ML20003F723
| ML20003F723 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse  |
| Issue date: | 04/16/1981 |
| From: | Johnson W, Williamson J TOLEDO EDISON CO. |
| To: | |
| Shared Package | |
| ML20003F720 | List: |
| References | |
| NUDOCS 8104230467 | |
| Download: ML20003F723 (32) | |
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.l The annual meeting of The Toled Edison Company will be held at i A..\l. I E.S.T.) on Tuesday. Apr
- 2S.1981 in the Company's heat r l quarters. Edison Plaza. 300.ilad i
son Asenue. Toledo. Ohio. Fo. mal notice of the meeting wil! ! sent to shareowners with the pros statement. l The Toledo Edimn Company is ' pubhe utility enceed primarily l the generation. transmission. d: l 19 9 tribution and sale ot electric ener. l in To tedo and Northwestern Ohi l Earnings Per Common Share S2.65 coverine an area or 2.500 <qu - l 52.20 miles. wit'n an etimated peru: ' Dividends Declared per Common Share tion ot ~ 50.Ono. The Compar Operating Resenues (millions) S 365 also provides relatively sm S 68 " * " " ' ' ' ""'"' I 2"5 ""d "- l Operating Income t millionsi heating services. Toledo Edisen 1 Svstem Enerav Sales (million kwhi ' 09 owned b) over 100.000 shar l
"""" i" "U 5" "d'e""d in m": !
System Peak Load (megawattsi 1395 countries around the world. l
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We have received permission from the Federal Energy Regu-12torv Commassion to amortize. over a 104 ear penod. the 546
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m:Hion of costs and any additional cance!! anon costs se may incur. subject to the xurrence of the Pubhc l'ulit:es Com-rmsson of Ohio. _ We ha e wcondarily requested that the 2mortizanon be incbded
- as an 2Howable cost to be ret .ered from custon:ers in our current 565 million rate increase request tefore the Ohio Com-ctss on. qThis same rate ind xcounting treatment has been authorized bv the Ohm Corntmsson for these same projects Jur 1950 ernings pr shue decreased 3 per cent to 52.56 for the rwo other CAPCO compames in Ohio m theit recent rate
-a 9 cent decrease. Cte.e an increase would hae been much decisions.I'Ihese actions would har the net etfect of recoupmg etter. the $2.56 was a ven good result considenna 23 the - our imestments in the cancr>Jed projects armf graduaHy elimmat-sherse factors that hit us l2st year. ing the ininal 21 cem earmnas loss over the 10 year penod.
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3ividends were continued in 1980 reflectma cur 58th con- mp n mmanends da se k ge""' w meest t. ecuns en of payments. Increases have twen made in eintht
>ut of the last ten years. Our Board of Directors connnues een y cem t an m ar f w w ed increase including the recmen of the cancenation costs. Hear-o carefuny study our dividend rate each quarter as we ne only ings on our request startedm. Februan and we would normally oo well aware of the continuing impact of int!ation on our -
expct a final Commission decision by April. areewners as well as our customers and empiosces. 1980 was another year of recession in the Midwest-includ- If a review of the not makes 1980 sound like a puticularly 'ne our service area. The auto and constructen industries both ahnse, and se hop unusual. vear-such is the truth. We have tal! a sen bad year. This resulted in reduced auto parts and msp nded be esen sumen effons m mdttce opm:ng costs. i dun g producten in local manufacturing f acthraes. result- increased our efforts to achieve good reliability of our Davis-ng in an 11 ;er cent decreue in our industrial sales on top Besse Nuclear Starm gernatit:g capacity. and placed a W 5t a 2 pr cent drot -he pnor year I1979. Natura!!y this de- down m a constmeta peeram m mIy those es;endimres vessed cur revenues and earninzs. sizmficantly. absolutely necenan m meet a mminuit:g cusemn gmw6 requirements. 1980 was also a vear in which we faced our first refueling it the Dnis-Besse Nuclear Strion which represents 25 pr cem The fumre emly Imks brighter. espciady after weathning t our generanna capac:tv. The refueling procedure itself re. the economic sterms et the 1970's: aaf the 3er 1950. in pr-guired ontv four weeks time-just as scheduled. However. ricular. With a new Mta nistmim and Cmsmss in Washinem nc6fications and additens required to meet changing Nuciear promising to sbw inflation and ease the burden of orer regula-legulatorv Comr:usuon requirements extended the outage to a ten that affects our industrv and company so particularly: sith a even-month pnad. This was in line with similar modification m m balanced legislamm in w s=e capa! m beter undu-rojects required at some other nuclear plants built in the same stand w state mgulmon poNems: wid a omimmers of me l ime frame. But it did deprne us of the use of this low-cost t the best cusemn niums pqmns in the nanon: with I rac:tv. and naturaHv had an impact on our 1980 earnings. 2 balunced mix of losnest mal and mc'ear genemem and 4 refueling outage 'is scheduled ia 1981. The next one is with an increasingly aggressive. k wwledgeable management team antic:paang and solving pcAh. we believe that there
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lue in early 1982. - will be a lot gaine for your compnv in the decade of the 80's.
\s previously reported. we reached agree:,ent with our CAPCO 'oser Pool partners. in January 1980. to cancel the construc. May I end be saving thank ym m a dediered stad har6 working ion of tour of the sesen nuclear units the pwl had under group of empbsces. Tnanis. m m e manaeemem team.
vnstruct:en. Th:s w as done in recognition er the great difficulty imm fommen thagh vice pressts. And t mst of 43. thanis j si proceedma with such a heaw nt$ciear censtru'ction program m ym shreewnns 3ho have insested its cur company. We ; hese dass from a regulatorv. financial and load-growth ;cint apprecine the mnWence an! sypon vm haw displawd in 4 j Of "5 D' IN5 ic! ?"' 52'5"i5 us. We l k upon your invest-
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i view.'At the time the decision was made. we knew that se l voeld be taimg a short-ter= earnings ;enaltv in order to achies e ment in w sock as a tmst-md ne doing a ven kst m i curmier long ranze ca ac:tv additions and iinancmg programs. mect and e6ance yw imere<ts. j The effect or the cancena2cns was to cause 2nimmedire earn- gg,., I ncs loss of reur 21 cents per shue for 1950 as se stopped l huging the construenon pregram. 2nd crediting our earmn2s. I tith the carmt g costs ci se four c2nceHed proec.s. Wisout his ynairv eur ermngs pr snare would have increased. rather han decre2 sed. Iast year. We had 546 cmulon invested in the our pro = cts a the ame cf cancenrion. '. 2t our 20 per cem John P. WiHiamsen hue of the cost to carrv se proects to completion would Ch2:rman and Chxi Execunve Otiscer int been an estimated 51.4 bilhon. i l
I _ constraints which we must face. Coal is abundant and read
. available in our region. Here. too, environmental requiremer i
* 's add about one third to the cost of building and operatinr new coal-fired unit. assuming we can even locate a unit in e N) .M
- service area under current environmental restrictions. It
% prudent to avoid total reliance upon any single fuel source a
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we planned our generation mix accordingly. g g. We expect no maior transmission additions will be necessars this decade because of our existing strong transmission netw.
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and interconnections with neighbonng utdities. Q A number of changes have been made at our nuclear and cc fired stations to meet regulatorv requirements. These are d cussed elsewhere but as an example we cite the investme of 553 million in environmental protection equipmen: at E k Shore station. including new electrostatic precipitators whi remove 99.5". of particulates from the stack gases, and a nt 475-foot stack. It should be noted that environmental protection involves r in evaluating our ability to provide reliable. adequate electric only the cost of installing the new equipment but also the cc power to our customers. it is clear that decisions made as long as of operating it. At Bay Shore station. however, the pon 12 years ago were sound. I. coking to the decade ahead, we have: required to operate the new precipitators is essentia!!y balanc by the power savings attributable to advanced technology inve' A strong energy supply because of our favorable mix of coal ing new variable speed fans. The long-standing commendat and nuclear generating capacity; operating priormance of the st: tion is credited both to sou: An extensive transmission network with strong ties to engineering design and to the qualitv of the people who maint; neighboring utilities: and operate it. Our Bay Shore personnel take particular pri
. in continuing its high ranking as one of the most efficient ios A completed 564 milh.on environmental improvement stations in the counttv. -
program begun in 19 8 at our coal-fired facihties:
. . . Circumstances can change dramatically in the eight to fot A nuclear pwer program that is gettmg progressively better teen vears between the time a power plant is ordered and wh:
evaluations following many months et expensne rebuilding it comes on line. Planning and management flexibility becor and changes in equipment. increasingly important. At the beginning of the Eighties we ha-The best planning. however. could not quite prepare us for the adjusted to new load torecasts higher costs. and the gro-sometimes shocking challengesof the past few years. Challenges ing burden of government regulation. A revised construct: like the huge inflationary jump in the cost of evervthing we schedule, new cost-cutting initiatives, and a sound environme buy. the sudden recognition by the nation of an unfortunate tal protection program demonstrate that we can have flexibil. reliance on foreign oil supplies, and the impact of our own within the traditionally stable structure of an electric utili: l gcverr. ment's intervention in our oprations through ever-changing regulation. Cordially, The most recent capacity addition to meet our customers' needs was the 155.000 kilowatts we received from our 20 per cent ownership share of a coal-fired generating unit located in l , Pennsylvanis on the Ohio River. This purs our coal-fired capacity ( at 69 per cent of our system. By 1988 we expect to base added
- another 636.000 kilowatts of nuclear capacity through our Wendell A. Johnson ownership shares in three units under construction. two in Ohio President and Chief Operating Officer and one in Pennsylvania.
! When the current construction schedule is completed in the late 1980's we will hase a favorable generating mix of 50 per cent coal. 45 per cent nuc! ear. and about 5 per cent oil. A balanced mix of coal and nuclear power is cited in several government studies as the only large-scale alternative to oil and natural gas in the near term. The availability of all other possible generating fuels is severely limited. As we see it. nuclear power has sieruficant advantaces in terms of fuel cost and environmental protection despite the accompanying regulatorv l l
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' " ..f...' power. This included 6.6 million rnegawatt hours generated at our own stations and other units in which we share .hrough the Central Area Power Coordination group (CAPCOL Bay Shore station produced over 4 mi!! ion AlWH. Davis-Besse produced oser one million AlWH tToledo Edison's shares, and Acme Station produced 629.000 A1WH. In addition. we received 612.000 A1WH from CAPCO sources and some one million A1WH from other wirces.
Our coal-fired units a ere responss'c kr 84 per cent of our requirements and the nuclear unit 16 per cent. The net system capability at year's end was 1789 megawatts. The Company
- . -; ..e ., had a favorable load factor of 68 per cent, which was an increase of about E!ectric sales in 1950 decreased 4 gr 2 per cent over 1979. Net generating cent overall at 7.388 millon kilowatt capability is about 25 per cent nuclear.
hours. Residential customers required 69 per cent coal and 6 per cent other. 37 million kilowatt hours more in 19S0 than in 1979, a 2 per cent increase. A third coal-fired unit at the $1.3 bil-Commercial sales increased by 26 rm.l- ~ n - tion Bruce Alanstield station in uestern lion kilowatt-hours. also a 2 per cent p g g increase. Industrial sales rei!ected the
. 29. The unit. in which we have 20 per depth of the recession in the industrial .
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Alidwest with an i1 per cent drop. svivania Power Company. Toledo Edison.as
. part of the Central Area Power Coordi-The annual rate of growth is obviousiv slower than in the decade of the Sixties n2 n SmuP. heg hut M000 and before. Historically, electric sales dollar ont of every three dollars spent growth in our service area had t een at for the Bruce A12nsfield plant went for six to seven per cent annuallv. In the .
