ML19318D168
| ML19318D168 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 02/07/1980 |
| From: | FITCHBURG GAS & ELECTRIC LIGHT CO. |
| To: | |
| Shared Package | |
| ML19318D157 | List: |
| References | |
| NUDOCS 8007080019 | |
| Download: ML19318D168 (25) | |
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Fitchburg Gas and Electric Light Company FinancialHighlights of1979 1979 1978 Net Income $ 2,260,706 $ 1,959,850 Earnings Per Common Share $4.34 $3.67 Dividends Paid Per Common Share $1.90 $1.50 Present Quarterly Dividend is Equivalent to an Annual Rate of $2.60 Electric Operating Revenues $24,475,296 $21.157,542 Gas Operating Revenues $ 9,786,185 $ 7,919,991 Total Operating Revenues $34,261,481 $29,077,533 Kilowatt IIours of Electricity Sold 392,691,432 390,543,732 Average Annual Kilowatt IIour Sales Per Residential Customer 5,033 5,073 Number of Electric Customers 21,744 21,508 Thousands of Cubic Feet of Gas Sold 2,343,116 2,062,391 Average Annual Cubic Feet Sales Per Residential Customer 86,431 92,076 Number of Gas Customers 13,693 13,069 Net Utility Plant $37,294,322 $35,267,214 Number of Employees 161 185 Number of Shareholders 2,252 2,236 l
Cover FG&E's service team works with a constantly improving range of equipment, including this recently acquired digger d:rrick truck with the new Company logo.
l Capital expenditures for 1979 amounted to
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4 *y 7 $3,504,444, including costs associated with l ,
the continued investment in jointly owned generating facilities, the relocation of three miles of overhead l
., distribution system in Ashby in connection with
, w he? , highway reconstruction and the completion of the
Ashby-Townsend loop tie and a high pressure gas l A main which ties the distribution systems of each town together to provide more reliabic service. An !
. additional expenditure was made for conversion Charles H. Tenney H Howard W. Evfrs, Jr., Presiden burners and gas water heaters which will be rented chairrnan of the Doord to customers on a monthly basis.
Looking to the year 1980, major capital i l
To OurShareholders: expenditures, estimated at $14,348,500, are expected to include increased investment in jointly owned For Fitchburg Gas and Electric, the year 1979 was an nucl r plants, a continuation of the gas conversion l excellent one, a period of continued growth and pr gram, and further m, vestmen m our exploration l progress. Whila consistently pursuing the corporate and development subsidiary, Fitchburg Energy l goals of controlling costs and increasing operating Development Company.
efficiencies, the Company achieved record earnings. ,
There was no long term financm, g in 1979. The Net income for the year was $2,200,700, up 15%
ye r 1980 will require that both debt and equity .
from the 1978 level of $1,959,850.1979 carnings per ,
financing be undertaken. The size and timmg of both (
common share were $4.34 compared to $3.07 in 1978.
will depend on developments m the security market j A number of factors played a significant role in nd the Company s attempt to acquire addit,onali enabling the Company to maintain the forward momentum reported last year: capacity m the Seabrook nuclear units.
- Cas mcf sales rose by 13.0% as a result of As highlighted in the following pages of this ,
improved availability of gas supplies. Due to spiraling report, the Company continues to seek new and l fuel oil costs, and the resulting increased demand improved ways to fulfillits responsibilities to its customers and its investors. Over the next ten years, for gas as an alternative fuel, the Company has embarked on an extensive marketing campaign, and Fitchburg Gas and Electric will work to shift the anticipates continued growth in this area throughout ratio of power generation sources from high-cost the coming year. imported oil to more efficient and economical energy.
- The Company obtained a favorable property A new FC&E Customer Service Center is being tax settlement on all its properties in the City of planned to increase operating and distribution Fitchburg. Though no longer in use, the retired efficiencies. A series of internal and external com-Sawyer Passway steam generating facility had been munications programs are being implemented.
appraised as an operating plant. This settlement The year 1979 marked the 100th anniversary of reduces the level of these property taxes by approxi- Thomas Alva Edison's invention of the electric mately 34%. Management's Discussion and Analysis lightbulb and with it the birth of the electric utility of the Summary of Operations contains details of industry. For Fitchburg Gas and Electric, the occasion these abatements. serves as a time of rededication, a time to move
- Continuing management commitment to forward with renewed vigor in our ongoing quest to strengthening the Company both internally and provide our region with a reliable and affordable j externally has led to improved efficiencies at all energy supply. <
levels of operation.Though firm kilowatt sales show We look forward to 1980 as a year of continued !
a decline of 1.5%, this may be attributed to a lengthy growth and progress in the fulfillment of our l strike at one of our major industrial customers, responsibilities to our customers, our shareholders plus the energy conservation efforts of our and our employees. l
, customers. Company employment as well as the !
' area's economy, has remained stable. !
l With the August 15 payment, the quarterly T gg y h, S.
j common dwidend was increased from S.45 per share to S.50 per share, an effective annual rate of $2.00 per AggT U j
share compared to the amount of $1.50 paid last year. Charles H. Tenney II Howard W. Evirs, Jr. '
No part of the dividends paid during 1979 constitutes Chairman of the President a tax-free return of capital. Board of Direrfors Reflecting the Company's continued improved performance, the dividend was again increased with the February 15,1980 payment to S.05 per common l l share, an effective annual rate of $2.60. Such continued support of the shareholders' need for a j higher return is an essential step in the ongoing
- process of attracting new shareholderinvestment. !
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y r, h L _ : . e 1 ero a pt. w e ninto nwter instaHarwn nn 1 u tung nro rentrnt to (GRE service PrOVi(lillg A Reli;ilile Eriergy Supply Today the Company continues to be accountable for the energy requirements of its custorr.ers and to assess electrical generation options in terms of Fitchburg Gas and Electric 1.ight Company is totally economical alternatives and acceptable risks. Within interdependent with the area it serves. As the that context, Fitchburg Gas and Electric remains provider of energy to an area encompassing approxi- committed to nuclear technology and to public safety.
mately 170 square miles in North Central Massachu- The impact of the increasingly high cost of setts, we have the ability to make significant foreign oil and the government mandate to reduce contributions to the quality of life in our region. Our our dependence on this politically volatile resource own financial performance in turn reflects the by 50% by 1990 underscores the urgency of replacing economic heahh and vitality of our customers and oil-fired generation with an increasingly greater share their communities. of nuclear power. Even with its heavier capital Fitchburg Gas and Electric remains committed requirements, nuclear energy has a 20 percent cost to its goal of providing its customers with an advantage over coal and an unquestionable advantage adequate and reliable energy supply at an affordable over the ever-increasing and uncontrollable costs price. During the past months many steps have been of oil.
taken to improve our operations and facilities in a On August 2,1979. the Massachusetts Depart-variety of constructive ways, thereby providing ment of Public Utilities reconvened hearings on the heller services to the more than 23,000 commercial, Company's proposed purchase of an additional to industrial and residential customers who rely on us megawatts of New Ilampshire's Seabrook nuclear for their energy needs. units from The Connecticut Light and Pouer Com-pany. Final decision on this acquisition was still pending at this printing.
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Estensn o n oril proe nsing capabilities streamline company performance President Howard W. Evirs. fr., addresses civic groups throughout the e ommunity On October 25th, the Company's Board of requested and received DPU approval to amortize Directors authorized the purchase from Public over a three year period its investment to date in the Service Company of New Ilampshire of an NEP units. The amount proposed to be amortized, net additional three megawatts in each of the two of taxes, is approximately $391,000. FG&E had a Scatirook nuclear units, increasing the Company's 20-megawatt interest in the units which, along wi'h proposed total ownership to approximately 20 mega- other joint interests, had been counted on to establish watts. The purchase is subject to approval by the a nuclear base capacity of 50% for the Company.
common shareholders and receipt of approval This capacity was also required to help the Company acceptable to the Company from the Massachusetts obtain a 50% reduction in the use of oil by 1990.
