ML18096A645
ML18096A645 | |
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Site: | Salem, Hope Creek |
Issue date: | 12/31/1991 |
From: | Huggard E, Jo Jacobs ATLANTIC ENERGY, INC. |
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NUDOCS 9204270198 | |
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- ** 9204270198 920415 PDR ADOCK 05000272 I PDR ATLANTIC ENEHGY Delivering P.ower at Atlantic Electric, Delivering Heliability, Delivering Affordability, Planning a Smootti Transmission Pandora's Box of the 1990s, ** Sa!Ps to Hcsidential rustomers increased 3.1%. Sales to the twelve hotel-casinos were almost 7% of total sales. Sales to Industrial customers declined slightly .
- fl:\A'.\CIAL HIGHUGllTS
%Change 1991 1991-1990
%Change 1990 1990-1989 1989 *****************************************************************************************************************************************************************************************************************
Earnings Per Common Share Dividends Paid Per Common Share Book Value Per Common Share $ $ $ 3.49 2.98 29.68 Return on Average Common Equity Electric Operating Revenues (000) 12.10% $ 777,970 Operating Expenses (000) $ 633,114 Net Income (000) $ 85,635 Utility Cash Construction Expenditures (000) $ 172,425 Total Assets (000) $2, 151,416 Sales ofElectricity (KWH) (000) 7,935,600 Price Paid Per Kilowatt-hom (All Customers) 9.a12c Total Electric Customer Accounts (Year-end) 453,100 Number of Shareholders
-Common Stock (Year-end) 43,802 Number of Atlantic Electric Employees (Year-end) 2,032 4 ,, 4.03 3.68 3.74 3 ,t 3.02 2.6S 2.77 2.82 2.92 2<1 l o r*-:*:-!*
- 'I Earnings and Dividends Paid Per Share of Common Stock e EARNINGS e DIVIDENDS 3.49 15.6 2.1 3.3 14.5 8.5 6.9 24.3 3.4 7.2 2.3 5.6 0.8 3.6 (1.1) 2.98 Earnings per share of Common Stock is net income divided by the average number of common shares outstanding.
Dividends paid per share is the sum of the quarterly dividend payments made in January , April , July and October. $ $ $ 3.02 2.92 28.73 10.57% (19.3) $ 3.5 0.7 $ $ 3.74 2.82 28.54 13.64% $ 716,779 (22.5) 1.7 3.8 $ 705,020 $ 592,217 $ 570,275 $ 68,879 (14.9) $ 80,964 $ 166,818 15.0 $ 145,081 $2,006,010 7.6 $1,864,461 40 30 20 10 7,756,867 1.8 7,617,784 9.288¢ 449,717 42,295 2,055 32.7S 30.62 1.4 1.3 (2.5) 1.7 38.SO 'I ATLANTIC ENERGY Market Price Per Share of Common Stock
- 9.161¢ 444,018 43,383 2,021 41.00 33.87 This is the closing price of Atlantic Energy's Common Stock on the last trading date of each year as reported by the New York Stock Exchange Composite Transactions listing. 1 J W hen all was said and done, 1991 turned out to be another fine year for . Atlantic Energy. Per share earnings rebounded to $3.49, a 15% improvem'ent over the $3.02 reported in 1990. We have the good performance of Atlantic Electric to thank. Here's how it happened.
We negotiated a $50 million increase in base rates in July to coincide with our peak sales season. In granting the higher rates, the New Jersey Board of Regulatory Commissioners (BRC) set our allowed return on equity at 12.5%. Mother Nature helped out, too. It was the hottest summer ever recorded at the Jersey shore. Kilowatt-hour sales grew 2.3% to almost eight billion, a record for Atlantic Electric.
The hot atures pushed the demand for energy to new highs. Peak demand reached 1,911megawatts,10%
greater than last year. We are cially pleased to note that many of the businesses located along the shore had their best year ever. Our 1991 financial results were weakened by our nonutility operations.
These businesses reported a combined loss of 22 cents per share. Most of that, about 15 cents, came from sions recorded by Atlantic Gener-ation Inc. (AGI). These provisions were the result of a one-time write-off of several small tion projects that were losing money. AGI is now better able to devote its attention to three larger projects with potential for contributing to future earnings.
In June, your Board of Directors increased the quarterly dividend on Common Stock by one cent, to 75 cents per share. This is the 39th consecutive year of es in cash dividends paid. Even though the amount was modest, it was our way of saying that in spite of the ups and downs, our core business is solid and our future holds promise. The very nature of our utility ness involves making substantial investments in facilities and equipment.
In the next three years, our capital expenditures will reach almost $500 million. About half of that is earmarked for ments to our power delivery system. As you look through the pages of this Annual Report, you'll learn why these are important investments.
You'll also see how we protect the environment as we go about our work. We continue to give high priority to the way we take care of our natural resources.
There is more good news for 1991. By all measures, it was the safest year in our history. Other operational and financial goals were met as well, particularly with respect to controllable expenses.
Overall, they increased only 2.5% over 1990, well below the 3.1 % growth in the consumer price index.
- Our ability to develop and achieve meaningful goals is essential to you and to our customers in today's economy. Ideal summer weather has not protected ern New Jersey from the effects of the recession.
Housing starts in the area a.re at a post World War II low. Just over 4,100 new customers were added to Atlantic Electric's system in 1991. a drastic drop from the average of 11,300 new tomers each year since 1986. We also felt the effects of competition and structural changes in our industry this year. In October, our largest industrial customer began generating its own * *
- electricity.
In the coming years, a few more of our large customers will follow. But our strategic plan can comn:iodate a slowed economy and competition.