. .. environmental controls. The third uru. .ts years after the oil embargo of 19..0 witn output is added to 135.000 kilowatts we subsequent sf ortages and highly inf!ated receive from a sccend unit which went oil prices, the growti: rate fell to below into service in 19.,.,.
four per cent. Today, . .it a clear that a depressed economy, a conservation and energy management ethic. and the rising The issue which occupied our attention cost of all energy sources willlikely keep for a good portion of 1980 was the opera-the grow th rate low, at least for the tion of Davis-Besse. In Arni the plant short term. was removed fmm service for main-tenance. testinJ. ard refueling after Average annual residential usace. how. several months of full operation. Alore ever,was 8.232 kilowatt hours in 1980 than 1.000 tasks involving more than up from S.166 in 1979. 1.200 workers were involsed in the out-age. The chief purpose ci the outage after the successful refueling was to con-
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duct tests and perform modifications re- ,. Toledo Edison pmvided .9 million quired bv the U.S. Nuclear Regulatorv meg 2 watt hours of electricity in 1950 Commission. through generation and purchased
Included was a project to .irgrade the The new environmental control installa- Good service comes in other ways, to ability of pipe support equipment to tion at Bay Shore includes the first such as responding to relephone inquir withstand seismic stresses of greater application by any utility in the United quickly and efficiently and by helpine intensity than any ever recorded in this States cJ an energy-efficient variable customers better understand how to , area. At Davis-Besse, about 780.000 ved urait fan system. The adjustable energy wisely. In September we spon-manhours and 539 million were in- frequencv fan system requires about 30 sored Encrey bro'1980. It featured solved in the upgrading of the pig per cent less electricity than a standard over 100 displays trom companies wh-supports and the tire protection system. system of that size. The environmental . specir.'ize in energy-related products These projects added many weeks to the project inclules raising the efficiency of and services. Some 30.000 people we extensive outage rme. the electrostauc precipitators to 99.5 per attracted to the three-day esent which cent and addition of a 475-foot stack. featured insulation materials. load
. .: . ', m.w.. Fly ash now recovered in dry form will control devices, electric vehicas sola increasing coal prices and freight rates in be sold for manufacture of concrete technologies, and high-ef ficiency glect 1980 were somewhat counteract d by materials and road building uses as a fur- heat pumps. .
Iower nuclear fuel costs. Nuclear fuel ther cost reduction measure. cost was .3 cents per kilowatt hou r, while coal was 1.87 cents per KWH. The hes. !!ened:s immv :c radical increase in coal costs during this it is necessarv that we balance tne Com-past decade can be seen by comparing pany's responsibility to keep electric rates the 1980 figureof 1.87 cents to the 1970 as low as possible while providing fair cost of about .36 cer.cs per KWH. wages and benefits for our employees. Wage and benefit improvements were
'bc.: Efficener G ntinues negotiated with union locals represent-Toledo Edison's over-all heat rate effi. ing operating. of fice and professional em-ciency for its coal-fired generation ployees. and security personnel in 1980.
system ranked 19th among the top 100 The basic package includes an 8.5 per electric utilities in 1979. This excellent cent wage increase. a limited cost of liv-
, ate was attributable in large measure to ing djustment. a new dental coverage an efficient basic equipment design.our plan. improvements in pension bene-fit 5 and other related changes in the.
rigorous preventative maintenance pro- , gram and the competence of our oprat. retirement program, ing staff. Bay Shore statior, again ranked among the top ten in the country. The Quality Ser . ice important Bay Shore units were designed and built Customers look to us for more than just to take advantage of the best technical their energy supply. We took steps in advances of their day. 1980 to further improve the quality of service to our customers. Construction Plans Reduced Construction exgnditures in 1980 were The primary measurement of service is
$235 million. The 1981 program is esti- whether or not the power is there when mated to be 52% million. reflecting a you want it. Toledo Edison has tradi-downward trend made possible in part by tionally provided customers with quick cancellation of constructionof four units restoration of power following storms planned by the CAPCOgroupef fise util- and other disruptions of service. In 1979 icy companies. including Toledo Edison. Toledo Edison had a verv low average The majority of the 1980 construction outage time per customer affected.
expenditures were for our portion of About 60 per cent of the customers who three nuclear units still under construc. did experience outages had service re-tion. althou gh on a delaved schedule. and stored within an hour. In 1980. this to complete a coal-firedhnit which began service restoration record improved to operation in 1980. Environmental work 76 gr cent of customers back in service at Bay Shore and Acme stations also within an hour. i were maior projects completed during the year.
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"n. : -h. ICSC icHar came from and how it was used.
Residential 28C ]] 4 1 ' Ill , i ' Fuel and purchased power 35c Operation and maintenance 19c l]l ]'I- 1 ~ t 1* 4 Commercial 18e ! ' ' '
! { i Depreciation 6C Industrial 31c i T.ues 9c l*
Municipal & Other 11c Interest 16c Preferred stock dividends 4c Gas and Steam hearing 2c Commondividends , c Other income IOC Earnings reinvested "
.. the Public Utilities Commission of Oh jurisdictional retail customers. The
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requested increase averages 18.3*. ant
'~. "' would yield approximately 565 million in increased revenues annually. This t is pending with Commission action or the proposed increase anticipated in the spring of 1981.
An application seeking an increase in the wholesale rates charged to fourtc municipal systems and one rural electr co-operative was filed wid the Federa! Energy Regulatory Commission (FER( on July 31,1980.13eing sought is an increase of 29.1". or approximately 50 million on an annual basis. The FERC authorized the Company to place the proposed rates into effect October 1. 1980. subject to refund after further proceedings. A tentative settlement w; rexhed with customer representatives resolving points at issue and providing that the fullincrease wouV co into
. effect in two steps, Octobet ;,1980 and April 1.1981. This agreement is subject to FERC approval.
The following discusson conce rning the trendsof financialresultsof theCompany On December 31,1980. the Company refers to ti.e Results of Oprations state- notified the Public Utilities Commissit ment. Palance Sheet rGtailed ten-year of Ohio and the communities of Defian wmmaries of financial arGratistical and Delta that it intended to seek an information found in the Financial Review increase in the rates for natural gas tp.24) and Statistical Review (p.251 service supplied in those two areas. Th proposed increase of 5.1". would prode.
" pressed Icor.cr y M:ects .'c.mpny
.- $226.000 of additional revenue on an e' .;r!y, annual basis.
Toledo Edison has experienced moderate increases in total ooerating revenues in comparison to the three previous during the last three years. The increase years. residential and commercial kilo-in 1980 over 1979 is due primarily to an wart-hour ( KWH) sales in 1980 increa; increase in rates granted by the Public while industrial sales decreased. Histor Utilities Commission of O'hio and in. ically, industrial KWH sales represent creased fuel clause recovery revenues approximately one-half of the Compan resulting from substantialljt higher electric sales. The decrease in 1980 fuel expenses encountered in 1980. industrial sales helped drop total electr sales to the lowest level recorded withi the past four years. Throughout 1980. A request by the Company for an in- the Company, as well as much of the crease in electric rates was filed with nation, experienced record-setting higi the Public Utilities Commission of Ohio interest r:te fevelt heightened unempt on May 22.1979. Its February 29. ment. and a depressed economy. The 1980 approvalof a $30.7 million increase decrease in industrial sales is the direc on an annual basis bacame effective resultof thedepressed statusof theeco-March 5,1980. omy and its effect on the industrial se. tor, particularly the automot..e area. On July 3.1980 the Company filed a our service area. This toner leselet sai. new request for rate relief affecting is anticipated to continue n ellinto 198
l 1 I l Jong with intlation and the general Effectne January 1.1980. the CAPCO c;,norme slowdowr armther key f actor Group agreed to change the basic ut affected 1950 operating results " . agreements which had been previously .2 outage at the Davis Besse Nuc' ear emploved to c21culate mandators annual ower Station. The schedu!ed refueling purchases and sales of power among , ut2ge was extea.ded an additonal sa pool memters. For 1960 the Cerrpany l onths to comp;e e nundated mamar had an agreement to buy I$0 megawatts
.odicanons and its ettect was f eit in of capaarv under an arrangerrent with peranon 2nd nuinterunce espenses another CAPCO member. The fixed l 5 w ell as in construcnon expend:tures. monthly capaarv charges for this ;cwer amounted to approximately 5750.000 1:e Company has had its cost of coal in 1950.
sed in generating electncirv nse dra-utically from $8.54 per ton in 1970 to Interchanged power deliveries increased 47.76 in 1980. Fuel expense increased due to the need for supplemental power ue to higher coal prices ard additional be ne ghbormg utility comparues and eneration from Cor spanv owned coal- the Company's ability to provide such red generating statens. iChart A e power ar advantaneous prices. omewhat offsetting these higher costs Depreciation ex;ense decreased. despite cere both decreased purchased and a higher lesel of depreaabte plant assets. terchanged power expenses and de- due to the unit of-producten deprecation rea2 tion expense. Desp.e the extended rnethod applied to the Davis Besse plant urage at the Davis Besse Nuclear which accrues depreciaten based upon 'ower Stanon. purchased and inter- the amount of generat on. As a result hanged power decreased from 1979 as of densions contained in a recent Public result of an increese in Cornpanvowned Unlines Commzssen of Ohio rate order. acacts. reduced industrial KWH sales the Company reduced deprecation nd increased interchanged power de- expense in 1980 by approximate!y 52 senes. To!edo Edison's dependence on m21Lon. urchaw-d power has contmued to ditninish cm 556.7 millionin 197 to 545.3
- e G t i Min:r; a .d ; a: '
.e i: ; . t . m..w 4;- c a. 4 Chart Al ailben in 1950 Chart B1 Durin.t the Lnt Decade 5 Ton 0 10 20 30 40 50 L-~'
*nor to January 1.1981 the Company 1950{
- E ._ -.__ 1- -a. - .i. _ -- *
.;. _
greed as part of its Central Area Power
'cordmation Grcup (CAPCO Group) ! - -- -
_-f= C r C- dr--~..-h y~j ~;0 f ommitmems to share the fixed costs h-_ c, _ _ __ c ;- 2 n 1975 L - - -- a .L.-_
.f and recette ent:tlements to purchase
-'- ~
ower from new CAPCO units as thev 6 -- - vere placed into commercial operation. (_- - [j xe in December 1977. when Davis- h - ksse IJmt No. I was in service at the 1970 ~' 1
.0". !evel and .\lansfield Unit No. 2 had een placedinto commeraal semce. the *
'empanv's CAPCO purchase commst- S e-de eeyn.'Nrd.23eu 6 xa P..:da.c.cr::it m. . . e _r iChart 36 9ent was 294 rnegawatts. Davis Besse
.\h d Doilars l nit No. I was declared m 100** 3 25 50 75 !00 omme cal semce in late July 1978. i- - -- i :
educing the Ccmpanv's CAPCO pur- I - M ~25.
. 1 ~~~' J -~
7 /--}1 r i
- l i
}
h2 sed power commitments to 227 ;
.e:2 va ts 2nd the fixed menthly capacity l, f ' . ~~ ~.' Z I 3
', 3 .
j h2rres to ateut 51.3 million. In Januarv _2 l 1975 - ; 9 9. tne Con rany's CAPCO purchased o ver commitment decreased to 156 !
