ML18230A842

Submitting 1974 Annual Report as Exhibit a

ML18230A842
Person / Time
Site:	Harris
Issue date:	03/19/1975
From:	Carolina Power & Light Co
To:	Office of Nuclear Reactor Regulation
References
Download: ML18230A842 (32)

Text

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EXHIBIT P THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE OFFICE OF REGULATION. THEY HAVE BEEN CHARGED TO YOU FOR A LIMITEDTIME PERIOD ANS MUST BE RETURNED TO RECORDS STATION 008. ANY PAGE{S)

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MARY JINKS, CHIEF CENTRAL RECORDS STATION h

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Average Annual Growth Percent Rate 1974 1973 Change 1964-1974 Operating Revenues

'Excluding Nonterritorial Sales $ 447g477g000 $ 327 598g000 37'5 Total $ 460I977p000 $ 341 206g000 'l5 Net Income $ 72g271 g000 $ 65g999g000 10 14 Number Shares of Common Stock Outstanding (Year End) 23g439 000 23g234g000 1 Earned per Common Share $ 2.21 $ 2.58 (14)

Cash Dividends Paid per Common Share $ 1.60 $ 1.54 4 Dividends Paid (Common and Preferred) $ 56/26,000 $ 43,552,000 29 16 Kilowatt-Hour Sales (Thousands)

'Excluding Nonterritorial Sales 23,607,000 23,229,000 10 Total Sales 24,076,000 24,082,000 11 System Capability Including Purchases (Kilowatts) 6,206,000 5,645,000 10 12 Maximum Service Area Hourly Load (Kilowatts) 4,771,000 4,711,000 Total Utility Plant (Including Nuclear Fuel) Q,252,856,000 $ 1,957,728,000 15 17 Construction Expenditures $ 381+75,000 $ 358,09'l,000 7 28 Customers (Year End) 648,000 632,000 3 3 Employees (Year End) 4,742 4@97 8 7

'Nonterritorial sales are sales to other electric utilities outside the Company service area.

This Annual Report is submined for information of shareholders. ft is nol intended for use in connection with any sate or purchase of, or any offer or soIicitation of offess to buy or sell, securities.

Carolina Power & Light Company, 336 Fayetteville Street, Raleigh, N. C. 27602 COVER: The Skaale Energy Control Center in Raleigh nerve center for the Company's bulk power supply syt tern, became operational in September 1974. The sophis Inside Front Cover COntentg Highlights of 1974 1 The 1974 Operating Revenue Doll' The President's Message 4 Financial 7 Rates 8 Construction

The 1974 Operating=Revenue Dollar Source Amount Cents Per Dollar Residential customers $ 156,134,000 34/

Commercial customers 88,420,000 19 Industrial customers 135,310,000 29 Wholesale customers 46,015,000 10 Nonterritorial sales 13,500,000 3 Other electric operating revenues 21,598,000 5

$ 460,977,000 I00II!

'1 Use Fuel $ 235,842,000 51/

Deferred fossil fuel expense (credit) (35~028p000) (8)

Purchased and interchange power net 14,494,000 3 Taxes 57,631,000 13 Wages and employee 38,031,000 8 benefits'epreciation 35,544,000 8 Maintenance (except employee wages) 20,180,000 4 Other operating expenses 16,929,000 4 Compensation to investors for use of their funds (interest, 9g; preferred stock, 2(I; common stock, 6g) 77,354,000 17

$ 460,977,000 100(t 1

• Does not include $ 20,288,000 of wages and employee benefits for Company employees that was charged to Construction and other accounts.

ticated control facility, utilizing the latest in digital com-puters, is expected to contribute to the economy and reliability of the Company's system operations.