We are mitted to finding ways to replace kilowatt-hour sales lost to petition.
And, we're doing our share to stimulate the local economy. We have revitalized our economic development efforts to attract new businesses to our region and to encourage nesses already here, to stay. Through our marketing activities we keep in closer contact with our customers and discover ways to serve them better. These are long term commitments that will help us be successful in a competitive energy marketplace.
We. continue to believe that tunities for growth exist with the activities of our nonutility nesses. Our strategy is to direct resources to investments that complement Atlantic Electric's goals. Our newest subsidiary, Atlantic Energy Technology, Inc. (AET), was formed in 1991. To date , it has invested in a company that state-of-the-art, energy effi,cient heating and cooling systems. AET's activities, along with the cogeneration development investments of AGI, will dominate our nonutility vities. AGI made progress on three large cogeneration projects in 1991. AGI's financial results are e xp e cted to improve in 1992 when two of the three projects will be pleted. Atlantic Southern Properties and ATE Investment continue to manage their existing portfolios . o new investments are planned in the near term for these companies.
Je r ry Jacobs, Doug Hugga r d Looking ahead, Atlantic Electric, the utility business, will remain our driving.force.
Its performance will guide the future for Atlantic* Energy. We are doing our work to prepare for a dated management audit that is expected to begin in late 1992. We intend to get an '/\ on our report card. The good news of1991 is pered by the loss of one of Atlantic Electric's most admired and respected employees, Senior Vice President Brian A. Parent. Brian died suddenly in July. We miss his humanity, his intellect and his sense of fun. The tribute we have prepared for Brian on page 5 of this Annual R e port only begins to e xpress our gratitude for the many contributions he made to this corporation.
' On behalf of the Board of Directors of Atlantic Energy, we thank our shareholders for their support and loyalty. You have our promise that we c onduct our business in y_o ur best interest , adhering to the highest ethical standards and at all times showing respect for tomers, concern for employees and care for our environment.
For the Board of Directors, E.D. Huggard Chairman and Chi e f Ex e cutive Offi ce r J.L. Jacobs Pr e sident January 31, 1992 THE NEWS OF 1991 New Sources of Capacity
- for Atlantic Electric In May, Atlantic Electric's new 84-megawatt combustion turbine , located in Vineland, New Jersey, went into service in time for the peak summer period. The unit Deepwater's Employee features high performance emis-Involvement Team , the Morale sion and noise control systems Boosters, contributed to this fine Nuclear News and can use natural gas or kero-record. They promoted safety The 1991 capacity factor for sene as a fuel source. It was built through a program to keep the Atlantia-Electric's five jointly-on schedule and at less than green light on the plant's safety owned nuclear units was 66.9%, expected cost. -sign "burning." When the green and as a result, no penalties were In September, Atlantic Electric light is lit, the station is accident-incurred under New Jersey's free. The program has gained nucl e ar performance standard.
began purchasing power from a recognition for the team, placing Over 70% of our customers' ener-nonutility power producer located them in the final round of a gy needs were supplied by coal in Chester, Pennsylvania under a national competition honoring 25-year contract.
The generating and nuclear sources, providing a unit is expected to provide up to excellence in employee teamwork.
savings of more than $135 million 75 megawatts of capacity using New Rates in Effect over the use of oil. municipal solid waste as its On July 3 , the New Jersey Board Hope Creek Nuclear Generating energy source. This marks the of Regulatory Commissioners Station received a manufacturer's first time in Atlantic Electric's (BRC) granted Atlantic Electric a award for outstanding perfor-history that capacity and energy $50 million increase in base
- mance of a boiling water reactor. is being_ provided by a non utility rates. The return on common Hope Creek achieved a lifetime power producer under a long equity was set at 12.5% with an capacity factor of and a term arrangement.
overall return of 10.52% on a test lifetime availability factor of ' Safety Continues to Shine year ending May 31 , 1991. The 82.4%, placing it among the top BRC also made permanent a perfoD?ing boiling water reactors Atlantic Electric proudly completed
$41.6 million provisional base in the nation. its second consecutive "safest year rate increase that had been in Hope Creek also set a record for ever." Workers at B.L. England effect since June 1990. It was and Deepwater Stations helped ruled that a Phase II to the continuous operation.
At the end make it happen. In early 1992, proceeding was appropriate to of 1991, it had completed 234 both generating stations, as well determine the regulatory days (and still counting). This as the rest of the production treatment of tax benefits. from the record helped establish another: section, recorded over one year nonutility affiliates.
The three units on Artificial without a lost-time accident.
Island-Hope Creek, Salem Unit 1 On August 30, Atlantic Electric and Unit 2-set a record for the filed a Phase II petition with BRC. island of 84 days of simultaneous Atlantic Electric asserts that no continuous operation.
changes in customers' rates Demand Hits New Record should be made as a result of tax benefits from the nonutility On July 23, Atlantic Electric re-affiliates.
The petition asked for a corded a record peak demand of Deepwater's Morale Boosters are: $25.8 million base rate increase 1 , 911megawatts,a10%
increase O to r) J. Sunderhauf, J. Rumaker, to recover the costs associated over 1990. Atlantic Electric's F. Jones, P. Humanick,. T. Harris, with recent changes in New
- direct load management program, M. Mason, J. Jenkins, T. Donofrio, Jersey's Gross Receipts and the Summer Savers Club, helped M. Kiger, J. Famkopf, J. Thompson, Franchise Tax law. A dec_ision is J. Rhoda, P. Harwood, G. Averiett, to reduce the demand by about K. Drummond and H. Hoover. expected in the second quarter 33 megawatts. Not Pictured:
E. Moore of 1992. 14 A LIVING TRIBUTE In the Fall of 1992, Atlantic Electric and the citizens of Millville, New Jersey will celebrate the opening of the Brian A. Parent Center. The Center is being built adjacent to Atlantic Electrics holly orchard. It will replace a farm house that once displayed all forms of holly artifacts and memorabilia.