Department of Public Utilities (DPU). Operational and financial testimony continues This proposed purchase was precipitated by the to be supplied to the DPU in support of the proposed October 9 announcement by New England Electric Seabrook purchases and we are hopeful that satis-System to defer indefinitely the in-service dates of factory approval will be received by mid-1980.
the New Eng' md Power (NEP) Charlestown nuclear units #1 and #2. Previously, in-service dates had been i
set at 1987 and 1989. NEP has since announced term-ination of this project. Fitchburg Gas and Electric haa 3
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m i of Iv;uifwd nattral gc i enhanco gus rnarketing girograra ltchoble sort ms Energy usage and sources are carefully rno frored to ensure continuous serval l
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UllllZilig All Passible Resources At year end, the Company had achieved its 1979 corporate goal of 2,000 residentialinstallations, primarily with existing customers. With the demand In 1979 we began to see the first fruits of deregulation for residential conversions from oil to gas heat of gas. For the first time in many years, delivery of continuing at a record pace through the year, the pipeline natural gas significantly increased as Company augmented existing gas marketing and compared to prior years. In addition, supplies of service staffs with reassigned personnel to help liquid propane (LP) and liquefied natural gas (LNG) respond to inquiries and to follow up on sales and from our suppliers continued on an uninterrupted installations.
basis. Initially some delays in installation were To insure that the Company will be able to fully experienced due to tight supply of conversion utilize these gas supplies, Fitchburg Gas and burners from manufacturers and the limited number Electric entered into two long-term underground of installers available. By year end the situation had storage arrangements with Consolidated Gas Supply cased and installations of gas heat within the
! Corporation and National Fuel Gas Corporation. Company's marketing area were proceeding at an
- As gas supplies have increased and home unprecedented pace.
l heatmg oil prices have risen, Fitchburg Gas and As long as gas supplies remain plentiful, at a Electric has conducted an aggressive marketing and price consistently less expensive than oil, the demand advertising campaign to promote gas for both home for gas heating cons ersions is expected to continue.
heating and water heating. Gas prices are expected to rise about 15% during 1980 over 1979 levels due to phased deregulation of natural gas. At the same time, however, oil prices continue to increase at a more rapid rate, making the market potential for conversions even greater.
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However, the customer using gas during the has committed in principle to drill an additional six 1979-80 winter will still achieve savings of 30% wells in Morgan County by June of 1980 and is or more as compared to the cil customer who will be evaluating opportunities in such areas as Louisiana, paying as much as $1.00 a gallon to heat a hon.e Texas and Oldahoma.
, during this period. Gas customers will be paying Fitchburg Gas and Electric ant:cipates petitioning prices similar to 1978 oil costs of 57C per gallon, a the hfassachusetts Department of Public Utilities for significant point considering the rise in the price the right to invest further funds in FEDCO. A DPU of oil. order currently limits the Company's investment to Fitchburg Gas and Electric continues to pursue $1 million. Hearings,if required, should be held by the development of domestic oil and gas supplies the middle part of 1980.
through its exploration and development subsidiary, Fitchburg Energy Development Company (FEDCO), Using OurEnergies
- which is a partner in the hiinuteman Exploration
, Company. A joint venture program through Minute- To Serve Ou: Customers Best man has involved the drilling of 17 wells in Morgan
! County, Ohio, since exploration was started in One of the Company's major responsibilities to its July 1978. customers is to assure an adequate and reliable The Company looks forward to continuing its source of energy around-the-clock; in short, to expansion in the oil and gas field during 1980. Sixteen provide excellence of service. As a demonstration of of these wells are currently producing oil and gas. its commitment to Fitchburg and the communities we
! Negotiations are underway to transport some of serve, Fitchburg Gas and Electric has announced
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this gas back to Fitchburg customers. Minuteman plans for coristruction of a new building in Fitchburg.
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{ Gas hearing conversions reach new homes along gas mains FGFE Consumer Aides e 87ectively answer questions and solve customer problems in line with the Company's obligation to COnSumerCOmmuniCaliOnS control expenses, the new building is being planned so as not to add to the present cost of service.
Construction expenditures are expected to amount to in today's inflationary climate, compounded by rising
$2 million, to be offset in part by the sale of the energy needs, nuclear licensing delays and complexi-l buildings being vacated as well as by energy cost ties of the regulatory process,it is essential that we reductions and other operating efficiencies. maintain open lines of communication with our The new facility, a one-story functional structure customers. Only through understanding can we geared to improving customer service without expect the utility industry to receive the support investing in elaborate surroundings,is expected to be required to provide an affordable and adequate leased. It will consolidate all Company departments, supply of energy to this area and this region. l except energy production facilities, under one roof. As a means of accomplishing this goal, the presently the Company operates from seven Company reinstituted its Operation Outreach pro-separate buildings. gram in early spring. presented as a series of Design plans call for a 55,000 sq. f t. facility with neighborhood meetings at which Company officials heating to consist of an energy efficient heat pump explain the whys and wherefores of Company opera-system supplemented by a gas-fired boiler, tions, the program has played an important role in generating a more positive attitude towards the Company within the community, Issues addressed include the need for increased nuclear power within i the Company's generation mix, the basis upon which fuel adjustments are charged, why electric rates are at their current level and the availability of gas supply. Additional exposure is gained through an 6
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'ha % MId i company nhool programs include educational trips to Seabrools. N.II., nuclear facaity active film and speaking program before community service. Customers are individually assigned so that ,
clubs and organizations, as well as through the they will he handled by the same Aide for all prob- '
- sponsorship of various school activities, including lems, thereby enabling the establishment of better
. bus trips to the Seabrook nuclear plant site. communications between the Company and its Key to the increased focus on the Company's customers.
image within the community which it serves is the creation and implementation of a new contemporary COHSerValiOn and
. logotype. Using strong cohesive Company graphics l and the theme, "Using our energies to serve you Energy Management best," the program stresses the importance of fast, efficient, quality customer se;rvice, and extends into In response to the National Energy Conservation all areas of Company operations. policy Act, the Company places special emphasis on As a means of providmg person-to-person com- the encouragement of energy conservation and energy munications between the Company and its customers, inanagement. In addition to implementing apoonal a new Consumer Aides program has been developed. residential Time-of-Day rates, which recognize the Four specially trained Consumer Aides handle all lower cost of producing electricity during off-peak
' calls having to do with any aspect of customer hours, the Company maintains an ongoing conserva-tion education program through its bill enclosures and other forms of customer communications.
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I Miniitigenitent Changes Edward D. hicKenzie was elected Assistant Treasurer of the Company, effective October 1.
Thomas W. Sherman has announced his intention Due to the increasing responsibilities as officers of not to stand for re-election as an officer when his another utility, Joseph A. Raffaele and George A. term expires as Treasurer at the 1980 annual meeting
, Carlson resigned as Assistant Treasurers of the and as Vice President at the first Directors' meeting Company and its subsidiary, effective July 1 and thereafter. Afr. Childs is being nominated for
- ' October 1, respectively, and Roger A. Young resigned election as Treasurer at the annual mee'ing. Afr.
as Assistant Clerk of the Company and as Assistant Sherman will remain as a Director of the Company j Secretary of the Company's subsidiary, both effective and its subsidia y.
July 1. Afanagement wishes to thank the former
- officers for their years of devoted service to the l Compa ny.
At the July 12th meeting of the lloard of Directors, Frank I.. Childs w as elected Vice president and Assistant Treasurer, and William LL hiacGillivray was appointed Assistant Clerk, all effective July 1.
Ntr. Childs ar..I hir. hiacGillivray were also elected Assistant Treasurer and Assistant Secretary, respectively, of the Company's subsidiary.
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c Fitchburg Gas and Electric Light Company L FinancialandStatisticalInformation Annual Report 1970' LCommon Dividends Paid Per Share
~
75 --
70 l n M
( 78 79
.80*
20 40 60 80 100 120 140 160 180 200 220 240. 200
- Assumes latest quarterly dividend annualized.-
Dividends Paid Per Share on the Common Stock of the Company
- 1st Quarter ~ 2nd Quaifer 3rd Quarter - 4th Quarter The Year
$.50. $.50 $1.50.