9 Operations 17 Statement of Income 28 Territory Served 11 Ownership 17 Statement of Retained Earnings Inside Back Cover 12 Customers 'l8 Balance Sheet Notice of Meeting 14 People 20 Statement of Source and Use of 15 Directors and Officers Financial Resources Transfer Agents and Registrars 21 Notes to Financial Statements 16 Auditors'pinion 26 Statistical Review

The President's Message My fellow shareholders: construction in progress. To continue usage below 250 kilowatt hours. The our construction program, we expect to rate increase would produce additional spend $ 343 million in 1975 and $ 1.14 annual revenue of $ 51.9 million from The year 1974 was unique for our billion for the three years 1975-77. En- North Carolina and $ 9.6 million from industry and our Company. Soaring vironmental protection measures will South Carolina customers based on the prices of coal and oil, high interest and account for $ 105 million of this amount. 1974 level of sales.

preferred dividend rates, mild weather, Because of difficulty in obtaining In February 1974, we were au-continuing rate increase proceedings new capital on reasonable terms, we thorized to place into effect a fossil fuel and the revision of construction plans reluctantly have revised our goal for sys- adjustment clause on retail sales in both occasioned by difficulty in obtaining tem generating reserves at the time of states that enables the Company to re-new capital were major developments. cover the extraordinarily high prices peak load from 18 percent to 12 percent Total energy sales decreased and are using this as a basis for our con- paid for coal and oil. This fuel clause slightly from 1973. Plant investment, in- struction planning. The lower reserve was in effect during the remainder of cluding nuclear fuel, increased 15 per- level will not be reached until after 1974.

cent to $ 2.3 billion, total operating 1978. Pending the outcome of a hearing revenues increased 35 percent to $ 461 The major plant addition in 1975 on the reasonableness of the fuel clause million and net income was up 10 per- will be the first 821,000 kilowatt Bruns- billing factor, the North Carolina Com-cent to $ 72 million. wick nuclear unit, scheduled for opera- mission, effective February 1, 1975, or-Sales of electricity within our ser- tion in the summer. When the second dered CPBL and the other two major vice area increased 2 percent and re- unit of the same size is placed into oper- electric utilities operating in the state to lated revenues were up 37 percent to ation in 1976, about 45 percent of the begin billing, for a period of not more

$ 442 million. Company's generation in the following than 60 days, only 75 percent of the Although net income increased, 12 months will come from nuclear amount of increased fuel cost applic-earnings per share decreased from sources. This will help stabilize the price able to residential customers.

$ 2.58 in 1973 to $ 2.21 in 1974 as the of electricity. As a result of the Commission's ac-result of a larger number of preferred Because of increased operating and tion, the Company placed into effect and common shares outstanding. capital expenses, the Company filed in stringent economy measures to offset The annual dividend rate on com- October 1973 for a retail rate increase the revenue lost through the temporary mon stock was unchanged at $ 1.60. averaging about 21 percent. fuel clause rollback. These measures in-We have continuing studies un- Interim increases were granted in cluded an across-the-board salary cut-derway to project the future electric 1974, pending final decisions by the back, a further revision of construction energy needs of our service area. The Commissions. In January 1975, the reg- schedules, suspension of research and most recent forecast is for an annual ulatory commissions in both states development expenditures and deferral growth rate of about 4.6 percent for granted permanent rate increases. In of some system and power plant 1975 and 7.7 percent during the next 10 North Carolina, the full amount re- maintenance. In making this adjust-years. quested was approved with a minor re- ment, our main concern was to reduce The Company spent $ 381.4 million structuring of rate schedules to favor all expenditures which did not im-for construction in 1974, which re- lower-use residential customers. In mediately affect direct service to our quired the raising of $ 311 million of South Carolina, the Commission ap- customers and to maintain the financial new capital. This construction figure in- proved 83 percent of the amount re- stability of the Company.

cluded over $ 50 million representing quested with some downward adjust- On January 2, 1975, the Federal the interest and other capital costs for ment of residential rates for monthly Power Commission allowed the Com-

pany to begin billing to its wholesale million as compared with the cost of fuel uranium must help reduce dependence customers a base rate increase and fos- to generate the same amount of energy upon foreign oil.

sil fuel adjustment charge, with provi- from fossil plants. The nation has entered a new era as sion for refund of the amount, if any, The power industry is a victim of to the price and availability of electric-which is not finally allowed. inflation to a greater degree than indus- ity. We have a continuing task to help Even though our rates have risen try generally because of the larger our customers understand why the price substantially in the past year, our cus- amount of capital required for construc- is higher and that the alternative to tomers continue to pay less per unit than tion of new power facilities and because higher prices now is to risk power short-the national average. During 1974, our the world fuel situation is more aggra- ages in the future.