- : - . [!- '
.; ". 2
--~ -
i i
.egawatts and the fixed monthly cara- , 1_ ,2 l ! i 4 l ,rr charges decreased to approximately "~J ;
930.000. 19 0 ... 2
- i
In early 1980, the Company along with needed to meet the anticipated enere-the other CAPCO companies announced needs of its customers. The rate-mak. tue termination of construction on practices of most utility regulatory four nuclear generating units and the commissions. including those to whis delays in the completion of three other the Company is subjected. effectively nuclear units. Our reviews of the existing require substantial external financin: circumstances and future prospects in- of the investment in additional facilir dicate that within the next decade our and equipment. In addition, these pr customers' electricity requirements tices generally provide that the finant ne expected to grow approximately 3 costs of construction projects be treat to 4 percent annually. In the longer as part of the cost of the new facilitie time frame, when electricity will be The inclusion of financing costs in tr j needed as an increasing share of the cost of new facilities is accomplished country's energy needs, the delayed units by recording a non-cash credit allowa: are expected to be completed. This for funds used during construction in decision is aligned with one of our the statement of Results of Operatior corporate objectives: to serve our cus- Although this accounting treatment comers at the lowest rates consistent with allows recovery of the cost of construc sound managment and ensure the in- funds through depreciation over the i regrity of the system and a reliable and of the facilities, the recording of the economic power supply, income credits is not immediately ac-companied by cash flow. As a result. Credits for allowance for funds used quantity of earnings may not be great during construction ( AFUDC) were reduced during periods of heavy con-discontinued for the terminated generat- struction but the cash flow content or ing units, effective January 1.1980. earnings is reduced. The low internal This reduced earnings for the 1980 year cash generation requires a large propt by 21 cents per share, although total tion of external financing to support AFUDC in 1980 was greater than prior the construction program. Considerat years. The third unit of the three-unit of liquidity and capital resources for coal-fired Bruce Manstield Station was electric utility companies must prima. placed in commercial service in late be directed toward an assessment of September allowing this unit to be in- continued ability to attract the capital cluded in rate base to support additional necessary to support the construction cash revenues from customers, replacing program. the non-cash credit allowance for funds used during construction. This addition The Company continues to rely upon to owned capacity should allow an even financing in the external public and greater reduction in purchased power private securities markets. The Comp. expense in the future. currently estimates tFat approximatei 45*.of its 1981-1985 construction Total interest charges csntinued to program will require external financi. increase in 1980. reflecting record setting Approximately 77".of the 1976-196 high interest rate levels, and the issuance construction program required exterr of additional first mortgage bonds and financing. The amount of external pollution control notes as well as a larger financing that will be required and th amount of short-term borrowings. Cort pany's ability to obtain such fina. ing will depend upon such factors as The e'fects of inflation on the Company's timing and amount of rate increases. operations are discussed further on changes in the Company's constructi. pages 12 and 13. program, the level of kilowatt hour s and the rifect of general inflation on
. .- .x % ' . -
construction costs and other expense The liquidity and capital resources of along with other factors. the Company, like most electric utility companies, are influenced most signifi- The Company utilizes short-term del cantly by construction required to provide obtained from commercial paper hor-the environmentally-acceptable facilities ings and bank lines of credit to pr
ew capital between external long-term cost and availability of new capital to the nancings. The Company is currently Company is affected by the credit ratings uthorized bv the Public tltilities Com- on its securities. The ratings on the ussion of Ohio to issue up to $150 Company's securities have been revised tillion of short term debt. At December downward in recent years bv the maior 1.1980. 589 million of short term rating agencies. These changes. in most ebt was outstanding. instances cause new capital to be more expensise to the Company. Inused bank lines of credit at December 1.1980 were $94 million. Included.in Despite the adverse factors associated his amount is a $20 million Eurodollar with the general economic slowdown of evohing line of credit which was estab- 1980. the Company experienced a 10% shed during the year to facilitate future growth in earnings on common stock to ntry into the European long-term capital 549 million. An increase of 14% in the urhets and to provide the availability of average number of common shares out-dditiond short term credit. stardng caused the earnings per share to decline somewhat from the 1979 lesel
'he completion of a 5235 million con- of $2.65 to $2.56 in 1980.
truction program in 1980 appears to ave marked the start of the Jownward Continuing an uninterrurted dividend end in construction expenditures after rec rd extending 58 years from 1922 to ie peak was reached in 1979. External the present, the Company declared the 55 nancing for the 1980 program included cent dividend on its common stock in each 37.3 million from the sJeof two million quarter of 1980. For federal income tax ew shares of common stock: $4.2 mil, Purposes. the 1980 common and preferred on from the sale of 236.361 common hares through the Shareowner Dividend stock dividends are treated as a 100%
- einvestment and Stock Purchase Pfan; return I C3P ital and thus non-taxable as rdinary income. This status was 33 million from the sale of 330.000 affected by the requirement to currently hares of cumulative preferred stock:
65.6 million from the sale of first ?*P'.nse, fu tax pwp ses nly, the tam-inati n expenses ass c ated with the , tortgage bonds: 531.5 million from fwr O mclear 6t tuminated in he sale of pollution control notes: Jamary 1980. net increase of 565.5 million in short-
- rm debt. Th% external financing. to-ether with 521,9 million of funds gen-rated internally, was used to meet con.
P-ice Rarn,:e and Cisidend3 Paid Per Nre er C.mrnen w a truction expenditures and repay $7.5 Price Range Dividends aillion of first mortgage bonds and a High Low Paid 30 million long-term bank loan note 5.55 1980 First Quarter 18 % 15 % hat matured during the year. The Com. any's construction program is presently Second Quarter 20 % 15 % .55 j stimated to be $206 million for the year Third Quarter 19M 17 % .55 ! 981. i
- is currently planned that external fi-ancing for the 1981 program, amounting i 3 approximately 5130 million, will be pro- 1979 First Quarter 23 % 21M 5.55 ~
f ided from the net proceeds of the 14.80% .55 Second Quarter 21 % 19 refeced stock issue offered in January l 981. the issuance of common stock. Third Quarter 20 % 19M .55 j l
- ng-term debt and a minor amount from l ne Company's Shareowner Dividend Fourth _ Quarter 19 5 17 % _ .5 5__
- einvestment and Stock Purchase P!an.
The Common Stock is listed on The New York Stock Exchange.These price quotations n addition. the Company anticipates the onversion of $50 million of short term are from the Wall Street Journal. ebt to long term notes under provisions The number of common stock shareholders as of December 31.1980 and 1979 were f 84'.855 and 83.S42. respectively. f an existing bank credit agreement.The l l
.;.- . , 1: 1 s Thousandsof Dollars For The Years Ended December 31. 1979 1978 OPERATING REVENUES Electric 358 707 334 083 Gas 3 583 3 085 Steam heating 2 831 2 SS8 Total operating revenues 365 121 340 05o OPERATING EXPENSES Fuel used in power plants . 93 295 82 039 Purchased and net interchanged power 53 574 55 850 Operation , 44 691 38 883 Alaintenance . 21 137 19 604 Depreciation provisions . .. . 29 117 26 532 State and local taxes 29 760 24 320 Federalincome taxes . 25 139 27 397 Total operating expenses 296 713 274 625 OPERATING INCOAtE FROM SALES TO CUSTOAtERS .. . 68 408 65 431 OTHER INCOME Allowance for equity funds used during construction .- . 23 512 17 470 Incorne tax credits applicable to nonorerating activities : - 8 251 6 484 Other income and deductions-net -. 1017 720 Total other income ..
32 780 24 674 INCOME BEFORE INTEREST CHARGES :. 4 . 101 188 90 105 INTEREST CHARGES Long-term debt 4.- . - ', 48 315 41 094 Short-term borrowings '. , 4 269 1652 Allowance for borrowed funds used during construction . 12 . (9 9911 17 090 Interest charges-net 4
.4 42 593 35 656-NETINCOME 1s 58 595 54 449 ,
PREFERRED STOCK DIVIDENDS ACCRUED i- ci 13 894 13 020 EARNINGS ON COMMON STOCK ai- 44 701 41 429
-.- .-- ===
EARNINGS PER COMMON SHARE i Average shares outstanding- 19.226,163 in 1980, 16.848.431 in 1979 and 14,900,405 in 1978) ..' 52.65 52.78 DIVIDENDS DECLARED PER COMMON SHARE . . . 52.20 52.14 The notes on pages 18 through 23 are an integral part of this statement.
Thousandsof Dollars December 31. 1979 ASSETS PROPERTY. PLANT AND EQUIPalENT Plant in service. at original cost 979 809 less accumulated provision for depreciation 201 S95
*** 914 Construct on work in progress 519 464 Nuclear fuel in service. at arnortired cost .I1 786 I W)!M CURRENT ASSETS Cash 4 302 Temporary cash investments -
Accounts receivable-tm 38 480 Refundable federalincome tues - Fuel for use in power plants, priced at average cost 24 307 Alaterials and supplies. priced at average cost 9 430 Prepaid tues 5024 Special deposits and other 5 250 86793 INVESTA*ENTS ANDOTHER Construction funds i pollution control) held in escrow 3 322 investments. at cost 1015
~
Property tues applicable to subsequent years 15 840 Deterred charges-Cancelled generating projects 45 719 Other 5 659
?! 555 TOTAL ASSETS 1 467 512 LIABILITIES CAPI ALIZATION Common stock equity 432 554 Cumulative preferred stock 150 000 Cumulative preferred stock wim mandatory redemption 34 000 Long-term debt . - . ..
611 137 I 227 69_1_ kk:RRENT LIABIUTIES Short-term notes payable . 23 500 Preferred stock and long-term debt due within one year .. 41 912 Accounts payable M 43 113 ' Accrued tues 38413 Accrued interest 12 313 l Dividends dec!ared 13 679 Accrued expenses and oiber . . _ - - _ . . - _ . 5 530 . . . i
~
i
. 178 460 l ACCUAIULATED PROVISIONS AND OTHER
- Deferred federalincorne tues Accelerated depreciation 29 435 Acce!erated amortization . 2 447
^
Cance!!cd generstmg prows - Property tues applicable to subsequent years and other 7389 Federal investment tu credits 20 801 Deterred crerlits and other . 1289 e ~~ "* 61 361 TOTAL LIABILITIEk . 1 467 512
- w. - .= -. . ~. u -- ; , = w =. - .. z-
. ._:.,.=m. -. . - - - ; :- z . :
The notes on pages IS through 24 are an integral part of this sracernent. l.
Thousands of Average 1980 Dollars Constant Curren D>llar Cost For the Yew Ended December 31,1980 Accounting Account: Earnmgs on Common Stock From Continuing Operations (as reported on paae 101 49 157 49 If Effects of Inflation on Common Stock Equity: Inflation effect during 1980 on capital investment: Increase in specific prices to current costs - 209 51 Effect of change in general price level - (302 20 Reduction to net recoverable cost (152 499) iS5 4r Additional provision for depreciation (12 827) (17 le (165 326) (165 32 Gain ftom decline in purchasing power of net amounts os.ed (primarily debt) I11 727 111 72 (53 599) 853 5E loss on Common Stock From Continuing Operations Adjusted for Changing Prices (4 442) 14 44
- u .-- = =- .=-== _.=.== =-= = . - . . - < - . = . = . . . .