-S.45 $.45 l
II il i I 1978 1979 Price Range ofCommon Stock 1978 1979 1978 1979 1978 1979 1978 1979 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter High 21%
8 High 18%
"8 High 18%
High 10% _
liigh 165/s .
Low ' 1"% Low 17%
Low.17 Low 163,'s Low 16 Low 15%
' I
Low 15%
1978 1979- 1978 1979 1978 1979 1978 1979 The Common Stock of the Company s listed on the American Stock Exchange
- (Symbol: FGE] and the Boston Stock Exchange.
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~ Consolidsted Bal nce Sheet ASSETS December 31, 1979 1978 -
Utility Plant (at cost):
Electric : -
$29,788,954 $29,'150,076 -
Gas - 10,763,237 9,701,448 Common s 1,395,550 1,430,568 Construction work in progress (Note 9) 5,196,391 4.179,203 Gross Utility Plant - .47,144,132 44,461,295 Less: Accumulated depreciation (Note 1) 9,849,810 9,194,081 Net Utility Plant 37,294,322 35,267,214 hiiscellaneous Physical Property (at cost) - ~^
26,005 20.005 Investments (Note 1) 348,006 270,748 Current Assets =
' Cash 1,727,899 - 459,751 Accounts receivable (including instellment sales)-less allowance for doubtful accounts of $177,580 and $220,480 5,082,572 3,885,345
~ Refundable income taxes 264,990 ~ -
hfaterials and supplies (at average cost) 877,721 676,050 Prepayments 829,875 201,322 Property tax abatements 462,821 -
Total Current Assets 9,245,878 5,222.448 l
l Deferred Debits l
' Unamortized debt expense (amortized over term of securities) 275,932 296,402 l Unamortized cost of abandoned properties (Note 2)- 2,976,821 2,981,332 Other (Note 2) . 646,331 160,878
]
Total Deferred Debits 3,899,084 3,438,612 TOTAL' $50,813,295 $44,225,027 ,
)
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-(The accompanying notes are an integral part of this statement) )
10 4
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LIABILITIES 4 l December 31, 1979 1978 l Capitilization '
Common Stock Equity Common Stock, $10 par value Authorized - 1,000,'000 shares -
. Outstanding- 455,475 shares . $ 4,554,750 $ 4,554,750 Premium on common stock 1,754,358- 1,754,358, C pital st'ock expense (181,737) -(183,744)
- Retained earnings (Note 3) 6,417,530 5,304,422 Total Common Stock Equity 12,544,901 11,429,786 Redeemable preferred stock (Note 4) '
Cumulative preferred stock, $100 par value 5% % Series Authorized - 16,880 and 17,300 shares Outstanding- 20,400 and 16,880 shares 1,646,000 1,688,000 8% Series
- Authorized -25,000 sbres Outstanding-::4,250 and 25,000 shares 2,425,000 2,500,000
. Total Redeemable Preferred Stock 4,071,000 4,188,000 Lo'ng-term Debt (Note 5) 16,780,000 16,978,000 Total Capitalization - 33,395,901 ~ 32.595,786 Current Liabilities Long-term debt due within one year 123,000 '123,000 Notes payable (Note 6) 5,420,000 970,000
' Accounts payable 4,995,568 3,835,149 Customer deposits and refunds 258,675 623,558 -
Taxes accrued 167,860 571,105 Deferred income taxes (Notes 1 and 7) 131,266 196,956
~
Interest accrued 495,950 452,997 Totil Current Liabilities 11,592,319 6,772,765 D ferred Credits
- Unamortized investment tax credit (Note 1) 1,583,601 1,361,332 -
Othir 70,219 . 73,746 Tot:1 Deferred Credits 1,653,820 1,435,078 Deferred Income Taxes (Notes 1 and 7) 4,122,357 3,362,276 R: serves - Other - 48,898 -59,122
-TOTAL $50,813,295 . $44,225,027
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Consolidated ' Statenient- of Income' -
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4 For Years Ended December 31, 1979 -1978 Operating Revenues Electric- -
$24A75,296 $21,157,542
. Gas . 9 J6,185 7,919,991-
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, Total Opert yg Revenues -
34,261,481 29,077,533
- Operating Expenses -
- Operating expenses, other- 5,132,726 4,833,281 Electricity purchased for resali 10,470,503 : -8,538,045:
- Fuel used in electric generation 3,401,852 2,158,983
~
Gas purchased for resale- r 5,850,610 4,334,696 '
Maintenance ' -
933,360 734,113 <
Depreciation (Note 1) 1,236,692 1,181,787
, Amortization of cost of abandoned properties (Note 2] 657,048- 595,937 Provisions for taxes (Notes 1 and 7),
Federal. income tax on net operating income . 957,846 1,216,342.
, Deferred Federalincome 715,030 339,151 Amortization of investment tax credit 4 (89,049) (61,766).
. State franchise 112,348 81,4C3' Deferred state franchise ' 66,293 32,587 Local property - current 1,362,511 1,693,904
-abasment of prior year (244,076) -
Other 193,669 166,859
. Total Operating Expenses 30,757,363 25,845,322 Operating Income 3,504,118 ' 3,232,211
. Non operating Income -
Allowance for other funds used during construction 116,319 - 118,573 Other (net of income taxes) (Note 7) (27,605) 83,418.
-Total Non-operatin'g In,come - -
88,714 '201,991 ~
Gross Income 2,592,832 3,434,202
~ Income Deductions
. Interest on long term debt 1,498,655 .1,515,476'
~ Other int'erest ch irges 325,596 233,859
. Amortization of debt expense. 20,470 16,32'4 . .
- Discount on long-term debt purchased for sinking fund (credit)
. (3,030) -(2,167) ,
Other - '
2,816 8.992 '
Gross Income Deductions 1 -
L844,507 1,772,484 l Allowance for borrowed funds used during construction - (512,3811 -(298,132) l
'N:t Income Deductions 1,332,126 ~ 1,474,352 i Net income ; -
2,260,706 1,959,850 .
. Dividend R'equirements on Preferred Stock 281,754 287,407'
..NJIncome Applicable to Common Stock.. $ 1,978,952 $ L672,443 Number of Common Shares Outstanding ~455,475 '455,475; tarninga per Common Sharc outstanding $4.34 : $3,67.
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Consolidated statement of Chrmges-in Financiil Position ,
Year Ended December St.
'^
-1979 '1978
~
Funds Provided By: -
' Funds from Operations > -
N:t Income' $2,260,706 - - $ 1,959,850
^
- Principal Non Cash Charges (Credits) to 'Income (Notes 1 and 7)
^
Ocpreciation -
1,236,692 1,181,787
. Deferred Federalincom'c tax 687,646 344,666/
Deferred state franchise tax 72,435 30,504 Amortization of investment tax credit - (89,049) (61,766)
~
- Allowance for other and borrowed funds used.during construction (628,700) (416,705)
Prope'rty tax abatements (270,813) -
Amortization of deferred debits 722,385 648,490
. Funds Provi $led by Operations 3,991,302 3,686,826
- Other Sources - Net 179,616 -224,299..
~
increase'[ Decrease)in Short term Debt 4,450,000 - '(1,530,000)
Total Funds Provided $8,620,918 $ 2,381,125 Funds Applied To:
Additions to Plant $3,270,600 $ 3,098,508
- Investments in Non-utility Operations'(Note 1) 233,844 271,222 Common Stock Dividends < 865,164. 683,017- '
. Preferred Stock Dividends 282,434 287,586
~ Funds Used for Retirement of Securities:
Long-term debt 198,000 191,000 Preferred stock 117,000 -42,000-Increase (Decrease) in Working Capital. Exclu' ding Short-term Debt 3,F53,876 (2,192,208)
' Total Funds Applied $8,620,918 - $ 2,381,125 I . L cre:_se (De<:rease) in Components of Working Capital, Excluding
- 'Sh:rt terniDebt:
- C:sh $1,268,148 $ (312,002) J Accounts receivable ' 1,197,227 71,440 Rciundable income taxes 264,990 -
,Matirlais and supplies .
