up tomers' cost of electric energy, increasing use of more than 15 per cent. The Company supplied a peak demand for power which was more than 10 lignite to produce the energy is having a signifi-cant leveling effect on customer cost. The aver-per cent greater than that of 1977. age cost per residential kilowatt-hour in 1978 The Company's accomplishments during 1978 was only1.6 per cent higher than in 1977.

take on added dimension when considered in Regulation of the Company's business by state relationship with the many problems which are and federal authorities is having an increasing being experienced by the electric utility industry. impact on the cost of constructing and operat-Major among these problems are: The effects of inflation on the cost of operations and construc- ing generating plants and on the cost of mining and utilizing lignite in producing electric energy.

tion expenditures, increased cost of generating This subject is discussed in some detail in the plant fuels, difficulty in secunng adequate rate increases, direct and indirect costs of com- Rates and Regulation section of this report. The pliance with environmental and other Company will continue to pursue its conviction that regulation should be based on a realistic regulations.

balance of costs and benefits to the users of Even though total cost for all types of generat- electric energy.

ing plant fuels used during 1978 increased 10 per With deep regret, we report the loss of Mr.

Cent Over 1977 cost, the average cost per million BTU's dechned 2.5 per cent. This was the first James D. Eppright who was a vice president of the Company at the time of his death in April time in 14 years that the Company's average cost for fuel has gone down. This occurrence is 1978. Mr. Epprightjoined the Company in 1947 largely the result of t:)e Company's ongoing and served in a number of supervisory and managerial capacities in field operations and in program the Dallas general office.

energy withtolower-cost produce lignite moreandandtomore reduceelectric.ts i

use of more expensive natural gas and oil as Respectfully submitted, generating plant fuels. I

' '7 Almost47 per cent of the Ccmpany's fuel re-quirements in 1978 was supplied by lignite. Two '

large lignite-fueled generating units which were J. F. Skelton placed in service in 1978 and a third unit which is Chairmanof theBoard .

scheduled to be placed in service in 1979, along 1

with previously operational lignite units, are expected to result in over 58 per cent of the

/[g h Company's 1979 fuel requirements being met R. K. Campbell g with lignite. President The nuclear-fueled Comanche Peak generat- nd Chief Executive ing plant which is being jointly constructed by Dallas, Texas Texas Power & Light, Dallas Power & Light and March 30,1979 Texas Electric Service was more than half com-plete at the end of 1978. The first of two units under construction at the plant is scheduled to be placed in operation in 1981 and the second in 1983.

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l Fuels utikties uel c Company JUFCO an af6 hate of the .

Company whth owns a natural gas c*pehne sys Texas Power & Light Company (TP&L; began in 1 1968 a massive program to change from tota l tem acquires stores an dehvers fue; ;;as and oi' use of natural gas to use of kgnite and nuclear and provides other fuei serutes at cost App'c -

as plant fuel imately49 per cent of gas rocu;rertients m 197E was provided by TUFCO f n 10mpanng changes over tne last 5 years.

As a safeguard for penods of peak demand fcr almost 47 per cent of the Company s generating plant f uel requirements in 1978 was supphed by electrt power or curtailment o' delwenes of gas kgnrte :ompared tc approximately 15 per cent by supphers reserve supphes of both gas an2 c1 are available tc the Company At the enj Cf 1978 l in 1975 Natural gas accounted for approxi-mateh 55 per :ent of requirements in 1978 the Company had oil storage capa: tty SU'%ent compared tc almost 84 per cent in 1975 Oil to accommodate approximately 2 0 milhon tar reis of oil. with approximate!v 16 milhon barre:s supphed less than 1 per cent of requirements in in inventory TUFCO owns or has under lease oli 1978 and appr oximately 5 per cent in 1975 P ta! cost for fuels in 1978 was $289 000.00CL an m rease of apprcximately 10 per cent over .  :

the '977 cost of $265 000.000 This increase was ,

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du'.ng the year

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" ~ reased use of lignite and decreased use of ------.-,- H ~ M 2 ga n 1978 along with other factors resulted in _. ; . . ; l_1 2 ..

< s 3ne nf 2 5 cents in the average cost per i _1 , ~,

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-,n EE s of fuel from that of 1977 This was ,3 , [

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P f rst i timein 14 years that the average cost for f# has gone down The cost per miihon eTu s in r+4 - l 08 was 47 Cents for hgnite and $161 for gas 7f1I^ l c c,mpared to the 1977 costs of 41 cents for hg- 7 {4 '

nite and $147 for gas '

The Company s requirements for fuel gas for ,

its eight pnnapal gas and gas OSfueled generat- s ing plants are provided under contracts with three major supphers One of these is Texas 1 M e anc s~ ar E vandeventer valley plant 2 Graphc Artist Design sandy Blavdes Dallas 2 Messenger patreia Cale

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Grant DaHas a chie+ substationman Bobby ingram Eastern Division

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l storage facilities with a capacity of 670,000 plant, owned in fee or had under lease approxi- l barrels TUFCO also owns and operates under- mately 800 million proven recoverable tons of l l ground gas storage facilities with a usable capac- lignite reserves Sandow Unit 4 which is under I ity of 6.1 billion cubic feet. Additional storage construction will be owned by TP&L, but will be facilities with a usable capacity of 14.1 billion fueled from lignite deposits owned by a large i cubic feet are under development by TUFCO. industrial customer.  !

Seven lignite fueled generating units are now Surface mining of lignite at the Big Brown, I in operation and six other lignite-fueled units are Martin Lake and Monticello plants is accom-l nowunderconstructionorindesign. Allof these panied by an extensive reclamation program units have been or are being constructed adja- which returns the land to productive uses and i cent to lignite deposits. At the end of 1978, TP&L, includes a vegetation restoration program. Simi-lar programs are planned for future lignite pro-Dallas Power & Light Company (DP&L) and Texas Electric Service Company (TES), along with a duction operations.

j large industnal customer which is a joint partici- More complex lignite mining legislation has i pant with TP&L in construction of the Twin Oak been enacted by the federal government. Texas Utilities Generating Company (TUCCO) filed suit i against the Secretary of the Department of i Interior in January 1978, in the belief that interim i - regulations implementing the law are impracti-cal and involve urnecessary costs and delays.

TUCCO, an affiliate of the Company, acts as agent for TP&L, DP&L and TES in the operation of their jointly-owned generating stations and furnishes j -

related services at cost.

_ The TUCCO suit is being appealed to the United States Court of Appeals for the District of Co-

' lumbia Circuit. Enforcement of these regu-

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l lations would increase the cost of producing lignite, however, the Company does not antici-pate that the terms and conditions of permits issued thereunder will have a material adverse effect upon its future use of lignite as fuel for i generating electricity.

5 Relay Test Engineer Barney Krebs. Central Division. Two nuclear-fueled generating units are under 6 Assistant Maintenance supervisor Ernest E. waites. stryker Construction at the Comanche Peak plant.

cree T feprese e Bob Landrum Commitments have been obtained for antici-N[fjnt ,

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' ' :p pated uranium ore concentrate requirements and fabrication services for both units for the first eleven years of operation, with an option

- for six additional years.

