ML18230B383

1976 Annual Report

ML18230B383
Person / Time
Site:	Harris
Issue date:	06/09/1977
From:	Carolina Power & Light Co
To:	Office of Nuclear Reactor Regulation
References
Download: ML18230B383 (36)

Text

EXHIBIT A Carolina Power 8cLightCompany 1976AnnuaIReport

&ill COAL NUCLEAR COAL NUCLEAR gO y~@~+~0 g%+~c+ii~k COAL NUCLEAR~t 4~~4 COAL NUCLEAR h Contents 1 Highlights, Operating Revenue Dollar 2 The Chairman's Message 4 Financial 8 Pates 9 Construction 10 Operations 13 Ownership 14 Customers 16 Service Area Map 18 People 20 Balance Sheets 22 Statements of Income 22 Statements of Retained Earnings 23 Statements of Source and Use of Financial Resources 24 Notes to Financial Statements 30 Auditors'pinion 30 Directors 31 Officers 32 Statistical Review Transfer Agents and Registtars For Common Stock and Preference Stock: Wachovia Bank&Trust Company.NA Winston-Salem, N.C.For Preferred Stock: Wachovia Bank 5.Trust Company, N.A.Winston-Salem, N.C.Bankers Trust Company New York, N.Y.Annual Meeting The 1977 Annual Meeting of Shareholders will be held in Raleigh, North Carolina, on May 18 at ll A.M.A formal notice of the meeting together with a proxy statement and form of proxy will be mailed about April 13.Carolina Power tk Light Company.336 Fayetteville Street, Raleigh.N.C.27602 This Annual Report is submitted for Information of shareholders.

It is not intended for use in connection with any sale or purchase of, or any offer or solicitation of offers to buy or sell, securities.

About the Cover: Coal and uranium, the nation's most plentiful boiler fuels, provided more than 95 percent c~Company's generation of electricity during 1976.Of this total, coal accounted for abo~>8 percent and nuclear 27 percent.

Highlights Operating Revenues.Net Income Number Shares of Common Stock Outstanding (Year End)Earned per Average Common Share Outstanding Cash Dividends Paid per Common Share Dividends Paid (Common and Preferred)

Kilowatt-Hour Sales (Thousands)

• Excluding Nonterritorial Sales Total Sales System Capability Including Purchases (Kilowatts)

Maximum Service Area Hourly Load (Kilowatts)

Total Utility Plant (Including Nuclear Fuel)Construction Expenditures Customers (Year End)'Employees (Year End)76$698,449,000

$118,341,000 35,890,000

$2.74$1.66$81,328,000 25,915,000 26,176,000 7,106,000 5,121,000$2,769,279,000

$205,953,000 677,000 4,983 Percent Change$601,903,000

• 16%$95,198,000*'4 32,693,000 10$2.47<<e 11$1.60 4$66,894,000 22 24,057,000 8 24,118,000 9 7,072,000 5,060,000 1$2,559,346,000 8$300,659,000 (31)661,000 2 4,749 5'NonterAtoAal sales are sales to other electAc utilities outside the company service area.-Restated to reflect 1/31/77 N.C.Supreme Court Decision.Operating Revenue Dollar SOURCE 320 Residential customers S 221,531.000 280 IndustAal customers S193,168.000 180 Commercial customers S123,624.000 170 Wholesale customers S120,578,000 40 10 Other electric Nonterrltorlal operating revenues sales S30,018,000

-S9,530,000

• Does nct Indude S2593IAXS of wages ard employee benefits for Ccrqpany employees that was charged to~icn and other acaxnts.U$E/330 Fuel S 231,513.000 200/Compensation to investors for use of their funds (Interest, 90;preferred and preference stock, 20;common stock, 90)S1 43.005.000 210/Taxes S143 506'000 90 Depreciation S62,385,000 70 I Wages and employee benefits<<S50,993,000 50 Other operating expenses S31,266,000 4OF Maintenance (except employee wages)S27.206.000 1C Purchased and interchange power, net S8,575,000 The Chairman's Message"Neither coal nor uranium alone can supply this nation's additional energy requirements, but there is hope if we make maximum use of both." My fellow shareholders:

In view of the energy shortages of.last winter, it is appropriate to begin this report by noting that during 1976 we generated 68 percent of the energy for our system from coal and 27 percent from nuclear fuel.We ex-pect to put our third nuclear generat-ing unit Into commercial operation this spring, so that for 1977 approxi-rnately 40 percent of our energy will be from nuclear fuel and 57 percent from coal.As a nation, our basic energy prob-lem Is that while petroleum and natural gas represent only about 4 percent of our fossil fuel resources, we presently are dependent.

on these scarce fuels for 75 percent of the total energy that is used.To have the energy we shall need during the re-mainder of this century, our country has no choice but to make far greater use of coal anduranium.

Neither coal nor uranium alone can supply this na-tion's additional energy require-ments, but there is hope if we make maximum use of both.It is imperative that we have a na-tional energy policy which will permit cohesive action now to avoid crip-pling energy shortages in the future.Financial Situation Improved During 1976 the Company's finan-cial situation Improved as earnings per share rose to S2.74 compared to S2.47 (restated) in 1975 and S2.21 in 1974.The 1975 net income was re-stated to reflect a ruling by the North Carolina Supreme Court requiring a refund of S12.4 million in deferred fuel costs collected as a fuel adjustment surcharge ln 1975 and 1976.We have petitioned the Supreme Court for a rehearing.

Effective with the third quarter payment, the annual dividend rate on common stock was raised from S1.60 to S1.72.Our interest coverage at year end was 2.94 times, up from 2.15 in 1975.With the return to more normal in-dustrial activity, our territorial energy sales increased 7.7 percent.Operat-ing revenues rose 16 percent to S698.4 million and net income was up 24.3 percent to S118.3 rnillior.These figures reflect the impact of 1975 and 1976 retail and wholesale rate adjustments which added S254.1 million to 1976 revenues.Construction Totaled$206 Million Construction expenditures during 1976 totaled S206 million.A construc-tion budget of S304.4 million has been adopted for 1977.Expenditures for the three years 1977-79 are esti-mated to be S1,146 million.The pres-ent construction plan reflects cut-backs and deferrals that were made in 1974 and 1975 as growth in energy usage dipped and depressed earn-ings made it necessary to tailor con-struction plans to the amount of capi-tal the Company could expect to at-tract on reasonable terms.Forecasts are that our customers'nergy requirements will grow at an average rate of about 6.9 percent annually for the next 10 years.This compares with a 10.3 percent growth rate for the years 1971-73 and less than 2 percent for 1974-75.To cope with that growth, we retain some flexibility in our present construction plan to move up the completion date for two large coal-fired generating units.The peak demand on our system during 1976 was 5,121,000 kilowatts, up only 61,000 kilowatts from the 1975 peak.However, the sustained sub-freezing conditions In January 1977 produced a peak of 5,509,000 kilo-watts, an increase of 7.6 percent.In recent years, our annual peaks have come In summer.During the year we received final approval for retail rate increases in North Carolina and South Carolina which, on the basis of 1976 sales, will produce S113 million of annual rev-enue.We have pending before the Federal Power Commission two wholesale rate requests that were placed into effect in 1975 and 1976, respectively.

The proposed higher rates are being collected subject to i refund of the amount, if any, which is not finally allowed.When our second Brunswick ni~clear generating unit goes Int%RF'ommercial operation this spring, it will represent an additional invest-ment of approximately S331 million to serve our customers.

This added in-vestment plus continuing inflation will require another increase in our base rates.We filed a request with the North Carolina Utilities Commission last December for a 15 percent in-crease and a hearing has been set for April 1977.We will request a similar Increase in South Carolina and for our wholesale customers.

The timing of the filings varies because of the dif-ference in the procedural rules of the commissions.

Lower Fuel Charges This increase in base rates will be partially offset by lower fuel adjust-ment charges which will result from obtaining a larger share of our,gen-eration from less expensive nuclear fuel.

We have told our customers that if this increase is granted, we hope we shall not have to seek another price Increase until 1980 when our next major new generating facility will be completed.

In December we completed a major reorganization which is de-signed to strengthen our ability to re-spond to the increasingly complex problems that confront us and to in-sure that our Company is strong and viable.We had a similar reorganiza-tion about 10 years ago.In planning for this change, which includes the designation of chief administrative and chief operating officers, the senior management group was aided ln its studies by independent anagement consultants.

that range from the development of solar energy to the gasification of coal, from studies of innovative rate structures to the development of new electrical systems technology.

We are today faced with long lead times to plan and build generating plants, and regulation has added to both the time and expense of build-ing the necessary plants.We must find a way to cut through the maze of regulatory approvals and get on with the job of staying ahead of America'energy needs.In planning for our energy future, there is a need to balance our desire to protect the environment with the realization that we must have steadily increasing amounts of energy if our nation Is to approach a full employ-ment economy.Largely as the result of the sale of three million additional shares of common stock In October, the number of shareholders Increased to 96,958 of whom about 42 percent live in the Carolinas.

We gratefully acknowledge the confidence and assIstance of our fel-low shareholders.

At the same time we recognize the Initiative and dedi-cation of our more than 4900 em-ployees whose individual and collec-tive effort made 1976 another suc-cessful year for CPSI.Respectfully submitted by order of our Board of Directors.

Performance Audited The North Carolina Utilities Com-mission ordered a management per-formance audit of our Company by Booz, Allen Bc Hamilton, an indepen-dent management consulting firm.A team of 20 consultants studied our operations over a period of eight months.Their report was delivered to the commission in January 1977.They found that we operate in a cost-efficient manner'nd that our employees are cost-conscious and have a strong customer seivice orien-tation.In short, the report stands for the proposition that CPfkL is doing a good job for its customers, and they are getting their money's worth.Through the Electric Power Re-search Institute, CPIkL is participating with other power suppliers-private and public-in a coordinated re-search and development program.ith an annual budget of$206 mil-lion for 1977, EPRI is funding projects March 16, 1977 Sincerely yours, Shearon Hams Chairman Financial Net income for 1976 was S118,341,000 In comparison with S95,198,000 as restated for 1975.Earn-ings per share, on the basis of a larger number of shares outstanding, were S2.74, in comparison with S2A7 as re-stated for 1975.Dividends totaling S1.66 per share were paid on com-mon stock during the year.The 1975 net income has been re-stated to reflect a January 31, 1977 North Carolina Supreme Court ruling that approximately S12.4 million of revenues be refunded.The revenues were collected (S4.43 million in 1975 and S7.93 million in 1976)to recover deferred fuel costs accumulated at August 31, 1975 for North Carolina re-tail operations.