The traditional method of reporting Results of Operations substantial amounts of debt used to finance property plan (as shown on page 10 l on the basis of historical costs has and equipment. The economic gain to the Company 1-the effect of overstating the earnings of a business in"real" reason of the decrease during 1980 in the value of th terms-especially during a period of high inflation. The net amounts owed is shown in the table presented abou primary reason is that depreciation expense, as reported. under the caption " Gain from decline in purchasing powe does not adequately reflect the rapidly increasing costs of net amounts owed". of replacing property, plant and equipment. When depre-ciation expense is based upon values that are less than During the year 1980. thegain from the decline in s alue o - curtent value, the difference not only appears as a profit . net amounts owed by the Company was more than of fset b-out. even worse it is taxed as though it were profit. the economic loss resulting from regulatory requirement which prevent the Company from recovering throus The above table is based upon a 1979 pronouncement depreciation the inflation-adjusted cost cf its plant assets by the Financial Accounting Standards Board. Statement No. 33. which involves presenting financial information to The same generally accepted accounting principles uset show the effects of general inflation iConstant Dollar Ac- in preparing the Conventional Historical Cost Accountin. counting) and changes in prices of specific assets. namely financial statements are used in preparing the Constan; property. plant and equipment (Current Cost Accounting). Dollar financial statements. Only the measuring unit i-restated from dollars recorded at the date of the origine Although inflation affects all industries it has a more transactions to units of average 1980 purchasing power severe impact on the regulated public utilities than on as measured by the Consumers Price Index for all Urba:- industry in general. The regulatory process does not permit Consumers. utilities to recover through revenues any more than the historical cost of their plant assets even thoug' h in.an Current Cost values represent the changes in spec:ti. inflationary economy the cost to replace such assets upon prices of property. plant and equipment, from the yea their retirement will substantially exceed historical cost. the plant was acquired to average 1980 values and Accordingly, the amount by which inflation during 1980 determined by indexing surviving plant by the Handy increased the cost to replace the Company's plant assets Whitman Index of Public Utility Construction Costs. Thi is not reflected in the historical cost upon which the amounts restated to Constant Dollar and Current Co>t Company's rates are based and therefore is an econemic are estimates of the effects of inflation on the Company loss to the Company. This loss is shown in the above As of Decmeber 31.1979, the current costs of property table under the caption " Inflation effect during 1980 plant and equipment, net of accumulated depreciatie; on capital investment". in average 1980 dollars, was 52.389.S79.000. As of De cember 31. 1980. current cost of property. plan During a period of intiation. holders of monetarv liabilities and equipment, net of accumulated depreciation wa experience an inflationarv gain to the extent such debts 52.796.858.000 while the historical cost t net recoveraH are fixed amounts which will be repaid with dollars of through depreciations was $1.524.S08.000, which in reduced purchasing power. This type of inflationary gain cludes non-utility plant of 51.046.000. At year end. th. is particularly significant for electric utilities due to the net recoverable cost of net ssets is $413.658.000, a
.h
-- v -
y
es!culated under Constant Dollar and Current Cost of inflation hase had substantial impact on all sectors Accounting. of the economy. everially elecnc utshties. The following t ole presents wIected operating i.nd tinancial data for the most recent five years on a histoncal cost basis and The comraratisc Constant Dollar and Current Cost values cr all items on the income statement. except depreciation. on an adiusted for milation basis as measured bv the represent the amounts recorded in the comentional his. Consumer Pnce Index for all Urban Consumers. tencal cost mcome statement. which amounts generally occurred ratably throughout the year. Fossil fuel imen. Earnings on common stock and earnings per share on a tones and the cost of fuel used in generation have not constant dollar basis and on a current cost basis are shes n been restated from their histoncal cost basis. Public Utili. below as if only the amount reportable as an additional ties Commission of Ohio and Federa! Energy Regulatory provision for depreciation were deducted from the reported Commission reaulations limit the recovery of fuel and amount of such income. The 1979 data has been revised purchased [wwer and gas costs through the operation of to reflect the cancellation of the four CAPCO generating adjustment clauses or adjustments in basic rate schedules projects as well as actualindices. to actual costs t historical cost basis L Also, fuel inventories turn oser approximately three omes a year. For these reasons fuel imentones are effectisely monetary assets. No federal income tax benefits for any inflation adjust-ment are reflected since current tax law does not allow am consideration for the erosion of capital which exists during inflationarv periods. The current year's provision for deprecation on the Constant Dollar and Current Cost amounts of property. plant and equipment was determined by applying the ratio of the provision for deprecation oser the average property, plant and equipment on the Historical Cost basis, to the indexed plant values. The erosion in the value of money through inflation has been at or near the double-digit level during the last five years. The cumulative effect of recent annual rates
~~.. . - - .n . . . ' -
Consurner Consusner p,,, Operaung Revenues Cash Dmdends p,,, Marner Value at Year End l 'h*"**"dU Declared Per share __ indes Per share Indes - - i Annual Hamoncal __. pestated_ to_A_yma'_._. Histancal Rnraced to_Aynt'. tYear Harteical ._ Rnts ed tg 1,' e End , Year _ _ Average t Cost Basas 198o l's 1976 S's One Basas 1980 5's 19?6 l's End) Cosa Basis 1980 5's 1976 S's 1980 246.8 5401.868 5401.868 5277.628 $2.20 52.20 $1.52 258.5 515.88 515.88 510.71 1979 217.4 365.121 414.498 2S6.353 2.20 2.50 1.73 229.9 17.50 19.68 13.27 1978 195.4 340.056 429.508 296.722 2.14 2.70 1.87 202.9 21.63 27.56 18.58 1977 181.5 276.794 376.379 260.019 2.12 2.86 1.99 186.1 25.13 34.91 23.54 1976 170.5 223.736 323.860 223.736 2.12 3.07 2.12 174.3 26.50 39.30 26.50 Earmr:4s on Cornrnon E2rmnss Corntnen 5eock Eauny Escess os Gun Frorn udousands. Per share e rhousands' trwreaw in kne !.i H.sroncan Constant Curre e Harorwai Constant Current Haror w al Correm - Ge ersi Price l.evel Purchas ns Cost Douar Cost Cuse Dollar Coss Casa Censrane Over Spectric Prxes Power Year Bas 4s Accounems Accountm; _ Basa , _Accounemy Accoumme ,Basa A courmns 6 thousands s (thousandsi 1980 549.157 536.330 531,900 $2.56 51.S9 51.66 5478,993 5425.394 592.753 5111.727 19 9 44.701 28.559 23.340 2.65 1.70 1.39 432.554 380.518 76.891 101.398 _ - _ _ _ _ .. ___d
s Thousands or Dollars 4 For The Yeus Ended December 31. 19 9 19 s BALANCE. C' .. .'NING OF YEAR 111 110 102 18-Add .4t income 58 595 54 444 Deduct-Preterred stock quarter!v dividends Jeclared 14 276 13 020 Common stock cash dividends declared 38 123 32 5tk-EAh. 4NGS REINVESTED DURING TiiE YEAR 6 196 S 923 BALANCE. END OF YEAR ..~ l17 306 III Ito
.. - . = . - ..: : .. . =.: , . . - .
e oi c u.n!, t 9 . ;-: ; i ! .1 -
- i.: m: 'c .1 ; .: o Thousandsof Dollars For The Years Ended December 31. .
1979___, 1978 PROVIDED FROM INTERNAL OPERATIONS
~
Earnings reinvested during the year 61% 8923 Principalincome charees not reqi.iiring current funds: Depreciation provisions 2. '2 29 117 26 532 Amortizationof nuclear fuel .~'+ 4 089 3 665 Deferred federal incorne taxes-net . :' 9 636 11 726
' 4 828 Investrnent tax credits-net . 7 139 Allowance for equity funds used during construction .
123 512 ( (17 470-Total provided from internal operations . 30 354 .0515 PROVIDED FROM NEW FINANCING Sale of securities: Common stock 44 275 45 069 Preferred stock 25 000 - First mortgage bonds lptincipal amount) 75 000 65 000 Pollution control notes-Proceeds on issuance 16 500 -
~~
Change in escrow deposit (878) 307 Net change in temporary short-term investments 4 500 (4 500 Net chacge in short term borrowings 23 500 69 500 Reduction of long-term debt and preferred stock , ,J (7 4406 _ (5 89-Total provided from new financing 180 457 90 479 OTHER Allowance for equity funds used dunng construction 23 512 17 470 Net change in current assets and liabilities. and other accounts 4 687 21 424 Total other 28 199 38 894 TOTAL SOURCES OF CONSTRUCTION FUNDS 239 010 169 888
- . 10 800 CAPITALIZE..D NUCLEAR FUEL LEA. SE--
INVEST 1ED IN PLANT AND FACILITIES 239 010 180 ess The notes on paaes IS throuith 23 are an inteitral pa ' of these statements
Thousandsof Dollars For The Years Ended December 31. 1979 1978 FEDERAL INCOME TAX EXPENSE WAS COMPI'TED AS FOLLOWS Tax at statutory rates on pre-tax income 34 ~22 26 174 Ixss tax ettects due to-Allowance for funds used dunne construct:on 15 4Ii 11 789 Acce!erated depreciation methods and other depreciation ditterer ces i3291 975 Removal cost ot ;'ropertv retined 623 681
~
,%scellaneous 2 129 1816 Total federalincome tax expense 16 888 20 913 Tax mcluded as credit in Other locorne . 9 251 6 484 Federal Income Taxes included in Ogeratmg Expenses 25 139 27 397
- .-.=--:--.:-.:....-.=.- .
FEDERAL INCOME TAX EXPENSE DETAll.S ARE AS FOLLOWS Payable (Retundable) 2 245 2 189 investment tax credits-Deferred 5 ?!3 7 518 Amortized 1756 t570) Deferred taxes- Accelerated depreciation (net s . 9 716 11 661
- Cancelled generatinie projects
~
Property taxes apy&able to subsequent years t801 65 I Other provisions - .' . 50 50 Total FederalIncome Tax Expense 16 888 20 913 _. . -- - a =.- - :... . .- .
~
. m w, 1 .' * : Y 'c . l Thousandsof Dollars For The Years Ended December 31.
1979 1978 BALANCE. BEGINNING OF YEAR 1.' - -1 192 332 157 612 l ! ADD or (DED1;CT) l ' Premium (net of expense) on sale of comrnon shares 33 495 34 728 Premium (net of expensel on sale of preferred shares (1391 (81 BALANCE. END OF YEAR P - 225 688 192 332
-.-:--..=.~-.==: _ = = .= = : -= a :. = =-- - - - - . = . = .
1 l l l I l The notes on pees 18 thre ahu 21 are an integral part or these statements. ? i
And Capitalization Ratios Thousandsof Dollars December 31. 1979 CONIAION STOCK EQUITY Common Stock. 55 par value. authorized 30.000.000 shares,outstarxling at year end. 20.148.332 in 1980 arx! 17.911.971 in 1979 80 560 Premium on capital stock 225 688 Earnings reinvested . 117 306 432 554 3 5 CUAIUI.ATIVE PREFERRED STOCK Shares outstanding _. Redemption price (Thousands' Eventual 1980 1979 Current Through minimum -. ...
$100 par value 4 %". 160 160 $104.625 -
$ 104.625 . 16 000 4.56*. 50 50 101.00 -
101.00 5000 4.25". 100 100 102.00 - 102.00 10 000 8.327. 100 100 107.70 9-1-81 102.46 10 000 7.767. 150 150 107.257 9 1-82 102.437 15 000 7.80*. 150 150 106.50 9-1 83 101.63 15000 107. 190 190 105.00 2-28-83 101.00 19 000 5 25 par value 8.847. 1000 1000 27.20 11-30-81 25.25 . 25 000 52.365 1400 1400 29.85 9-30 82 27.75 ,'_, _ _ 35 000 150 000 12* CUAIULATIVE PREFERRED STOCK WITH AIANDATORY REDE.TIPTION. excluding current sinking fund requirements Shares outstanding Redemption price iThousands) Eventual 1980
...___...______.___.________._9_. 197 Current Through _ . _minimum 5100 par value 117. 85 90 $ 111.00 83184 ~ 01.00 -
9 000 9%7. 250 250 106.92 5-31 85 iOO.00 _' 25 000 13 %*. 130 - 113.25 5-31-81 100.00 - - 12.657. 200 - 112.65 6-1-85 100.00 : : - s
- 34 000 3*.
f The notes on pac.s 18 through 23 are an integral part of this sracernent.
- ._ . ,,~ _. _ , . . - - - .. -
. . .~. _
1979 FIRST AtORTGAGE BONDS. escluding currect cutant:es and Snis 1 xmnred and held for siniing tund ,mrpe 10 % due 1982 40 000 3%% Jue 1994 14 000 9.35"., due 1985 50 000 3h".due1956 15000 L. 4 ". due 1988 15 000 1 14"., due 1990 -
. ~ 657 due 1997 35 000 1(r% duc 1998 9% duc 2000 35 000 TH % duc2002 30 000 S'.. Joe 2t03 40 000 ,
, 9.65" due 2006 50 000 -l 9%' duc 2008 05 000 i il'% due 2009 75 000 Discount in process of arnortaation iM36
. . 463 637 l
OTIIER LONG-TERai DEBT Unsecured rxxes 835*. doe 1983 through 1997 110 000 4 Crnecured ;ollution control note. are age interest rate 5.71'.due 194 through 2003 6 000 Unsect. red guiluten control note. 74' duc 1992 through 2006 15 000 Unsecured piluton control note. 'NA due 1999 through 2009 16 500 Unwured polluten control loan agreement.asersge interest rate or 10.055% due 1900 through 2010 - Secured ;ollution control loan agreemem.
- - 10~.due 2000 through 2010 -
+ -
< Nuclear fuel lease .
- 147 500 TOTAL LONG-TERai DEBT ~ ' . -
- i:~ 611 137 50*.
TOTAL CAPITALIZATION 1ao - *r ' t ". I 227 691 100*.
- _ - _ _ _ _ - - - - , - .__-u a
i 1 i ! t l l I The notes on pages :s r5-oue5 23 are a i inrnral rarr or his smem. I I l I
- b. Depreciation and. Maintenance December 31.1980 o,7,,ci,, ion ,,,,, ,,,a in compo,io, depreciation expense shown in the finan-cial statements. except for Davis-Besse Unit No.1. are based upon age-life studier and averaged 3.3% in 1980 and 3.4% in .