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Martin Lake Unit 1, with a capability of 750,000 l

I Construction kilowatts, was placed in operation in 1977 and Texas Power & Light's progra, m to reduce its Unit 2 of the same size in 1978. The Company use of natural gas as, a generating plant fuel and owns 60 per cent of the capability of each of progress made i,n this program is outlined in the these two units Two additional 750,000-kilowatt

' preceding section of this report. Units at the Martin Lake plant were under con-The transition in fuels is being accomplished structicn or in design at the end of 1978. Unit 3 is by construction of new generating plants de- schedul?d for completion in 1979 and Unit 4 in i signed to use lignite and nuclear materials. 1985. TF &L will own 30 per cent of the capability Approximately $226,000,000 of total construc- of each ]f these two units. The remainder will be i

tion expenditures of $305,000,000 during 1978 owned ']y DP&L and TES. '

were for new lignite and nuclear fueled generat- Connruction of the lignite-fueled,545.000-l ing units. Total construction expenditures are kilowrct Sandow Unit 4 continued during 1978.

l expec+ed to be approximately $344,000,000 in The 'Jnit, Which is scheduled for completion in l

1979, approximately $302,000,000 in 1980 and 1961, will be wholly owned by TP&L and will be l approximately $336,000,000 in 1981. used in part to provide electric energy under a

, The seven lignite-fueled generating units in firm contract to a large industrial customer.

l operation on the Company's system at the end

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of 1978 arejointly owned by Texas Power & Light. .m  :  :: . r l Dallas Power & Light and Texas Electric Service.

' These units are located at the Big Brown, Monticello and Martin Lake plants.

The Company owns one-third of each of two 575,000-kilowatt units at the Big Brown plant.

Unit 1 was placed in service in 1971 and Unit 2 was placed in service in 1972.

Monticello Unit 1, with a capability of 575,000 kilowatts, was placed in operation in 1974 and Unit 2 of the same size in 1975. Unit 3, with a capability of 750,000 kfowatts, was placed in ,

a service in 1978. TP&L ovens 50 per cent of the capability of each of the three units. ,

c Generating Units Under Construction s^

kortherNvIs"oM9. Pro rare "f Na st hver Milner, orin Design Dallas.10. Power Consultant Khosrow Ostovani, unit met southern Division.

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l During the year, work continued on the DP&L and TES and the three companies originally lignite-fueled,750,000-kilowatt Forest Grove owned equal shares of the two Units. However, Unit 1 which is scheduled for service in 1984. The negotiations involving the sale by DP&L of a 10

Company will own 20 per cent of the unit, with per cent interest in the plant to the Texas Munic- l the remainder owned by DP&L and TES. ipal Power Agency (TMPA) and the Brazos Electric Design and acquisition of right-of-way con. Power Cooperative, Inc. (BEPC) have been tinued on two lignite-fueled 750,000-kilowatt underway for some time. On January 2,1979, a units at the Twin Oak plant site. TP&L will own 70 joint ownership agreement was executed be-per cent of the two units, but will receive 75 per tween the three companies and TMPA for its cent of the capability of each unit, with the re. purchase of a 6.2 per cent interest in Comanche mainder going to a large industrial customer. Peak from DP&L. This sale is subject to the ap-

! Unit 1 is scheduled to be completed in 1984 and proval of the Nuclear Regulatory Commission.

Unit 2 in 1986. Negotiations are continuing for the sale of a 3.8 At the end of 1978, construction of two per cent interest in the plant to BEPC. Comple-1,150,000-kilowatt units at the Comanche Peak tion of these sales would reduce DP&L's owner-nuclear fueled plant was 52 per cent complete. ship of Comanche Peak to 23% per cent, with This plant is being jointly constructed by TP&L, TP&L and TES each retaining a one-third interest.

During 1978, approximately $75,000,000 was expended on transmission, distribution and

,Pc'; , . x general plant improvements to the Company's system.

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__] Each year, increasing amounts of the Com-pany's construction expenditures must be l devoted to meeting federal, state and locai regu-lations involving environmental matters.

For instance,1978 construction expenditures f* for lignite-fueled generating units included al-most $22,000,000 for additional equipment re-

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• quired under certain environmental rulings. This g  ;' .

will grow to an estimated $25,000,000 in 1979. In

> T the past five years, over $100,000,000 has been spent on these items, many of which, in the opinion of management, have been of doubtful value in protecting the environment.

, 11 serviceman carrol ward. Mccregor; 12. clerk cashier The Environmental Protection Agency has re-

! sharon Ann cran {Denison .

7 r quired that all future lignite plants be equipped

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generating unit as it cost to build an entire gas-

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All generating facilities under construction are A=,*

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g.e. :I g ,j concerning air emissions.

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~ ]'){f [- . .. L4 {V; Operating and Financing Costs The upward trend in the Company's operation

'@ g >fM M...,- ,2 o r- and maintenance expenses, other than fuel, in 8 -i-. - . ._. .e d 4. . 1978, reflects the effects o' inflation on the cost 4

_. of labor, materials and services. The addition of  !

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I new lignite-fueled generating units has a!so re-l 3F sulted in higher operation and maintenance a costs as compared to the less complex gas-D fueled units, and higher fixed costs, such as de-ew preciation. However, as a result of using a larger

..j @ percentage of lower-cost lignite-fueled genera-

' *~"~ tion, the Company's customers paid consider-

/'"*/ ably less in 1978 per kilowatt-hour than would s

j l have been the case if natural gas or oil had Financing System Expansion been used. In 1978, th:. Company financed 49 per cent of At the end of 1978, the Company's embedded i.ts construction program from operations. In costs of long-term debt and preferred stock addition to net income after dividends, inter-were 7.6 per cent and 7.4 per cent, respectively. nally generated funds were derived from depre-The upward trend in these costs, as demon. ciation provisions and from deferred federal in-strated in the chart on page 7, is expected to come taxes and investment credits. This was a continue as the Company's long-term financing significant improvement from recent years and i

requirements remain fairly large and market is closer to the Company's goal of financing a interest and dividend rates continue to exceed minimum of 50 per cent of its construction ex-the embedded costs. pend tures internally.