average residential customer used 36 vated than other elements of the We are committed to finding the percent more electricity and paid 9 per- economy. solutions to our energy problems and cent less per kilowatt hour than the av- Since economic opportunity for are proud that utilization of nuclear erage charge nationally. everyone is directly related to an ade- power by 1976 will place our Company Coal produced 66.3 percent of the quate power supply, we must develop a as far advanced in the nuclear area as Company's generation during the year, public understanding that "no power is the nation expects to be by the year while nuclear accounted for 19.6 per- as expensive as no power at all." If an 2000. We see nuclear-generated elec-cent, oil 9.4 percent, hydro 3.8 percent adequate supply of electricity is to be tricity as a bright spot with respect to and natural gas 0.9 percent. The Robin- maintained, it must be priced to cover availability and price.

son nuclear unit produced a savings in all costs, including the cost of money. I believe we can take justifiable fuel cost during 1974 of more than $ 43 Electricity generated from coal and pride in the performance of our Com-pany during the past year. For example, based on the latest figures available, CP8 L's original cost of constructing fa-cilities is 23 percent below the industry average per unit of electricity sold and is the lowest of 19 companies generally located in the southeast. Other specific areas of comparison show CP8fL con-sistently performing better than the in-dustry average insofar as cost to deliver a unit of electricity and rates charged are concerned.

We are experiencing trying economic times and our Company has not been immune to the complex factors affecting the economic slowdown.

However, the dedication and loyalty of our 4,700 employees and your con-tinued support will enable the Com-pany to solve its problems and continue to provide efficiently a service that is so vital to our national well-being.

Respectfully submitted by order of the Board of Directors.

Sincerely, Chairman/President March 19, 1975

Financial j4 Sherwood H. Smith, Jr., executive vice-president, administration (left) and Edward G. Lilly, Jr.,

senior vice-president, finance.

RESULTS OF OPERATIONS L 4 Operating revenues:

Residential Commercial Industrial Net Income, Earnings and Dividends Cost of fuel for electric generation Government and municipal Net income for 1974 was increased 122 percent in 1974 as com- Total from retail operations

$ 72,271,000 as compared with pared with an increase of 20 percent in Sales for resale

$ 65,999,000 for 1973. Earnings per 1973 while total kilowatt hours gener- Total from electricity sales in ated in fuel-burning units decreased by service area share based on the larger average Nonterritorial electricity sales number of shares outstanding were .5 percent in 1974 after increasing 9.7 Miscellaneous electric revenues

$ 2.21 as compared with $ 2.58 in 1973. percent in 1973. Costs of fossil fuel Total operating revenues Continuing the dividend rate estab- burned have increased significantly av-Operating expenses:

lished in September 1973, dividends to- eraging 46.5 cents per million Btu's in Fuel taling $ 1.60 per share were paid on 1972, 50.6 cents in 1973, and 118.8 Deferred fossil fuel expense (credit), net common stock during the year. cents during 1974. Purchased power Deferred fossil fuel expense (credit) Wages and employee benefits Maintenance (except I Operating Revenues represents the net effect of deferring in- employee wages)

Operating revenues from sales of creased fuel costs, as defined by applic- Other operation expenses electricity within the service area during able fuel adjustment clauses, until the Taxes other than mcome taxes month the related revenue is billed (ap- Income tax expense 1974 increased $ 118.9 million or 37 Depreciation percent over 1973. During 1973, such proximately two months later).

Total cost of purchased power in- Total operating expenses revenues increased $ 40.7 million or 14 creased 85 percent in 1974 as com- Operating Income percent over 1972. Rate increases Other income placed into effect since 1970 resulted in pared with a 32 percent decrease in Allowance for funds used increased revenue of $ 180,760,000 in 1973. The 1974 increase primarily re- during construction 1974, $ 68,091,000 in 1973 and flected a 15 percent increase in electric-Income taxes credit

$ 53,312,000 in 1972. ity purchased and fuel cost escalation Other, net Sales of electric energy, excluding provision in contracts. The 1973 de- Total other income nonterritorial sales, increased 2 percent crease was the result of the company's Gross income in 1974 as compared with 13 percent in generating a greater proportion of its Interest charges 1973, reflecting the effect of energy energy requirements thereby reducing Net income purchased electricity. Preferred dividend requirements conservation, relatively milder weather Earnings for common stock and reduced economic activity. Other operation and maintenance expenses reflect the additional person- Average common shares outstanding Operating Expenses nel and other costs required for new Earnings per common share Common dividends paid per share Operating expenses increased 43 facilities placed in service, especially for percent or $ 116 million in 1974 as additional steam-electric generating See Statistical Review for additional data compared with a 13 percent increase or units added at the Sutton Plant in for the years 1964 and 1969 through 1974.