201,'691 L (20,487)
Preplyments 628,553 (29,591)
. Property tax abatement 462,821 -
- Accounts payableL _
(1,160,419). (1,090,918)
Customers' deposits and refunds . 364,883- (256,117)-
[ ' '
T .xes accrued ~ 403,245 ~ (508,104) ,
Difarred income tax'es .
65,690 (63,885) l (42,953) 17,456
~
r
" Int:r:st accrucd. ,
L Incrcise (Decrease) in Working Capital '
~
' $3,653,876 $(i,192,208) j
~ -
l iIThe accompanying notes'are on in'tegral part of this statement)
. 13
A Consolidated Statement of Retained Earnings Year Ended December 31, 1979 1978 Retained Earnings, Beginning of Year $5,304,422 $4,315',175 Net Income 2,260,706 1,959,850' Total 7,565,128 6,275.025 '
Deduct:
Cash dividends declared:
Cumulative preferred stock:
5%% Series at an annual rate of $5.125 per share 85,434 87,586 8% Series at an annual rate of $8.00 per share 197,000 200,000 Common stock at an annual rate of $1.00 and $1.50 per share 865,164 683,017 )
Total Deductions 1,147,598 970,603 Retained Earnings, End of Year (Note 3) $6,417,530 $5.304,422 l (The accorapanying notes are an integral part of this statement)
Notes to Consolidated Financial Statements lI Note' 1: Summary of Significant Accounting Policies Revenue Fecognition -The Company records
-The Company is subject to regulation by the unbilled fuel adjustment revenue currently to - !
Massachusetts Department of Public Utilities (DPU) properly match revenues with related costs. Such with respect to its rates and accounting. The Com- unbilled revenue _ aggregated $756,082 and $389,156' l pany's accounting policies conform with generally at December.31,1979 and 1978 res.pectively, accepted accounting principles, as applied in the case of regulated public utilities, and are in accor- Depreciation - Annual provisions are determined dance with the accounting requirements of the on a group straight line basis. Provisions for deprecia-DPU, A description c? the Company's significant tion were equivalent to the following composite accounting policies follows. rates based on the average depreciable property balances at the beginning and end of each year:
Principles of Consolidation-On February 24,1978, 1979 - 3.11% and_1978 - 3.01%.
Fitchburg invested $20,000 in the Common Stock of a new who!!y. owned subsidiary, Fitchburg Energy Accounting for Income Taxes - For income tax Development Company (FEDCO). FEDCO has ir.. purposes the Company excludes a portion of unbilled vested in oil and gas drilling facilities, which - fuel adjustment reven ae and accordingly provides s investment has been recorded on the equity method; deferred income taxes payable in the succeeding All inter-company items have been eliminated in - ' year on such revenue which is carried as a current:
consolidation. asset.
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m UThh Companybf uskd'an accelerned meihod- - (Note 2:' Deferred Debits - 4 Unamortized Cost of ~ ,
Wef dipreciation which presently results in the annual.~
LAbandoned Properties-The unamortized cost of;
" d tN de,preciation being in' excess'of book depreciation, - . abandoned properties is being amortized at various L .
< Mdnd has' deducted currently certain elinents of con u - rates as ordered by the Massachusetts Department of;
' fatruction' overheads that are capitalized for book' Public Utilities (DPU). During 1978 and 1979 the i purposes. For each of_these 'diffeiences the Com- ~ following events occurred: ,
'{ p:ny provides;for deferred income tax as approved - On October 18.1978, the Company filed with the 7 or f rate ' making purposes. In addition, the Company . DPU its ' proposed accounting treatment relative'
- has recorded deferred income taxes related t to the book abandonment of a generating unit ordered
~
' 7(certam abandoned properties which are recognized; ; by the DPU, which treatment was approved by the es tax losses at differing times.
-DPU on November 7,1978. As a result, the Company 1 In' addition to the above, th'e Company, in 1979..
commenced amortization of this property in_
September.1978, retroactive to January 21,1978.
~ ' c pitalized certain maintenance costs for a generat.
',;ing unit,'yet continued to deduct these costs currently . On November 1,1979, the Company began .
" . for tax purposes. Deferred income taxes have been amortizing the costs of its investment in the Charles-
_ fprovided for this timing' difference. t'own Units 1 and 2 proposed nuclear generating plants; This abandonment was precipitated by the 4 The annual investment tax credits pennitted by announcement on October 9,1979 by the lead " '
. ! additions to the Company's utility property are p'articipant, New England Electric System, to defer
. , being amortized into income rateably over the esti- Indefinitely the in-service date and the subsequent
. . mated productive lives of the related assets as announced termination of this project. On Novem- -
allowed by the DPU. Such deferrals for the year ber 27,1979 the DPU approved the Company's
.1979 and 1978 amount to $308,687 and $292,457, .
- request to amortize approximately $653,000 over a
~ '
' respectively. 30 month period. The Company will request from the DPU permission to apply similar_ treatment to any
- Th'e Company has elected to account for invest- additional costs associated with these units.
. ment tax credits on non-utility property additions, primarily related to FEDCO, by the'"Ilow-through - - The amounts to be amortized for all properties
> 7 method. Under this method credits are recognized as
~
over the next five years are as follows:1980, 3 'a reduction of Fede'ralincome tax expense in the. .$838,309; 1981, $723,467; 1982, $67.9,867; 1983,
- year utilized. In 1979 and 1978 these credits amount $58,523: 1984, $58,523.
p , ]10.$7,607 and $10,380,~respectively.1 Other Deferred Debits - Other deferred debits are c composed of the following:
A . The' additional investment tax credit permitted meemw st,
- under the Company's' Tax Reduction Act Employee e Stock Ownership Plan (TRAESOP) reduced Federal *** 1'" '
' In60me, Taxes' payable by.1%%;of the Company's
. property tax abatements (Due ,
qualified property additions.The resulting amounts '1981) $270,813 $ - 3
'are payable to the TRAESOP.: '
preliminary survey and engineering
~
costs _ 101,688 52,189-
[ Allowance for Funds Used During Construc, tion
^
~
i-Deferred maintenance costs (amor- .
- A'n ellowance for' funds used during construction tized based upon generation) 195,102 - '.
, 1(AFUDC), a non-cash' item; is included in construction .
- Miscellaneous 78,638 108.689 iwork in' progress 'and based upon a composite rate
^
s (applicd to construction work in progress, which '
Total other deferred debits $646,331. $160,878 7Eisumes th'a t fumis 'used for construction were -
s provided by borrowings, preferred stock and common 1 '
Eefuity. The allowance for fun'ds used during con- Note 3: Restrictions on Retained Earnings--Under J struction amounted ' tci 31.80/o and 24.90/o of the net - ;the nost restrictive provisions of the Indentiires ,
f Lincome applicable to common stock for the yeath . relating to the Company's long-term debt, $4,32'4,106 -
41979 and 1978, resli ectively' The annual rates uf. . ~ and $3,120,077 of retained earnings were available
( Gipproximately.14% and 11% were used for the ' , for'the payment of cash dividends on Common '
I - ;:ynra 19,79 and 1978, respectively.' Stock at December 31,1979 and 1978, respectively. .
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i 24 Note A::Redeemsble Cumulative Preferred Stock :- , The aggregate amount of sinking fund requirementsc .
i i!The' Cumulative Preferred Stock,5%% Serieslis: a J ^ for each of the five years following 1979 are: 1980,e , . * ;
M - Qpreferred' ave ~r Common Stock in v'oluntaryliquida' ; ' - ; $123,000; 1981,' $198.000; 1982 and 1983, $398,000 and ' .