Interest coverage-one of the indicators of The balance of the1978 construction program the protection afforded the Company's security was principally funded by the repayment of ap-holders-improved significantly in 1978 as the proximately $100 million of advances made to I combined result of the1977 and 1978 rate in, Texas Utilities Generating Company by the Com-creases and greater custorner usage due, in pany to finance a pro rata share of lignite mining part. to abnormal summer and winter weather. equipment at thejointly-owned plants. TUCCO

Future periodic rate increases will be required, obtained outside financing in September I however, to avoid a return to the downward through the sale of $200 million in Senior Notes.

l trend of previous years, as shown in the chart below. These increases will be necessary in In February 1979, the Company sold at com-l petitive bidding $100 million of 9% per cent first order to protect the quality of the Company's mortgage bonds due February 1,2009, and securities and to enable the Company to ac-300,000 shares of $8.84 preferred stock. Alsoin quire, at reasonable rates, the large amounts of February 1979,1,600,000 shares of common new capital required to serve its customers. stock were sold to Texas Utilities Company (par-The Company's commitment to protect the ent) for $40 million. The $170 million proceeds quality of its securities is further demonstrated from these sales will be used to partially finance by a conservative capital structure policy At De- the 1979 construction program. Financing for cember 31,1978, long-term debt, preferred the remainder of the1979-81 construction pro-stock and common stock equity comprised 46.4 grams wiii require addit,onai i funds from exter.

per cent.12.8 per cent and 40.8 per cent. respec. rial sources. The Company expects to obtain tively of total capitalization. These ratios are rep- Intenm financing through short-term loans resentativeof theCompany'slong-rangegoals. from Texas Utilities and expects to obtain in early 1979, the major credit rating agencies additional permanent financing in amounts and reaffirmed their corifidence in the Company's of types presently undetermined.

securities by continuing the triple-A rating on 15 Storekeeper wendell Varner, Hillsboro,14. Jr.

the Company's first mortgage bonds. Draftsrnan Raquel Vdlarreal, southern Division.15. Plant supenntendent Wdliarn May. Tradinghouse Plant.

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~ eJ e "LONG-TERM e7 : into certain affiliate transa2 ions of the Com-ep- .E - ' ED STOCKW pany and other Texas Utilities subsidiaries The

-mm -t hearing was to determine whether any refunds l I or adjustments to rates may be required. At the wr; ting of this report, a final order of the Com-

-/ , mission had not Jeen received

' The lengthening arm of regulation only in-l l creased its reach in 1978. Individuals and com-

-- P 'PT~" j-- panies alike failed to escape the grasp-Texas Power & Light Company was no exception

_2 After two years of exhausting debate, the 95th Congress enacted the national energy plan consisting of five separate acts. The impact of the new laws is certain, but the degree of impact is, as yet unclear.

The new legislation provides the Federal Energy Regulatory Commission with greater au-thonty to mandate the distribution of power Rates and Regulation from one utility to another while dictating in-In December 1977, applications for rate ad. terstate system interconnections Federalinter-Justments were filed with all incorporated vention rights into rate-making procedure and munlopalities served by the Company and with guidelines are now a reality Previously. utility the Public Utility Commission of Texas (PUC). In regulatory policy and standards were left to May 1978. the Commission granted an increase state authonty of about 7 per cent, or $41 million. The new rate While the national energy plan will require util-schedules, which continue a fuel cost factor ity emphasis on conservation information and providing for the current recovery of fuel costs, services for customers, the Company's pro-were effective with consumpt.cn after May 30, grams and personnel are well established in cus-1978. for customers subject to the originaljuris- tomer contact and communication. Details may diction of the PUC and were subsequently made be found in the Service to Customers and Area effective in the vanous cities and towns for im. Growth section of this report.

plementation in June and July 1978. The five acts of the national energy plan join Pursuant to an order of the Commission, a the rapidly expanding list of utility related laws hearing was concluded in March 1979, to inquire that increases the maze of regulations demand-ing the Company's compliance.

^ Certain laws and regulations of the Environ-ob se Pa s 1 c esecetary\ a cunningham. Dallas.18 Right of Way Crew Foreman mental Protection Agency. the Clean Air Act and Bennie Jones Eastern Dmston the Surface Mining and Reclamation Act impose but a few of the costly requirements that have.

y to date proved less than beneficial when mea-

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j sured against the ascertainable results.

1 a Required sulphur dioxide (502) removal sys-M .. ..

tems (scrubbers), now in operation on three lig-I  ?

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nite units at the Martin Lake facility, represent a prime example of regulatory overkill. Following

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- 2 17 months of operating experience with Unit 1, a 2ATwa. N comprehensive study or 502 emission was con-ducted. This scrubber has met regulatory standards, but operating and maintenance costs are difficult to justify on a cost / benefit basis.

@( Regulations proposed under the Clean Air Act Amendments of 1977 are even more restrictive.

- Although many environmental requirements

-of water, air and the surface mine-approach absurdity. the Company and other agents of the Texas Utilities System fully intend to comply with all regulations in the operation of facilities.

/

. _ _ _ _ _ _ . . I

I in another regulatory matter, Central and During the year,82 industrial and office South West Corporation (CSW) and its sub- facilities employing 25 or more persons chose i sidiaries have continued their efforts to force locations in the TP&L service area. When in full member companies of the Texas Intercon- operation, these facilities are expected to create nected System (TIS) into interstate commerce more than 10,000 new jobs and to produce with out-of-state affiliate companies of CSW. TIS some $9.5 million in electric energy sales Eleven i is a reliable interconnection of utility systems of these facilities will have electrical demands of operating solely within the State of Texas. CSW's 2,000 kilowatts or more: Folger Coffee Com-actions are an effort to preserve its status as a pany, Sherman, a coffee processing plant; B. J.

j holding company under the Public Utility Ho!d- Hughes Tool Company, Round Rock, a manufac-ing Company Act of 1935. turer of oil well drilling tools; RockwellInterna-i The Company's position for maintaining tional, Collins Telecommunications Systems Divi-commerce only on the intrastate level has been sion, Richardson, a manufacturer of communi-upheld by the Public Utility Commission of Texas, cations systems; Libbey-Owens-Ford Company, but CSW has filed actions before the Federal Sherman, a manufacturer of automotive glass;

); Energy Regulatory Commission, other federal Guardian Industries Corporation, Corsicana, a agencies and courts. manufacturer of architectural glass; Procter &

in one of these proceedings, two CSW sub-sidiaries sought to force members of TIS into er e e r-interstate interconnection, alleging that failure 1 to do so violated the federal antitrust laws. Fol-lowing a lengthy trial before a United States '

District Court, the Court ruled in early 1979 that the decision not to interconnect did not l violate such laws, and further, that it would not _

be in the best interest of the public for TIS to be ~-

i engaged in interstate commerce.

Texas Power & Light Company p' edges con-tinued action to protect its custc mers' interest in any regulatory aspect. , ,

Service to Customers and Area Growth 19 supervisor of Rate Design and statistics Harold sneed, A surge in new home construction, an influx " '

of a large number of new industries, one of the $itr ct En nie"r$a Guest Nat gd S.

coldest winters on record and a lengthy, unsea- 7 < .7

7. -

sonably hot summer were the major factors in p/ '. . 'nT . - ><

an increase of 10 per cent in the Company's total d.L - ~- a & .) . - ' "? .,. g Y

electric energy sales in 1978 over sales in 1977. g -~ '

' ? J The average annual usage by residential cus-  ! .,

! tomers rose from 11.863 kilowatt-hours in 1977  : ,/ . t if ? b . .. . 1 -1 to 12,435 kilowatt-hours in 1978, an increase of '(L.' -

almost 5 per cent. While the Company has not i. Eg ' ' O'  ? '

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! been able to specifically identify and measure *' 4 l' the exact effects of conservatior efforts by in-

- 46 ~ ' '