Together with the holly orchard, the Cf(nter will renew a South Jersey tra_dition-the Millville Holly Orchard Tour. The Center is named after senior vice president Brian Parent, the man who spearheaded the holly orchard project, who died suddenly last July. The idea was to create a living memorial in honor of his many contributions to the Company, its share-. holders and its employees. . Honoring Brian in this way is fitting for another reason, one that stems from the kind of man he was. Brian believed that. a corporation has an obligation to give something back to the nities it serves. He put this belief into practice many. times, but never with as much enthusiasm as with the holly orchard and visitors, center. Thanks to Brian, the citizens of South Jersey will have a special place to view artists* exhibits, learn about their heritage, tour a commercial holly orchard and hold community events. If Brian were with us today, he would be extremely proud. Marketing Goes Gangbusters, Exceeds Goals Eleven of the fifteen major marketing programs exceeded operating goals in 1991. The B.E.S.T Home program (Built for Energy Saving Tomorrows) signed up over 1,100 homes, exceeding the program goal by over 700%! This year, the Summer Savers Club was a hit with commercial customers, gaining over six times more participation than expected.
The Save-A-Watt efficient lighting program achieved more than double its target. Capital News In May, Atlantic Electric redeemed its First Mortgage Bonds, 11 5/s% Pollution Control Series A of 1981 due 2011 with proceeds from the issuance of $38.865 million of First Mortgage Bonds, 6.80% Pollution Contrel Series A of 1991. The refunding is expected to save Atlantic Electric approximately
$2 million per year in interest costs. In May, Atlantic Energy sold a total of 2,000,000 shares of new Common Stock at a price to the public of $34.50. Also in May, Atlantic Electric sold 700,000 shares of $7.80 No Par Preferred Stock at a price to the public of $100 per share. Proceeds from the sales of these securities were used primarily to fund Atlantic Electric's on-going construction program. Construction expenditures in 1991 totaled $172.4 million in cash, plus $4.9 million in allowance for funds used during construction.
A VERY SPECIAL DELIVERY SYSTEM Specialized equipment helps Atlantic Electric keep the power flowing to more than one million people in southern Jersey FROM TO-DOOR A generating station converts fuel such as coal, oil, natural gas or uranium to supply electrical energy. Electricity is generated at a voltage or pressure too low to be trans-. ported through conductors tively over long distances 0 .. DELIVERING POWER AT ATLANTIC ELECTRIC Electricity. We depend on it to be there when we need it. If you're an average Atlantic Electric customer , that's about 99. 99% of the , time. We call that "reliability.
and it's a record we're proud to share. That kind of service requires a very special delivery system. It's called a transmission and distribution system. Electricity is unique. It is produced and distributed at the very instant it is used. From one second to the next, customers vary the amount of electricity they use. Electrical generators and the transmission and distribution system respond instantaf!.e0!-1-sly to meet t_hese changing conditions.
At the heart of it all is our system control center. From generation to end use, every aspect of our power delivery system is managed from this point. Each day, thousands of details come together there, helping us make decisions that electricity reliable and affordable . (Italicized words are defined in the Glossary of Terms. p. 8) A transmission substation may be located right next to a generating station. Here, a transformer does the job of creasing-" stepping up" the power to move it along the lines more efficiently
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- TRANSMISS I ON & DISTR I BUT I ON PROD UCT I O N ----* Over the next three years, more than half of Atlantic Electric's construction dollars will he used to expand, improve and strengthen the transmission and distribution system An interconnection with a, neighboring utility or a nonutility power producer occurs at higher voltage levels known as transmission voltage. Atlantic Electric's system transmission voltage is either 230 kV, 138 kV or 69 kV ustomer satisfaction and success. You can't have one without the other. It is tradition in the utility business to measure tomer satisfaction with words like "reliability" and 'affordability.,, These are the features of good, sound service that customers expect. But, theres more. Customers tell us that satisfaction is also measured with words like "care," "concern" and "protect." They 're about our world, and we couldn't agree more. The system that delivers the power is the most visible part of our business.
Poles, wires and ! armers are seen on virtually every s_treet served by an electric utility. At the end of 1991, Atlantic Electric had about $850 million invested in its transmission and distribution system. Through 1994, another $260 million will be invested, over ' . 50% of our expected total capital spending.
In todays competitive energy market, it.s a sound strategy to invest in the power delivery system. A well-planned, well-maintained system delivers energy efficiently.
It keeps prices competitive and service at its highest level. Our.success depends on earning our customers' respect and loyalty. We do that by delivering power safely, continuously, at a reasonable cost, at all times showing respect and concern for our world.
GLOSSARY OF TERMS Conductors wires through which electricity flows readily with little resistance or loss of voltage Current a flow of electric charge Distribution feeders conductors that connect the distribution substation to the final transformer before hook-up with the customer , Generating station the site where fuel is converted to electric energy Interconnection a hook-up between electric utilities or nonutility power producers that allows the transfer of electric energy in either direction kV kilovolt: a measure of voltage; i kV= 1,000 volts Substation points of interconnection for transmission and distribution lines where the voltage level of electricity is changed and regulated Transformer a device that increases-"steps up" or decreases-"steps down" the voltage level of electrici_ty Transmission and distribution system the delivery network for electr i city that ties generating stations to customers; it consists of land, wires, poles, substations and all equipment necessary to transport power Transmission lines conductors that transport electric energy at higher voltages over long distances between substations Volt unit of measure of pressure or force Voltage the level of force applied to electric current in a conductor, measured in volts, generally described as kilovolts There are many reasons why we make investments in power delivery, but none more important than reliability.