1979 and 1978 and are applied on a ' straight-line basis. Depreciation exivnse on Davis-Besse Unit No. I is based on the unic-of-production method using a rate which includes a provision for the Companv's share of total estimated de-
. commissioning costs of $40 million.
In we-J w with a Public Utilities Commission of Ohio (PUCOI rate order effective Januarv 1977. the Company ' began accruing additional depreciation of approximately $1.4 million annually to adjust past depreciation provisions. As a result of decisions contained in a recent PUCO rate order, the Company reduced depreciation expense in 1980 by
- approximately $2 nullion. This reduction conforms the balance of accumulated provision for depreciation with the rate-making treatrnent as applicable to common facilities at Beaver Valley Unit No. 2 and the composite depreciation race for Bruce Mansfield Unit No. 2.
Expenditures for maintenance and repairs of property including renewals of minor -
- - cc n . mra items are charged to maintenance ex-
.;.3 pense. Costs of replacements and renew-als of items considered to be units of
- a. Construction Orerheads Property are charged to the property accounts.-
Construction costs of property, plant and equiprnent include overheads for payroll- When property is retired the cost thereof related costs such as taxes. pensions and plus the removal cost less any salvase is other fringe benefits. and administrative charged to the reserve for depreciation. and general expenses, as well as an allow-4- ance for funds used during construction c. federallsconre Taxes ( AFUDC). AFUDC represents the esti-mated composite interest and equity costs The Company provides deferred federal of capital funds used to finance construc- income taxes on the additional deprecia- l - tion to the extent that such costs have tion resulting from thedifference betwee - been transferred to property. plant and straight-line and accelerated tax depre-equipment from the statement of Results ciation methods for property additions of Operations. Effective Januarv 1.1980. placed in service after December 1973 in 1979 and 1978.theCompany's AFUDC accordance with provisions of PUCO rate , rate net of-tax was SVa'. 7M% and 7Vf., orders. The Company does not provide
' respectively. deferred federal income taxes resulting 4
f rom other depreciation dif ferences or Virtually all of the Companv's rate sched- Purchase Plan. and sold 250.000 shares from the use of accelerated tax deprecia- ules include fuel adjustment provisions of Preferred Stock 15100 par valuet in tion methods for properts additions pnor under which almost all fuel costs are 1978. the Company sold 2.000.000 to Januarv 1974 since, based on Ohio permitted to be billed to customers during shares of Common Stock through a public court and PUCO decisions, the Company the tanth following recording of the orfenna and 68.349 shares of Common >> of the opinion that such future taxes expense. Such adjustments are subject Stock through the Shareosner Dividend will!v recoverable out of future revenues. to periodic review and heanngs by the Reinvestment and Stock Purchase Plan. Book depreciation rates include an allow- PUCO.The Company charges to expense ance for removal costs with such costs the cost of fuel as it is consumed. On Januarv 29.1981 the Company issued charged to the xcumulated provision for 300.000 shares of 14.80% Preterred
- f. Retirement Income Plas Stock ($100 par valueL depreciation as incurred. Removal costs are deducted for federal income tax pur. The Company has a non-contributory poses as incurred.
retirement inc me plan c venng all em- The Company estimates, subject to final playee groups. The Company's provision determination by the Internal Revenue All interest costs are deducted for tax for wnsion cost was 54.464.431 in 1980. Service,that 100%of the 1980 Common purmses as incurred. Tax deductions The Company's policy is to fund annual Stock and Preferred Stock dividend pay-applicable to interest exper;se arising from costs as accrued each year, including ments will be considered a return of im estments in non utility properties, amonization of unfunded actuarialliabil- capital for federal income tax purposes primarily construction work in progress. itv over the 20-year period ending Decem-have been classified in income tax credits ber 31,1995. The Company is authorized to issue applicable to normperating activities. 2.000.000 shares of 5100 par value and The actuarial present value of accumu- 6.000.000 shares of $25 pu value Cumu-For federalincome tax purposes, the lated vested and nonvested plan benefits lative Preferred Stock under the Com-Company's federal income tax return as of January 1,1980 was $35.814.872 pany's amended articles of incorporation. will show a net oprating loss in 1980. and $1.612,941. respectively. The The annual dividend requirement on This loss will be used to reduce the tax weighted average assumed rate of return Preferred Stock outstanding at December hability for the years '978 and 1979. used in determining these values was 6 31,1980 is $19.$06.250 for an average ~ The balance will be available to reduce percent. .\larket value of assets available dividend rate of 8.99%. At the option of the tax liability in 1981. The expected for benefits amounted to $44.505.129 the Board of Directors, the Company may tax retund for the prior years is included as et January 1,1980. redeem the whole or any part of its out-as a receivable on the balance sheet. 7 p7,,.isiosfor Doubt /u/ Accousts standing Preferred Stock at aay time upon thirty days notice at the amounts disclosed The Company.s accumulated provisions in th'e statement of Capitalization. subject Investment tax credits have been deferred and are being added to income over the f r doubtful accounts amounted t to the following additional restrictions life of the property giving rise to the 5302.000 in 1980 and $272.000 in 1979. applicable to specific issues. The Com-credits. Unrealized investment tax credits pany may not redeem the shares of the
- b. Reclassificarioss from 1976 to 1980 aggregate 552 million 13%% series prior to June 1,1990, the Certain minor reclassifications have been and will be recorded in future years 12.65% series prior to June 1,1985, the made t am unes rep rted in 1978 and when utilized. 11% series prior to September 1,1984, 1979 to conform to the presentation used the 9%% series prior to Jurr 1,1989, 2 State and Local Tax,, f r 1980. the 8.84% series prior to December 1.
State and local taxes for 1980 consisted 1981 and the 52.365 series prior to of $15.569.000 of local property taxes. October 1.1982 through certain refund-514.446.000 of Ohio State excise In 1980 the Company sold 2.000,000 ing operations involving an effective cost shares of Common Stock at a public offer- of money to the Company of less than taxes and $1.187.000 of other taxes. ing price of $19.25 per share. 236.361 13%%.12.65%.11%. 9%".,8.84% and These taxes in 1979 were 514.100.000. shares of Common Stock at an average 8.60". per annum. respectively. In addi-513.466.000 and 52.194.000. and in price of $17.97 per share through the tion. the Company may not redeem any 197S were $11.405.000. 510.867.000 Shareewner Dividend Reinvestment and shares of the 9%7. series prior to June 1. and 52.048.000, respectively. Stock Purchase P!an. and sold 330.000 1984 regardless of the effective cost of
- e. Re:ceues and Fuel shares of Preferred Stock t $100 par money.
Revenues are included in income as billed valueL In 1979. the Company sold to customers on a daily cycle billing 2.000.000 shares of Common Stock basis Revenues from the larger industrial through a public offering. 183.497 shares customers are based on month-end meter of Common Stock through the Share-readings. owner Dividend Reinvestment and Stock
The annual interest requirement on long-term debt outstanding at December 31,1980, including amonization of debt discount and expense. but exclud-ing interest on nuclear fuel lease, is
$65.369.847 for an average interest rate of 9.22" .
Sinking fund redemption requirements and scheduled maturities for long-term debt through 1985 are as follows: Other 1.ong-Term Preferred First Mongage Bonds Debt Stock Sinking Fund Sinking Fuad Redemption Scheduled Scheduled Redemption Requirements Maturities Maturities Requirements 1981 $2.340,000 $ - 5 - 5 500.000 1982 2,340,000 40,000,000 - 500,000 1983 2.990.000 - 6.600,000 500.000 1984 3,600,000 14.000,000 6,700.000 500.N0 1985 3,600,000 50,000,000 6.700.000 2.165.000 in addition, bond sinking fund redemp- June 1 in each yeu, beginning in 1986. tion premiums for these periods total The shares of all the issues will be pur-
$12,873. The bond indenture covering chased at the sinking fund redemption the first mortgage bonds also provides price of $100 per share plus accrued an.
for a required annual payment after cer- unpdd diviknds. tain credits, as defined. to the Trustee as a Maintenance and Replacement Fund. y , ,,.. , g ,
, 3 This requirement may be satisfied by The mongage and supplements theretc (al payment of cash (b) delivery of bonds ,
securing first m regage bonds issued bs issued under the indenture, or (c) certifi-the Company constitute a direct first cation of the cost of propeny additions m rtgagelien nsubstantially allproper which have not theretofore become and franchises owned by the Company. funded property. The Company has been ther than expressly excepted property following alternative (c) in satisfying which mcludes cash and securities, this requirement. accounts receivable, fuel. supph,es and 8ut m tive e9uiPment.
- 3. Cumulative Preferred 50ck With
.\landatory Redemption The 11*. series includes provisions for a N' " *" * *I" 5 mandatory sinking fund sufficient to retire a minimum of 5,000 shares of the The Company has unused lines of cred:
series on or prior to September 1 in at December 31,1980 with various ban each year, beginning in 1979. The 9%7. aggregating 593.970,000. The Compa: series includes provisions for a mandatory has informal compensating balance sinking fund sufficient to retire a mini- arrangements with some of these banks mum of 16.650 shares on June 1 in each and is expected to maintain average de-of the years 1985-1998 and 16,900 shares posits based on bank ledger records. on June 1.1999. The 13X% series in- equal to 10% to 20% of theline of a cludes provisions for a mandatory sinking depending on the amount of borrowine fund sufficient to retire a minimum of outstanding at the respective bank. Tin 8.660 shares of the series on June 1 in balances are not legally restricted and exh of the years 1986-1999 and 8,760 also serve to compensate the banks for shares on June 1,2000. The 12.65% banking services and to provide operatir series includes pmvis:ons for a mandatory balances to the Company. The Compar sinking fund sufficient to retire a mini- pays commitment fees to other banks tc mum of 8.000 shares of the series on the lines of credit. , ,. s<w . - _ ,.-.- -_.., - -- . .-
, , , - . ,, . , , e g
.u about $11 million. respectively. Effective January 1.19S0. the CAPCO Group agreed to change the basic agreements The Company in the interest of reliabili, and the Company arranged to buy 150 tv and economy. entered into a power-wiing arrangement with four other megawatts f car city fr m another CAPCO member for the year 1980 w,th i utilities iCAPCO Group) which involves taxed annual e pacity charges amounting subst.intial commitments for joint par-
' 'II' *' *"'*I F N *'UI "-
ticipation in purchased power as well as additional pwer generation and trans- The Company will have an ownership mission racilities. The Company's com- share in six CAPCO generating units mitment to purchase power f rom various M which four are nuclear and two are other CAPCO companies, which has coal) with three of these umts presentiv ~ been decreasing dunng the previous three in service. The Company's ownership 3; ears. expired at rnidnight on December g ;9 g ,g,, CAPCO units. 31.1980. At the beginning of 1978. the which are under construction and planned Company's CAPCO purchase power for operation in 1984 and bevond. will commitment was 294 megawarts. In ,,,,3 ,,; ,y ,,, ,,,,of ,pp ,,,; ,,,,;, conjunction with Davis-Besse Unit N,o. 51.3 billion. The Company provides its I being pixed into 1007. commercial own financing for this inv'stment. e The perati n in July 1978. the Company.s Company's share of direct expenses for CAPC0 purchase commitment dropped o eration of the jointiv-owned units in to 22,. megawatts and the fixed annual service is included in the operating ex-cap;.cirv charges amounted to approxi- ,, g , og gg gg mately 517 milhon for the year. During Operations ~ 1979, the Company's CAPCO purchase commitment and fixed annual capacity The following represents the Company's charges decreased to 158 megawatts and ownership in each of the CAPCO jointly-owned units at December 31,1980: Actual or (thousands of dollars) Scheduled Ownership P! ant Accumulated Construction Generating Unit Completion Share In-Service Depreciation Work in Progress _ Davis-Besse =1 1977 48.62*. 360.741 18 .92 21.417 Alansfield =2 1977 17.30 % 66.848 5.519 1.338 Alansfield =3 1980 19.91*. 124.010 2.188 1.004 Perrv =1 1984 19.91 % - - 158.761 Beaver Vallev =2 1986 19.91". 9.559' - 169.649 Perry =2 198S 19.91*. - - 144.416 "The plant ia-service amount for this unit, currently under construction, represents facilities which are common to the operation of both the units at the generating station. These facdities are classified as electric plant held for future use.