7. g? ( [1+.L g -y [M g

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dividual customers, it is believed that such ef-j forts are producing some impact on electric energy consumption. "-

w ;.,j, j 1:n m:: -

j Service was extended to 10,2e new electri- 4 cally heated homes during the year and an ,f A ~

additional 409 homes were converted to electric -'T W '* '

heating. More than 5,000 new electrically heated 4

apartment units were built in the Company's -

service area and 301 mobile homes using electric +

heating were added to the Company's lines. ,

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8

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Camble Companv Wa:o a manufacturer of - **

pape' proclucts. Hughes Tool Company Cor.

sicana. a manu'actu er of mining and constru -

r tion eauipment Harns Corporation. Grapev,ne. a i  : 1 i i ,

manuf acturer of pnnting presses Southwest &.,,g. cos4,, g'wn ,c _ f j hemica! Services Company. Crockett a man. Res ae%a Customers uf acturer of additive concentrates Mobi! Re- --cost o4 umg- a.. . ,

search and Development Corr" ration Farmers Branch a research laborator', md JamaL inc ' ^ - ' - * * ^

Hillsb0r: a producer M Sth ene ruCDer productt j l The E0mpm, fferc residentia! Tustomerc its V - - - - - + '

E 'y program :';morehensive gudelines f or ,

hcme energy :onseraation This program is a l regcna: extenscn of the Edison Electn: Insti-tuter Natena' E nergi Watch Centennial l Homes a major homebuilder in TR&Ls service area began constructing ali of its homes accord-ing to E-OK" specifications Pox & Jacobs another major homebuilder Wdl begin instalhng electric heat pumps in most of its homes in 1979 and has a! read, begun incorporating E-Ci

' * * +

j '

standards in homes bull

• by the firm An E-0V program' adapted to the needs of commeraa; and industnai customers was initiated dunng the year

._f TP&L Home Service Advisors Continued to

- ,, promote efficient use of energy in the home S and enhanced their efforts with an energy conservation presentation which includes a i g, - .

..- 4 See-through model home to demonstrate techniques and matenals information on con.

Servation is also suophed to customers by Cus-tomer Service Representatives and through ser-y gy7nypyj@$nne{nNc* li)Eay vice bill enclosures newspaper. radio and sc.r N D m er- water smy Bish,c Ennis television advertisements

. t , , .w~. Technical services personnel conducted ex-

. 7 .

~;o- "1 . s p' tensive research on vanous energy-saving

" d - . ,

.. products and devices including solar equip-8 ,- .

3 ' .

ment The results of these studies were

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furnished to customers to assist them in making

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l J,0 cost-effective decisions concerning energy usage

'g. f r .

7 twg . ..M lr Public Affairs J ;i ~ - j '

w ., .. ,

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"1 The necessity and importance of communica-

$21. .s..$ w - ~ _..y3 . . . . ' .~ ^ tion and personal contact between the Com-pany and its customers have continued to in-h crease New needs for dialogues with con-4 Sumensts. environmentahsts governmental regulatory agencies and other special-interest

g. .  ; individuals and groups have emerged Dunng 1978. Texas Power & Ught continued tc (A intensify its efforts to voluntarily supply infor-mation and counsel to che vanous pubkc seg-ments and to respond to their inquines regard-ing the Company and its activities 9

I Company personnel at every level of man- the Training Center at the Trinidad plant. In addi-agement and operations are accepting the re- tion, more than 1,500 employees maintained or sponsibility of being spokespersons, not only in upgraded their skill levels by participating in connection with the performance of theirjobs, technical training sessions conducted at their but in every situation which demands or affords work locations.

the opportunitV Employees are regularly supplied information During the year, a Consumer Affairs Division on a broad range of subjects through a monthly was created and the Division initiated a new for- magazine, weekly news summaries and, as the malized program of employee-public contact. timeliness of the subject requires, by means of The program is called " Neighbor-to-Neighbor" special news bulletins which are sent to all field and its purpose is to demonstrate the Com- offices via a telecopier system. In addition, pany's concern for its customers, with special periodic employee information conferences are emphasis on increased understanding of the held in all Company offices.

supply, wise use and cost of electric energy. TP&L conducts a continuing program of on-For many years, TP&L has cooperated with the-job safety education and biannual safety l

! colleges, universities, public schools and youth audits of employee work habits and inspections l organizations on mutually desirable and bene- of equipment and facilities. During one period of ficial educational programs. Implementation of 1978, employees worked more than one million such programs involves films, literature, com- man-hours without a disabling injury and during plete study courses, lecture-demonstrations a second period recorded more than two million l

and seminars attended by young people, man-hours without a disabling injury

teachers and adult leaders. These programs con- The Company continues its commitment as an tinue to be given major attention in the Com- Equal Opportunity Employer anc. through its pany's public affairs activities Affirmative Action Program, seeks out areas in l which all individuals may Le moi e effectively A speakers bureau, plant tours, service bill en-l utilized.

closures, advertising and periodic special mail-i ngs gment other communication and con- Research and Development improvement of present methods of produc-Employees ing electric power and development of new The growing complexity of producing and energy sources and technology are ongoing supplying electric power and of related support concerns of the electric utility industry functions demands continuing refinement of the knowledge and skills of the people involved.

pm To keep pace with changes in the technologic, gE nsuran e erk en wof$ord D as 27 ew economic and regulatory aspects of its opera- Foreman John Neill, Terrell,28 supervisor of Program tions. Texas Power & Light places high priority on Development steve weams. Dallas the recruiting of qualified new personnel and on implementation of training and information programs for all employees.

f During 1978, some1,200 of the Company's 1 3,700 employees participated in one or more of i 50 workshops, conferences and seminars held at I

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-- - - - - . - y __. _

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g Resnwnta ) Commerc ia: Indu st ria 3 other g F oei g operation and Maintenance Deprecation g Taxes [ Interest on Debt Preferred Dividends Etc -- Net 3 Common Dmdends and Retained in Business for Expanson

%; ' /.e s .v* an j m:e than 500 nthor

. , , . , , ' ,,,m,Jniet ,

- c>n c 'o 7 mE and nine Cther inveer-

.,, , n 4' , are suroc rting the m . no"-

i m l9' Ir * -

• ESCO"SO'EUIhE'E*3E 9 '*n. ,

+

- , p, po' car hw*** *r ' 0Se r PQu dat1C A[U i I' - /, N _ " i . n N ir it keverh. y: ear [f . T the companies are supporting nr es+yoq3-<,pggpPhaasome150C ~

pH

~ U 'nagv Pesearch Center at the

-+

ro r in v tr ' ns Unwersirv of Texas- Aust;n tc develop the nuclear F

'he r lo t +' ,r-r[ r m[q: +- Ie uaed ma pd, ow recewing etnor rre ma nuDear fush n onbrg' Thebnst' . s xantial federa! of thefTAE unding Notable among a[m

~

tuto ' ' e n ; t ,n y. ~ " ' 'he Aa)+<'v' at an annaa' comphshments PF -Univers,ty csf 7g gg rA +

.n m,1lc n program is construmon of a fusion devce the Texas Expenmental Tokamak <TEvT whch is e -

pected to be in operation by late 1980

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Dunng 197E the Company continued for a

.c ,- - ,, . ,f r. , ; e g,-

second year its study of the practica! applcation

,. ," , ' "; ,y '7 ' ,, ','"L',, ',, Jr" Q * ' of solar power to residential reauirements The q.- . z % 'g study is being conducted in an occupied home

%- x j .T O . q. Lg which was constructed by a Dallas-area builder in

._ y cooperation with TP&L and a manufdurer of w _ _ y- . '. solar energy collectors and heat pumps (an elec-7 -. .. i'. .; . trially operated device for space heating and

^  ;

M coohngt The pnmary purpose of the project is

'e.;

3j ,

D to test the combined effiaency of a solar system

1 z . .4 .