For customers, reliability is a simple matter: The lights come on at the flip of a switch. For us, ity is far more complex. We build safeguards
- into our system to keep our customers' lights on and 99.99% of the time, we're successful.
But, severe weather or problems can cause occasional power interruptions.
We keep those situations to a minimum by making sure electricity can travel to a customer's door by more than one route. If one path is blocked, we can get there-another way. Protective devices, ing circuit breakers, are used to isolate problems from the rest of the system. This protects expensive equipment from damage and lets energy 'continue to flow over an alternate path. We look for trouble before it happens. An elaborate network links the system. Almost 100 times a day, computer technology scans for potential problems.
If something is spotted that's not just right, we can take quick, corrective actions before customers are affected.
New customer growth can put heavy demand on parts of the system and stretch existing equipment to its capacity.
When that happens, we make investments in new equipment or find ways to upgrade existing equipment to keep the lights on. We've set some tough standards for reliability.
Our efforts are paying off. Except for major storms in 1991, on average, customers were without electricity less than once and, when an outage did occur, we restored service in a little over an hour. We think customers should expect that kind of reliability.
It's our job to make it happen. This transmission substation houses
- Transmission lines transj>ort higher voltage power over long distances to another transmission substation a transformer that steps down the voltage to lower, sion levels
- DELIVERl'.\G AFFORIHRILITY Dollar for dollar, the cost of fuel and energy is passed along to Atlantic Electric's customers.
That's why it's important to seek out the most economical source of fuel and energy available . A top-notch system delivers low-cost power* from where it's generated to where it's needed, when it's needed. Energy supply is a two-way street. There are times when Atlantic Electric is able to supply energy to the Pennsylvania-New Jersey-Maryland Interconnection (PJM). Other times the P JM, a neighboring utility or a non utility generator supplies us with economical power. Any savings are passed along to customers.
The point is that a strong power delivery system lets us make choices for customers to help .keep their energy costs affordable.
Atlantic Electric is expanding its 230 kV transmission system to make more choices possible.
This project is state-of-the-art in terms of longrange planning and construction.
For customers, it means improved reliability, affordability and room to grow. Making these improvements to our high voltage transmission system will span several years. In 1988, we finished the first phase:* a 33-mile line that begins in the north central part of our service territory and delivers energy to our fast growing ern region. The second phase*will be finished in early 1992. This 21-mile line on the western side of our territory has special importance.
It ties three non utility power plants to Atlantic Electric.
Both of these lines have used money-saving planning and construction techniques. tional phases are planned to connect the eastern and western links and complete the project. After the turn of the century, it's expected that customers will continue to be served by an improyed, highly-reliable transmission "loop" within southern New Jersey. The Cardiff-New Freedom mission line is the first link in an proved high voltage transmission loop that will serve southern 'ew Jersey into the 21st_ century Large industrial customers may be connected to the utility's system at these mission levels Planning a power delivery system mixes sound engineering and cal cost control with thoughtful insight. It begins with questions:
Who will our customers be? How much will they need? Where will the energy be needed? What new sources of energy will be available?
I We develop forecasts based on oiir experience and our expectations.
We study the past, analyze the options and ask more questions:
Will new generating sources have to be built or can we use existing facilities?
What happens if energy use grows faster than we thought? How much will it cost? The help usylan for the future. In the final analysis, a well-planned power delivery system has certain traditional characteristics.
It has room for: growth. It can accommodate customers' changing use and can keep up with the interchange of energy between utilities, nonµtilities and power pools like tpe PJM. It can stand Mother Nature's bad days or the loss of a generating unit. Atlantic Electric's goes *beyond the basics. We have "master plans" for our power delivery system to guide long-range planning, *design, construction and maintenance
._ What makes these plans sp.ecial is that they provide for the orderly development of a power delivery system giving consideration to all the unknowns'that exist. The ples and standards adopted in those are based on the knowledge that circumstances change, new technologies emerge, demand for energy varies and philosophies shift. To some, it might seem like a whole lot to keep track of. But not for us, we'r_e ready. At these lower voltages, electricity flows to a distr ib ution sstation where it is ste p ped down even more for use b y homes an d businesses.
Each distribution substation provides electricity to a local area *by means of distribution feeders or lines Distributio n line transformers a r e loca t e d on p r actically every street served by a utility. They step down the voltage to its lowest level (120/240 volts) to provi d e electric service to customers TRANSMISSION PANDORA'S BOX OF An impnrtAn:
- cy., is e xchanging e nergy. In 1 990, about 15% of the e n e rgy g e n e rat e d in our nation reached custom e rs as a r e sult of th e s e e xchanges
- 11 % from utiliti e s and 4% from nonutilities.
En e rgy is deli ve red through compl e x , d e licately-balanc e d transmission systems that op e rate in conc e rt. Utilities dep e nd
- on each oth e r to coordinate thos e systems and to keep reliability high. R e cently , regulations have been proposed that could forc e utilities to open th e ir transmission lines to oth e rs for the purpos e of deliv e ring en e rgy. Those in favor say that ultimately , customers will be serv e d by lower rates. We disagree.
Th e risks ar e too great. From our perspective, op e ning transmission lines threatens r e liability. Numerous pow e r produc e rs competing for open access to a transmission syst e m would c omplicate and impair syst e m operation.
Costs would in c reas e. ating problems would b e come mor e difficult to det ec t and s e rvice r e storation far mor e complicat e d and ex pensive. We cannot support r e gulations that.