The restatement re-flects the write-off as of August 31, 1975 of the S12.4 million of deferred fuel costs less applicable income taxes of S5.9 million.Operating Revenues During 1976, operating revenues from sales of electricity within the ser-vice area increased S93.4 million over those for 1975.General rate in-creases placed into effect during 1975 and 1976 resulted In increased revenues of S146.3 million in 1976 and S37.5 million in 1975.Fuel adjustment charges totaled S107.8 million in 1976 and S148.1 million in 1975.Sales of electric energy, excluding nonterritorial sales, increased 7.7 percent In 1976, as compared with a 1.9 percent increase in 1975.The sales growth reflects increased Industrial activity and an improvement in gen-eral economic conditions.

Sales of energy to industrial customers In 1976 showed an 11.8 percent increase over 1975 and a 5.9 percent increase over 1974.Operating Expenses Operating expenses Increased 12 percent or S58 million in 1976, as compared with 30 percent or S113.8 million in 1975.The total cost of fuel for electric generation decreased about 1 per-cent in both 1976 and 1975.Nuclear-fueled generation increased by 32 percent ln 1976, a reflection of the operation of the first unit of the Brunswick plant for a full year.This unit was placedln commercial operation In November 1975.Deferred fuel cost accounting (begun in 1974 with the implementa-tion of fossil fuel adjustment clauses)resulted in a net credit to income of S.9 million in 1976 in comparison with!a net charge against income of S28.6 million in 1975.The Company discon-tinued deferring excess fuel costs for North Carolina retail operations on September1, 1975 and for wholesale operations on May 1, 1976.Excess fuel costs are deferred only for South Carolina retail operations.

Purchased power costs decreased 35 percent in 1976 in comparison with 10 percent in 1975.The 1976 decrease reflects a 49 percent reduction in kilowatt-hours purchased primarily because the Company's own plan~.'enerated a greater proportion of energy requirements.

The increase in other operation and maintenance expenses during 1976 and 1975 reflects many factors, including inflation and a full-year' operating cost (in 1976)for the initial unit of the Brunswick nuclear power plant.The nuclear unit, which has fuel costs significantly lower than those for~~-~~~~9 e7 e8-'70~-'7.1~-'773~-'74-'75-'76~~~~128>124t 138>4 1A6'1Aei 1A7 1.54<1.s.eoi 1.66>~:~~~~

Analysis of Results of Operations Percent Change from 4~9" 1975 (000's omitted)1975'000's omitted)Percent Change from 1974~Operating revenues: Total from electricity sales in service area Nontetritorial electricity sales Miscellaneous electric revenues$682,127 9,531 6,791 16%27 19$588,735 7,485 5,683 33%(45)2 Total operating revenues Operating expenses: Fuel Deferred fossil fuel expense (credit), net Purchased power Wages and employee benefits Maintenance (except employee wages)Other operation expenses Depreciation Taxes other than income taxes Income tax expense Total operating expenses Operating income Other Income: Allowance for funds used during construction Income taxes-credit Other, net Total other income 698,449 16 231,513 (1)(900)(103)8,575 (35)50,993 17 27,206 15 32,166 37 62,385 34 53,499 15 90,007 129 555,444 12 143,005 37 48,802 (19)14,586 (26)469 (54)63,857 (21)601,903 31 232,722 (1)28,578 182 13,115 (10)43,667 15 23,604 17 23,451 39 46,648 31 46,436 14 39,240 132 497,461 30 104,442 35 59,957 10 19,734 23 1,020 31 80;711 13 Grass income Interest charges Net Income Preferred and preference stock dividend requirements Earnings for common stock Average common shares outstanding Earnings per common share Common dividends paid per share 2064862 88,521 1184341 26,926 9 91 415 33,385$2.74$1.66 12 (2)24 5 32 19 11 4 185,153 89,955 95,198 25,752 6 69 446 28,109$2.47$1.60 24 18 32 25 35 21 12 See Statistical Review for additional data for the years 1966 and,1971 through 1976.'Aeflects restated flnanclal statements as a result of 1/31/77 N.C.Supreme Court Decision.

(left to right)Utility operator coordinates un-loading of coal cars at CPSL generating plant;secretary handles arrangements for meeting;(lower)customer service representative makes energy audit at customer's home;and lineman works on high-voltage transmission line.

a fossil unit, has a h!gher requirement for other operating expenses.Depreciation expense increased S15.7 million In 1976;in comparison with'an increase of Sll.l million in 1975.The increase reflected greater amounts of property in selVic, prin-cipally the first unit of the Brunswick nuclear plant, and a full year's effect (S10,150,000 in 1976)of revised de-preciation rates adopted effective October 1, 1975.Income tax expense increased to S90 rnillion inl976, in comparison with S39milllonin 1975.This reflects primar-Ily the increase In income before taxes.In addition, during 1976 the Company started providing fully for eferred income taxes.Tax expense for 1976 represented 21 cents of each revenue dollar with 9 cents for state and local govern-ments and 12 cents for federal taxes.These amounts compare with 14 cents, 8 cents, and 6 cents, respec-tively, for 1975.Other Inccme Other income decreased S16.9 mil-lion in 1976 as compared with a S9.3 million increase in 1975.Allowance for funds used during construction and income tax (construction interest associated) credits decreased sub-stantially, a reflection of the reduced average investment in construction work in progress in 1976.Financing and Construction Construction expenditures during 1976 totaled S206 million.Of this total, S162.4 million was for generating facilities, S16.2 million was for trans-mission, and S27.4 million was for distribution and general facilities.

In addition, nuclear fuel expenditures during 1976 totaled S21.4 million.During 1976, the Company gener-ated substantial funds Internally.

Recovery of capital through depre-ciation and amortization charges to-taled S76.2 million;earnings retained and invested in the business totaled S34.7 million;and deferred income taxes and investment tax credits pro-vided S77.8 million.In October 1976, the Company sold three million shares of common stock for net proceeds of S64,950,000.

In June, the Company prepaid its S50 million six-year note and In De-cember, a S2 million principal amount of First Mortgage Bonds PRICE RANGES AND DIVIDENDS PAID PER SHARE COMMON AND PREFERRED STOCK Common Stock N.Y.Stock Exchange Reported Prices$5 Preferred Stock Amertcan Stock Exchange Reported Prices 1975 First Quarter Second Quarter Third Quarter Fourth Quarter 1976 First Quarter Second Quarter Third Quarter Fourth Quarter Dtvtdends H~fh Low Paid$17$11$.40 18Ys 13Vs.40 18sh 15s/4.40 20V<16'/s.40 21'9Ve.40 21eh 17'40 23Ve 20V4.43 24 Vs 21'/e.43 1975 First Quarter Second Quarter Third Quarter Fourth Quarter 1976 First Quarter Second Quarter Third Quarter Fourth Quarter H~th Low$55Vs$49 53Vs fi 48 55'h b 49Vs 59 50 59 53 58 Vs 53V4 59 54Ve 60~h 55 Dividends Paid$1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 Note: Other voting stocks are not actively traded.Regular quarterly dividends have been paid on all preferred and preference stocks.

(11~/e.%Series due 1994)was re-deemed under sinking fund require-ments.The Company's construction pro-gram for 1977 through 1979 is esti-mated to require Sl.l billion with S304.4 million budgeted for 1977.Capitalization The Company's capitalization at the end of the year amounted to S2,259,038A68; it consisted of 48.8 percent first mortgage bonds, 36.3 percent common equity, and 14.9 percent preferred and prefer-ence stock.Rates Rate increases, excluding fuel ad-justment charges, placed into effect during 1975 andl976 produced addi-tional revenues of S146,346,000 for the Company during 1976.Retail gqrth Carolina-Affer making ap-p1ication in July 1975, CP&L received approval in February 1976 for a retail rate increase which raised total cus-tomer charges In North Carolina by approximately 22 percent or S82 mil-lion annually, based on the 1974 test year.In December, the Company made Bpplication to the North Carolina Utilities Commission for an increase of about 15 percent in base charges to retail customers.

The case will be heard in April 1977.In response to a commission order, CP&L, along with Duke Power Com-.pany and Virginia Electric&.Power Company, filed proposed time-of-day rates for all classes of North Carolina retail customers in early Oc-tober.Preliminary hearings were held in December.The Company is In-volved in three separate studies to determine the feasibility of time-of-day metering and peak pricing.In January 1977, the North Carolina Supreme Court, by a 4-3 vote, re-versed an earlier decision of the North Carolina Court of Appeals which up-held the right of CP&L to collect deferred fossil fuel expenses of ap-proximately S12.4 million through a surcharge.

Similar rulings were made by the court in cases involving two other major power companies operating in the state.The recent court decision would require refunds of surcharge amounts collected fro'm September 1975 through August 1976 for fuel expense incurred in July and August 1975.The Company has asked for a rehearing.

South Carolina-In September 1976, the South Carolina Public Ser-vice Commission issued an order ap-proving CP&L's requests (filed in July and August 1975)for an increase in retail rates in South Carolina.The order allowed an increase in retail revenues of approximately 27'er-cent.or about S22.5 million annually.based on the 1975 test year.Application for an increase (similar to the one applied for in North Carolina in December)will be made in South Carolina duriing the early part of 1977.Wholesale Initial hearings have been com-pleted on a wholesale rate increase which was filed in July 1974 and au-thorizedto be placed into effect, sub-ject to refund with interest, in January 1975.Total increased revenues of S59.8 million have been billed under this rate increase for electric service rendered through April 30, 1976.Negotiations with the Federal Power Commission (FPC)and with the Company's wholesale customers for the settlement of this rate case con-tinue.If the case is not settled, a con-cluding hearing on one aspect of the rates will be held in April 1977.On January 30, 1976, CP&L re-quested that the FPC allow new rates for wholesale customers to be placed into effect on March 1, 1976.The FPC ordered these new rates placed into effect, subject to refund with interest, on May 1, 1976.The in crease resulted in additional wholesale revenues of approxi-mately S21 million during 1976.Initial hearings on the case began in March 1977.Performance Audit In January 1977, the North Carolina Utilities Commission released a report on the performance analysis audit of CP&L which was conducted from May to December 1976 by Booz, Allen&.Hamilton, a management consulting firm retained by the com-mission.In an overall summary of its find-ings, Booz, Allen concluded that."CP&L has demonstrated the capa-bility to anticipate, respond to, and successfully manage change." The summary report listed a number of CP&l's strong points.These Construction included:~Well-defined goals that ap-propriately reflect current priorities

~A sound basic organization with recent organizational and staffing changes par-~ticularly well-conceived and carried out~A position of industry leader-ship in utilizing state-of-the-art technology in.several functional areas~Favorable cost trends In comparison with a group of other utilities In the South At-lantic region~A hIgh degree of cost con-sciousness reflected in man-" agement systems for labor cost control The consulting firm also reported that CPSL's generating facilities are being efficiently designed and con-stiucted;that the Company is con-ducting its nuclear fuel planning, procurement, and management ac-tivities in an effective manner;and that the Company's performance in coal activ1ties demonstrates that its management system is operating ef-fectively.