'. and a heat pump for space heating and water

.. .- heating and to determine operating costs j -

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4

Comparative Growth (Thousands of Dollars) 1978 1977 1976 Operating Revenues ,

$_ 743,308 $ 645,204 $ 494,024 288,557 262,739 186,275 FuelCost ... ... .

293,309 243,832 195,732 Other Operating Expenses .

161,442 138,633 112.037 Operating income . . . . . . . . . . . . . ... .......

11,093 13,155 11,388 Allowance for Equity Funds Used During Construction . 6,749 9 444 8.767 Otherincome and Deductions-Net . 160,555 130,174 181,979 Totallncome .

65,920 62,732 55,391 Interest Charges . ..... ........... ... .......

(7.720 Allowance for Borrowed Funds Used During Construction _ _ 7_,027)

( (7.512)

$_12_3,086 $ 105,335 $ 82.503 Netincome

$ 1,999,639 $ 1,752,481 $ 1,524.697 Electric Plant . 107,774 223,600 160,109 Other Assets

$ 2,107,413 $ 1.976,081 $ 1,684.806 Total Assets . ,

Capitalization $ 722,263 $ 675,046 $ 590,576 Common Stock Equity 226,521 196,866 226,521 Preferred Stock . . . . . . ..... ... ....

820,113 815,047 695,709 Long-Term Debt-less Amounts Due Currently .

1,768,897 1,716,614 1,483,151 Total Capitalization . 126,712 109,156 153,936 Other liabiltties . . . . . . . . . . . . . . ....

81,133 60,306 47,114 Accumulated Deferred Federalincome Taxes 72.449 45,385 Unamortized Federal lnvestment Tax Credits _ _ 103,44_7 .

$ 2,107,413 $ 1,976.081 $ 1,684,806 Total Liabilities .

Statistics OPERATING REVENUES (Thousands of Dollars) $ 285,748 $ 256.624 $ 204.114 Residential . . 168,904 144,185 112.077 Commercial . . . . . . . 184,091 156,093 110,734

ndustrial(See Note) 23,208 18,703 Governmentand Municipal.. 26,902 70,828 58,075 43,534 Other Electric Utilities 6,835 7,019 4,882 Miscellaneous _

Total Operating Revenues . . $_743,308 $ 645,204 $ 494,044 ELECTRIC ENERGY SALES (Megawatt-hours) 7,520,665 6.921,676 6.048,26C-Residential . . . .

4,338,257 4,045,638 3,624.348 Commercial . . . . . . . . 8,000,546 7,391,531 6,000,781 Industrial (See Note) ..

880,988 809,213 746,488 Government and Muniapal . .

2,351,515

_ 3,245,222 2,640,738 Other Electric Utilities .

23,985,678 21,808,7 % 18,771,39E Total Ele ~tric Energy Sales .

CUSTOMERS (End of Year) 563,378 535,012 514.011 Residential . . .,

77,371 74,327 70,51C Commercial . .

6,257 5,919 5.745 Industrial . . . . . . . ..

7,06'i 7.121 7,11C Government and Municipal

___30 29 2E Other Electric Utilities ,

622,408 597,43E TotalCustomers ~__ 654,097

' 5',242 4,f54 4,515 Peak Demand (Megawatts)(See Note) . .

Residential (Average): 11,863 10,66E AnnualKilowatt-hourUsageperCustomer. . 12,435 Cost to Customer per Kilowatt-hour 3.87c 3.81c 3.5C Note: Includes interruptible sales to a largeindustrialcustomer: 41,572 $

Operating Revenues (Thousands of Dollars) . . . $ 36.878 $ 20.05:

2,891,259 2,786,027 1,822,48E Electric Energy Sales (Megawatt-hoursh .

Peak Demand (Megawatts) . . .

316 277 23(

12

1975 1974 1973 1972 1971 1970 1%9 1968

'$ 398,136 $ 316,068 $ 255.077 $ 226,960 $ 189,364 $ 171,716 $ 154.166 $ 132,006 146,890 88.640 54,021 41,495 31,848 25.860 21,691 16.364 158,600 141,339 126,264 115,556 99,245 93.856 87,505 76.953 92,646 86,089 74,792 69,909 58,271 52,000 44,970 38,689 9,101 7,370 3,978 3,560 4,216 3.078 2.288 1,164 2,608 1,419 1,976 1,755 1,174 841 348 330 104.355 94,878 , 80,746 75,224 63,661 55,919 47,606 40,183 44,351 33,287 25,557 22,287 19,145 15,122 12.177 10,524 (5,438) (4,702) (1,643) (1,428) (1,715) (937) (959) (352)

$ 65,442 $ 66,293 $ 56,832 ,$ 54,365 $ 46,231 $ 41.734 $ 36,388 $ 30,011

$ 1,308.471 $ 1,111,622 $ 936,450 $ 802.925 $ 717,471 $ 636,580 $ 565.603 $ 501,167 157,500 101,291 69,898 56,050 54,443 44,286 31,054 29,308

$ 1,465,971 $ 1,212,913 .$ 1,006,348 $ 858,975 $ 771,914 $ 68 ,866 $ 5 % ,657 $ 530,475

$ 510,761 $ 439,644 $ 359,281 $ 296,559 $ 277,074 $ 232,155 $ 208,811 $ 178.247 167,316 137,S91 107,583 107,583 82,470 82,470 82,470 52.440 599,698 501,466 434.588 387,287 351,993 322,744 265,355 246,222 1,277,775 1,078,801 901,452 791,423 711.537 637,369 556,636 476,90's 124.530 91,401 74,746 45,293 45,596 32,901 29,297 42,159 35,962 26,548 19,849 14.450 11,768 10.596 10,724 11,407 27.704 16,163 10.301 7,803 3,013 - - -

$ 1,465,971 $ 1,212,913 $ 1,006,348 $ 858,975 $ 771,914 ^$ 680,866 $ 5 % ,657 $ 530,475

$ 169,989 $ 137,328 $ 113,991 $ 104,510 $ 86.219 $ 79,335 $ 71,670 $ 60,096 91,720 73.113 59,906 53,581 44,110 40,290 36,751 33,079 83,535 66,092 49,969 40,797 37,708 35,283 31,110 26,097 14,509 11.079 8,849 7.976 6,826 5,931 5,203 4,446 33,077 22,939 20,478 18,477 13,100 9,556 8,389 7,330 5,306 5,517 1,884 1,619 1,401 1,321 1,043 958