$ 31.1 million in 1973.

mid-1972 and the Roxboro Plant in

J.A. Jones, executive vice-president, engineering, construction and operation (left) and W. J. Rid-out, Jr., senior vice-president, customer services.

".Y <<I

'.<<t',S,'974 Percent Percent Change Change from from 1973 1973 1972 (000's (000's omitted) omitted)

$ 156,134 33% $ 117,559 14)o 88/20 35 65,647 13 135/10 60 84/66 13 16,034 38 11,632 7 395,898 42 279,204 13 mid-1973. The first refueling of the senting amounts capitalized as a part of 46,015 5 43,827 24 Robinson Plant nuclear unit in 1973 in- the original cost of assets being con-creased related operations and mainte- structed, increased by $ 16.5 million in 441,913 37 323,031 14 nance expenses significantly over 1972. 1974 and $ 13.3 million in 1973. The 13+99 (1) 13,608 (35) To reduce costs during 1974, the Com- credits to income are substantially 5,565 22 4,567 21 1'I pany, among other actions,-deferred equivalent to and offset interest and 460,977 35 341,206 discretionary maintenance for some of other capital costs of the construction 235,842 122 106,191 20 its facilities. Higher prices for equip- program which are reflected in the state-(35,028) ment and material and services of all ment of income. These increases reflect 14+94 85 7,847 (32) kinds have further increased these items larger amounts of construction work in 38,031 17 32,391 20 of expense. progress during the periods. Income Taxes other than income taxes re- taxes-credit increased by $ 5.6 million 20,180 (9) 22,227 15 16,929 (1) 17,041 38 flected increased state and local taxes in 1974 and $ 3.8 million in 1973, re-40,684 42 28,706 20 on increased revenues and plant in ser- flecting primarily the increasing tax de-16,947 (20) 21,268 (19) vice. ductible interest charges applicable to 35,544 12 31,845 17 the greater amount of funds invested in Income tax expense decreased to 383,623 43 267,516 13

$ 16.9 million in 1974 from $ 21.3 mill- facilities under construction.

77+54 5 73,690 4 ion in 1973 and from $ 26.4 million in 1972. To a greater degree than in 1973, Financing and Construction 54,609 43 38,093 54 the Company's 1974 pre-tax operating Construction expenditures during 16p068 53 10/77 57 income decreased and related interest 1974 totaled $ 381 million. Of this, $ 303 776 97 393 charges increased. million was for generating facilities, $ 28 71/53 46 48,963 56 Tax expense for 1974 represented million for transmission and $ 50 million 148,807 21 122,653 20 13 cents of each revenue dollar, with 9 for distribution and general facilities. In 76,536 35 56,654 36 cents going to state and local govern- addition, nuclear fuel expenditures for 72,271 10 65,999 9 ment and 4 cents for federal taxes. This 1974 totaled $ 39.9 million.

20,672 59 13,017 35 compared with 15,cents, 9 cents and 6 In February 1974, the Company

$ 51,599 (3) $ 52,982 4 sold 650,000 shares of Serial Preferred cents respectively for 1973.