- would surrend e r som e control of a very complex transmission syst e m. This system has b e en dev e loped ov e r th e years by p e opl e experienc e d in m e eting southern New Jersey's e n e rgy needs. Our shareholders and customers li:av e paid for that system and our customers are entitled to be served by \t. We cannot support rules that would give priority to power deliveries that would benefit only a few. Rul e s like this could make it impossible to tak e advantage of economical purchases that could benefit all. Our ability to provid e customers with safe , reliable and affordable en e rgy is why we are in business. We oppose any effort that jeopardizes our obligation to s e rv e customers.
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- High strength, low maintenance sleet poles are replacing the familiar vanized steel lattice towers for higher 'voltage transmission lines. When exposed to the elements, the finish on these high strength poles "weathers" to blend in with the sur-, rounding area. These poles and lines can withstand per-hour winds and a 1 'lz-inch thick coating of ice "My favorite picture (below, left) shows the
- past and the future in the same spot. Our new weathering steel poles are next to the lattice towers we've used for years. Most of the lattice towers still have a lot of service left in them. But you can bet that as they need replacing, we'll use the new steel poles. Y.ou can really see how much better they blend in with . the environment.
They not only look better but they turned out to be the best choice for an important transmission project. "A COUJ!le of years ago we added a new 230 kV line to our system to bring more energy into the part of our territory, including the shore. Some of the line had to be built through wetlands and the Jersey pinelands.
We had to figure out how we could bring it in without ing tliese areas and without spending a fortune. "It turned out to be one of the best projects I've ever worked on. We learned how to install these new poles without building costly access roads. We didn't have to clear as much land because of the poles' special design. We're using a new type of foundation that doesn't need nearly as much concrete carried to the site. We used helicopters to string some of the wires. What's more, we're using many of the same construction techniques on the new 230 kV lines we're building now. 'Tm really proud that Atlantic Electric is doing things this way." Dave Beckmann is Superintendent of Transmission and Civil. *
- * * -* .. Atlantic Electric's extensive transmission and distribution system makes sure that power is the r e when customers need it. More than 10,000 miles of wire wind tllrough Atlantic Electric's 700 square-m¥e service territory, bringing the power door to door "Once we know where the power is needed, we have to figure out the best way to get it there. Sometimes, it's a tough job because you have to get from "point A" to "point B," but you can't always go in a straight line. "We have lots of things to consider when we plan a line route. First, we try to use rights of way that already exist. Then, we see if we can use industrial areas, roadways or railroad tracks as corridors for new lines. We try our hardest to keep our transmission lines out of developed dential areas. Sometimes we wind up with a line that has a lot of twists and but in the end it's the most prudent way to go. "Our new pole design for higher voltage wires uses a narrower right of way. Now, they only have to be about half the.width of what we used to need for the same line voltage. That means we have less area to clear. But when we do have to clear an area, wE)'re very careful about how we do it. We clear only the areas that might impact the safety or reliability of our lines. In environmentally sensitive areas like pinelands or lands we are especially careful. We try to leave the low-growth plants and smaller trees in the area. We've even re-seeded areas with annual plants and other ground cover that will like partridges and songbirds.
To make things look more pleasing, we'll plant trees or shrubs to act as a screen or buffer, making our facilities less visible. "Maintenance is a full time job. We try to keep the areas free of debris. Unfortunately, our rights of way sometimes get used by others as a dump site. When that happens, we'll do our best to barricade the area to stop the problem. Tl;le bottom line is, the area must be clear enough to permit the safe operation of our lines, but remain natural enough to allow plants and wildlife to flourish." George Henry is Superintendent of Right of Way and Forestry.
A right of way is a narrow corridor or cleared land that runs on either side or a utility transmission or distribution line. Narrower rights of way mean more land can be left in its natural state. ew high voltage pole designs make this possible Part of the job. for George Henry and Nancy Sullivan or the Right of Way Depf1.rtment involves discussing plans for a right of way with customers
- .. A compatible tree is one that works gether with a utility's distribution lines. These trees, like wood or cherry, grow at a slower rate and mature at ll smaller height, keeping their branches at a safer distance from power lines. "Keeping the power flowing means we have to keep all of our lines free and clear. With sion lines, our job is a bit easier because they are located in wider rights of way. When it comes to distribution lines, like the ones you see in front of your house, we sometimes have a tough time. Our biggest challenge is trees. You get one good ice or wind storm ap.d the next thing you know, tree limbs are down all over power lines and our customers are out of service. It hurts our reliability and it can cause soine serious safety problems. "That means we have to trim the trees near our power lines. It's my job to see that the health of the tree gets proper attention.
We use a method called 'directional trimming' researched by the US Forest Service. This kind of trimming encourages the tree to grow away from the lines. Over a period of years, *we won't have to trim as often and that's healthier for the tree. "Sometimes we find a tree that can't be saved. It may be unsafe or ardous to our lines. When that happens, we ha.ve to recommend to the property owner that the tree be removed. In the not too distant future, we'll be able to replace a lost tree with a 'compatible tree: one that grows a bit slower and matures a bit shorter. These trees fit in well with our lines while still providing shade and beauty for the community.
We've tested the program in a few communities and it's been very successful. "You might wonder where we get these trees from. Well, we're starting to grow our own. A few years ago, Atlantic Electric began fixing up a holly orchard in Millville, New Jersey. I'm real proud of the way it has come along. We have over 50 acres of orchard and nursery With just about ever:y type of American holly tree you could imagine. We've also planted an area for our "co_mpatible trees." Once they'r_e ready, they will be the source for replacement trees in our communities.