The report pointed out that the accounting support to the field is effectively managed, and the an-nual budget receives rigorous top management review.The consultants also identified four areas as having potential for im-provement In managerial and operating efficiency:

~Reorganizing selected func-tions for improved coordina-tion and control~Upgrading work manage-ment systems for improved productivity and control~Developing improved pur-chasing and inventory man-agement procedures

~Strengthening the Com-pany's financial reporting sys-tem The report stated that the Com-pany had previously recognized these areas for Improvement poten-tial and initiated action to ac-complish them.A summary of the report Is avail-able from the Company's corporate secretary, 336 Fayetteville Street, Raleigh, N.C.27602.New Facilities Unit No.1 of the Brunswick nuclear plant is expected to go into commer-cial operation in April 1977.At the end of 1976, the Company had Invested$709 million at the plant, which in-cludes an earlier unit (No.2)which began.commercial operation in November 1975.Total investment in the completed plant, Including the expense for cooling towers and other modifications to the, cooling system, will be approximately

$824 million.Canstruction Schedule Minor changes were made to the Company's construction schedule, which was revised in 1975 on the basis of revised energy forecasts and un-availability of capital on reasonable terms.The current schedule supports a growth rate of 6.5 percent annually, slightly less than the 6.9 percent compounded ten-year growth rate~~~~I~~

which latest studies indicate will oc-cur.If demand dictates, the Com-pany could accelerate the construc-tion of one or more coal-fired plants.In March 1977, approval was granted for CP&L's application for a certificate of convenience and necessity for construction of a coal-fired plant on Mayo Creek In Person County, N.C.The plant's first 720,000-kilowatt unit is scheduled for com-mercial service in 1983 and the sec-ond In 1985.There was limited construction dur-ing 1976 on Unit No.4 at Roxboro.This unit is scheduled for operation in 1980.In August 1976, CP&L requested the NRC to resume hearings on a con-struction permit for the Harris nuclear plant.The commission has not set a hearing date.Proposed Construction Unit Type Btunswlck¹1 (821MWj Nudear 10 Pcoboro¹4 (720MWj Fossil Mayo¹1 (720MWj Fossil Harls¹1 (900MWj Nuclear Mayo¹2 (720MWj Fossil Harls¹2 (900MWj Nudear Haris¹4 (900MWj Nudear Undesignated (1150MWj Nudear Harls¹3 (900MWj Nudear Undesignated (1150MWj Nuclear In Service Date 1977 80 83, 84 85 88 88 89 90 91 Transmission Line Authorized Authorized transmission line con-struction for 1977 and following years includes 335 miles of 500,000-volt line, 637 miles of 230,000-volt line, and 90 miles of 115,000-volt line.Environmental Matters CP&L spent nearly S20.8 million dur-ing 1976 for construction of facilities to protect the environment.

Of this S1.1 million went for air quality control equipment and S19.7 million for water quality control devices.A cooling tower for Roxboro Unit No.3 was completed during the year.Expenditures for environmental pro-tection equipment at new and exist-ing plants are expected to be S25 million in 1977.EPA Hearing on Robinson On February 8, 1977, the Environ-mental Protection Agency (EPA)conducted a public hearing on CP&L's request for less stringent ther-mal limits of the heated water at the Robinson plant.If the Company's re-quest ls denied, the construction of cooling towers at an estimated cost of S35 million may be required.Based on the technical reports filed by the Company and EPA biologists, the EPA and the state of South Carolina have preliminarily agreed that off-stream cooling is not required to protect fish and wildlife at the plant.A satisfactory resolution of the matter is considered likely.Brunswick Cooling Towers In order to receive an operating license from the Nuclear Regulatory Commission (NRC)for.the Brunswick plant, CP&L in 1974 signed a stipula-tion agreeing to construct a closed-cycle cooling system.The EPA permit for the plant also required this type of cooling system.Construction on two natural<raft, salt-water cooling tow-ers began in 1975.ln January 1974, when the once-through circulating water system for Unit No.2 became operational, the Company began more extensive biological monitoring.

The prelimi-naty data from this study showed that the effect of the plant on the area's fish life was minimal.The Company then appealed the EPA permit and requested a delay in construction of the cooling towers until more defini-tive data couldbe accumulated with both units in operation.

In June 1976, the EPA conducted hearings on the Company's appeal.In October, the administrative law judge hearing the matter recorn-mended denial of the postpone-ment.The case is now pending be-fore the Region IV EPA Administrator.

Construction of the cooling towers was suspended in May pending the outcome of the proceeding.

In March 1977.the Company filed with the NRC an amendment requesting that the cooling tower requirement be de-leted from the operating licenses Cost of the towers and related work is estimated to be approximately S92 million.Operations Total system energy requirements for 1976 were 27.7 billion kilowatt-hours.Of this total, about 0.3 billion kilowatt-hours were sold to utilities outside the service area.System load factor was 61 percent as compared to 58.1 percent in 1975.System capa-bility.including long-term contract purchases from other utilities, was 7,105,500 kilowatts.

Total generating capacity is 6,877,500 kilowatts.

Of this, 56.9 per-cent is from seven steam-electric plants burning fossil fuels, 21.6 per-cent from the Robinson and Bruns-wick nuclear units, 18.4 percent from 33 internal combustion turbine generators, and the remaining 3.1 (lett to right)Television technician edits video tape for training program: (lower)computer operator loads tape to process billing Informa-tion;proJect engineer tests new Insulator; dis-trict accounting personnel discuss customer account;and (lower)plant engineer Inspects agdliay generating equipment.

1966 67'68'69'70'71'72'73~4'75 76~~~~~~~percent from four hydroelectric plants.Sources for the total energy pro-duced were 68.2 percent coal, 27.1 percent nuclear, 2.8 percent hydro-electric, 0.9 percent residual oil, 1.0 percent No.2 oil, and 0.1 percent natural gas.Of the 7.7 million tons of coal burned during the year, 79 percent was received under long-term con-tracts.The Company expects to re-ceive approximately 75 percent of its 1977 coal requirements from contrac-tual agreements.

Peak Loads A new peak load for the system was reached on January 17, 1977 when customer demand durin record+reaklng cold weather was 5,509,000 kilowatts, 7.6 percent higher than the previous peak de-mand of 5,121.000 kilowatts on July 29, 1976.The new record for energy use In one day was also set on January 17 when customers required 115,121.000 kilowatt-hours.

The previ-ous one-day record of 102,578,000 kilowatt-hours was on January 19, 1976.Reliability Groups CPSL continues its participation as one of the 30 companies In the Southeastern Electric Reliability Council (SERC).Membership in-cludes all power suppliers with generating capacities of at least 25,000 kilowatts.

The Company is also one of seven electric utilities In the Virginia-Carolinas Reliability Group (VACAR).Improving system reliability for member companies is the princi-pal purpose of both groups.

Coal Production Leslie coal mine, owned jointly by the Company and Pickands Mather&Co., began raw coal production in June.Shipments of clean coal began in January 1977.Initial development of fhe Com-pany's second jointly owned mine in Pike County, Kentucky will begin in mid-1977.CP&L anticipates receiving an annual supply of 1.6 million tons of low-sulfur coal from the two mines after both attain full production.

It Is expected that this coal will enable the Company to meet air quality re-quirements without adding scrubbers to a new unit.Action Against Uranium Supplier On January 18, 1977, CP&L took legal action against Uranex, a French uranium supplier, which has said it is unwilling to deliver approximately 12 million pounds of uranium at the con-tracted price.CP&L has sufficient uranium under contract from other sources to meet ifs needs through 1982.The contract with Uranex calls for delivery from 1977 through 1986.In the arbitration proceedings, CP&L is seeking damages from Uranex in excess of$400 million, the difference befween the contract price of seven to eight dollars per pound and the current market price of uranium.Other uranium is also available at prices higher than those previously agreed to by Uranex, but the Corn-pany is pressing its claim under the contract as part of its responsibility to hold the long-term price of electricity at the lowest reasonable level.'Ownership Ofstrlbutfon of Stock Ownership (Common, Preferred, and Preference Stock Combined)Shareholders Shares Number Percent Number Percent The Carolinas.Elsewhere~....Totals.......

40,863 42.15 9,332,669 22.88 56,095 57.85 31,463,515 77.12 96,958 100.00 40,796,184 100.00 The total number of shares and shareholders Increased considerably during the year as a result of the is-suance and sale of three million shares of common stock.At the end of the year, there were 73,775 holders of common stock, 15,796 holders of preferred stock, and 7,387 holders of preference stock, or a total of 96,958 shareholders com-pared with 91,628 at the end of 1975.The percentage of those living in the Carolinas was 42.15 percent at the end of 1976.In addition to shareholders indi-t eated by these statistics, several thousand shareholders own shares which are held by banks, stock-participating shareholders.

brokers, Investment trusfs, or initiated by fhe company in 1973, nominees.the plan permits automatic reinvest-At the 1976 annual meeting, more lng of common, preferred, or prefer-than 83 percent of the total shares ence dividends in additional shares outstanding were represented in per-of stock.At year's end, more than son or by proxy.8,000 shareholders were participat-The largest beneficial shareholder ing, compared with 4,100 at the end of record at fhe end of'i976 held less of 1975.than2percentofthesharesoutstand-The program is administered by ing.Norfh Carolina National Bank and any questions regarding participa-Divldend Reinvestment Service tion should be directed.to NCNB,-Shareholders were notified in Dividend Reinvestment Service, Post November of a revision to the Div-Office Box 120, Charlotte, North idend Reinvestment Plan, effective Carolina, 28201.Januaryl, 1977.The revision allows the company to issue"authorized but un-issued" shares of stock at no cost to Customers Total energy sales Increased in 1976 by 7.7 percent compared with 1.9 percent in 1975.Total Company sales were 25.9 billion kilowatt-hours compared to 24.1 billion in 1975.Resi-dential sales were up 5.5 percent: commercial sales increased 5.8 per-cent;sales for resale were up 6.8 percent;and kilowatt-hour sales to industrial customers showed the largest increase at 11.8 percent.The number of retail customers In-creased 2.5 percent to 676,902.Elec-tlic energy for resale was supplied to 18 electric membership corporations, 24 municipalities, and 2 privately owned utilities.

These resale custom-ers used 5.7 billion kilowatt-hours in 1976.22.1 percent of total Company sales.Of the total residential units served by CP81L at year's end, 23.7 percent were all-electric.

Similarly, 23.5 per-cent of the commercial and 11.4 per-cent of the Industrial customers had total electric facilities.