O jon at the' redemption price in effect at th'e time '
1984, $3,366,000. The Company has satisfied the; W 2 @ cf such voluntary lif luidatiEn,'and in involuntary [
, . 2 Y liquidation at $100 per share, both plus accrued 7
- 1980 sinking fund rei luirement for the 9.%%
- Notes :, *
. in the amount of $75,000.1 '
3 ,
^
mi idividendsl Shares of thA 5%% Series are re'deemable J V D.bct the Comp'any's option at $102.56 per share on or; ' -Note a: Notes Payable---The Company has agreed 7before May 3i, ikd1'and 'a't $10i.28 thereafter/ ~
to maintain certain average amounts on' deposit '
A~ - (The Company is required to 'purchase on Juns t of - or pay certain fees in lieu of compensating balances.
s - jach year not'less' than 420 shares, unless a" <
Certain of the lines require that compensating-i :Irsser am6unt ' f shares are tendered, at $100 per' o -balances be increased in relation to usage. Compen . ' <
s ? sharefplus accrue ~d dividends.. sating balances at_ December 31,1979,' w ere ;
w Th'e Cumuldtive Preferred Sto'ck,8% Series,is . c approximately,$985,000.. -
Npreferred'over Common Stock in voluntary liquida . , Shor erm ~ '
G
. E
, - tion 'at the redemption price in effect at the time = December 31. -
L f ,
of.such voluntary liquidation and in involuntary ' 1m -1m : ,
.T liq'uldation at $100 per' share, both plus accrued' divi- -
. m idends.' Shares of the 8% Series are redeemable at 7 ? ^* I *"d I I '""
. - Weighted average interest rate 15.33 % 11.52 %
- g. f the Company's option at $108.00 per share on or .
Unused line of credit $4,230,000 $5,630,000 -
- 3 before August 31,1983 and at diminishmg premium
> ' rr.tes thereafter. The Company is required to purchase ,jj,,"d daily average inter-g on Jun'e 1, of each year, not less than 750 shares, - '
est rate 13.01 % 8.61% '
,unless a lesser amount of shares are tendered,'at
,s Average borrowings $2,441,400 - $1,491,700 ;
$100 per share plus accrued dividends.
Maximum borrowings at month- .
>5 . Purcharas of redeemable PreferrAd Stock during - end .
$5,420,0m . $1,M5,0M J the years 1979 and 1978 consisted'of the following: y nth such maxinmm occumd: Dumber Mar &
md '
^
M
~
" s ries -
1m. Note 7: FederalIncome Tax-Federalincome tax
. t .
expenseis comprised of the following componentss
,f, 5%% y $42,000 $42,000 ,
- 8% N ^ _ Year Ended .
- $75,000 --
December 31, '
1979- 1978-A =The aggregate a' mount'of sinking fund requirements
- : in each of the five y'ears following 1979 is $117,000. , Current expense charged
~
., . (credited):.
' Note 5: Long term Debt J-Details of Long-term Debt Operating expenses' ' $l 957,846 - ; $1,216,342
'; 4t Dece'mber v31.11979'and 1978 are shown belowi - n- pera, ting income (123,736). ' (78,9,49)
.. '. Amortization of investment 3 q . December 31, tax credit--
(89,049) (61,766]
^
- c , .
7 .
l1979 ~ ' 1975 - 745.061 ~ ' 1,075,627 '
- Et 1 Twenty Ave year notes;4%%,' ~- . -
Deferred tax expense. char 8ed -
f ~, '
7 due February.1,1984 ' r . $i3,183,000 : $ 3,226,000; -
-(credited):
M ~
~;
LTwend-five year n'otes[9%'/d . [ ' '
- Defe.rred unbilled revenue _ _ 74,905i . 61,1807 Edue March 1,~19959 '
3 "6,900,000 6,975,000 - Accelerated tax- depreciation 278,315 l 284,733 -
' " U Twenth yeir notesb1'0 /a,4due- E f' Abandoned properties ,
c 39,085 '(15,6,853) :
, iSeptember 1,1996 : ' . 3,000,000; 3,000,000 Overheads and'other 217,473-- .92,910 '
^
t ' < 5 Twenty-five ye'afnotes.. ' J "[ 5. ~.
- . , Deferred maintenance costs /85,303
. 3 t
, 510%%,Edue May_1,11999 . J 3,820,000 -3,900,000 Percentage ' repair allowance ' '19.949 57,181 7 I Talal I ' ' ~
- I [m' L16,903,000.
- 17,101,000
- 715,030- 339,151
- Non-operating ex6ense . 44,692i
[ kLeis[ Installments dueMithin4 1.[ '67.317 :
.aa-T 'Joneiyeari s * - - 2 123,000 123,000 < , - - -
759,722' 406,468
,. .s ,. . _
" , s
}Tpt 1.ong-term Debt; -
.$16,780,000 !$16,978,000 = . . Total expense - . $1,504,783 - $1,482,095 - '
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[. ,M The Federalincome tax amountiincluded in th'e nl % for r,ates de' sign to increase' electric and gas rev.-x - '
- ' *Stitement of Ihcome differ isom th'eamounts which . enues' by $3,633,000.! -
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@( j tax resuit rate tofrom applyinithe statutory Federalincoms ,
Net Income before income tax. The; e
, f.1Yhe DPU,in orders dated August 31 and Septem .
W re sons,lwith related percentage effects, are as i ber 15,1977,' allowed the Company to file rates i 3 y #shown b'elow: j^
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! designed to prodiice an additional $1,615,843 in 7 EM ' electric and gas revenues. , '
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. . . 7 The Company appealed'the decision to'th'e Su-c Strtutoryl Federal income tax 1 rate- C 146% ? 48% 'preme Judicial Court (SJC) of Massachusetts, and on .
,[Incoine tax e'ffehts of timkng"
~
r , grad a Ma aMnh 1,
..i'2' differences: ' % ~ '
s
' the Company to collect annually an addit [iona
.Y'> .a. * $472,831 in electric revenues, subject to refund.
' Allowance forIunds used dhr!ngy 7 _
' ~
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construction (see Note 1): ' (5); _
(4 _ _' 05 June 30.1978, the Court isssed its order up-
~
. ^
;y MiscellaneousL ~ [11"
- (1)[ L holding the DPU's' decision to femove a generating
, c Effective Federal IAcome tax rate ' < 40 % : 43% - ' unit from the Company's rate base, but instructed 4 - .
, 4 the DPU to reconsider how much in revenues the g } c7 a'
' ~
Company would still be allowed.
<, *, , Y "
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- Nitt 8: Regulatory Matters:
s zThe DPU's October 1978 decision reflected its
.'I. 'I - final ruling allowing the Company to retain the'
. . f ,
, ? Revenue Adjustme'atsi--The Company.'s method ofJ - $472,831 annual amount collected under the Court billing and accounting for revenue under its fuel stay, as well as granting the additional $269,240.-
adjustment clause in effect through Scritember 26,' -
~ ] 11974 has been challenged before the Massachusetts ' '
~
Department of Public Utilities (DPU) by the ' Attorney - q Central of the Commo'nwealth'of Massachus'etts.- i ' Note 9: Commitments:
'v fThe required 'monthlp fuel adjustment schedule -
x - il1 arctofore h filed with the DPU had not been disputedi ' ;I.e'ase Obligations-In accordance'with the gulde ;
"by the regulatorp huthority. The portion of such fuel.
, : lines of Statement of Financial' Accounting Standards'
% adjustment clause revenues recorded by'the Com- , No.13 issued by the Financial' Accounting Standards
/; piny and now challenged by the Attorney l General-~ _ Board, the Company is disclosing pertinent informa-j aggregate approximately $724,000 and is equivalent tion regarding its capitalleases. The Securities and
, , to $.83 per average Commo_n Share outstanding on Exchang~e Commission requires, for rate-regulated >
> :1974 earnings, after giving tax effect thdreto. The enterprises, d' isclosure df the effect on the balance -
Company has vigorously defended its procedures ini sheet and on expenses if such le'ases had be a a proczedings_before the DPU; th'e outcome of which capitalized, pending the results of its review of the Min uncertain.: Q. . . Statement's applicability to rate-regulated enter-w .1 .
+yM '
'7 prises. .
s
;
M ^The Company's billing and Accosnting for revenues
> 2 undsr' fuel adjustments based on costs incurre'd after , .