~' ' ' I " '* 1979, the coal mining svstems were cer-The Company, together with the other rified as complete. Because of difficulties CAPCO companies, has made long-term exprienced during the development coal supply arrangements with Quarto period, the unit production costs of Alining Company (Quarton, a subsidiary Quarto coal have been in excess of the of North American Coal Company. The current spor market price of coal. The CAPCO companies have severally, and CAPCO companies are reviewing the not jointly. agreed to guarantee their vanous alternatives available to : educe proportionate shares et Quarto's debt these unit production costs.
and lease obligations incurred in cen-nection with developing 2nd equipping The Company owns 4*.of the common the mines. protected to produce 4.7 mil- stock of Ohio Vallev Electric Corporation lion tons per year. As of December 31. tOVEC). which has a long-term contract 1950. the Company's share of the guaran- to supply power to the Department of tee was 523.600.000. At December 31. Energy (DOE). The proceeds from the
sales of power are designed to be suf- at this time but could be substantial. ficierit for OVEC to earn a return on The Company is seekmg in its current its common stock after meeting all of its rate case to amortize the costs already costs. including (in lieu of depreciation) expended over a ten year period. It is amortiz2tionof debt capital. AtDecember the opinion of the Cornpany that the 31.1980. debt capital of approximately anticipated regulatory treatment of the 54 million remained to te amortized by amounts already expended on the projects OVEC over the period ending in 1981. together with terminxion costs if any. The Company is entitled to receive and would not result in any material a6erse oNigated to pay for the right to receive effect on the Company's financial con-4".of any available pwer not contracted dition or results of cperations. for bv DOE.
..-- w ..
.* c m w. . :
Construction expenditures in 1981 are regulation as'to air, water, solid waste estimated at $2% million, including and noise matters and as to location of
$158 million toward CAPCO generating cenain fa61ities by federal, state and units The Company's financing program local authorities. in 1980. the Company is estimated to require approximately spent approximatelv 524 million for pol-
$ 130 mi!! ion of external itnds in 1981 lution control f acilities. The Company's to meet the above construction program. future five yer comtrucuen program The Company has limitations impsed includes $10 million toward initiation upon it by the first mortgage bond and complecon of such pollution control indenture and articles of incorpration facilities as it presently foresees as being which require the maintenance of requir- required at its present generaung stations.
ed earnings coverage ratios in order to In order to assure continued compliance issue additional first mortgage bonds with all applicable laws and regulations. and preferred stock. The Company's the Company has plans for insta!!ation coverage under the limitations for first of equipment. has applied for permits or mortgage bonds at December 31,1980 variances. is awaiting promulgation of was 2.45 and would allow the issuance applicable regulations or is contesting of $74 millionof first mortgage bonds at the validity of existing or propsed an assumed interest rate of 1511n addi- regulations. tion, the Company's em erage for pre-ferred stock under the articles of incorpor- Since environmental controls are still in ation at December 31,1980 was 1.60 the process of development, the Company and would allow the issuance of $38 can not estimate the effects of existing million (including the $30 million and potential regulations and legislation. issued January 29,1981)cf additional The Company may incur substantial civil preferred stock at an assumed dividend and criminal penalties if it fails to comply rate of 151 with environmental control regulations.
- 9. Cance!Ied Gene-at:n.: P+ects ! 1. I.m In January 1980, the Company, along The initial nuclear fuel core for Davis-with the other CAPCO companies, termi- Besse Unit M.1 is ! eased. The nuclear nated plans for the construction of the fue! lease was capitalized in July 1978 DavwBesse &. 2. Davis-Besse W. 3. in accordance with provisions of the June Erie M.1. and Erie &. 2 nucleu gen- 9.1978 PUCO rate order. Members of erating units scheduled for completion the CAPCO Group have entered into a in 1988.1990.19S9 and 1991. respec- lease for additional nuclear fuel to be tively. At Decenter 31.19S0. the loaded throu;:h 1982 for Davis-Besse Companv's share of the arnounts already Unit &.1. The Company capit2lized its expended on these projects amounted share of this additional nuclear fuelIcase to 546.771.000. Additional costs could relating to the prtion !caded into the be incurrtd as the Company termmates reactor in June 1980 subkt to approva; the outstanding contracts associated with from the PUCO in a pendmg rate case.
. these projects. Such additional termina- The Companis share of these CAPCO tion costs cannot be reasonably estimated teases. aggresaring 5254.5 million.
2nwunts to approximateiv 547.4 m:Ilaon. . - -- n :. ~--: Estimated paime-ts induding interest ter tne Cocyanv's share of enese au- The focowing represe :ts the parterly meets Which are ci a cor=al reentr:ng c!c2r fvilleases are 54.118.000 in resuhs, which 2re ermudned. but in the naturei nemu v for a fzt statement 1981. .i5.219.000 in 1982. 59.789.000 cr:non of de Cu , w reflec: a3 adrast- of results fw such renocs in MS3. 515.416.0C0 in 1954 ard 5i9,483.000 in 1955.The bern up ra:e uheesuds ei doilus: a desizned to amort:ze the total im est- Tceal Total Earnings Erninzs Per ment in nuc' ear fue! 2s weil as pedde Opning Omanns on CornAn Cr.::en fer the Cornpam's share of the tc<21 Three Atonths Erded kenues Income Scock S:.re dW costs. The M mU be rem mer an acptn= h threeear produc- 1980 Alarch 31 97.976 19.956 13.M5 5.76 IS O C} * - June 30 93.202 13.559 10.952 .59 Other t:nannne leases entered into br the Sepe=ber 30 107.352 21.317 14.520 .72 Company are noc size fr2nt. December 31 103.308 20.4 % 10.009 .50 1979 Alarch 31 99.680 19.412 12.7 % 5.S1 June 30 87.558 16.737 10.268 .65 September 30 87.567 18.645 13.689 .-- December 31 59.956 13.614 S.009 .45
~~-: Oi: Shareo v..ers 2:.d 3c ;rl of Dir-c Ors ci T'.: T ?:-lc F.in-c.~ C - -.;;c.,- %~e hase curraned the balance sheets and sta:ements of Ia ocr cphsen. the financial s:rements referred to abase captaliz2 con and captiizzen r2ccs of The To:edo Edisco present fairiv the finaxia! pcsiten of The To;edo F.J+c Co= pam ean Ohio corporaticm as of Decest 31.1950 Cocpany as of December 31.1950 and 19'9. 2:d tne results and 1979 and the re! red 5:reme~3 ci results of opera- ciits cpermaces and the socrce of fu:xis imes:ed in plan: ard tiens. earnings re:mes:ed. premium cc captal s:ock. Federal facilines for exh of the :hree yers in the ;encd ended ixorne taxes 2nd secrce cf fu:ds imes:ed in plant ard fa- Decender 31.19EO. 211 in confon=:v with renera2y accepted ciIi::es for exh ci de three 3ers in the pencd erded xcounting prirr: pies 2:~piied on a ccesisten: basis.
December 31.' 1950. Our euminarices sere made in xcerdance wi:h eerera!!v xcer ed auditing sta:dards 2ni. xcerdinzly. included such rests ei the xcounnne recerls and such od.er suinng ; ram!cres 25 se co :sidered necessur in Tckda. Oho.
- he circur:s:2nces. Januars 30.1951.
**%# * ..N h =44pe-. Te m,g pg w w% , g..,, * , q --A p g .weg <pi.'. m w pes .t . gp. "'y.. Ag
OPERATING REVENUES thousands of dollars and percent of electric revenues Torat Rese- Com- Total Steam Oswratinat Year Jenual *. mercial *
. Industnal % Other *
. Electnc Cas Heaung Resenues in .
1980 126 085 32 80 836 20 137 860 35 50 105 13 394 886 4 182 2 800 401 868 1979 113 464 32 72 354 20 128 931 36 43 958 12 358 707 3 583 2 831 365 121 1978 106 512 32 67 563 20 120 570 36 39 438 12 334 083 3 085 2 888 340 056 - 1977 86 977 32 55 870 21 97 586 36 31 296 11 271 729 2 743 2 322 276 794 - 1976 71 562 33 45 384 21 76 998 35 25 185 11 219 129 2 315 2 292 223 736 1975 61 236 33 39 566 21 64 767 34 21 803 12 187 372 1 924 2 268 191 564 1974 46 590 32 30 566 21 49 203 34 17 868 13 144 227 1 901 1 667 147 795 1973 40 696 32 27 390 21 43 632 35 14 697 12 126 415 1682 1 050 129 147 1972 37 055 32 24 698 21 38 013 33 16 001 14 115 767 1 619 1 196 118 582 1971 32 071 32 21 194 21 33 838 33 14 599 14 101 702 1 531 1131 104 364 1970 29 952 33 18 721 20 29 442 32 13 674 15 91 789 1 431 925 94 145 OPERATING EXPENSES thousands of dollars and percent of total revenues Purchami a Nei federal Tocal Interchanged Maanie- State & income Ograting Year Furt % Pnn er % Operation *. nance % Depreciation . t.otal Taaes Tases . En g _es 1980 110 423 27 45 348 11 55 842 14 29 319 7 26 002 7 31 202 8 23 376 6 321 512 > 1979 93 295 25 53 574 15 44 691 12 21 137 6 '29 117 8 29 760 8 25 139 7 296 713 8 1978 82 039 24 55 850 16 38 883 12 19 604 6 26 532 8 24 320 7 27 397 8 274 625 > 1977 73 677 27 86 735 31 27 951 10 12 249 5 19 565 7 19 129 7 6 173 2 245 479 - 1976 61 227 27 46 950 21 26 612 12 9 148 4 15 964 7 15 956 7 12 446 6 188 303 . 1975 51 411 27 32 328 17 25 059 13 7 955 4 14 305 8 14 091 7 13 062 7 158 211 > 1974 40 648 27 20 077 14 23 160 16 7 677 5 13 089 9 12 922 9 5 081 3 122 654 : 1973 27 697 21 14 810 12 22 098 17 7 471 6 *12 318 10 11 822 9 8 040 6 104 256 9 1972 23 721 20 13 959 12 20 097 17 6 799 5 11778 10 10 513 9 8 209 7 95 076 s 1971 21 573 21 8 643 8 18 306 17 6 700 7 10 617 10 10 075 10 7 755 7 83 669 e i 1970 16 885 18 6 934 7 16 085 17 6 082 7 .10 232 11 9 427 10 8568 9 74 213 - INCOME thousands of dollars COMMON STOCK
! dollars per share and percent income Total Taa e Return Diva Market
~
A!!awance Credits- Income Earnings On 9,c For Funds Non- Before Preferred On Averas, Pnce Ranse_ p Operauns Used Dunns operauns interest Interes Net Stock Common Share ** Common Year Book Coc-Year income Construction Actmues Charges Charaes Income Dmdends Stock Carnmv Equiry Hash 1.ow End Value Sh 1980 80 356 43 591* 13 218 138 044* 70 866* 67 178 18 021 49 157 2.56 10.5 21 15 16 23.77 2.. 1979 68 408 33 503* 8 251 111 179* 52 584* 58 595 13 894 44 701 2.65 10.7 23 17 17 24.15 2.. 1978 65 431 24 560* 6 484 97 195* 42 746' 54 449 13 020 41 429 2.78 11.3 26 21 22 24.29 2. 1977 31 315 43 564* 9 032 83 904- 35 249* 48 655 10 $18 38137 2.95 12.4 27 24 25 24.02 2. 1976 35 433 24 457 6 087 67 923 28 460 39 463 7 683 31 780 2.82 12.2 27 22 27 22.85 2. 1975 33 353 20 458 5 820 59 453 24 071 35 382 7 135 28 247 3.29 14.5 24 16 24 22.39 2. I 1974 25 141 15 886 4 323 45 554 20 904 24 650 4 964 19 686 2.85 1 '.5 28 15 16 21.73 2. 1973 24 891 10 282 2 294 37 694 14 126 23 M8 3 911 19 657 3.13 14.3 31 23 27 22.20 1. 1972 23 506 4 458 1 004 29 058 9 972 19 086 2 650 16 436 2.91 14.5 32 26 30 20.44 1. . 1971 20 695 2 672 562 24 038 8 754 15 284 1 675 13 609 2.64 14.4 36 27 31 18.39 1. 1970 19 932 1050 , _ ,264 ,21 397 6 555 ,14 842 1 333 1_3 509 2.62 14.9 _ 35 28 35 17.68 1.