Residential Residential customers totaled 575,019, representing 84.9 percent of the Company's customers, and ac-counted for 31.7 percent of 1976 operating revenues.Average annual consumption per customer was11A07 kilowatt-hours, up from 11,094 in 1975.The average annual residential bill of$389.32 was less than 3 percent of the average family buying income for the Carollnas as reported by Sales Management Magazine's Survey of Buying Power.Commercial The Company's 96,783 commer-cial customers represented 14.3 per-cent of the total retail customers and produced 17.7 percent of operating revenues.tn 1976, average annual usage by commercial customers was 41,080 kilowatt-hours.

an increase of 1,031 kilowatt-hours over 1975.Industrial For the year, CPM.'s 3,353 industrial customers used 8.8 billion kllowatt-Average Price of Electricity Paid by Residential Customers ITwetve Montto Ending December 31, 1976 and 1975)Cents Per Ktsowatt&our

%974 1975 Place 8.85 8.27 New York.New York 5.75 5.44 Newark.New Jersey SA8 526 Boston, Massachusetts 5.05 5.01 Phtlodetphta.

Pennsylvania 4.74 4.55 Pittsburgh, Pennsylvonla 4.61 4.56 New Hoven, Connecticut 4.46 4.71 Hartford.Connecticut 4.20 4.25 Battlmore, Maryfand 4.19 4.09 St.Petersbwg, Florida 4.08 3.59 Tampa, Fkxtda 4.00 337 Fairmont.West VVglnta 3.97 3.88 Cleveland, Ohio 3.94 3.61 Savannah, Georgia 3.88 3.89 Washington.

D.c.3.77 3.89 Richmond.Virginia Cents Per Kilowatt&our 1974 4976 Place 3.69 3.04 Jackson, Mississippi 361 369 Columbia.South Cardlna 3.50 3.53 lvllaml.Florida 3.46 2.89 Gutrport.Mississippi 3A4 3M Syracuse.New York 3.41 3.11 3.31 3.25 Atlanta.Georgia 3.29 3.00 Charlotte.

North Carolina 3.24 3.18 Cincinnati, Ohio 3.19 3.00 Pensacola.

Florida 3.10 2.97 Roanoke, Virglnla 3.08 2.97 BVmlngham, Alcbama~~(Prices shown are averages for the systems of companies which serve these cities) hours, representing an increase of 11.8 percent overl975.Industrial sales rep-resented 27.7 percent of the total Company operating revenues.Expenditures announced for new and expanded industries in the ser-vice area totaled S259 million.slightly less than the$269 million reported in 1975.An estimated 7,597 new job oppor-tunities, with an annual payroll of$61.3 million, are expected to be pro-vided by the new or expanded in-dustries.Customer Relations As part of Its load management program, the Company developed t recommendations for saving energy in new home construction.

The first energy-efficient home was erected by a builder in Marion;South Carolina;others have been com-pletedinvarious locations throughout the service area.The success of this pilot project has prompted the Com-pany to adopt promotion of the Common Sense House as part of the 1977 customer service program.The Company's communications and customer contact programs continued to stress conservation and greater understanding of current energy issues.~~~~~~1966'6 65'69'70'71'72'73'74'75'76~~~~'70'71'72'73'74'75'76~~~~I I'67 I I 68 I I 6 I I'70 I'71 I'72'73 l'74 I'75 I'76 I i I QQ::..'.,@+SHALL',ASHEVILLE 8.ASHEVI N.C.At the end of 1976, CPM.was providing electric service to about 677,000 customers in an area of 30,000 square miles-almost half of North Carolina and about one-fourth of South Carolina.Total population of the territory is estimated to be about 2.8 million.This territory is comparable in size to the combined areas of Connecticut, Massachusetts, Rhode Island, New Jersey, and New Hampshire.

It includes part of the Mountain and Piedmont regions, but is largely in the Coastal Plains section.Service to customers is provided by more than 4,900 employees through 5 division, 10 district, and 40 area offices.S.C, HENDERSON RALEISH HARRIS CAPE FEAR AN FORD.LEE GOLDSBQRO SOUTHERN PINES BLEWETT JACKSONVILLE ASTON NSON LORENCE V/EATH ERSPOON SUTTON WLMINSTON BRUNSIhtlCK People~i Management Changes Organizational changes were im-plemented in December 1976 to en-sure the continued efficient operation of the Company.The new form of or-ganization was developed as a result of studies made during 1975 andl976 by senior management with the assis-tance of a management consulting firm.Sherwood H.Smith, Jr., was elected president and chief administrative of-ficer.Smith, 42, who joined CP&L in 1965 as associate general counsel, received his A.B.degree and his J.D.degree withhonors from the University of North Carolina where he was a Morehead Scholar and a Phi Beta Kappa.He was elected senior vice-president, general counsel, and a director in 1971, and became execu-tive vice-president-administration in 1974.J.A.Jones, executive vice-president, was designated as chief operating officer, and Edward G.Lllly, Jr., senior vice-president and group executive for finance and ac-counting, was designated chief fi-nancial officer.Elected senior vice-presidents and group executives in the new organi-zation were W.E.Graham, Jr., gen-eral counsel and group executive for legal, regulatory, and communica-tions;E.E.Utley, group executive for power supply;Darrell V.Menscer, group executive for corporate ser-vices;and M.A.McDuffie, group executive for engineering and con-struction.

Graham, 47, was a judge on the North Carolina Court of Appeals be-fore coming to CP&L in 1973 as vice-president and senior counsel.He was named general counsel in 1974.Utley, 52, joined the Company in 1959 and was a plant manager and production and results engineer be-fore becoming manager of the bulk power supply department in 1970.He was elected a vice-president in 1972.Menscer, 42, started at CP&L in 1960 as a junior engineer.Sub-sequently, he served as budget di-rector, western division operations manager, assistant to the group executive for engineering and opera-tions, manager of the special sewices department, and manager of corpo-rate performance review.He was elected a vice-president In 1973.Howe, technical services;Wilson W.Morgan, system planning and coor-dination;and Earl F.Stephenson, cus-tomer service operations support.Paul S.Bradshaw was named con-troller and chief accounting officer.Howe joined CP&L in 1971 after more than 20 years'xperience in the nuclear energy field.He became manager of CP&L's technical ser-vices department in 1975.Morganbegan working for CP&L in 1950 as an engineer.He became manager of system planning in 1969, manager of system planning and cost control in 1972, assistant to the group executive for engineering, construction, and operation in 1975, and manager of the system plannin~and coordination department earlier in 1976.Stephenson came to CP&L in 1949 as an engineer and was named planning engineer in 1965.He was made manager of transmission and distribution construction in 1971 and northern division general manager in 1972.Mr.Graham i~i w P;,"l(3..+-,.i g Mr.Utley j QW(McDuffie, 53, had sewed as con struction manager with overall re-sponsibility for construction on several nuclear projects before he came with CP&L in 1970.He was elected vice-president for power plant construc-tion in 1974 and senior vice-president in June 1976.Three department heads were elected vice-presidents:

Patrick W.Mr.Hcwve Bradshaw, an accountant with CP&L since 1962, was named assis-tant controller in 1969, manager of budgets and statistics In 1972, and assistant treasurer ln 1975.Elected division vice-presidents were E.Wilson Craig, Wilmlngton; C.Joe Turner, Florence;and W.Burt Grant, Southern Pines.Craig joined CP&L ln 1965 ln the area development department.

In 1971, he was named ecological coordinator in the engineering and operating group and in 1972 was named eastern division general manager.Turner came to CP&L in 1960 as an industrial development agent, was med director of Industrial de-elopment for the Company in 1964, manager of the area development department in 1968, and southern di-vision general manager in 1972.Grant's association with the Com-pany began in 1956 as a cadet man-ager.He was named district rnan-ager in Southern Pines in 1969 and promoted to central division general manager in 1972.Directors Elected George H.V.Cecil and A.Coy Monk, Jr.were elected directors in March 1976.Mr.Cecil Mr.Cecil, who was educated in England and Switzerland, is president of the Blltrnore Company, Asheville, N.C., and a director of the First Union Corporation and of Multimedia, Inc.He has served as president of the Southern Association of Ice Cream Manufacturers and as vice-president of the N.C.Dairy Products Associa-tion.Mr.Monk is president and treasurer of A.C.Monk and Company, Farmville, N.C., and a director of the Monk-Henderson Tobacco Com-pany and the Wachovia Corpora-tion.He has served as president of the Tobacco Association of the U.S.and as president and chairman of the executive committee of the Leaf To-bacco Exporters Association.

Mr.Monk attended Duke University.

Employee Relations The Company ended 1976 with 4,983 employees, an increase of 234 over the number employed at the end of 1975.Additional personnel were needed to prepare increasing data required by regulatory bodies, to computerize additional Company functions, and to properly administer growing operating requirements.

During the year, more than 2,000 employees from all levels of man-agement participated in 24 courses and seminars designed to upgrade job performance.

During 1976, a new merit pay plan was initiated for all supervisory and professional positions in the Com-pany.The Company reinstated most of the employee benefit programs suspended in February 1975 because of depressed earnings and updated its pension plan, holiday, and vaca-tion policies.The Company also an-nounced the establishment of an Employee Stock Ownership Program.During the year, the International Union of Operating Engineers made a concerted effort to organize CPM.employees at seven of the Com-pany's generating plants in the cen-tral service area.In a November elec-tion, employees rejected the union by more than a three to one margin.Within the Southeastern Electric Ex-change, a 25-member association of private power companies in the southeastern states, CPM.was the safest working utility of its size (with fewest lost-time injuries for each mil-lion manhours worked)for the fourth consecutive year.CP&L also placed first in its group on vehicle safety (with fewest accidents per million miles driven)for the third consecutive year.Mr.Craig Mr.TUrner Mr.Grant Mr.Bradshaw Balance Sheets December 31, 1916 and 1975 ASSETS Electric Utility Plant (At original cost): Electric utility plant other than nuclear fuel: In service Held for future use.Construction work In progress.Total.Less accumulated depreciation Net Nuclear fuel.Less accumulated amortization Net.Electric utility plant, net 1976$1,905)090,664 4,673,993 775,981,828 2)685,746,485 352,855,967 2,332,890,518 83,532,576 22)535,100 60)997,476 2,393,887,994 1975 (see Note 7)$1,837,332,579 8,705,994 643,068,549 2,489,107,122 296,425,899 2,192,681,223 70,239,100 18,507,102 51,731,998 2,244,413,221 Other Property and Investments 5,057,266 2,026,358 Current Assets: Cash.Temporary cash Investments Accounts receivable, net Deferred fuel costs (Notes 5 and 7)Materials and supplies: Fuel Other.Current portion of deferred income taxes (Notes 4 and 7)Prepayrnents, etc.Total current assets 9,571,930 11,459,656 37)891,233 7)349,637 39,649,652 18,790,871 6,861,669 1,788,679 133,363,327 9,354,350 13,496,583 31,484,653 6,450,224 60,008,940 18,093,951 519',733 1,472,295 140,880,729 Deferred Debits: Unamortized debt expense Other Total deferred debits.Total See notes to financial statements.