The Company hds a significant twenty'-five year ,
. , Siptember 26,1974 are being made under a new lease which began April 1,1973 for a combustion! ~ '
y fupl adjustment c'lause which took effect on. Sept turbine and a liquefied natural gas stoiage facility. {jtimber 27,1974 and;are not being challenged. The lease is subject to a ten year renewal period at ' -
**',}@ K y 4 "
lthe option of the Coinpany at an annual rental of/ r Conclusion of Rats Appeal '--The Company on f -14% % of the. aggregate fair market value as at the. ' ,
- 5,'1978 wa's autho'rized by'the Massachu . .; -
%Oct:bersetta Deputment.of Public Utilities (DPU) ; the Company to increase has the . -right end to' of the initialleas.e purchase the units'at i term. i Jits clec' tric rates bp'$269,240. With this action by the- an indepen'dently . appraised market value. Under the
~
h EDPU, the Company wa's granted a total of.$2,357,914 7 lease, the Company has the obligation to maintain - -
~ def thi amou'nt it originally requested when it filed - the equipment in good operating condition and pay w
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a> 1 a cll taxes and insurance'on said equipment. Had the : The Company has executed a commitment letter
- Company capitalized its capital leases, Depreciation- tapurchase computer system herdwt.re and periph-'
- end Other Interest Charges would have increased eral equipment, with an acquisition cost of approx-~
$171,721 and $181,920 respectively, and Operating imately $211,000 to be in operation by the end of ? Expenses, Other wodd hav~e' decreased $307,493 1480. The Company intends to finance this acquisition for the year ended December 31,1979. At December - . by means of a third-party sale and leaseback 31,1979 the asset and related liability which would . arrangement. . have been recorded on the balance sheet for the Company's capitalleases were $2,202,922 and .
" $2,538,358, respectively. For the year ended Decem- Pension Plans-The Company has in effect two ber 31 1978, Depreciation and Other Interest Charges funded Pension Plans and related Trust Agreements would have increased'$102,733, and $179,180, re . to provide retirement annuities for participating spectively,'and Operating Expenses, Other would employees at age 05. The entire amount of the annual.
' have decreased $287,507. At December 31,1978, contribution under the actuarial requirements of the the asset and related liability which would have Plans is borne by the Company, been recorded on the balance sheet ivere $2,374,643 and $2,005,328, respectively, The Company's contribution to the Plans during the years ended December 31,1979 and 1978 The minimum commitments under all non-can- ~
amounted to $519,323 and $497,077, respectively, cellable long-term leases in effect at December 31, which includes amortization of prior service costs 1979 are as follows: 1980 - $309,884; 1981 - ~ over a period of thirty years.
$280,325; 1982 - $262,930; 1983 - $255,073; 1984
- $249,495; 1985-1989 - $1,141,148; aggregate for The Company's policy is to fund the pension cost the period; 1990-1994 -- $1,120,043 aggregate for accrued. The actuarially computed value of vested the period; and 1995 and thereafter- $788,230 benefits as of January 1,1979, the date of the latest aggregate for the period. actuarial valuation, exceeded the total of the Total rental expenses for the years ended Decem- pension fund by $3,969,379. The aggregate amount of ber 31,1979 and 1978 amounted to $430,309 and unfunded prior service costs as of the same date
$428,289, respectively. was $5,105,390.
. Joint Ownership Units and Construction-The Company is participa' ting on a tenancy-in-common basis with other New England utilities in the construction and ownership of eight generating units. New Haven Harbor
'and Wyman Unit #4, both oil-fired stations, have been in commercial operation since August 1975 and Decem-ber 1978, respectively. The remaining six nuclear -units are planned or under construction.
Details relating to the various units are as folloivs: I Company's Share in Thousands of Dollars i Proportionate .rok! I Share of Amount of Accumn- Amount Estimated ' i Total Utility lated Expended Cost of Ownersh.ip- Plant in Depreci- through ' Construc-Joint Ownership Units ' State % mw Service ' ation 12/31#9 tion Seabrook Units #1 & 2 ~ New Hampshire .1710 3.9 - - 1,902 ' . 5,851
' Millstone Unit #3 -Connecticut .217 2.5 - - 1,762 7,037 Pilgrim Unit #2 Massachusetts ' .19 2.2 - -
827' 5,565 l
'hfontague Units #1 & 2. Massachusetts '.3 5 8.1 - -
250 12,293 ; 1
- Wyman Unit #4 - Maine .1822 1.1 396 19 l
~
New Haven Harbor Connecticut 4.5 20.1 6,930 828 l _18
- - - ~
2 ; -
,P j# ~ ~
'A LOperating expenses included in'the Consolidated On January 25,1979, the common shareholders
- Stat:. ment'of Income and proportionate amounts - approved the acquisition of an additional.43332%
- charged to specific operating expenses are as follows: ownership interest in each of the Seabrook units from
~t he Connecticut Light & Power Company.The Thousands of Dollars Company has made an' agreement to purchase up to
% to
-Wyman . New Haven Total an' additional 26087% ownership in each of the U.nft 4 ' Harbor - Electric
. Seabrook units from Public Service Company of .
Oper; ting expense, other 32 250 8 New Hampshire, subject to tbe apprcval of the
< "Fugl used in electric genera- . . common shareholders. The puichase of both tion 19 :. 3,228 95 additionalinterests, representing approximately an-MrintInance . 2 90 14 additional 16 mw, has been excluded fro:n the in-Loc:1 property tax . 4 187 18' formation presented herein, pending final app ~r oval Oth:r taxes' -
6- 5 of the purchases by the Massachusetts Department
; . Total operating expenses: .
57- 3,767 The Company expects to finance the cost of its
;The Company estimates construction requirements participation in the units initially through the use of relative to these units of approximately $10,160,000 short-term borrowings. At the appropriate times, 1 during the next five year period ending December short-term borrowings will be converted into
- 31,1984,~
permanent financing. N;tilo: Segment Inform'ation-In accordance with Financial Accounting Standard No.14, the following in-
- i farmation is presented relative to the gas and electric operations of the Company:
Electric Gas Total Operations - _ Operations Company 1979 19 8 1979 1978 1979 1978 ~ Operating revenues - $24,475,296 $21,157,542 . $ 9,786,185 ' $ 7,919,991 $34,261,481 $29,077,533
~
Operating income before in - ,
$_3,910,716 $ 3,654,896 $ 1,355,870 $ 1,185,032 $ 5,266,586~ $ 4,839,928
.m - come taxes . -
Income taxes (1,762,468) ~ (1,607,717)
- Non-operating income 88,714 201,991 Net income deductions (1,332,126) (1,474,352)
$ 2,260,700 $ 1,959.850 ~
1N:t income]
' Identifiable assets as'of
$32,460,207 $30,724,323 $11.097,002 $ 8,987,224 $43,557,z09 $39,711,547 D:3cmber 31 l Unallocated assets, primar-
- ]y working capital' $ 7,256,086 $ 4,513,480
- Total assets as of .
December 31 $50,813,295 ' $44,225,027 es- - - . .
. Depreciation . $ ' 955,004 $ 932,260 $- 281,688 $_ 249,527 $ 1,236,692 $ 1,181,787' E
Construction expenditures : $ 1,841,551 $ 2,339,849 . $ 1,429,049. S . 758,659 $ 3,270,600 $ 3,098,508 Expenses used td determine operating income Department of Public Utilities. Assets allocated to b: fore taxes are charged directly to either segment , each segment are based upon specific identification .
' or cre allocated in accordance with factors contained of such assets provided by Company records. Assets in' cost of service studies which were included in l not so identified represent primarily working capital r;ta epplications approved by the Massachusetts ' items.
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+- % e Note'11:1 Quarterly Financial Data (Unaudited) - , !