*!n the 1980.1979.1978 and 19?? Results of Operations. the allowance for funds used during construction is reprted in two portions. equ.r-
- terrowed. with the borrowed arnount shown as a credit to interest charges.
" Average number of shares outstandmg (thousandsl: 1980 - 19.226:'1979 - 16.848: 19'8 - 14.900: 1977 - 12.909: 19*6 - 11.250: 1975 - 8.
1974-6.917: 1973-6.282: 1972 -5.649: 19'O through 1971 - 5.160.
5 ALES millions of kitowatt hours CUSTOMERS end of year USAGE, residential Annual N umtser Annual Prae Revenue or
'. KWH Per Per Emr6 overs Rew Com- Indusenal Total increase Industrial Total Per KWH Customer War Year der tial mersial & Other Decenc t Decrease 6 Resedennal Commerual de Other Dectnc Customer Cents t Dalaru End 1980 1 971 1282 4 135 7 388 (4) 240 142 23 532 3 818 267 492 8 232 6.40 $r 2 331 19 9 I934 1256 4 519 7 709 -
238 353 23 636 3 695 265 684 8 166 5.87 479 2 260 1978 1914 1 231 4 540 7 685 3 234 450 23 334 3 551 261 335 8 244 5.57 459 2 188 197- 1 874 1233 4 381 7 488 4 230 583 23 226 3 478 257 287 8 192 4.64 380 2 062 19~6 1 '82 1203 4 237 7 222 8 227 167 22 912 3 428 253 507 i903 4 02 317 1997 l975 1722 1156 3 780 6 658 2 223 S07 22 495 3 340 249 642 7 732 3.56 275 1937 19'4 1634 1107 3 801 6 542 (li 221 846 22 360 3 249 247 455 7 419 2.85 212 1971 1973 1552 1102 3 937 6 591 3 218 105 22 591 2 927 243 623 7 187 2.62 188 1960 1972 1460 1 014 3 947 6 421 9 213 546 22 47! 3 015 239 032 6 916 2.54 176 1912 1971 1366 924 3589 5 879 7 208 448 21 984 2 963 233 395 6 640 2.35 156 1 809 l970 1281 838 3 388 5 507 Ii1 203 808 21 313 2 939 228 060 6 348 2.34 148 1741 LOAD megawatts ENERGY FUEL millions of kilowatt hours Net Capabelsty Toledo Edison Sistem Efficiencv Reserve Purchawd at Year End Load Factor Net Fuel Cet BTU
~ ---- - ~ ~~
At Time Peak Fauor at Peak Generated Interchanged Per KWH Per Year Purt ha.ed Owned Total of Peak load t'n 4*4 I Net t Power Total (Cents e KWH 1980 5? I737 1789* I760 1310 68 34 6 560 1352 7 912 1.65 10 245 1979 259 I625 1884 I825 1395 67 31 6 884 1348 8 232 1.33 10 262 l978 267 1625 1892 1813 1386 67 31 6 674 1566 8 240 1.20 10 283 1977 482 1295 1777 1536 1393 66 10 5 972 2 128 8 100 1,19 10 247 19'6 423 1042 1465 1465 1340 66 9 5 421 2 394 7 815 1.11 9 963 1975 368 1042 1410 1397 1256 64 11 4 877 2 227 7 104 1.04 9 982 1974 367 1045 1 412 1453 1 219 64 16 5259 1737 6 996 .75 10 065 19'3 465 1 045 1 510 1358 1246 64 9 5 376 1670 7 046 .52 9 880 l972 332 1045 1377 1273 10% 68 16 5 036 1837 6 873 .47 10 030 l971 216 1079 1295 1 228 1054 65 17 4 845 1435 6 280 .44 to 037 l970 165 1079 1244 1217 939 67 30 4604 1275 5879 .36 10 022 NVESTMENT thousands of dollars TOTAL CAPITALIZATION thousands of dollars ASSETS Accumulated Cumulanve Provisions Thousands Prete-red l * * *- *= Plant in for Annual Of Common . Cumut ave with lenst-Servece Deprecianon Construction Dollars Stock Of Preterred Of , Mandatorv Of Term Of Year iYr.Endt eYr. Ends Expendstures t Yr. End e Equiti Total Sawk foral Redempton Total Debt Total Total 1980 1 208 001 220 629 234 827 1 701 443 478 993 34 150 000 10 66 500 5 714 406 51 1 409 899 i 979 979 SO9 201 895 239 010 1 467 512 432 554 35 150 000 12 34 000 3 611 137 50 1 227 691 978 950 873 l'6 450 169 888 1 255 947 382 084 35 150 000 13 9 500 1 560 644 51 1 102 228 977 727 226 153 463 194 283 1 101 610 328 100 34 150 000 15 10 000 1 494 280 50 982 380 976 531459 137 540 144 714 904 524 266 469 34 115 000 15 10 000 1 388 270 50 779 739 975 479 ?23 126 149 112 399 759 044 216 27' 33 90 000 14 to 000 1 349 181 52 665 458 94 438 639 116 062 121 360 654 983 17' 296 32 1000 13 10 000 1 299 172 54 557 468 973 407 105 108 467 119 524 540 896 145 665 31 71000 15 -
- 259 164 54 475 829 972 387 874 100 305 75 278 422 511 117 745 33 56 000 16 - -
183 969 51 357 714 971 367 918 95 589 53 056 355 797 94 908 33 41 000 14 -
- 154 687 53 290 595 970 344 898 92 957 34 762 312 630 91 211 33 31 000 11 -
- 154 952 56 277 163 Purchased capability at se.tr end retlects the expiration.or a 150 MW commitment trom another CAPCO company at midnight on December 31.1980.
- . n - 4 . 2 , - . ..: a ::' ' *o bledo Edison's Bay Shore Station is located on th-Ataumee Day. just outside the city limits of Toledo. There ar.
*.Of Availabdiev four generating units with a combined capacity of 621.00 O ~ 20 40 60 80 100 1980 .! ~ f.y a kilowarts. The first unit was placed in service in 1955.Thre more units were added over the next 13 years.
- ~
- .L~ 1 1977
" ~~1
. . .)
. .1 The Bay Shore Station has consistently ranked as one i the top ten most efficient stations among the hundreds i
~
l fossil stanons in the country.' 1974 . I 1 Environmental additions have kept pace with increasmc
! strict requirements. Through 1980 more than $53 millic 1971 . _ . - . I was invested to upgrade precipitators to 99.5 per cer.
efficiency and to construct a new stxk to serve all unit. The station now contains one of the rnost technological: advanced energy-saving air pollution control systems i
% the country.
0 20 40 60 80 100 I r r l l Sixty-nine per cent of the Company's net ge. *ating cap. . 1 l . 1. _.J . .- L ..- 1 I bility is by coal, twe ity-five per cent by nuclear and abov Nuclear 25*. Oil 6% six Fer cent by oil.
' Coal 69*.
- u- < - , ..N .. , In retrospect, the construction costs of the jointly.owne Dollars Per Kilowatt of Capacity nuclear station were a bargain. The unit began initial gener tion in 1977 and in mid-1978 reached its 100 per cer.
0 500 1000 1500 2000 2500 commercial ratirig. MtDWEST UNIT C.1Ni 1988 * -
~ ~~" --
By late 1980, a coal unit of about the same size begar MIDWEST U. 'IT 8'tNit984 e ~
~ ' " ' '
[- 1 providing power to Ohio and Pennsylvania. Due largely e MIDWEST U{IT A IND,1982e -.. environmental facilities and regulation the coal unit showe
~~- a construction cost of 5812 per installed kilowatt. Th:
M AN5 FIELD =3 d t9m) - compares to 5741 per installed kilowatt for our nuclear un: i~ DAVIS-BE55E IND 1977 l and S1270 per kilowatt for a new nuclear unit not yet i. service elsewhere in the Alidwest. StANsFIELD 2iC)1977 Once the initial investment in a nuclest plant is made. th BEA 'ER VA LEY e! IN)1976
~ ~~ l J. ] comparatively low operating costs tend to be inflation-re MANSFIE et (C) 1976 sistant. This is particularly true in comparison to the muc
"- I higher and ever increasing cost of other fuels.
(C) Coal Unit (N) Nuclear Unit ' Estimated
'Ea.2 on n c ;e! Cats lentinues in IC'St) A really good bargain for customers of Toledo Edi on is f und in the costs of the nuclear and coal fuels used in o Cents Per Kilowatt Hour
? base load generating units.
0 1 2 3 4 5 6 8 9 10 NUCLEAR Nuclear fuel costs were projected to be about one-third a cent per kilowatt-hour in 1980. coal was projected at Ic COAL than two cents for the efficent Bay Shore Station. Oil a: Otl AND GAS. _ _ _ , _, _ . gas, when used was projected to cost over eight cents ;-
.. . k . l..... . . _ . . . . _ _ . . . _ . . _ _ . - . _ . - kilowatt hour.
-~. A .;- ; Since 1973, costs of natural gas and heating oil have i creased at a faster rate than the cost of electricity. This trer
*.OiIncrease 1973-19a0 0 100 200 300 400 500 600 is expected to continue and even escalate as the reserve <
ELECTRIC 17? petroleum and natural gas diminish in future years.
. HEATING OIL SD _ _ . . - _ , .. . . . -. .. Substitution of electricity as a major energy source expected to continue - nto the Nineties-Jgain as use(f scar GA5oLINE 197 t
, j~ M fuels declines. Electrificanon of transportation is a verv re N ATUR AL G A5 277 _, probability. Additionsof efficient heatmgsystemsusingek I- - -~ > tric pumps are a reality.
I
- - - ~ ~ - -
\ . xri m . n: 1
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Our current energy " crisis'is noe simply one of insufficient resources. The dilemma is much more complex. Of costs-since we've depleted most of the relanvely inex- ; i pensive fuel suppbes. Of the types of energy on which we've become dependent-large-i ly oil, among the least of domestic natural reserves and therefore supplemented by
. ?! ,, massise imports. Of inactwn on national policy-the inabihty to obtairi bmdmg de-
~ M'M . M- , cisions for any large-scale energy project.
("L-v g g.+ ~ i~~~~~ -. . . . b Conservation and Fuel Substitution as mandated by the Nuclear Regulatorv Commission. To improve the umt's reli- { l A study of the National Academy of Sci- ability, we hase reorgrnized the manage-ences. Energy in Tr.insition: 198 % 2010. ment structure. added manpom er. and have , the most ramstaking and comprehensive of employed engineenng and various other a11 recent studies, concluded that this na- consultants to review oprations. We are non's maior concern over the next 25 years . seeinggreatlyimprovedperformanceof the , is with the supply of fluid fuels. As a result. urut ard are optirnistic about its future ; ; it stated, the highest prioney should be. economic viabdity. ' ' placed on conservation and fuel substitu-tion. The report has this to say about the Why Nuclear?
--- w 7 ' use of electricitv as a substitute for fluid
.a e. & . Nu&ar fuel is the most economical and
.. fuels t natural gas ard oilr: ,
<% ,4 inflation-resistant of all the fuels available
"..... accelerated electrificatios could . for generating electnc:tv.