1)428)536 10,369,353 11,797,889

$2,544,106,476 1,518,038 5,775,927 7,293,965$2,394,614,273 Carolina Power fkLight Company LIABILITIES Capital Stock and Retained Earnings (Note 2): Preferred stock Preference stock~Common stock Retained earnings (Note 7).Total capital stock and retained earnings.~..~.......Long-Term Debt (Excluding current maturlties):

Principal amounts (Note 3)Less unamortized discount and premium, net....Long-term debt, net Current Liabilities:

Long-term debt due within one year (Note 3)...............

Notes payable.Accounts payable.,~Reserve for possible refund of revenues (Note 7)............

~Customers'eposits,..........,~..~Taxes accrued~...,~~~...~.~..........

~~.~interest accrued Dividends declared Other Total current liabilities

.Deferred Credits: Investment tax credits (Note 1).~Reserve for possible refund of revenues (Note 7)~......Customers'dvances for construction

.Other.Total deferred credits 1976$288,118,400 47,900,000 634,821,118 184,735,570 1,155)575)088 1,105,204,721 3,741,341 1,101,463,380 2,000,000 10,961 33,258,477 12,353,377 3,830,590 13,738,804 20,183,468 27,966,944 2)945,436 116,288,057 46,896,915 319,983 654,349 47,871,247 1975 (see Note 7)$288,118,400 47,900,000 565,609,691 150,252,672 1,051,880,763 1,157,234,359 3,980,298 1,153,254,061 2,000,000 78,385 28,710,977 3,753,970 9,380,705 20,932,577 25,608,792 2,114,170 92,579,576 18,787,931 4,425,686 202,420 459,170 23,875,207 Reserve for InJurles and Damages....Accumulated Deferred Income Taxes (Notes 4 and 7)....I Commitments and Contingencies (Note 5)................

964,976 121,943,728 794,184 72,230,482 Total See notes to financial statements.

$2,544,106,476

$2,394,614,273 StaternentS Of InCOme Fcr the Years Ended December 31, 1976 1975 Operating Revenues (Notes 5, 6 and 7)Operating Expenses: Fuel for generation

...Deferred fuel expense (credit)(Notes 5 and 7).................

Purchased power Other operation expenses Maintenance

.Depreciation

.Taxes other than on income, Income tax expense (Notes 4 and 7)~Total operating expenses.Operating Income......,..........

Other Income: Allowance for funds used during construction

.Income taxes-credit (Note 4).Other, net.............~~.,....~................

~.......Total other income..Gross Income.Interest Charges: Long-term debt..Other.Total interest charges.Net income.Preferred and Preference Stock Dividend Requirements,...

Earnings for Common Stock Average Common Shares Outstanding Earnings Per Common Share$698,449,356 (See Note 7)$601,903,43 231,512,614 (899,413)8,574,961 70)924,518 39,440,641 62,385,000 53,498,736 90,006,759 555,443,81 6 143,005,540 48)801)829 14,585,869 468,909 63,856,607 206,862,147 86,965,303 1,555,931 88,521,234 118,340,913 26,925,913 232,722,278 28,577,822 13,114,681 57,035,576 33,685,947 46,648,000 46,436,686 39,240,171 497,461,161 104,442,275 59,956,830 19,733,336 1,020,787 80,710,953 185,153,228 85,740,402 4,214,861 89,955,263 95,197,965 25,751,863 33,385,493

$2.74 28,109,099

$2.$91,415,000

$69,446,102 StaterrentS Of Retained EarniAgS Fcr the Years Ended December 31, 22 Balance at Beginning of Year: As previously reported.Adjustment (Note 7)..............

As restated..................