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" ( .x ' Summarized,mquarterly Anancial data for 1979 and 1978 is as follows:
, ; ;;... > r .e, 1 Mm hb EM
. March si' ,
June se ~ Sept. 33 Dec.s1
.' -2 1973 ; ;1973 1973 - 1973 1973 1973 - 1973 1973
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t,,,.. Total ? . , 4 evenues L $9,262,880[$8.,913,440. ;$7,903,958 ' $6,585,503 $7,790,297 - $5,988,814 $9,304,346 - $7,589,776
. [Operdting n '
l . Income [ ' ' $ 1942,984 - $1,032,845 ' $ [689,517 ' $ f 692,098 . $ 667,486 ~ $ 677,117 ~ $1204131 - $ 1830.,151
~
f Netincome "$ d654,713 '.$ 689,468 $ 3424,545' $ 391,099 $ 319,'478 3 365,942 .$ 861,970 $ 513,341
,/ " Earnings .
' - ' per share . ~ ; $1.28 - $1.36 - $.78 $.70 $.55 = $.65 $1.73 $.96 Net' income for the quarter ended December 31,1979 nas been increased by,$376,478 or $.83 of earnings per
. common share, resulting from abatements.of real estate taxes.
a~~ i. Auditors' Report- . . To tlEe Sharehokler's of ~ FITCHBURG GAS AND ELECTRIC' . LIGHT COMPANY: . , defended its procedures, but the ultimate outcome .
~
1We have examined the consolidated balance . ~
' ' sheetso' f Fitchburg Gas and Electric Light Company . is uncertain and no p'rovision for any liability that
, .and Subsidiaries'as of December 31,1979 and 1978 ~
may result has been made in the financial statements. - .
~
% - " cnd.the related consolida'ted statements of incomeJ In our opinion, subject to the effect of such , .
Eretained eainings end chan'g es in financial position ' adjustments, if any, as might _have been required , .
* : : for the years then ended. Our examinations were had the outcome of the matter discussed above been
,, i made'in'accordance with~ generally accept'ed auditing - ' known,'the financial st' atements referred to above - l standards, and accordingly included such tests of ' pre'sent fairly the financial position of Fitchburg Gas 4 . the accouriting records and such other auditing-
~
' . and Electric Light Company and Subsidiaries at : '
i procedures as we considered necessary in thel l December 31,1979 and 1978 and the results of its . ,, : circumstances.: . s operations and changes in its financial position : 'M - for the years then ended, in conformity with .
,- 1 As discussed in Not6 8 to the financial statements, generally accepted accoimting principles ~ applied >
.. (the Company's method of billing and accountin8 - : on a consistent basis.~ 4
~ ' '
; for revenues under its fuel adjust' ment clause in '
,4 I -4 ' iffect from January 1 through Septeinber 26,1974, .> ,
Alexander Grant & Companyc ' H 15 has be'en challenged by the Attorney General of -
, G: . the Commonwealth of Massach'usetts. The Company; . Boston, Massachusetts ,
p/ ".bellsves'ils methods'are correct and has vigorouslyl , February 7,'1980" '
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l Management's Discussion and Analysis of the Summary of perations -
~
THE ELECTRI_C OPERATING REVENUES increase . , OPERATION, OTHER AND MAINTENANCE in .
; cf 10% in 1979_ was attributable to the net effect _of
^
creases are associated with lease obligations, higher ( thr03 major factors: the increase in fuel costs for - wage rates, increased pension and insurance costs fgener!. tion an'd energy costs of purchased power; the and other cost increases that reflect the continuing .
~
full y:ar effect of the rate increase, approved 06tober - - effect of inflation. 5,1978; and a strike that halted production by one
' of our majorlindustrial customers. The 11% DEPRECIATION expense has risen due to the incrrse hi1978 is due primarily to four factors; add tional plant put m service and due to the in -
tha full year's effect of additional rate relief granted. cre sed rates that became effective September
'tiffctive September 1977: the additions' rate relief I*1977'
. parmitted in October 1977 and subsequently granted -
^ . ANIORTIZATION OF COST OF ABANDONED es a result of the Company's appeal of the above L ' PROPERTIES increased in 1979 due to the first full .
m:ntioned rate decision, the sale of 76,747,276 year's effect of the amortization of unit No. 6 and. kilowatt hours to the six new industrial customers two months amortization of Charlestown No.1 and.
- gcquir:d as of June 1,1977 in connection with the - No. 2. The increase in 1978 is due to the amortization :
purchtse of electric facilities from New England of unit No. 6. . PowpCompany, and the lower per unit energy cost components of poiver generated and purchased LOCAL PROPERTY TAXES in 1979 decreased
- with a resuiting decrease in total cost recoverable from 1978, principally due to a property tax settle-through the Company's fuel expens'e adjustment '
ment agreed to by the City of Fitchburg in October, cliuse.- 1979. The Company in 1979 received abatements
.with a value of $733,634, of which $244,076 pertains
' GAS OPERATING REVENUES increased 24% in ~ to the 1978 period. In 1979, these abatements have
' 1979 primarily due to thre'e fac' tors: increase of increased net income by $370,478 or,$.83 of earnings 1 391,300 hiCF's in interruptible sales ($1'279,400 in- ,
'per common share.The Company anticipates that the crease): the increased cost of purchased gas which future levels of property tax expense will continue to .
. is passed on to customers through the operation of reflect the lower assessed valuation resulting from a cost of gas adjustment clause; and a' decrease in this settlement. The 1978 increase over 1977 is
~ off-system sales of $410,431. The 15% increase in due to the acquisition of the new electric facilities 1978 gas operating revenues is primarily related t : purchased on June 1,1977.
three factors: th'e increased cost of purch'ased gas
. which is passed on' to customers through the cost of THE ALLOWANCE FOR OTHER AND
; gas adjustment clause; the first full year impact of the BORROWED FUNDS USED DURING CONSTRUC-
- p:rm:nent rate relief of $553,734 granted effective TION has generally increased since 1976 due to the
'in September 1977: and an increase in off-system Company's continued investment in electric ,
,s:les of 30,892 hfCF., generating facilities under construction. In addition,-
. . the increase in interest rates has had a significant
' ELECTRICITY PURCHASED FOR RESALE in- ~
' impact on these amounts .
crcisid $1,932,458 in 1979 over 1978 and $297,758 in 1978 over 1977. The 1979 increase reflects the higher. - O'THER NON-OPERATING INCOME has
. per unit energy cost.lThe 1978 expenses' increased - decreased by $109,015 due to the loss sustained by
, - prhn:rily due to a greater reliance on electricity : the Company's subsidiary (Fitchburg Energy Devel-
"from other utilities. pment Company) and to the reduced interest
< a- - income on commercial and Industrial accounts FUEL USED IN ELECTRIC GENERATION in- receivable outstanding.