$ 398.136 $ 316.068 $ 255,077 $ 226,960 $ 189,364 _$ 171,716 $ 154,166 $ 132,006 6.013.819 5,540,001 5.293,948 4,985,215 4,155,475 3,768,634 3,341,018 2,650,271 3,488.570 3,200,226 2, % 9,764 2,724,241 2,308,586 2,064,844 1,886,276 1,662,543 5,651,842 6,102,297 5,600,927 4,780.509 4,82',608 4,516,524 3,907,866 2,875,028 690.118 661,764 628,238 602,728 548,264 476,675 430,903 368,419 2,255,379 2,238,955 2,116,285 1,986,333 1,678,55? 1,340,699 1,232,786 1,170,754 18,099,728 17,743,243 16,609,162 15.079,026 13.514,485 12.169,376 10,798,849 8,727.015 495,097 483,055 470,353 454,478 437,348 422,288 408,986 392,704 66,848 64,789 64,104 62,493 59,914 57.770 55,843 54,291 5,703 5,610 5.524 5,291 5.082 5,002 4,996 5,001 6,823 6,501 6,146 5,867 5.566 5,436 5,078 4.842 27 29 30 34 34 33 33 32 574,498 559,984 546,157 528,163 507,944 490,529 474,936 456,870 YM

~

4T353 3 F94 3,514 3,224 2,956 2,711 2,159 10.999 10.381 10.282 10,132 8,875 8,392 7,824 6.4% .

2.93c 2.58c 2.24c 2.18c 2.14c 2.17c 2.20c 2.31c

$ 18,704 $ 15,309 $ . 10,037 ' $ 6,637 $ 8,276 $ 8.226 $ 5.624 $ 2,224 2,038,618 2,431,269 2,001,058 1,500,644 1,945,309 1,947,850 1,401,417 551,333 163 282 256 162 213 235 162 82 15

Texas Power & Ught Company Balance Sheet Assets December 31 1978 1977 (Thousands of Dollars)

ELECTRIC PLANT-at original cost (Note 1)

In service: $ 632,202

$ 846,066 Production . . ... . . . . . .

370,350 352,486 Transmission . .. . . . .. . . . .

553,738 Distribution . . .

. 592.694 51.021 44,758 General . . . . . . . .

1,860,131 1,583,184 Total . . .. . . .. . .

Construction workin progress . . . .. . ... ..

512,702 492.585 4,152 2,488 Held for futureuse . .

2,376,985 2,078,257 Totalelectric plant . . .

377,346 325,776 Less reservefor depreciation . .. . . ..

1,999.639 1,752,481 Electric plant,less reserve . .. .

1.200 100,775 INVESTMENT ADVANCES TO AFFILIATE (Note 2) . . . .

CURRENT ASSETS 10,293 8,502 Cashin banks . . . . . . .

6,872 6,870 Specialdeposits . . . .. . .

Temporary cash investments-at cost . . . .

26.458 Accounts receivable:

39,199 31,808 Customers . ... . . ... . . ..

4.643 2,818 Other .. . . ... .. . .. . .. .. . . .

(1,728) (1,533)

Reserve forUncollectible accounts . . .. .

Inventories-ataverage cost:

Materials and supplies . . . . .. .... . . .. . . . . . 10,5 % 11,867 19.470 20,484 Fueistock .. .. . . . .. . .. . . .

8,351 11,035 Other current assets . . . . . . .. .. ... . ... . . .. .. ...

100,380 115,625 Totalcurrent assets . . ... .. . . . . .

. .. .. 6,194 7.200 l DEFERRED DEBITS . . ... .. . .. . .... . ... ..

t I

. . $2.107,413 $1.976.081 TOTAL . .. ... ..... . . .. .

l l

I i

3 l

- 14

Wabilities December 31 1978 1977 miousands of Dollars)

CAPITAUZATION Common stock (Note 3) . . . . $ 570,000 $ 570,000 Retained earningsiNote4) . . . . .

152,263 105,046 Total . . . . .. .

722,263 675,046 Preferred stock (Note 3) . . .

226,521 226,521 Long-term debt-less amounts due currently (Note 5):

First mortgage bonds . .

747,500 747,503 Otherlong-term debt . . . .

74,841 69,859 Unamortized discount . . .

(2,228) (2,312)

Total . . . .

820,113 815,047 Totalcapitalization . .. 1,768,897 1,716.614 CURRENT UABluTIES Accounts payable:

Affiliates . . . 22,163 17.610 Other . ... ......... 48,C56 35,507 Dividends declared . . . . ..

4,207 4,207 Long-term debt due currently . .. . .. ..

- 3,455 Customers' deposits . .. .. .. . . .. .. 5,474 4,953 Taxes accrued . .. . . . .. .. 37,488 26,770 Interest accrued . . . . .. ... .. .

23,315 23,299 Other currentliabilities . . . .. . .. 10,439 8.248 Totsicurrentliabilities . . .... . . .. 151,142 124,049 RESERVE FOR INSURANCE AND CASUALTIES (Note 1) . ... .. 2,794 2,662 ACCUMULATED DEFERRED FEDERAllNCOME TAXES (Note 1) .. ........ . 81,133 60,306 UNAMORTIZED FEDERAL INVESTMENT TAX CREDITS (Note 1) . . .. . . 103,447 72,450 TOTAL . .. .. ... . . .. ... . .... . .. $2,107.413 $1.976,081 See accompanying Notes to Financial Statements.

15

Texas Power & Ught Company Statements ofincome and Retained Earnings Year Ended December 31 1978 1977 (Thousands of Dot!ars)

Income OPERATING REVENUES-Electric ,, , . $743,500 $645,204 OPERATING EXPENSES (Note 1)

Operation . .

82,592 74,939 Fuel . . . . .

288,557 262.739 Maintenance . ..

39,657 28,422 Depreciation provisions .

56,312 49,009 Federalincome taxes . . .

18,676 13,827 Deferred federalincome taxes-net .

21,864 15,039 Federal investment tax credits-net . . .

35,021 31,118 State, local and miscellaneous taxes . .

39,187 31,478 Totaloperating expenses .

581,866 506,571 OPERATING INCOME .

161,442 138,633 OTHER INCOME Allowance for equity funds used during construction (Note 1) . . . 11,093 13,155 Other income and deductions-net . . . .

18,195 16,972 Federalincometaes on otherincome. (8,751) (8,205)

Totalother ,acome - 20,537 21,922 TOTAL INCOME . 181,979 160,555

,NTEREST CHARGES Interest on mortgage bonds . . . . . . 57.684 57,198 Interest on otherIcng term debt . . .

4,891 4,749 Otherinterest . . .