~~Net Income Total...,.

~~~1976$156,676,428 150,252,672 118,340,913 268,593,585 1975$128,762,726 128,762,726 95,197,965 223,960,691 Deduct: Cash dividends declared:$5 Preferred Stock.Serial Preferred Stock:$4.20 Series$5.44 Series$9.10 Series$7.95 Series...,........,...,,,..~..$7.72 Series.$8.48 Series.Preferred Stock A,$7.45 Series$2.675 Preference Stock, Series A...'ommon Stock (at annual rate of$1.69 a share in 1976 and$1.60 in 1975)Total cash dividends declared.....~.....~~...Capital stock expense...

Total deductions

.~.........~.....~........Balance at End of Year.See notes to financial statements.

1,186,295 1,186,295 420,000 1,360,000 2,730,009 2,782)525 3,860,000 5,512,000 3,725,000 5,513,534 420,000 1,360,000 2,730,009 2)782)526 3,860,000 5,512,000 3,725,000 5,350,083 46,172,859 56,760,099 83,686,012 172,003 73,262,2P 445,76 83,858,015 73,708,019 3)64,735 576 5150,252,672 Statements of Source and Use of Financial Resouices 1975 (see Note 7)1976$118,340,913

$95,197,965 57,242,327 22,448,849 14,273,805 (59,956,830) 76,280,043 49,713,246 28,108,984 (48,801,829) 129,206,116 223,641,357 59,956,830 48,801,829 29)2561380~5,299,175) 25,278,014 11,522,163 296,400,391 225,963,123 120 742 943 47,744,042 145,617,948 69,071,132 (145,075,244) 169,029,689

$394,992,812 1,969,503 71,040,635

.....$367,441,026

~5:or the Years Ended December 3I, 1976 and 1975!f Source of Ftnanclal Resources:

Current resources provided from operations:

Net income,.Items not requiring (providing) current resources:

Depreciation and amortization.......

~..,.~.~Noncurrent deferred income taxes, net.Investment tax credit adjustments, net Allowance for funds used during construction

................

Total current resources provided from operations

...,.~..,~.Other resources provided: Additions to plant accounts representing capitalization of the net cost of funds used during construction...

~.~........Net decrease in working capital, excluding temporary cash investments, long-term debt due within one year, and short-term notes payable.Miscellaneous, net Total resources provided from operations and other.........

Financlngs:

Sale of: First mortgage bonds.........................,~~......~.Preference stock Common stock..Increase (decrease) in short-term notes payable t less temporary cash investments......

~,~.~..,...~~., iTotal resources provided from financings TOTAL~~~~~~~~~s~Use of Financial Resources:

Gross property additions, excluding nuclear fuel*Nuclear fuel additions*

.Dividends for the year...Prepayment of six-year note Redemption of first mortgage bonds.TOTAL$210,299,669 21,455,345 83,686,012 50,000,000 2,000,000$367,441,026

$305,552,826 17,515,265 71,924,721

$394,992,812 Decrease (increase) in working capital, excluding temporary cash Investments, tong-term debt due within one year, and short-term notes payable, by components:

Accounts receivable Deferred fuel costs~Material and supplies (principally fuel).Accounts payable Reserve for possible refund of revenues Taxes accrued Current portion of deferred income taxes..interest and dividends payable...

Other, net.Net decrease in working capital, excluding temporary cash investments, long-term debt due within one year, and short-term notes payable.S (6,406,580)

(899,413)19,662,368 4,547,500 12,353,377 4,358,099 (6,341,936) 1,609,043 373,922$29,256,380

$14,135,051 28,577,822 19,575,705 (30,701,206)

(1,896,194)

(14,097,276) 7,979,956 1,704,156$25,278,014

'Includes amounts capitalized as allowance for funds used during construction.

See notes to financial statements.

Notes to Rnancial Statements 24 I.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES System of Accounts.The accounting records of the Company are maintained as prescribed in uni-form systems of accounts of the Federal Power Comm-ission~(FPC)and the regulatory commissions of North Carolina (NCUC)Cnd South Carolina (SCPSC)." Electric Utility Plant.The cost of additions, includ-ing replacements of units of properly and better-ments, is charged to utility plant.Maintenance and repairs of property, and replacements and renewals of items determined to be less than units of property, are charged to maintenance expense.The cost of units of property replaced or renewed plus removal costs, less salvage, is charged to accumulated de-preciation.

Utility plant is subject to the lien of the Company's mortgage.Allowance for Funds Used During Construction (AFUDC).As prescribedin regulatory uniform systems of accounts, an allowance for borrowed and equity funds used to finance construction is charged to cost of plant construction work In progress.The offsetting non-cash credit Is made to Other Income.Regula-tory authorities consider the..inclusion of this recog-nized cost inutiliiy plant as anbppropriate cost for the purpose of establishing rates for the Company's utility service charges to customers over the service lives of the property.The allowance for 1976 and 1975.was calculated using an 8/o composite net-of-tax rate applied to construction work in progress balances excluding previously accumulated AFUDC, Depreciation and Amortization.

Depreciation of utility plant, other than nuclear fuel, for financial reporting purposes is computed on the straight-line methodbased on estimateduseful lives and charged principally to depreciation expense.Depreciation provisions as a percent of average depreciable properly other than nuclear fuel approximated 3.5'/o inl976and 3.0/0 In 1975.Effective as of October 1, 1975 the Company adopted revised depreciation rates generally reflecting shorter estimated useful lives for utility plant, which increased the provision'for depre-ciation by S10,150,000 in 1976 and S2,538,000 in 1975.Amortization of nucle'ar fuel charged to fuel expense 0976, S12,190,000;~I975, S9,190,000) is computed on the unit~f-production method.Revenues.Customers meters are read and bills are rendered on a cycle basis.Revenues are re-corded when billed, as is the customary practice in the industry.Deferred Fuel Costs.Pursuant to regulatory commission orders allowing the Company to recover increased fuel costs, automatic fossil fuel adjustment clauses were placed into effect (retail, 1974;wholesale, January 1975).Because a time lag existed between the date increased fuel cost was incurred and the date such cost was billed to customers, the Company began deferring increased fuel cost when Incurred and expensing such cost in the month the related revenue was billed.Related deferred income taxes are recorded.In September 1975 for North Carolina retail custom-ers, and May 1976 for wholesale customers, the Com-pany ceased deferring increased fuel costs and was authorized to recover by billings to customers the de-ferred fuel costs accumulated at the dates such ac-counting ceased.However, see Note 7 with regard to the deferred fuel costs for North Carolina retail cus-tomers and Note 5 for deferred fuel costs for wholesale customers.

Income Taxes.Deferred Income tax provisions are recorded only to the extent such amounts are currently allowed for rate-making purposes.In con-nection with rate increases placed into effect In March 1976 for retail operations, and in May 1976 for wholesale operations, the Company began provid-ing fully for all significan'timing differences.

Because these provisions coincided with the recognition of-revenues from new billing rates which reflect such costs, net income was not materially affected.In compliance with regulatory accounting, income taxes are allocated between Operating Income and Other Income, principally with respect to Interest charges related to construction work in progress.De-ferred income taxes are provided relating to the de-duction for income tax purposes of a coal mining subsidiary's development costs and such tax provi-sions are included in Income Taxes-Credit in Other Income.See Note 4 with respect to certain other in-come tax information:

Investment Tax Credits.Investment tax credits generated and utilized after 1971 have been deferred and are being amortized over the service lives of the property;substantially all credits prior to 1972 were deferred for amortization over five-year periods.A December 31, 1976 the Company had generatedbut not utilizedinvestment taxcredits totaling S16,000,000.

I Preferred and Preference Dividends.

Preferred and preference dividends declared and charged to retained earnings include amounts applicable to the first quarter of the following year, except for the Pre--ferred Stock A,$7.45 Series, which dividends are wholly applicable to the year in which declared.Retirement Plan.The Company has a non-contributory retirement plan for all regular full-time employees and is funding the costs accrued under the plan.Retirement plan costs for1976 andl975 were approximately S3,810,000 and$3,526,000, respec-tively.At January 1, 1976, the date of the latest actu-arial valuation, the unfunded prior service cost was approximately

$21 million and the actuarially com-puted value of vested benefits exceeded assets of I 2.CAPITAL STOCK the plan by approximately Sll million.Other Policies.The Company has available lines of credit with various banks and maintains account balances In connection with certain of such lines.Other property and investments are stated principally at cost, less accumulated depreciation where applicable, except for the investment in its coal min-ing subsidiary which is accounted for on the equity basis.Temporary cash investments are stated at cost, approximating market value.Materials and supplies inventories are stated at average cost.The Company maintains an allowance for doubtful accounts re-ceivable (1976,$1,184,199:

1975,$580.237).Bond premium, discount and expense are amortized over the fife of the related debt.December 31 Preferred Stock.without par value, cumulative:

$5 (authorized, 300,000 shares: outstanding, 237,259 shores)Serial (authorized, 10.000.000 shares):$4.20 Series (outstanding.

100,000 shares)$5.44 Series (outstanding.

250,000 shares)............

......,......,..........., i$9.10 Series (outstanding.

300,000 shares)$7.95 Series (outstanding.

350,000 shares).,$7.72 Series (outstanding, 500,000 shares)$8.48 Series (outstanding, 650,000 shares)Preferred Stock A (authorized, 5,000,000 shares)-$7.45 Series (outstanding.

500,000 shares)...,.........

~........,.........,.,....T otal.~~~~~~1976$24,375,900 10,000,000 25,000,000 30,000,000 35,000,000 49,425,000 64,317,500 50,000,000

$288,118,400 1975$24,375,900 10,000,000 25,000,000 30,000,000 35,000,000 49,425,000 64,317,500 50,000,000

$288,118,400 Preference Stock, without par value, cumulative (authorized.

10,000,000 shares)-$2.675 Series A (outstanding, 2,000,000 shares)i Conan Stock, without par value (authorized.

60,000,000 shares): Outstanding 0976, 35.889,949 shares;1975, 32,692,79) shares)Subscribed but not issued-6,019 shares.Total ie t r~i~~vq~i~~~~'I$47,900,000

$47,900,000

$634 677f41 5$565 609p691 143,703$634,821,118

$565,609,691 25 Common stock outstanding increased S69,067,724 in 1976 and$146,151,004 in 1975 from the sale of 3,000,000 shares in 1976 and 9,000.000 shares in 1975 in public offerings and the sale of 197,158 shares in 1976 and 253,947 shares in 1975 under the Company's Stock Purchase-Savings Program for Employees.

The preference stock account increased$47,900,000 in 1975 from the sale of 2,000,000 shares of such se-curities in public offerings.

At December 31, 1976, 514,355 shares of unissued mon stock were reserved for issuance under the tock Purchase-Savings Program.An Automatic Div-idend Reinvestment Plan was authorized in Sep-tember 1976 and at December 31, 1976, 500,000 shares of unissued common stock were reserved for issuance under the Plan.The preferred stocks are callable, in whole or in part, at redemption prices ranging from$102 to S115 a share plus accumulated dividends.

The Preferred Stock A, S7.45 Series, has a sinking fund requirement, commencing in 1984, to redeem 20,000 shares annu-ally at S100 per share plus accumulated dividends.

In the event of liquidation, the preferred stocks are entI-tied to S100 a share plus accumulated dividends.

The$2.675 Preference Stock, Series A, is presently call-able in whole or in part at S27.68 per share plus ac-cumulated dividends, unless refunding Is involved in which case there are substantial limitations on re-demption until April 1, 1980, and in the event of liqui-dation Is entitled, in preference only to the common stock, to S25 a share plus accumulated dividends.

BV%Sedes, due 2003 9V4%Series, due 2004 December 31, 1976 1975 100,000,000 100,000,000 125,000,000 125,000,000 The Company's charter and the first mortgage bond indenture as amended contain provisions Ilmit-Ing payments of cash dividends on common stock under certain circumstances.

At December 31, 1976, none of the retained earnings was restricted under these provisions.

3.LONG-TERM DEBT-PRINCIPAL AMOUNTS Total long-term debt, including current maturities