. cre:sid in 1979 due to the escalation in the costs of _
. fuel 'used to generate a level of kilowatt hours. GROSS INCOME DEDUCTIONS increa. sed due to slightly higher than that of 1978. The 1978 costs the Company's issuing $3,000,000 of 10% Notes in _
. increased over 1977 due 16 a higher level of kilowatt . September,1970. The increase also reflects the
' hours generated;
_ interest expense's related to short-term borrowings { : required to finance,the Company's construction GAS PURCHASED FOR RESALE increased due to . program and in 1979,and 1978, the expense in-
- the lirge increak by our pipeline supplier, the in-
- clu, des Interest related to pipeline refunds due
,crering unit c'ost of our sulsplemental gases and a customers which the Company used in lieu of short-
!high:rle' vel of total MCF salesi , 1. term borrowings s -
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t Summary of Con ~solidated Operations - Statement of Income (000's) 1979 1978 1977 1976 1975 Operating Revenues: Electric $24,475 $21,158 $19,001 $16,601 - $16,107
. Gas' 9,786 7,920 6,861 5,698 4,408 Total Operating Revenues 34,261 29,078 25,922 22,299 20,515 Operating Expenses:
Operation, other and maintenance 6,066 5,568 5,326 4,861 4,516 Electricity purchased for resale 10,470 8,538 8,240 6,390 7,163 Fuel used in electric generation 3,402 2,159 2,083 1,869 1,536 Gas purchased for resale 5,851 4,335 3,709 2,986 2,173 Depreciation 1,237 1,182 1,094 953 873 Amortization of cost of abandoned properties 657 596 173 176 71 Federalincome tax 958 1,216 562 762 311 Deferred income taxes 781 371 470 258 230 Amortization of investment tax credit (89) (62) (52) (49) (34) State franchise tax 112 81 84 100 54 Local property tax ---current 1,362 1,694 1,529 1,384 1,254
-abatement of prior year (244) - - - -
Other taxes 194 167 160 145' 135 Total Operating Expenses 30,757 25,845 23,378 19,841- 18.282 Operating Income 3,504 3,233 2,544 2,458 2,233 Non-operating Income:
- Allowance for funds used during construction - - -
135 ~ 452-Allowance for other funds used during construction . 116 118 36 - - Other (net of income taxes) . (27) 83 76 63 93 Total Non-operating Income
~
89 201 112 198 545 Gross Income' 3,593 3,434 2,656 2,656 2,778 Income Deductions (Net) 1,332 1,474 1,456 1,573 1,000 l Net income 2,261 1,900 1,200 1,083 1,178 Preferred Stock Dividend Requirements 282 288 290 291 294 Net income Available for Common Stock . $ 1,979 $ 1.672 $ '910 $ 792 $ 884 Common Stock Data . Shares of Common Stocki Year end (000's) 455 455 455 455. 455 Earnings per Common Share Outstanding $ 4.34 $ 3.67 - $ 2.00 $ 1.74 . $ 1.94 Dividends paid per Common Share $ 1.90 $ 1.50 . $ 1.44 $ 1.41 $ 1.38
+
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. 1979 1978 -1977 -1976 1975
' Balance Sheet Data (000's)
Utility Plant (at cost) - , $47,144 ' $44,461~ $44,100 $39,829 $37,957 ' ? Accumulated Depreciation ' $ 9,850; $ 9,194 $ 9,020 $ 7,125 $ 6,365 Tct:1 Assets - $50,813 $44,225 $42,435 $39,271 $38,777 Capit-lization and Short-term Notesi
, ' Common ' stock equity $12,545 -$11,430 $10,440 $10,185 . $ 9,805 Redeemable preferred stock equity $ 4,071 ' $ 4,188 $ 4,230 $ 4,272 $ 4,314
- Long-term debt $16,780 $16,978 $17,176 $17,294 $14,414 Short-term notes payable . $ 5,420 $ 970 $ 2,500 $ 300 $ 4,400 Eldctric istics S:les-Thousands of KWH ,
392,691 398,544 349,549 309,257 289,320 Electric Customers - Year End :21,744 21,508 21,272 21,023 20,957
' Avg. Annual KWH Sales per Residential Customer. 5,033 5,073 5,049 5,140 4,992 Avg. Revenue per Hundred KWH - Residential $ 7.78 $ 6.91 $ 6.00 $ . 6.45 $ 6.65 ~
- Gas Statistics Sales--Thousands of MCF 2,343 2,062 2,044 1,970 1,805
' Gis Customers - Year End 13,693 13,069 12,927 12r?. 12,937
- Average Annual Cubic Feet Sales per Residential Customer 86,431 : 92,076 87,253 91,253 84,139 Average Revenue per MCF- Residential $ 4.62 $ 4.03 $ 3.56 $ 3.08 $ 2.60.
i.
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. Board of Directors . . Officers _;
l' Philip H. Bradley, Resident Manager, Northeast, Charles H.Tenney II, Chairman of the Board of of IBM Corporation, Waltham, Mass. . Directors and Chief Executive Officer of the Company.* *
' Richard L. Brickley, Lawyer; partner in the law firm of Brickley; Sears & Cole, Boston, Mass.: Director Howard W. Evirs, Jr., President of the Company.**
of subsidiary. Thomas W. Sherman, Vice President and Treasurer , Howard W. Evirs, Jr., President of the Company; of the Company.** .l Director and President of subsidiaryc Frank L. Childs, Vice President and_ Assistant,
- John Grado, Jr., Vice President of Litton Industries, Treasurer of the Company: Assistant Treasurer of Inc., Fitchburg, Mass. (a diversified industry), and subsidiary; Assistant Treasurer of Concord Electric Chief Executive of its Paper, Printing and Forms . Company, Concord, N.H., cnd Exeter & Hampton Group. _
Electric Company, Exeter, N.IL l Thomas W. Sherman, Vice President and Treasurer Charles T. Ellis, Vice President of the Company; ^ Director and Vice President of subsidiary; Vice
~
of the Company: Director, Vice President and Trea- ~ surer of subsidiary: Director, Executive Vice President of Bay Statc Gas Company, Canton, Mass. I President and Treasurer of Bay State Gas' Company, Edward D. McKenzie, Assistant Treasurer of the Canton, Mass.: Director, Vice President and
, Company; Assistant Treasurer of subsidiary; Assist- I i
Treasurer of Concord Electric Company, Concord,. ant Treasurer of Concord Electric Company, Concord, l N.H., and Exeter & Hampton Electric Company, N.H.,~ and Exeter & Hampton Electric Company, Exeter, N.H. Exeter, N.H.'
' f Robert V. Shupe,' President of R. L. Gourley Co.,
Angela P. Carlion, Clerk of the Company; Secretary Inc., %'cIlesley, Mass. (distributors of heating, air
, of subsidiary; Clerk of Bay State Gas Company, conditiomng and water heating equipment).
Canton, Mass.; Secretary of the Board of Directors
' Charles Hbenney II, Chairman of the Board of of Concord Electric Company, Concord,' N.H., and Directors and Chief Executive Officer of the Exeter & Hampton Electric Company, Exeter, N.H.
Company; Director, Chairman of the Board of
. Directors and Chief Executive Officer of subsidiary; . William D. MacGillivray, Assistant Clerk of the
! Director, Chairman of the Board of Directors, Company; Assistant Secretary of subsidiary; Ass,st- i ant Clerk of Bay State Gas Compar;y, Canton, Mass. - I President and Chief Executive Officer of Bay State Cas Company, Canton, Mass.; Director, Chairman of " See Director listing for other principal occupations. the Board of Directors and Chief Executive Officer of Subsidiary: Fitchburg Energy Development Company. Concord Electric Company, Concord, N.H., and i Exeter & Hampton Electric Company, Exeter, N.H. l iRobert L. Ware, Lawyer; partner in the law firm of Ware & Ware, Fitchburg, Mass. > I Member of Audit Committee. j
- Member of Compensation Committee.
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TRUSTEE: The First National Bank of Boston, P.O. Box
~
ANNUAL MEETING: The annual meeting of common
' ch:rehrlders is scheduled to be held at The First National 1897. Boston, hfassachusetts 02105, is Trustee under indentures Bank of Boston,100 Federal Street, Boston, hfassachusetts, in covering the Company's Notes due hfarch 1.1995 and hfay 1, tha Directors Room on the Second Floor, on Tuesday, March 1999, respectively. . 25,1980, Et 10:30 A.ht.-
This report, including the financial statements contained herein,is submitted for the generalinformation of the TRANSFER OF STOCK: The Company's Transfer Agent shareholders of the Company as such, and is not intended to is Tha First National Bank of Doston,100 Federal Street, induce, or for use in connection with, any sale or purchase 3:ston, hiassachusetts 02110. of any securities. FG&E Service Area Fitchburg Gas and Electric Light Company serves a population of approximately 80,000 people in an area of approximately 170 square miles in North Central Massachusetts. The Company provides both gas and electric services to the area communities of Fitchburg, Ashby, Lunenburg, and Townsend. In addition, we provide gas service in the neighboring areas of Gardner and Westminster. The City of Fitchburg is the primary business and commercial center for surrounding communities, drawing on an estimated 225,000 people, both within and outside our service area. The entire area benefits from a skilled labor force, diverse transportation facil-itles, and proximity to important commercial markets. The continued vitality and stability of the Fitchburg business community is a key factor in the stable employment and healthy economy which characterize the area. l l i l
1 i I I l l l l 1 i l l l
= 1 18 FITCHBURG GAS AND l
'Te ELECTRIC LIGHT CO. l m Using our energies to serve you best l
General Office: 655 hiain Street
- Fitchburg
- hiassachusetts 01420
- Telephone (017) 343-6931
. _ . _}}