23,324 13 20,554 '15 Stock, $ 8.48 Series; in May,

$ 221 (14) $ 2.58 (10) Other Income $ 125,000,000 principal amount of First

$ 1.60 4 $ 1.54 4 Other income increased 46 percent Mortgage Bonds, 974% Series due 2004; in 1974 as compared with a 56 percent and in December, the Company sold increase in 1973. The allowance for $ 27,650,000 principal amount of First funds used during construction, repre- Mortgage Bonds, 11t/a% Series due

,',ELECTRIC OPERATING REVENUES NET INCOME (Millions of Dolfsss) (Millions ol Oolfsrs) 1964 1133 1964 19.6

'65 122.0 '65 22.0

'66 134.9 '66 23.3

'67 146.7 '67 25.0

'68 170.0 '68 26.0

'69 187.1 '69 27.4

'0 204.8 70 24.8 255.6 71 378

'72 307.1 608 341.2 66.0 461.0 74 72.3 1994. In June 1974, the Company, for The Company's construction pro- and profits did not reflect any accumu-about $ 44.5 million, assigned its rights gram for 1975 through 1977 is esti- lated "tax basis" profits, such distribu-to and leased back the eleven internal mated to require $ 1.14 billion with tions were not taxable to the recipient as combustion turbine generator units and $ 343 million of this amount budgeted taxable dividend income. The amounts related equipment being constructed at for 1975. of such dividends should be deducted its Darlington County Plant. In De- from the cost basis of the stock so that cember the Company sold for when the shares are sold, the capital approximately $ 47.6 million and leased Tax Status of Common and Preferred gain or loss may be properly computed.

back certain nuclear materials. Dividends Additional funds for construction Dividends paid to common and and for other corporate purposes were preferred shareholders during 1974, Capitalization obtained primarily from an increase of under existing Internal Revenue Service The Company's capitalization at

$ 103 million in short-term notes pay- regulations, constituted a return of capi- December 31, 1974 was $ 1,870,678,-

able, from the recovery of capital tal. For corporate book purposes, divi. 303, consisting of 53.percent first mort-through depreciation and amortization dends were paid from retained earn- gage bonds, 29 percent common stock totaling $ 45.4 million and from earnings ings; but, because the tax records kept in and retained earnings, 15 percent pre-retained and invested in the business of accordance with IRS definitions of de- ferred stock and the remaining 3 percent

$ 14 million. preciation, taxable income and earninf*.s a six-year promissory note.

PRICE RANGES AND DIVIDENDS PAID PER SHARE COMMON AND PREFERRED STOCK Common Stock $ 5 Preferred Stock N. Y. Stock Exchange American Stock Exchange Re re Prices Dlvld nds Re rted Prices Dividends Period ~HI h Low Paid ~HI h Low Paid 1973 First Quarter $ 303/e $ 24'/>> $ .38 $ 72'/2 $ 69 $ 1.25 Second Quarter 27'/>> 24 .38 72 65/>> 1.25 Third Quarter 257/e 21 1/2 .38 70 61 '/2. 1.25 Fourth Quarter 25'/e 19 .40 72'/2 60 1.25 1974 First Quarter 23'/>> 20 .40 66'/2 60 1.25 Second Quarter 193/>> 137/e .40 61'/>> 55 1.25" Third Quarter 14'/>> 11'/e .40 56'/>> 50 1.25 Fourth Quarter 14% 10'/2 ~

40 52'/2 ~

46 1.25 Other preferred stocks are not actively traded. Regular quarterly dividends have been paid on all preferred stocks.

I COMMON STOCK ~D(videndsPaid per Share CONSTRUCTION EXPENDITURES (Millions ol Dollars)

Parnlngs per Share f 2.2 ~Projected 11,146 1964 51.62 3.9 11,289 65 .80 98 11r488 .88 67 767 11,584 .91 73.1 11,61 6 .98 9 97.1 11,920 .05 66.1 12,934 70 86 38.4 14,776 71 .97 3178 17,814 72 2A)6 58.1 20r 554 73 381 4 23r324 .21 42dj

'65.1 vAverage Shares Outstanding (ln thousands)

Adjusted lor a 2.(or 1 stock split ln 1964 435.0 Rates The continuing increase in costs in crease, with the full difference reflected reasonable fossil fuel procurement prac-almost every area of the Company's op- in the rates for the first 250 kilowatt tices. After two days the hearings were erations required that the Company ob- hours of monthly usage by the residen- continued until February 18. They were tain rate relief in 1974. tial customer. concluded February 26.