.~.........

Less long-term debt due within one year-llVO%

Series, due 1994.............,.1,107,204,721 1,159,234,359 2,000,000 2,000,000 Total.................

1,107,030,000 1,109,030,000 Six-year note payable to a bank 50,000,000 IViiscellaneous promissory notes 174,721 204,359 December 31, 1976 1975 Total long-term debt, excluding current maturl ties...........

$1,105,204,721

$1,157,234.359 26 First Mortgage Bonds: 3'%eries, due 1979.....$3'%eries, due 1979 2)/s%Series, due 1981.....3V~%Series, due 1982.....11%Series,due1984

.....4Vs%Series, due 1988.....4Vs%Series, due 1990.....4V2%Series, due 1991 4Vi%Series, due 1994.....11Vs%Series, due 1994.....5Vs%Sedes, due 1996.....&Vs%Sales, due 1997.....6Vs%Series, due 1998.....8%%Series, due 2000.....83/4%Series, due 2000.....7%%Series, due 2001 TVi%Series, due 2001.....TY4%Series, due 2002.....7V4%Series, due 2003~.~~~20,100,000 43,930,000 15,000,000 20>000,000 100,000,000 20,000,000 25,000,000 25,000,000 30>000>000 48,000,000 30,000,000 40,000,000 40,000,000 40,000,000 50,000,000 65,000,000 70,000,000 100,000,000 100,000,000

$20,100,000 43,930,000 15,000,000 20,000,000 100,000,000 20,000,000 25,000,000 25,000,000 30,000)000 50,000,000 30,000,000 40,000,000 40,000,000 40,000,000 50,000,000 65,000,000 70,000,000 100,000,000 100,000,000 The bond indenture, as amended, contains re-quirements that additional properly be certified o~that specified amounts in cash and/or principa~amount ofbonds be delivered annually to the Trustee as an"improvement fund." At December 31, 1976, the"improvement fund" requirements for 1977 approxi-mated S6,700,000.

Bonds of the ll'/a%Series, due 1994, are being re-deerned under sinking fund provisions at S2,000,000 on December 1 each year, commencing In 1976, at the principal amount without premium plus accrued interest.4.INCOME TAXES Year Ended December 31, 1976 1975 (Amounts in Thousands)

Income tax expense ls composed of tho following:

Induded In Operating Expenses: Provision for currently payable taxes.Provision for deferred taxes, net.Investment tax credit adjustments, net,...., Total charged to operating income.Included In Other Income: Reduction In currently payable taxes,.Provision for deferred taxes,....Total credited to other income,....,.

~....,~....Total Income tax expense,~>~$20,767 41,131 28,109 90,007 (16,826)2,240 (14,586)$75,421$19,451 5,515 14,274 39,240 (22,570)2,837 (19,73$19,507 Year fnded December 31, A reconclllatton of the Company's effeotlve Income tax rate (computed by dividing total)Income tax expense by pre-tax Income)to the statutory federal Income tax rate follows: Effective Income tax rate.,~>II~Effect of including AFUDC (not includible ln taxable income)In pre-tax Income.1 Effective Income tax rate, excluding AFUDC from pre-tax income..State income taxes, net of federal income tax benefit..............,..Differences between book and tax property depreciation and amortization for which deferred taxes have not been provided.Taxes and fringe benefit costs capitalized

~I 1 Other differences.

net........I'~1 r%~4 4 IP4~Statutory federal Income tax rate....,...,.

1976 38.9o/o 13.1 52.0" (3.3)4 (7)48.04/o 1975 170/o 18.6 35.6 (2.5)4.6 5.8 4.5 480/0 i Provisions for net deferred Income taxes, which result from timing differences In the recognltlon of items for tax and financial reporting purposes, related to the followlngr Excess of tax depreciation deductions over straight-line book depreciation and amortization

....Reserve for possible refund of revenues Taxes and fringe benefit costs capitalized Deferred fuel costs Utlllzatlon of subsidiary's tax net loss....,..........,......

.......,...,.....................

Miscellaneous other timing differences Total provisions for deferred taxes.net$42,395**(3,806)2,983 432 2,240 (873)$43,371$21,245 (2,124)(13,717)2,837 111$8,352 I i'Amounts for 1976 are not significant.-Includes, beglnn!ng In 1976, provisions for differences between book and tax lives of property-the amounts are not significant as the Company's revised depreciation rates for financial reporting purposes (see Note 1)more closely approximate useful lives for income tax purposes.Also includes S8.346,000 provision related to additional 1975 depreciation for Income tax purposes: provisions for deferred investment tax credits have been appropriately reduced and, therefore.

there Is no significant effect on 1976 net Income.27 5.COMMITMENTS AND CONTINGENCIES

)It is estimated the Company's construction program for 1977 through 1979, excluding nuclear fuel, will cost approximately Sl.l billion.At December 31, 1976, firm commitments for construction aggregated approxi-mately S536 million plus approximately S318 million for initial and replacement nuclear fuel, In addition, the Company has a contract with the Energy Re-search and Development Administration for nuclear fuel enrichment requirements through June 30, 2002, which is cancelable without penalty upon five years ritten notice.Payments for enrichment services are ticipated to approximate S149 million during the ext five years.Many contracts include escalation provisions.

The Company has entered into agreements with i Pickands Mather (k Co.(PM), a firm engaged in own-ing, operating and managing mineral properties, to develop two adjacent deep coal mines in Pike County, Kentucky, each capable of producing 1,000,000 tons of coal per year over about 25 years.A subsidiary, Leslie Coal Mining Company (LC), has been formed, owned 80 kby the Company and 20/o by PM, to construct and develop one of the mines.Significant aspects of LC's financial position are summarized as follows (in thousands):

December 31, 1976 1975 Total assets...~...,,....

....,."....,$

30,252$17,744 Notes payable to bank.................

$27,345$16,200 Cost of assets financed by lease........$10,255 28 The Company has guaranteed the obligations of LC under the terms ofbank loan agreements and a lease financing arrangement (S10.3 million obtained through December 31, 1976)which can provide up to S49.7 million in funds for the LC mine (currently esti-mated maximum capital cost is S50 million).The Company has further agreed to advance any other funds requlredby LC and to cause LC to complete the mine not later than December 31, 1979.The Company and PM have entered into coal purchase contracts for 80%and 20%, respectively, of LC's production at prices sufficient to meet all of its costs.The adjacent mine is currently expected to cost approximately S51.8 million.Rentals, excluding nuclear fuel, charged to Income were approximately S8,188,000 In 1976 and S7A00,000 in 1975.Minfmum rental commitments under noncancelabie leases (except for nuclear fuel)at December 31, 1976 aggregated approximately S119,923,000 (ICT generators, S85,500.000; other, S34A23,000) and for each of the five succeeding years were (in thousands):

ICZ Payable Generators Other 1977$3,800$3,000 1978 3,800 1,700 1979 3,800 1,300 1980 3,800 1)200 1981 3,800 1,400 The above does not Include rentals forbuildfng space expected to be occupied In late 1977 with annual rental expected to approximate S2.1 million.Rentals under a nuclear fuel lease totaled S9A59,000 in 1976 and S5A00.000 fn 1975 of which S6,200,000 for 1976 and S3,500,000 for 1975 was charged to income.Such rentals include a compo-nent based on energy produced and another com-puted on the lessor's unamortized acquisition cost (S41,200,000 at December 31, 1976).Rental payments fornuclear fuel presently under lease are estimated to approximate S10,000,000 in 1977 and S13,000,000 in 1978 and declinlng each year thereafter through 1980.Under the terms of the leases for the internal combus-tion turbine (ICT)generators and the nuclear fuel, the Company, under certain circumstances, is contin-gently liable to purchase the properties from the les-sors.The Company is responsible for expenses in con-nection with most of the leased properties, including insurance, taxes and maintenance.

Electric utility plant at December 31.1976 includes approximately S15 million representing cost less ac-cumulated depreciation of four hydroelectric proj-ects licensed by the FPC.Upon or after expiration of each license, the United States may take over the project, or the FPC may issue a new license either to the Company or a new licensee.In the event of a takeover or licensing to another licensee, the Com-pany would be paid its"net investment" in the proj-ect, not to exceed fair value, pIus severance dam-ages, if any.The Company has applied for a new 50-year license for its 105,000 kilowatt Walters Hydro-electric Project which original license expired in November 1976.An annual license has been issued and will be continued until a new license is issued or federal takeover takes place.A competing applica-tion has been flied by a group of rural electric~ratives.The Company is a member of Nuclear Mutual Limited (NML), established to provide insurance coverage against property damage to members'uclear generating facilities.

The Company wouldbe subteot to a maximum assessment ot about$25 miO lion in the event of losses which exceed premiums, reseives and other NML resources.

There are certain claims pending against the Company;in the opinion of the Company, liabilities, if any, arising from these claims wouldnot have a mate-rial effect on the financial position or results of opera-tions of the Company.Federal Income tax returnsafter1973 have not been examined.Operating revenues include S59.300.000 for 1976 and S50.732,000 for 1975 subject to possible refund with Interest to the extent not finally allowed in pend-fng FPC rate proceedings.

Included in the balance sheet at December 31, 1976 are deferred fuel costs of S3,050,000 which the FPC, in authorizing new general rates effective May 1, 1976 and the termination of deferred fuel cost accounting, has authorizedbe col-lected (subject to possible refund with interest)as a temporary surcharge from wholesale customers.

By agreement with such customers, the Company has deferred collection of this surcharge pending final regulatory determinations relating to the wholesale rates.

~6.RATE INCREASES Operating revenues Include amounts (1976, S146,346,000; 1975, S37A51,000) attributable to au-thorized basic rate Increases placed in effect during 1976 and 1975, and fuel cost adjustment billings of S107,770,000 and S148,111,000, respectively (see Note 5).7.RESTATEMENT OF FINANCIAL STATEMENTS The financial statements for 1975 have been re-stated to reflect a North Carolina Supreme Court judgment on January 31, 1977 declaring that an Au-gust 27, 1975 NCUC order, authorizing the Company to add a temporary fuel adjustment surcharge to Ifs North Carolina retail rates, was in excess of the Com-mission's authority.

The judgment reversed an earlier decision of the Court of Appeals of North Carolina confftmlng the NCUC order and directed that the NCUC order the-Company to refund the surcharge amounts collected.

The surcharge to be refunded related to the withdrawal by NCUC on August 27, 1975, effective September 1, 1975, of the approval of deferred fuel cost accounting for North Carolina retail customers and the authorization for recovery of de-ferred costs accumulated at August 31,1975byatem-porary rate surcharge over an approximate twelve-month period, with matching amortization of the de-ferred costs.The Company plans to request a rehear-ing on the Supreme Court's ruling.The accompanying financial statements reflect in retained earnings at December 31, 1975 the write-off of S12,353,377 In deferred costs accumulated at Au-gust 31, 1975, less applicable income taxes of S5,929,621, and the balance sheet at December 31, 1976 reflects a reserve for possible refund of revenues of S12,353,377.

The statement of income for 1975 re-flecfs a reduction of S4A25,686 in operating revenues (surcharge collected In 1975), a net increase in de-ferred fuel expense of S7.927,691 (the S12,353,377 less the S4A25.686 amortized through December 31, 1975), and a reduction in income tax expense of S5,929,621.

The effect of the restatement on 1975 net income was a reduction of S6,423,756 (S.23 per share).Quarters Ending During 1976 First Second Third Fourth (In millions, except Earnings per Common Share)Operating Revenues*'....,.....~..............,$167.3$156.7$188.7$185.7 Operating Income....,......,,.......36.6 32.9 41.0 32.5 Net Income.,,,...~......29.0 26.6 35.0 27.7 Earnings for Common Stock.............,......,....

22.3 19.9 28.3 20.9 Average Common Shares Outstanding,~........,...

32.71 32.76 32.81 35.25 Earnings per Common Share........,...

.$,68$.61$86$59'Quarterly data normally varies seasonably with temperature variations, the timing of rate increases and the scheduled down-time and maintenance of electric generating units, especially nuclear fueled units.-Amounts restated to reflect provision for possible refund of revenues (see Note 7).9.REPLACEMENT COST The impact of inflation has resulted in replacement preciation expense on suchbasis will be included as costs of productive capacity that are significantly unaudited supplemental data in registration state-greater than the historical costs of such assets re-ments and annual reports filed with the SEC.Existing ported in the Company's financial statements.