<s
'r[".; *Q jwh
., - contribute significantly to relievin g . Nuclear urut ogr ating costs are carected Y r.p%p$.q-$ .. future fluid fuel problems... As fluid to be less than a comparable coal unit over- -
'i '
fuels are phased out of use forslectri1 - the next 10 years, despite the higher ininal ' ~ c .. gereranon, coal and smcTear power art . investment and carryingchargesJ - 1
' the onfy economic alternatives for iarre- i scale application in the remainder ol this
- The imestnwnt of 574I pr kilowatt of ,. '
century. A balanced mix of coal and installed capacity in the Davis Besse unit
. G 8 '- + nuclear generated electricity is prefer. was a bargam in comparison to the invest-able to the prepnderance of eitherJ" ment required for units now coming into M
'y N g [...i:_ *7 seruce-either coal or nuclear.
. NorthwesternOhic has a favorable balance
- Large coal generstmg units today are at '
c' s of coat.ard nuclear electnc generaung least as costly to build as the Davis-Besse capabilities with 69 pr cent coal and 25. ' unit was because of the required environ- 3 L Fer. cent nuclear. ,.
<.~ remaioderM;q% g, Oil accounts S . ,w /' . .* 4 for the . mental Construction of another protection coal ura. .
equipment
't in, N
- n. c . ..g ( o ~
t DThe'tO laspest c'est itemsin a ciistomer's . noethwestern Ohio wouki be very difficult ' ' ' i 'electricht bili aie .fuct ard theproduction . _and ' expensive today because of errviron- , f equipoieitt .used to' generate electricity, inental restncnons. g ;,4f._,3 4 S Mosr.of the fuel used iscoal, and the~ rapid D A nuclear fuel unit has tiie telse impas ' , i escathnow sciisi prices (1980 crial costs Todtidenvtronment of # alithe fuel sources.2/4 odi fiwir clines.;as much as iir 1970ihasW c 5 b W PWW . *. P
~
- r- ' T"W -
8@N.P *W tf beiro tizising' ebiggest factoririinercassng MOR amenatun! gas are a scarce and tooq j [ ~ M Edectnc
.6 has+zuorretool. rates.The est with of largetransportingcoal increases inX t . "P'"'ih'
- W Intnonth.that;t every ~be 3' ,,
.CfierMicraiesp J. i;,$ $$'4 ' W Win fullyperationJ cusmmers of the two - !
;; . N .:MM - m t *: j . - . utilitiesowniogthestationhavelowerbills <
y b 'If 1970'swe instead'of imidfoilecur a rmelear coalburnig prantin/the station.our l 1,%,c,, n;;. .;- thare;e. iVpir
- -- . wed to k s l
7 customers wouldbepayingthehighercosts . , .' i
. t of generatingwithcoal wrthererymonthly ( Any sudde tsurgein growth in the Eighnes
& - h!!. It's a fact thatwhen the rmctearstation will have to be met br capacity already is operating our customers pay less for their installed or Ni: g built today. There is no electricitv substantially tess. easy wav to increase &ric generating capability quickly. It takes 10 to 14 years Obviously, the plant must sjav on hne as to buikt a maiorgenerating unit.
base load to capitahre on its potentv.: -
' economic advantage. Adnuttedfy.ourumre Providing adequate suppliescf electricity has tren out of service more than i.4 desir- to insure full empicy ment in northween 1 able. The oprating reccrd has v.afered due Ohro-in the decade ahead dercacs upnn to isilure of various commnts along with the coal aral nuclear resources available I shutdowns for additior.3 and tradificanons to us now.
C I _ _ _ _ _ - _ _ _ . _ _ _ _ _
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Urg:1 A. Gla!=us WenMI A. Johnson .Wrrm 5. Koticker twirl F. .Wmn Donald G. Shhm Henry A. Pase.
... 7 .
\' j I-Chairman. Toledo Trust Co. and T.
,; V k.7Mh Trustcorp. Inc. Graduate or Dartm l; [ < 9 g,
y % g.4 >!
.F.7 (
College and Tuck School of Busi Administration. A Director since ! Vice President.
* ', clear. Graduate. chemical engineer University of Toledo. Honored in 19' Imed E. R.= WJIard I. Wet +. III John P. Wilamson Rdert G. Wineener Chemical'Engineerof theYear. A Dir-
, since 1979. Senior President. Director of Corporate Den , ment. Owens Illinois. Inc. Iglass. pla forest productst Mechanical enginee I graduat . University of Atinnesota. A (
.. O b ,
was elected to the Board of Directorsin l A December. Air. Anderson is a partner and General Atanager of President ! y The Andersons, a grain and f arm supply complex serving North- Chief Executive Officer. Dinner ; west Ohio and other midwestern areas. A graduate magna cum Foods. Inc. Board Chairman. Four C. ;
'. laude from Alichigan State University School of Agriculture. Technical Institute. Trustee of Det: I
% He was named Toledo Area's Citizen of the Year in 1974. College. Attended University of Ind. ,
A Director since 1977 BoardC: man. Chief Exe:utive Officer, Glac Retired Executive Vice President.Owens- Corporation tfood servicesL Board C
~ ' ' '
!!Jnois. Inc.. Air. Canter retired from the Toledo Edison Board man. Toledo Hockey. Inc.. Pres.. I of Directors in December. He was elected Director Emeritus in Sports Arena. Inc.. North Shores In recognition of his seven years of excellent counsel and service. ment Company. Inc.. Canteen Seruc
\ Toledo. A Director since 1960. ,
Other directors ementi are William S. Carlson. former President p . l l , of the Uniyersity of Toledo and Fred E. Fuller, retired partner Chief Operating Offker. Grad a 1 A in the law tirm or Fuller. Henrv. Hodge & Snyder. tncal engineer. University of Minne ; he has a master's degree in indur ! l engineenng. Universirv et Toledo. ; I rector since 1975. I t- - - .. _ , _ _ _ . . _ .- - , . - . , _ . _ . . _ . - , . , - - - - . _ _ - . - . - - ,
Board Vice hairman. Kobacker Stores. Inc. tretail 300 Aladison Asenue crest Graduate. Unisersity of Alichigan Toledo. Ohm 43652 Phonei419 259 5000
~
ieconomics hoads a masteis degree trom larvard School of Busmess. A Director p. . nce 1%9. The Toledo Trust Company Vi e Praidem. Tetedo. Ohio 43603 Consultant to Public Relations oledo's Utured Way. She w as named The Toledo Trust Comrany >utstanding Chi Omega in Ohio. Graduate \, ice President. Toledo. Ohm 4 tun the Unnersity of Toledo. A Director Admmistranon .Wrcan Guarantv Trust nce 19'9. Comranv of New York Vice President. New York. N.Y.10015 Vice President. inance. Grad uate cu m laude. Bowling Corporate Deveiopmem .reen State Utuversirv. holds a master's Cinbank. N.A. rgree in business administration from Vice President. Box 3305 . se University of Toledo. A Director Admmistrante Services .New Y rk. N.Y.10043 nce 19'3. Ohio Citizens Bank
\. ice Presiden .
Director of Toledo. Ohio 43603 'evelopment. The Atedical College of C" " S'' Alanufacturers Hanover Trust 'hio at Toledo. former President. Page Compant iairv Company. Graduate in industnal en- Secretary b Yo'rk. N.Y.10022 neering. Cornell (*niversirv. A Director nce 1967. Treasurer The Cnase Alanitarran Bank. N A. Vice President. Energy upp!v. Registered Professional Engineer Controller t Ohb. Graduate mechanical engineer. re- Arthur Andersen & Co. pient of Ohio State Universit'y College
^
", 4 3]*
f Engineering Distmguished Alumnus . ward. A Director since 1975. This report. including the fmancial state-ments. is submitted for the general m- Fuller. Hentv. Hod:e & Smuer Board Chair. formation et Toledo Edison Company's 200 Aladison A enue ' tan. Chief Execunve Officer. Ohio Citi. shareowners. It is not intended to be used Toledo. Ohio 436m tns Bancorp. Inc. Board Chairman. in connecnon with any sale or purchase or lower Hospital.Graduateof Williams #"F C"""' Common oilege. A Director since 1%8. A copv et Form 10-K as filed with the New York Stock Exchange Secunties and Exchange Commission %:1 Atidwest Stock Exchange Chairman. be available to shareowners u;en written Amsterdam Stock Exchange hief Execunve Otficer. Chairman. East request to the Company's Vice President. T U"12
- entral Area Reliability Coordinating Finance.
n 2$ roup. President. Ohio Electnc Unlities Cincinnati Stock Exchange istitute: Chairman. Ohio Chamber of Detroit Stock Exchange ommerce. Graduate. business adminis- Philadelphia. Baltimore and ation. Kent State University.Distin- Washington Stock Exchange aished Alumnus Award. C.P.A. Named
' ledo's Outstanding Citizen of 1976. A o
, fed -525 par value-8.84., -
6 6 rector since 1962. New York Stock Exchange Chair- Preferred-5100 par value-4%*. ian. Executive Committee. Libbev- 8.32*.176% 2nd 10% American Stock Exchange wens-Ford Company tglass and plasnc roducts. fluid systems componentsi. Bonds resident. Toledo Museum of Art. Ate- 10 " -Due 1982. 9.35%-Due 1985 1anical engineering graduate. 'Vayne 9%Due 2000. ?M%Due 2002
- ate (~mversirv. A Director since 19'4. Audit Committee 8%Due 2004. 9.65 %Due 2006 Compensat:o.i Committee 9% Due 200S. I1%Due 2009 New Y rk Stock Exchange Executae Committee Nommanne Committee Operanons Committee Committee Chairman
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Financial Summary i 1980 1979 Percent Change i Earnings Per Share of Common Stock (a) , 5 2.26 _ _5 2.42 , ..
,(6.6)
Dividends Paid Per Share of Common Stock .. 5 __ ..2.00 5 . 1.92 4.2 Book Value Per Share of Common Stock .
$ 19. 72 . .5 19.88 ...
..(0.8)
Common Stock Share Owners 101.001 94,851 6.5 Oper.ating Revenues.(000). = - = ~ . . . ,- =. =- .= . . - - - .- = . 589 : -.3,566 5824,267 8.4
.= =.: n . n n. ,=..,=.-:e-.~ .
5743,051 5688,788 Operating Expensesj000_) _J . Net Income (0,00).. ....-.-. = .
- ...--.. - - - . .- - .383.5125,. - - . -5117.,659 - - - = - . , - = - . . ~ .
6.6 Earnings Available for Common Stock (000) $ 97,672 5 92,073 6.1 i Kilowatthour Sales (Millions of Kilowatthours) . Residential 4.463 4,353 2.5 l
. ...= = -.. - = ..r..- n ...=-.= . = n . . - - . . . . . =.- u Commercial. . . .=.a.. - . . .n m . . a ..
- =w . . .-- 4,149 .: n 4,041.,. --.. = .... ,2.7 Industrial. . . . . - . --. - . - . - - - . . .
. . . 8,062.. -.9,269 .-- . . - (13.01 Other . - . . - .. - -. ... .
416 -. 398 . - - - 4.2 Sub-total _ 17,090 _ 18,061 (5.4) II'cIs~to tiIities ._ .. . . . . . . . . _ . _ . . . . . . . . 1,070_ _ . %9 ._ . . 15.4 . , Quarterly Earnmgs and Dividends Per Share of Common Stock (cents) 1980 1979 Earnings Dividends Earnings (b) Dividends F_ irs.t.. Quarte.r .._ . 45 50 61.- _ .__ 48 Secon. d Quate.r. . - - . . . . 45 50 45 48
- n. .
Third _ Quarter _ 83 50 93 _ 48 Fourth Quarter 52 50 43 48 j l Quarterly High, Low and Closing Prices of Common Stock (dollars) l 1980 1779 l l High Low Close High Low Close First Quarter . _ _ . 17 % 13 % 14 % 19 % 16% 18 % Second Quar +er . . . . . . .... . .. 18 % . 14 % 17% . . . . . . - - . 19 % . - - 16 % 19 18 % 15 % Third Quara:: . -- .. .. .. . . . - . . . ._ 16%. . . . . .. - 19 .% . ~ .17 % 17 % Fourth Quarter 16 % 13 % 14 % , 18 % 15 % 16 % tai See Note 3 of " Notes to Consolidated Financial Statements
- tb) See Note P of ' Notes to Consolidated financial Statements:
i i
. . . . . . . . . .ns _
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