We'll also use trees from this farm to landscape areas around our facilities. "It's nice to know that the work we do gives something to our community and our world." Matt Simons is Superuisor of Forestry.
Directional trimming (depicted above) maintains the health of the tree and the safety of power lines Mike eal Oeft) and Matt Simons, Forestry Department, examine the growth of newly planted holly seedlings
- Electric Field only (no current) Electric and Magnetic Fields (with current) Electric and Magnetic Fields (EMFs) are invisible lines of force that occur whenever an electric charge is present and moving. Electric fields are invisible fields of force created by the pressure (voltage) of an electric charge. -Magnetic fields are invisible fields of force created by the motion (amperage) of ar electric charge I "Today the most complex issue facing us is electric. and magnetic fields_:known as EMFs-and the public's interest in their possible health effects. Customers are as concerned about this as anything in recent history. That's why it's my job to make sure that our company knows as much as possible about this issue. That way, we can respond knowledg_eably to our customers' and employees' questions. "What makes this difficult is that there are no simple answers. But, that doesn't mean we are ignoring the questions.
So far, almost 50 scientific studies have been published examining possible relationships between . EMFs and health. The results may appear confusing and contradictory.
However, there-has been no sufficient scientific evidence to conclude that exposure to EMFs causes any illness or disease. There's more research going on today, but it will be several years before it's completed. "The way I see it, there are three ways to deal with public concern about EMPs now. First, we could ignore it and hope it goes away. That's just not acceptable at Atlantic Electric.
Second, we could start spending a lot of money on procedures that could significantly reduce, but not eliminate EMFs. That's not very wise since the cost would be astronomical and not really justified. "I think we've chosen the most prudent course of action for now. We're managing EMFs through careful placement and layo'ut of our new mission and distribution lines and substation facilities.
If customers ask, we'll go to their homes and businesses and measure the level of EMFs. Where we can reduce the level of EMFs through modest costs, we're doing so. We're supporting scientific research at the academic and fessional levels.
out talking to citizens who have raised concerns about the health effects of EMFs. We've even involved those citizens in our plans to provide future service. And, we're continuing to dedicate a small group of people, myself included, to study and learn from information supplied by outside medical, technical and _other experts. "Like I said, we_don't have all the answers today. But we're asking the right questions." Mike Picucci is Coordinator of the EMF Management Seruices Team. A gaussmeter is an instrument used to measure the level ofEMFs . ..
Residential Customers Sales to Residential customers increased 3.1 % in i 991 because of hotter weather during the sumnier months. More than 3,300 new Residential customers were added to the system during the year. %Annual Est.%Annual For the Growth Rate Est. Growth Rate ten-year period 1986-1996:
1986 1991 '86-'91 1996 '91-'96 Sales (billion kwh) 2.839 3.370 3.5% 3.631 1.5% % of Total Sales 43 42 43 Average Use (kwh) 7,982 8,440 1.1% 8,424 (0.4)% Peak (Mw) . 786 1,086 6.7% 998 (1.7)% Commercial Customers Sales to Commercial customers grew 2.8% as a result of a modest increase in the number of new customers and higher average use per customer.
Sales to , 12 hotel-casinos increased 3.5%, and comprise 6.9% of total sales. 8 7 6 5 4 3 2 1 %Annual Est.%Annual For the Growth Rate Est. Growth Rate ten-year period 1986-1996:
1986 1991 '86-'91 1996 '91-'96 Sales (billion kwh) 2.401 3.147 5.6% 3.497 2.1% % of Total Sales 37 40 41 Average Use (kwh) 52,938 61,619 3.1% 59,872 (0.6)% Peak (Mw) 528 622 3.3% 659 1.2% Industrial
& Other Customers Sales to Industrial
& Other customers decreased by 0.6% in 1991. During the fourth quarter, ACE's largest industrial customer became a self-generator and will now supply virtually all its own f)nergy needs. For the ten-year period 1986-1996:
1986 Sales (billion kwh) 1.281 % of Total Sales 20 Average Use (000 kwh)* 1196.7 Peak (Mw) 145 *Industrial customers only 1.435 1426 1.395 1.382 3.063 2.742 2.917 2.592 3.040 3.213 3.266 3.268 'I ATLANTIC ELECTRIC Energy Sales by Customer Class RESIDE TIAL e COMMERCIAL e I DUSTRIAL AND OTHER %Annual Growth Rate 1991 '86-'91 1.418 2.1% 18 1371.1 2.8 o/o 203 7.0% 1418 3.147 The growth in kilowatt-hour sales is determined by how 3.370 many new customers are added, how much electricity each customer uses and weather conditions.
Since 1986, kilowatt-hour sales have increased an average of 4.0% each year as a result of customer additions and increased usage per customer.
Est.% Annual Est. Growth Rate '1996 '91-'96 1.333 (1.2)% 16 1249.5 (1.8)% 154 (5.4)% Atlantic Electric serves more than 450,000 customers in a 2, 700 square-mile area in the southern one-third of ew Jersey. Peak load has occurred during the summer months. _ Major businesses include gaming, stone, clay, glass, chemical, petroleum, rubber and food processing
- *
- CONTENTS
- Report of Management
- Report of The Audit Committee
- Independent Auditors' Report CD Consolidated Statement of Income
- Consolidat e d Statement of Cash Flows e Consolidated Balance Sheet
- Consolidated Statement of Changes in Common Shareholders' Equity e Notes to Consolidated Financial Statements
- Management
's Discussion and Analysis of Financial Condition and Results of Operation
-G Summary Financial and Statistical Review Atlantic Energy, Inc. and Subsidiaries HEPORT OF '.\L\\AGE'.\1E\T The management of Atlantic Energy, Inc. and its subsidi-aries (the Company) is responsible for the preparation of. the financial statements presented in this Annual Report. The financial statements have been prepared in conform-ity with generally accepted accounting principles.