In con-accounting principles do not permit such computed nection with Securities and Exchange Commission additional depreciation expense based on esti-(SEC)regulations adopted in 1976, estimated current mated replacement costs to be reflected in conven-replacernent costs for productive capacity and de-tional financial statements.

29 Auditors'pinion Ditectors'At January 1, 1977 To the Board of Directors and Shareholders of Carolina Power 5 Light Company: 30 We have examined the balance sheets of Carolina Power 8.Light Company as of December 31, 1976 and 1975, and the related statements of income.retained earnings, and source and use of financial resources for.the years then ended.Our examinations were made in accordance with generally accepted auditing standards and, accordingly, Included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

As discussed in the last paragraph of Note 5 to financial statements, operating revenues include S59,300,000 for 1976 and S50,732,000 for 1975 which are subject to refund with interest, and the December 31, 1976 balance sheet includes deferred fuel costs of S3,050,000 for which collection has been deferred, pending final regulatory determinations.

In our opinion, subject to the effects, if any, on the 1976 and 1975 financial statements of the final determination of the uncertainties described in the preceding paragraph, the financial statements referred to above present fairly the financial position of Carolina Power 8, Light Company as of December 31, 1976 and 1975, and the results of its operations and the source and use of its financial resources for the years then ended.in conformity with generally accepted accounting principles applied on a consistent basis.Oantel D.Cameron, Sr.President Atlantic Telecasting Corporation Vriimtngton, N.C.$970)Felton J.Capel President Century Associates of North Carolina Southern Pines, N.C.0972)George H.V.Cecil President, The Biltmore Company Asheville, N.C.0976)Q (Q Charles W.Coker, Jr.President.

Sonoco Products Company Hartsvllle, S.C.0975)Raleigh, North Carolina February 21, 1977 Margaret T.Harper Owner, Stevens Agency Southport, N.C.(1975)

Officers At January 1, 1977 Shoaron Harris Chairman of the Board and Chief Executive Office of the Company Raleigh, N.C.0961)L H.Harvln, Jr.President and Chief Executive Offfcer Pose's Stores, Inc.Henderson, N.C.(195S)Karl O.Hudson, Jr.Executive Vice President and General Manager Hudson-Belk Company Palelgh, N.C.(1967)J.A.Jones Executive Vice President and Chief Operating Officer of the Company Paieigh, N.C.(1971)A.C, Monk, Jr.President and Treasurer A.G Monk and Company Farmvllle, N.C.(1976)Lg 1I Sherwood H.Smith, Jr.President and Chfef Administrative Officer of the Company Palelgh, N.C.(1971)Horace L Tllghman, Jr.Peal Estate and investments Marion, S.C.(1961)John F.Watllngton, Jr.Chairman of the Executive Committee of the Wachovla Corporation and Wachovla Bank&Trust Company.N.A.Winston4alem, N.C.(1970)Shearon Harris Chairman and Chief Executive Office Sherwood H.Smith, Jr.President and Chief Administrative Officer J.A.Jones Executive Vice President and Chief Operating Officer Edward O.Lllly, Jr.Senior Vice President and Chief Financial Officer (Group Executive)

William E.Oraham, Jr.Senior Vice President and General Counsel (Group Executive)

Darrell V.Menscer Senior Vice Presidenf (Group Executive)

M.A.McDuNe Senior Vice President (Group Executive)

W.J.Rldout, Jr.Senior Vice President (Group Executive)

Edwfn E.Utley, Jr.Senior Vice President (Group Executive)

Samuel Behrends, Jr.Vice President E.M.Oeddle Vice President P.W.Howe Vice President William B.Klncald Vice President Wilson W.Morgan Vice President Albert L Morris, Jr.Vice President J.R.Riley Vice President Earl F.Stephenson Vice President R.S.Talton Vice President J.S.Currle Treasurer L T.Quarles Assistant Treasurer Paul S.Bradshaw Controller and Chief Accounting Officer C.D.Mann Assistant Controller J.L Lancaster, Jr.Secretary Robert M.Williams Assistant Secretary Edward O.Lllly, Jr.Senior Vice President and Chief Financial Officer f the Company leigh, N.C, (1971)'Year shown tn parenthesis Indicates beglnnlng of service as a director.DIVISION OFFICERS: E.Wilson Craig Vice President-Eastern Division W.Burt Orant Vice President-Central Division C.Joseph Turner Vice President-Southern Division Statistical Review (Dollars In Thousands)

Balance Sheet Data (End of Period): Total¹ilily Plant other than Nuclear Fuel,...Accumulated DeprMlatlon

...,.....,..., Net Umity Plant other than Nuclear.Fuel.....K italization mmon Stock and Retained Earnings...Preferred Stock.Preference Stock First Mortgage Bonds, Net'..............

Other Long-Term Debt..............,....

Total.,>i~.Ratio of Accumulated Depreciation to Utility Plant ln Service......~...,.........

Percent of Total Capitalization Ccmmon Stock and Retafried Earnings...Preferred Stock Preference Stock...........,........

~...First Mortgage Bonds.Net'..,.........

~.Other Long-Term Debt.............., Total.Ratio Bonds to Net Utlliiy Plant Other'than Nuclear Fuel.......,~., 1976 1975 S 819,557 288,118 47,900 1,103,289 175 S2,259,039 18.5 36.3 12.8 2.1 48.8 100.0 715,862 288,118 47,900 1,105,050 50,204 2,20,134 16.1 32.4 13.1 2.2 50.0 2.3 100.0 47,3 50.4$2,685,?46 2,489,107 352,856 296;426 S2,332,890 2,192,681 1974 2,197,738 256,659 1,941,079 548,465 288,118 983,861 50,234 1,870,678 18.8 29.3 15.4 52.6 2.7 100.0 50.7 1973 1,872,859 227,645 1,645,214 531,297 223,801 832,548 50,253 1,637,899 17.7 32.4 13.7 50.8 3.1 100.0 50.6 1972 1,524,238 200,190 1,324,048 447,609 173,801 632,497 50,110 1,304,017 18.4 34.3 13.3 48.5 3.9 100.0 47.8 1971 1966 1,212,822 178,096 587,000 111,640 299,852 124,376 533,003 123 174,703 34,376 229,224 957,354 438,303 18.9 31.3 13.0 55.7 100.0 20.2 39.9 7.8 52.3 100.0 51.5 48.2 1.034,726 475,360 32 Results of Operatfons Operating Revenues S 698,449 Operating Expenses Fuel for Generation of Power...........,.

Deferred Fossil Fuel Expense (Credit)......Purchased Power Other Operation Expense.....'.-,...~....

Maintenance

.Depreciation.

Taxes-income..............

...i......Total Operating Expenses..............

555,444 Operating income~~~~~~~~s~~~~~r~~~~~c~~Other Income Allowance for Funds Used During Construction

.......,........

,...,...48,802 income Taxes-6edit

...................

14,586 Other Income (Deductions)-Net

........469 Other Income I~, I'~, i.i,,......~...,.63,857 Gross Income..206,862 Interest Charges Bond fnterest.....,.....,~~.......,......

84,995 Other Interest Charges...,...............

3,526 Total Interest Charges.....

.........,, 88,521 Net Income.7%HA Preferred Stock Dividend Requirements

...26,926 Earnings for Common Stock......,......,..91,415 DMdends Declared on Common Stock...56,760 Earnings Invested In the Business.....,......

S 34,655 Earnings Per Share-Weighted Average.....

S 2.74 DMdends Paid Per Common Share.........S 1.66 Payout Percent 60.6 Shares Common Stock Outstanding (000's)Year-End........,;......:.........,..35,890 Wefghted average alluring year...,....,., 33,385 Times Earned Bond Interest-Before Income Taxes...,., 3.32-After income Taxes........2.43 Preferred Dividend Requfrements

...,.,4.40 Fixed Charges*2.94'Includes current maturities of long-term debt.'For purposes of this rat fo.earnings represent net Incom anlmputed Interest factor portion of rentals.134,892 255,643 307,136 601,903 460,977 341,206 28,7 6,113 88,549 84,749 231,513 (900)8,575 70>924 39,441 62,385 53,499 90,007 232,722 28,578 13,115 57,036 33,686 46,648 46,436 39,240 235,842 (35,028)14,494 i 46,549 28,591 35,544 40,684 16,947 106,191 7,847 41,910 29,749 31,845 28,706 21,268 11,537 32,979 25,624 27,280 24,021 26,378 10,422 28,510 23,098 22,820 21,400 14,328 18,368 9,413 12,516 12,216 17,573 383,623-497,461 236,368 205,327 267,516 73.690 104,906 29,986 143,005 104, 42 77,354 50,316 70,768~Q 59,957 19,734 1,020 54,609 16,068 776 24,759 6,666 49 14,708 3,532 517 2,153 433 104 38,093 10,477 393 80,711 71,453 48,963 2,690 31,474 18,757 185,153 122,653 148,807 32,676 102,242 69,073 8,774 651 27,895 3,704 63,676 12,860 45,653 11,001 37,782 3,931 81,108 8,847 41,713 31,599 5 89,955 9,425~2,251 1,606 21,645 14,891 6,754 1.88 1.28 68.5 76,536 56,654 I>VK5 9,612 Tr22r 20,672 m5 13,017 25,752 8,371 50,917 27,174 29,103 22,122 51,599 37,375 52,982 32,691 69,446 46,173 6,981 20,291 14,224 23,743 23,273 2.58 1.54 60.0 2.21 1.60 72.4 2.47 1.60 64.8 2.86 1.97 1.47'.46 51.6 74.1 11,570 11,488 15,555 14,776 20,125 17,814 23,234 20,554 23,439 23,324 32,693 28,109 2.52 2.28 3.70 2.15 5.68 3.72 14.4r 5.2.86 2.48 4.48 2.50 3.23 2.71 6.30 2.90 2.92 2.69 5.07 2.34 2.35 2.34 3.50 1.92 e plus Income taxes and fixed charges;fixed charges represent fnterest charges plus Revenues (Thousands)

Residential Commercial industrial-Textile'ndustrial-Other Government and Municipal.............

Sales for Resale Total Electrfcity Sales Within Service Area.NonterNorfal Electricity Sales............

Miscellaneous Revenues................

Total Operating Revenues..........

1976 1975 1974 1973 S 221>531 114,534 23,227 120,578 191,349 96,581 20,825 99,990 156,134 78,649 16,034 46,015 117,559 47,677 11,632 43,827 682,128 9,530 6,791 S 698,449 588,735 7,485 5,683 601,903 441,913 13,499 5,565 460,977 323,031 13,608 4,567 341,206 123,624 110,700 88,420 65,647 78,634 69,290 56,661 36,689 1972 103,254 58,246 33,438 41,161 10,827 35,396 282,322 21,040 3,774 307.136 1971 89,711 49,223 26,725 34,096 9,685 31,643 241,083 11,967 2,593 255,643 1966 51,944 26,653 13,526 18,168 7,347 15,977 133,615 1,277 134,892 Kwh Load Data Electric Energy Sales (Millions):

Resldentfal Ccmmercial

...industrfal........,.............,,.......

Other.Total Energy Sales Within Service Area..Nonterrltorlal

.Total Electric Energy Sales.......,......

Company Uses, Losses and Unaccounted For.Total Energy Requirements

.............Kwh Electric Energy Supply (Millions):

Generated-Steam-Fossil

...........Kwh Generated-Steam-Nuclear

......~.....Generated-Hydro Generated-Other Fuel.......,........., Purchased and interchange-Net

........Total Energy Supply.................Kwh Peak Demand of Firm Load (000's): Within Service Area............,.....

XW Nonterrftorfal

.Total Peak Demand...,............KW Total Capability at December 31 (000's): Fossil Fuel Plants..................,...KW Nuclear Plants............

Hydro Plants.Purchased.Total Capability*

...................KW 6,491 4,016 8,759 6,649 25,915 261 26,176 1,528 27,704 18,989 7>383 756 130 446 27,704 5>121 62 5,183 5,176 1,490 212 228 7,106 6,152 3,798 7,833 6,274 24,057 61 24,118 1,700 25,818 18,374 5,591 947 31 875 25,818 5,060 38 5,098 5,142 1,490 212 228 7,072 5,917 3,576 8,273 5,841 23,607 469 24,076 1,556 25,632 18,603 4,813 921 215 1,080 25,632 4,771 143 4,914 5,014 700 212 280 6,206 5,937 3,628 7,885 5,779 23,229 853 24,082 1,501 25,583 19,875 3,764 891 113 940 25,583 4,711 212 4,923 4,453 700 212 280 5,645 5,208 3,202 7,037 5,070 20,517 1,584 22,101 1,671 23.772 16,605 4,828 882 210 1,247 23,772 4,119 516 4,635 3,833 700 212 265 5,010 4,974 2,945 6,232 4,710 18,861 796 19,657 1,307 20,964 16,135 2,414 849 257 1,309 20,964 3,625 170 3,795 3,482 700 211 245 4,638 2,991 1,666 3,586 2,763 11,006 11,006 912 11,918 10,323 620 975 11,918 2,184 2,184 2,038 211 263 2,512 Aver Aver Annu~a Miscellaneous Customers at Year End Residential

.Other...,............

Total Average Revenue Per KWH Residential

.......Cents Commercial Industrial

.Total Energy Sales Within Service Area....Residential Average Annual Energy Use..........Kwh Average Annual Bill.....................

S Steam Electric Generating Plant Fossil Fuel Average Annual Heat Rate (BTU Per Net KWH)...................., age Cost Per Million BTU.....,..Cents Cost Per Million BTU-All Fuels.....Load Factor, Service Area Load...,.%575,019 101,937 676>956 3.41 3.08 2.21 2.63 11,407 389.32 9,980 108.4 84.9 61.0 560,954 99,574 660,528 3,11 2.91 2.12 2.45 11,094 345.04 9,951 119.0 94.6 58.1 550,128 98,179 648,307 2.64 2.47 1.64 1.87 10,861 286.60 10,090 116.7 96.6 60.2 535,607 96,844 632,451 1.98 1.81 1.07 1.39 11,276 223.29 9,739 50.0 44.6 59.9 515,041 95,020 610,061 1.98 1.82 1.06 1.38 10,293 204.05 9,946 45.7 39.6 61.3 495,528 90,561 586,089 1.80 1.67.98 1.28 10,205 184.08 9,832 48.0 44.9 63.5 426,707 73,469 500,176 1.74 1.60.88 1.21 7,093 123.19 9,672 28.7 28.7 62.3 Includes yarn mills, weaving or cloth mills, finishing plants (bfeaching.

shrinking, dyeing'Company now has 821.000 Kw, under construction for service In 1977.and printing), knitting mills, and hosiery mills.

I CPRL Carolina Power lk Ught Company P.O.Box 1551, Raleigh, N.C.27602 CORRECTED ADDRESS REQUESTED