On October 29, 1973, applications Because of rapid fluctuations in the On February 3, 1975, the Commis-

'were filed to increase rates for retail ser- price of fossil fuels, the Company sought sion ordered utility companies in the vice by approximately 21.25 percent. A and obtained during the year authority state to collect from retail residential series of interim rate increases placed to place into effect a fossil fuel adjust- customers only 75 percent of additional into effect during the first half of 1974 ment clause applicable to all kilowatt fuel cost above base rates under the fos-brought the amount of increased rates hours sold in metered retail service. The sil fuel adjustment clause. The order was being collected on June 1 to 18 percent. clause became effective on February 6, effective February 1 fora period ofup to For service rendered on and after 1974, subject to final determination by 60 days.

October 1, 1974, the full amount of the the state regulatory commissions.

requested increase was placed into ef- On December 19, 1974, the North On July 1, 1974, the Company re-fect on North Carolina retail service Carolina Utilities Commission issued an quested the Federal Power Commission awaiting final commission action. The order approving the fossil fuel clause to authorize an increase in the rates for charges for service after October 1 and the revenues collected under it sales at wholesale to municipalities, pri-under the requested rate were not sub- through September 30, 1974. On vate utilities, and rural electric coopera-ject to refund. January 15, 1975, the South Carolina tives and to apply a fossil fuel adjust-On January 6, 1975, the North Public Service Commission issued an ment clause to the wholesale sales. The Carolina Utilities Commission issued its order approving a similar fossil fuel ad- FPC allowed the proposed rates and ad-order allowing the requested increase justment clause. justment clause to become effective, with certain modifications of the resi- The North Carolina Utilities Com- subject to refund, on service rendered dential rate schedules that the Company mission set hearings for January 30, on and after January 2, 1975. The in-had sought to place into effect. On 1975 to determine whether the fossil crease will produce additional annual January 15, 1975, the South Carolina fuel adjustment clauses used by the revenue of $ 40 million based on the Public Service Commission issued an three major utility companies in North 1974 level of sales and fossil fuel costs.

order allowing an 18.3 percent increase Carolina were being properly applied Mearings are scheduled to begin in April rather than the requested 21 percent in- and whether the companies have used 1975.

Construction New Facilities Nuclear Power Plant. This license en- water quality control installations.

Nine of the 11 Darlington internal abled the Company to proceed with ini- Electrostatic precipitators, designed combustion generating units came on tial fueling of the first unit and subse- to remove more than 99 percent of the line during the latter half of 1974. All quent preliminary testing. With the ad- solid matter from stack emissions, were units are expected to be in service by the dition of this nuclear unit, the Company placed into service during 1974 on six summer of 1975. expects about 23 percent of its total coal-burning generating units.

The Skaale Energy Control Center generation in 1975 to come from nu- On July 8, the Company entered began operation in September. This clear power. The second 821,000 into a stipulation requiring the installa-modern facility automatically kilowatt Brunswick unit is expected to tion of natural draft salt water cooling schedules, monitors and controls the go into operation in 1976. towers at the Brunswick Plant, flow of electricity across the Company's scheduled for completion by May 1, service area and to and from neighbor- 1978. Construction and related costs are ing companies. expected to be about $ 72 million.

Transmission lines Authorized Expenditures for environmental Transmission line construction au- protection equipment at new and exist-thorized for 1975 and subsequent years ing plants through 1977 are estimated at Future Generation Additions includes 111 miles of 500,000 volt line, $ 105 million. Of this, $ 33 million is ex-Revised energy forecasts, coupled 1,040 miles of 230,000 volt line and pected to be spent in 1975: $ 18 million 8 with the unavailability of capital on 178 miles of 115,000 volt line. at the Brunswick Plant and Roxboro reasonable terms, caused the Company Unit 4 and $ 15 million at existing to make several major revisions in its generating facilities.

construction plans. The reductions re- Environmental Matters Projects scheduled for completion lated principally to plants scheduled for During 1974, CPAL spent nearly during 1975 include installation of four service in 1979 or later. $ 31 million to construct facilities to pro- additional electrostatic precipitators On December 27, 1974, the tect the environment of the Carolinas. and modifications to circulating water Atomic Energy Commission issued an Of this, $ 21.4 million was for air quality systems at the Cape Fear and Weather-operating license for the Brunswick control devices and $ 9.6 million for spoon plants.