3,345 785 Allowance for borrowed fur.ds used during construction (Note 1) . . (7.027) (7.512)

Totalinterest charges . . . 58.893 55,220 NET INCOME . . . . $123.086 $105,335 Retained Earnings BALANCE AT BEC!NNING OF YEAR . . . . .. . .. $105,046 $ 70,576 ADD-Netincome . . . . .. . . .. 123.086 105,335 lotal . .. . . .. . ... .. . .. . .. . . .. 228,132 175,911 DEDUCT-Dividends (cashh Preferredstock . ... . .. .. .. ... .. . . 16,829 16,815 Common stock . . .. . . .. . .. . . . . .

59,040 54,050 Totaldividends . ... .. .. . . .. .. .. .. 75.869 70.865 BALANCE AT END OF YEAR (Note 41. .. . . . . .... . $152,263 $105.046 See accompanying Notes to Financial Statements.

1 16

Texas Power & Ught Company Statement of Source of Funds for Construction Year Ended December 31 1978 1977 (Thousands of Doltarsj FUNDS FROM OPERATIONS Netincome $125,086 $105,335 Less-Dividends declared:

Preferred stock 16,829 16,815 Common stock . 59,040 54,050 Total dividends declared . 75,869 70,865 Balance . 47,217 34,470 Depreciation provisions 56,312 49,009 Deferred federalincome taxes-net 20.827 13,192 Federal investment tax credits-net . 35,021 31,118 Allowance for funds used during construction . (18,120) (20,667)

Totalfunds from operations 141,257 107.122 FUNDS FROM FINANCING First mortgage bonds . - 100,000 Other long term debt . 5,600 24,440 Preferted stock - 29,655 Common stock . - 50,000 Long-term debt retired (4,073) (12,385)

Total funds from financing . 1,527 191,710 Total 142,784 298,832 I

DEDUCT Investment advances to affiliate . (99,575) 33,460 Other-net . (19,949) (15,820)

Total deductions . (119,524) ~':7,640 Balance . 262,308 211.192 CASH IN BANKS AND TEMPORARY CASH INVESTMENTS-NET CHANGE 24,667 (23,784)

CONSTRUCTION EXF ENDITURES (excluding allowance for funds used during construction) . , , $286,975 $257,408 See accompanying Notes to Financial Statements.

17

Texas Power & Ught Company Notes to FinancialStatements cost of $1,629,000 The actuarially computed value of 1.SIGNIFICANT ACCOUNTING POUCIES Electric Plant--The cost of property additions, vested benefits exceeded fund assets by approxi-including replacements of units of property and bet- mately $15.135,000 as of the latest anniversary date terments,is charged to electric plant. An allowance of the plan.

for funds used during construction has oeen - Reserve forInsurance and Casualties-The charged to electric plant at the rate of 7% of expendi- Company makes provision for major uninsured losses tures incurred, except for that portion of construc- and claims anc' charges the amounts thereof to the tion work in progress included in rate base by reserve whenincurred.

regulatory authorities. Maintenance and repairs of property, and replacements of items determined to 2. AFFluATES be less than units of property, are charged to operat- The Company is a subsidiary of Texas Utilities Com-ing expenses. Depreciation reserve is charged with pany which provides common stock capital and the cost of units of property retired, plus removal short-term financing to the Company as required.

costs,less salvage. Primarily as agent for the Company. Texas Utilities Services Inc. fun iishes engineering and other ser-Depreclarion-Depreciation provisions are based vices Texas Utilities Fuel Company procures certain upon an amortization of the original cost of depreci-fuels and related services, and Texas Utilities Generat-able properties on a straight-line basis over the esti-mated service lives of the properties. Depreciation ing Company produces lignite fuel and operates cer-tain electric generating stations at cost. Investment provisions in per cent of average depreciable electric advances to affiliate represents the share of funds plant in service approximated 3.4% for 1978 and 3.5%

required by Generating Company which has been for1977.

advanced by the Company Federallncome Taxes-Deferred federalincome The Company, jointly with Dallas Power & Light taxes are generally provided for differences between book and taxable income; such differences result Company and Texas Electric Service Company, has entered into agreements with Fuel Company and primarily from the use of liberalized depreciation for Generating Company whereby payments are at cost property placed in service after 1969 and also the of the services received and are required by the class life depreciation system (ADR) for property agreements to be "at least equivalent in the aggre-placed in service after 1971. Federal income tax pro-visions have been reduced by the amounts of in- gate to the annual charge to income on the books" of Fuel Company and of Generating Company.

vestment tax credits allowable under the Internal Revenue Code, including amounts for an Employee 3. COMMON AND PREFERRED STOCKS Stock Ownership Plan established pursuant to the Tax December 31 Reduction Act of 1975, as amended; a ratable portion, 1978 1977 except for amounts applicable to the Employee Stock (Thousands of ooliars)

Ownership Plan, is being amortized to income over Common stock-without the estimated service lives of the properties. The par value, authorized, 80 $'

effective income tax rates for1978 and 1977 were t hg$h 40.7 % and 39.3 %, respectively; the statutory rate was 50.750.000 shares $570.000 $570.000 48 %; the difference was primarily due to the exclu- Preferred stock-cumulative, without par value; author-sion from taxable income of the allowance for funds ized,5.000.000 shares:

used during construction. outstanding, entitled upon Refirement Plan-The Company has a retire- tiauidation to $100 a share:

r ment plan covering substantially all employees. The gri$k000$'a ri  ;

15'06 15,579 cost of the plan is determined by an indeoendent .56 series-155.786 shares . 15,579 actuary and is funded by the Company as accrued. .76 series-100.000 shares 10.000 10.000 84 series- 70.000 shares . 7.000 7.000 The con of the plan approximated $5,821,000 for 1978 and $4,671,000 for 1977. The Company has made 7$$$$$ggalr $ !b$5b !bh5b minor amendments to the plan to comply with the .16 series 500.000 shares . . 29.655 29.655 Employee Retirement income Security Act of 1974 ;2g g .

g 29,625 g.g 29.625 and other amendments which were effective 9.52 series-500.000 shares :

January 1,1976. Unfunded prior service cost, at- Total $226.521 $226.521 tributable to such amendments and certain changes in actuarial assumptions, approximating $22,083,000 at December 31,1978,is being amortized at an annual 18

In February 1979, the Company sold 1.600,000 6. COMMITMENTS AND CONTINGENCIES shares of common stock to Texas Utihties Company For major new construction work now in progress for $40,000,000 and 300,000 shares of $8.84 pre- or contemplated, and commitments with respect ferred stock for $29,591.400. thereto, see " Construction" The Company, along with Dallas Power & Light

4. RETAINED EARNINGS RESTRICTIONS The Company's articles of incorporation, the Company and Texas Electric Service Company, has mor tgage, as supplemented, and the debenture entered into contracts with public agencies to pur-agreements contain provisions which, under certain chase cooling water for use in the generation of elec-conditions, restrict distributions on or acquisitions of tric energy and has agreed, in effect, to guarantee its its common stock. At December 31,1978 and De- share of the principal, $47,932,000 at December 31, cember 31,1977 $25,841,000 of retained earnings .1978 and $44,684,000 at December 31,1977, and were thus restricted as a result of the provisions of interest on bonds issued to finance the reservoirs the articles of incorporation. from which the wateris supplied.