In preparing the financial statements, management made informed judgments and estimates, as necessary, relating to events and transactions reported.
Management is also responsible for the preparation of other financial informa-tion included elsewhere in this Annual Report. Management has established a system of internal account-ing and financial controls and procedures designed to provide reasonable assurance as to the integrity and ability of financial reporting.
This system is examined by management on a continuing basis for effectiveness and efficiency.
Management believes that, as of December 31, 1991, the system of internal accounting and financial con-trols is adequate to accomplish its objectives.
Management also recognizes its responsibility for fostering a strong ethical climate in which the Company's affairs are con-ducted according to the highest standards of corporate conduct. This responsibility is characterized and re-flected in the Company's code of ethics and business conduct policy. The financial statements have been audited by Deloitte & Touche, Certified Public Accountants.
The auditors provi.de an objective, independent review as to management's di. charge of its responsibilities insofar as they relate to the fairness ofreported operating results and financial condi-tion. Their audits are based on procedures believed by them to provide reasonable assurance that the financial statements are not misleading and include a review of the Company's internal control structure and tests of transactions.
The internal auditing function conducts audits and praisals of the Company's accounting and other tions, and evaluates the financial and operational control procedures which have been established and compliance with those procedures.
Both Deloitte & Touche and the internal auditors periodically make recommendations concerning the Company's internal control structure, and management responds to such recommendations as appropriate in the circumstances.
None of the mendations made for the year ended December 31, 1991 represented significant deficiencies in the design or opera-* tion of the Company's internal control structure.
9-/ J. L. Jacobs President J. G. Salomon e Vice President and Treasurer
- Atlantic Energy , Inc. and Subsidiaries The Audit Committee of the Board of Directors is com-*rised s?lely directors.
The members of e Audit Committee are: Matthew Holden, Jr., Chairman, Michael Galvin, Jr., Gerald A. Hale, Madeline H. McWhinney and Harold J. Raveche. The Committee held six meetings during fiscal year 1991. The Audit Committee oversees the Company's financial reporting process on behalf of the Board of Directors.
In fulfilling its responsibility, the Committee recommended to the Board of Directors, subject to shareholder tion, the selection of the Company's independent public accountants.
The Audit Committee discussed with the internal auditors and the independent public accountants the overall scope and specific plans for their respective audits. The Committee also discussed the Company's consolidated financial statements and the adequacy of the Company's internal control structure with the independent public accountants.
The Committee met regularly with the Company's internal auditors and independent public accountants, without management present, to discuss the results of their examinations , their evaluations of the Company's internal control structure and the overall quality of the Company's financial reporting. The meetings also were designed to facilitate any private communication with the Committee desired by th e internal auditors or independent public accountants.
I *-4 dtMJ I Jr. Matthew Holden, Jr. Chairman , Audit Committee Atlanti c t: nergy , I n c. and S u bsidia r ies Deloitte&
Touche C e rtifi e d Public Accountants Two Hilton Co urt , P.O. B ox 3 19 Parsippan y, N ew J e rs ey 07054-0319 To the Shareholders and the Board of Directors of Atlantic Energy, Inc.: We have audited the accompanying consolidated balance sheets of Atlantic Energy , Inc. and subsidiaries as of December 31, 1991 and 1990 and the related consolidated statements of income, changes in common shareholders' equity, and of cash flows for each of the three years in the period ended December 31, 1991. These financial statements are the responsibility of the Company's ment. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable ance about whether the financial statements are free of material misstatement.
An audit includes examining , on a t e st basis , evidence supporting th e amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects , the financial tion of Atlantic Energy, Inc. and its subsidiaries at b e r 31 , 1991 and 1990 and the results of th e ir operations and their cash flows for each of the three years in the period ended December 31, 1991 in conformity with generally accepted accounting principles.
January 31, 1992
- Allanlic Energy, Inc. and Subsidiaries CONSOLIDATED STATEME:\T OF INCOME (fhousands of Dollars) For the Years Ended December 31 *********************************************************
- lml******************
llmll******************llml******* Operating Expenses:
Energy Costs Operations Maintenance Depreciation and Amortization Gross Receipts and Franchise Taxes Federal Income Taxes Other Taxes
.. Other Income: Allowance for Equity Funds Used During Construction Other Income-Net Total Other Income
... Interest Charges: Interest on Long Term Debt Interest on Short Term Debt Other Interest Expense .............................................
Total Interest Charges
..
...
..... ... Net Income $777,970 156,718 221,712 51,960 66,023 88,932 36,244 11,525 633,114 144,856 1,814 7,043 8,857 153,713 51,601 1,946 1,179 54,726 (3,059) ...............
.... 51,667 (16,411) $ 85,635 ****************************::::::::::*:::::::::::::::::
- ************************:t:::**:::::::::::
- :::::;:::::::::::::::::::
Average Number of Shares of Common Stock Outstanding
$716,779 161,428 190,951 52,351 62,141 87,314 26,917 11 , 115 592,217 124,562 1,727 7,585 9,312 133,874 54,803 1,510 109 56,422 (2,226) 54,196 (10,799) $ 68,879 $705,020 $ 173,724 167,435 55,203 58,485 83,396 22,865 9,167 570,275 134,745 5,450 5,450 140,195 47,131 5,231 909 53,271 (2,805) 50,466 (8, 765) 80,964 (in thousands) 24,504 22,795 21,634 :::::::::::::::::::::::***
- ***********::::::::::::*::::::::::::::<::::::::::::::::::::::
Per Common Share: * $3.02 $3.74 * .......................