5. LONG-TERM DEST (less amounts due currently) 7. REPLACEMENT COST December 31 Unaudited replacement cost data are disclosed in 1978 19M the annual report of the Company to the Securities 5 5 " 5' First mortgage bonds. and Exchange Commission on Form 10-K for the year 5%% senes due1982 $ 14.000 $ 14,000 1978 in compliance with the reporting requirements of the Commission. The reported data call attention 4 !e sd e 6 l000 000 to the fact that in recent years the impact of inflation 4%% series due 1988 ' 12,500 12,500 4%% series due1991 12.000 12.000 has generally resulted in replacement costs for elec-jp'gesjyjjy ]g ]jg tric plant in service which are significantly higher than the historical costs of such assets as reported in the 5% senes due 1996 20.000 20.000 5%% series dut 1997 50,000 50.000 financial Statements of the Company.

6%% series due 1998 25.000 25.000 8%% series due 2000 . 30.000 50.000 8%% series due 2000 . 30.000 30.000 7%% series due 2001 30.000 50.000 7%% series due 2002 40.000 40.000 7%% series due 2005 50.000 50,000 8%% series due 2002 . . . 50.000 50.000 Accountants' Opinion 10%% series due 2004 . 50.000 50.000 9%% series due 2005 . . 100.000 100.000 8.60% series due 2006 . 100.000 100.000 DELOITTE HASKINS & SELLS 8%% series due 2007 100.000 100.000 Certified Public Accountants Total 747,500 747,500 other long term debt: Texas Power & Light Company; sinking fund debentures We have examined the balance sheet of Texas 4 k',Ndib9 1 l4 1 1l6 Power & Light Company as of December 31,1978 and 7%%. due 1994 17,504 17,598 1977 and the related statements of income, retained Total , , 56.156 56.774 earnings, and source of funds for ccnstruction for Pollution control revenue the years then ended. Our examinations were made bonds-net in accordance with generally accepted auditing

% r es ue 71

.'j { .-l standards and, accordingly, included such tests of the Funds on deposit accounting records and such other auditing proce-with trustee . . (4.955) (10.555) dures as we considered necessary in the circum-Total 58,685 55.085 stances.

In omOMm,beMandaWemenWeneMo erm d t 74.841 69.859 Unamortized discount, ,

(2,228) (2,512) ahe mesWaMe MandalpoWm Me Company at December 31,1978 and 1977 and the Totallong-term debt ,, $820,115 5815.047 results of its operations and the source of its funds in February 1979, the Company sold $100,000,000 for construction for the years then ended, in con-principal amount of First Mortgage Bonds,9%% se- formity with generally accepted accounting princi-ries due February 1,2009. pies applied on a consistent basis.

+

Substantially all of the electric plant is subject to the Dallas, Texas DELOITTE HASKINS & SELLS '

lien of the mortgage. March 23,1979 I 19

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SystemMapLegend Generating Stations-Jointly Owned by Texas This map of the Company's service area shows Power & Ught, Dallas Power & Ught and Texas generating stations, ma}or transmission lines and towns ElectricGervice in which a Division. District or local Office is located. O Ugnite-fueled. Operating

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. . -w~ . - - - _ w. - .. =.. - . - - - w -- -n-Facts About The Company Officers Texas Power & Light Company is ari investor- J. E SKELTON Chairmanof theBoard owned electric utility engaged in the generation, R. K. CAMPBELL President and Chief Executive transmission, distribution and sale of electricity GERSON BERMAN Vice President whollywithin theState of Texas. THOMAS E. BLAKEY Vice President The Companyserves customersin426 LOUIS W. HOWARD Vice President communities in 51 Counties in North, Central and LEON LOVELESS Vice President EastTexas. Forty-oneof thesecommunitieshavea JOE M. NELSON Vice President population in excess of 10,000 and 43 have a H. O. WEATHERBEE, JR. Vice President population of 2,500 to 10,000. The territory served CHARLES V. McCARTER Secretary and includes the rich agricultural blacklands of Central Assistant Treasurer Texas, the farming and ranching sections north and S. S. SWICER Treasurer and east of Dallas, part of the oil and gas fields of East Assistant Secretary Texas and the Dallas / Fort Worth Airport. The area GARY L PRICE Assistant Treasurer has a highly diversified industrial base of light and heavy manufacturing and substantial commercial activities.

Executive Committee K. A. ANDERSON Directors T. L AUSTIN, JR.

R. K. CAMPBELL K. A. ANDERSON Palestine, Texas owner. The "K" way Equipment Company BEN H. CARPENTER E. L ASHCROFT, JR. JOHN M GRIFFITH Sulphur Springs, Texas owner, Ashcroft Motor-Investment Company CHARLES E HAWN T L AUSTIN, JR. Dallas, Texas J. E SKELTON Chairman of the Board and Chief Executive.

Texas Utihties Company Transfer Agen;(for Preferred Stocks)

THOMAS W. BAKER Nacogdoches, Texas Chairman of the Board, Corntnercial National Bank Mercantilai'ational Bank at Dallas THOMAS E. BLAKEY Oallas,Te, . DaHas Tms Vice President of the Company Registrar (for Preferred Stocks)

FRANK A. BLANKENBECKLER,JR. Waxahachie, Texas Chairman of the Board. Ellis County savings Association Republic NationalBank of Dallas Dallas, Texas R. K. CAMPBELL Dallas, Texas President and Chief Executive of the Company Trustee (for Mortgage Bonds)

BEN H. CARPENTER Dallas, Texas Republic NationalBank of Dallas President and Chief Executive officer- Dallas, Texas Southland Financial Corporation MARVIN GIBBS Paris, Texas Trustee (for Debentures)

President, Fry & Cibbs Funeral Home First NationalBank in Dallas JOHN M. GRIFFITH Taylor, Texas Chairman of the Board, City National Bank Dallas' Texas CHARLES E HAWN Athens, Texas Trustee (for Employees' Retirement Plan)

President. Hawn Lumber Company, inc. Republic NationalBank of Dallas ABNER V. McCALL Waco, Texas Gallas, Texas President, Baylor University EDWARD NASH Kaufman, Texas General Offices Chairman of Board & President. 1511 Bryan Street The Farmers & Merchants National Bank Dallas, Texas 75201 JAMES A. RATTEREE Irving Texas

'nvestments

' burne, Texas This report and the financial statements contained airm n o t e Board and Chief herein are submitted for the general information of Executive officer, Rangaire Corporation the stockholders of Texas Power & Light Company.

B. LyNN SANDERS, JR. Corsicana, Texas They are not presented in connection with any sale President, Corsicana Crain and Elevator Company, Inc. or offer to sell, or any solicitation to buy, any J. E SKELTON Dallas, Texas securities.

Chairmanof theBoardof theCompany C. TRUETT SMITH Wylie, Texas President, First State Bank JOE N. WEATHERBY Brownwood, Texas President and Manager, Weatherby Motor Company, Inc.

TEXAS LOWER & LIGHT COMPANY A tax-paying, investor-owned electric utihty