,,,,,,,,.,,,,,,,,.,,,,,,,,,,,,,,,,, , ,,,... "' $2.99 $2.94 $2.85
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ... Dividends Declared $3.49 ************::::::::
- 1'f::::::::::***
Dividends Paid $2.98 $2.92 $2.82 **************:*:::::::::::::::::::::::::::::::::
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Atlantic Energy, Inc. and Subsidiaries (Thousands of Dollars) For the Years Ended December 31 *********************************************************************
- lml****************
- lllllDl******************
lllm******* Cash Flows Of Operating Activities:
Net Income Deferred Purchased Power Costs Deferred Energy Costs Noncash items affecting operating activities:
Preferred Stock Dividend Requirements of Subsidiary Depreciation and Amortization Allowance for Funds Used During Construction Investment Tax Credit Adjustments-Net Deferred Income Taxes-Net Net (Increase)
Decrease in Other Working Capital Other-Net ..
Cash Flows Of Investing Activities:
Utility Cash Construction Expenditures Leveraged Lease Investments Leased Property Nuclear Decommissioning Trust Fund Deposits *nutility Property and Equipment ility Plant Removal Costs Other-Net
$ 85,635 (12,938) 13, 180 16,411 66,023 (4,873) (2,348) 15,761 (2,821) 10,508 184,538 (172,425) 3,960 (8,793) (13,777) (538) (5, 157) (6,822) (203,552) ..
..
...............................................................
................
....... Cash Flows Of Financing Activities:
Proceeds from Long Term Debt Retirement and Maturity of Long Term Debt Increase (Decrease) in Short Term Debt Proceeds from Capital Lease Obligations Common Stock Issued Preferred Stock Issued Redemption of Preferred Stock Dividends on Preferred Sto c k Dividends on Common Sto c k Other-Net .. ..
... Net Increase (Decrease) in Cash and Temporary Investments a.5.1.1. .11:1.1?. !
p?. r.11:1:!'. : .. ?. e.
.?.f ye a.r. .....
.11:1.1?. ! Il:1 P.?.r.11:1:!'.
e.11 . Ild . 0 f x e.a.r. ..... Supplemental Schedule of Payments:
Interest .....
... 38,779 (50, 170) (23,350) 8,793 72,698 70,000 (1,050) (16,411)
(62,769)
... 28,120 9,106 8,961 $ 18,067 $ 57,221 $ 23,721 $ 11,304 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. $ 68 , 879 (21,840) 20,136 10 , 799 62,141 (3, 953) (2,349) 15 , 177 9,591 1,290 159,871 (166,818) 3,993 (10,576) (1,920) (129) (3 , 912) (4,200) (183,562)
(28,625) 43,950 10,576 4,694 50,000 (1,050) (10,799) (56,673) (4,329) 7,744 (15,947) 24,908 $ 8,961 $ 58,080 $ 19,279 $ 10,412 $ 80,964 (19,660) 8,560 8,765 58,485 (2,805) (2,449) 17,616 (23,060) 902 127,318 (145,081)
(27,777) (9,229) (3,263) (3 , 536) (4,286) (4,548) (197 , 720) 150,183 (15,998) (61,000) 9,229 71,605 (4,050) (8, 765) (52,756) (4,044) 84,404 14,002 10 , 906 $ 24,908 $ 52,817 $ 14,284 $ 9 , 639 Atlantic En e rgy , Inc. and Subsidiaries
- CO:\SOLIDATED BALA:\CE SHEET (Fhousands of Dollars) December31
......................
..........................
...........................................................................................................................
- IIIIll*** .............. *ll!l!Ill
- ..... . Assets Electric utility Plant: In Service: Production Transmission Distribution General Total In Service Less Accumulated Depreciation
...................................................................................
Net Construction Work in Progress Land Held for Future Use
.. Electric Utility Plant-Net
......................... Nonutility Property and Investments:
Investment in Leveraged Leases Nuclear Decommissioning Trust Fund Nonutility Property and Equipment-Net Other Investments and Funds
... Current Assets: Cash and Temporary Investments Working Funds Accounts Receivable:
Utility Service Miscellaneous Allowance for Doubtful Accounts Unbilled R e venues Fuel (at average cost) Materials and Supplies (at average cost) Prepayments D e ferred Taxes $1,009,776 295,044 557,494 152,441 2,014,755 545,829 1,468,926 102,708 5,045 53,093 1,629,772 75,293 26,489 15,039 4,233 121,054 18,067 15,955 49,842 16,703 (2,400) 38,078 21,646 27,394 11,267 11, 142 $ 953,342 281,431 494 , 807 119 , 892 1 , 849 , 472 504,202 1,345,270 114,622 5 , 073 57,971 1 , 522,936 75,156 11 , 784 15,003 7,425 109,368 8,961 14,709 48,461 17,767 (2,000) 34,849 26,262 28 , 221 12 , 113 * ................... . . ..............
.... ... ...... ...............
..........
.. ........ . ........................ ************
.................
... . 7,476 196,819 Total Current Assets Deferred Debits: Property Abandonment Costs Unr e covered Purchased Power Costs D e ferred Energy Costs Unamortized Debt Costs Other Total Deferred Debits Total Assets Th e accompanying N otes to Consolidated Financial Stat e ments are an integral part of these statements. 207,694 8,502 137,818 10,360 22,505 13,711 9,443 124 , 880 10,360 22,379. . 9 , 825 ... 192,896 176 , 887 ..........
- $2, 151,416 $2,006,010
- December31