Operations Total energy requirements for the year because of Federal Energy Office electric usage. The increase in peak load system during 1974 were 2S.6 billion allocations. was modest compared to previous kilowatt hours. Of this total nearly 0.5 During the year, 6 million tons of years.

billion kilowatt hours were sold to coal were burned, 41 percent having utilities outside the service area. System Reliability Groups been received under long-term con- CP&L continues as one of the 30 load factor was 60.2 percent as com- tracts. The Company expects to receive companies in the Southeastern Electric pared to 59.9 percent in 1973. At year' approximately 51 percent of its coal re- Reliability Council (SERC). This mem-end, system capability, including long- quirements for 1975 from long-term term contract purchases from other bership includes all power suppliers agreements. with generating capacities of at least utilities, was 6,205,500 kilowatts.

Peak Loads 25,000 kilowatts. The Company is also Total Company generating capacity one of seven power systems in the was 5,925,500 kilowatts. Of this 64.9 A new peak load for the system was Virginia-Carolinas Reliability Group percent was from 7 steam electric plants reached on August 28 when customer (VACAR). The principal purpose of both burning fossil fuels, 11.8 percent from demand was 4,771,000 kilowatts. A groups is to improve system reliability the Robinson nuclear unit, 19.7 percent daily use record was set on August 29 for member companies.

from 31 internal combustion turbine when the total kilowatt-hour demand generators and the remaining 3.6 per- was 92,838,000. The previous high of Long-Term Coal Supply cent from 4 hydroelectric plants. 90,807,000 was on August 30, 1973. The Company has entered into a Total energy produced came from A winter peak of 4,261,000 joint venture with Pickands Mather 9 kilowatts was recorded on December Company for the development of a coal the following fuel sources: 66.35 per- 10, 1974. mining property in Pike County, Ken-cent coal, 19.61 percent nuclear, 3.75 Energy conservation, milder tucky. The mine, which is expected to percent hydroelectric, 8.00 percent re- weather and reduced economic activity begin production in 1977, will furnish sidual oil, 1.41 percent No. 2 oil and of the Company's customers during 800,000 tons of low sulfur coal annually 0.88 percent natural gas. Percentage of 1974 resulted in only a slight increase in for the No. 4 unit of the Roxboro Plant.

residual oil used was down from last

SERVI'CE AREA PEAK LOAD TOTAL UTILITYPLANT

-(Thousands of tNosratts) iM80ons of f)o)tars)

I

'65 749 ~ 5uInnrer 8

'964

,184 '66~7 0 2 445

'68 2,834 '68 731.5

~69 171 827.0

,484 I70

,625 1 242.9

,119 1 718 j11 1 957.7

,771 2 252.9 FUEL EXPENSE iAII fueb es burned)

Cents Per MillionBTU 1964 28,07

~I65 26.99) 28.74

'68 29.67

'69 31.48 42.09 44.91 72

'73 4457 6,58

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Ownership Distribution of Stock Ownership (Common and Preferred Stock Combined)

Shareholders Shares Number Percent Number Percent The Carolinas . 32,296 47.71 6,51 7,01 7 24.74 Elsewhere..... 35,392 52.29 19,828,961 75.26 Totals ...... 67,688 100.00 26,345,978 100.00 The total number of shares and cated by these statistics, several ticipating in the Dividend Reinvestment shareholders increased during the year thousand shareholders own shares Plan initiated by the Company in 1973.

as a result of the issuance and sale of which are held by banks, stockbrokers, Under the plan, Company common or 650,000 shares of Serial Preferred Stock, investment trusts or nominees. preferred dividends may be automati-

$ 8.48 Series in February. At the 1974 annual meeting, more cally reinvested in additional shares of At the end of the year there were than 86 percent of the total shares out- common stock.

52,787 holders of common and 14,901 standing were represented in person or The program is being administered holders of preferred stock, or a total of by proxy. by North Carolina National Bank and 67,688 shareholders compared with The largest beneficial shareholder any questions regarding participation 59,986 at the end of 1973. The percen- at the end of 1974 had less than two should be directed to NCNB, Dividend tage of those living in the Carolinas in- percent of the shares outstanding. Reinvestment Service, Post Office Box creased from 46.06 percent in 1973 to 120, Charlotte, North Carolina 28201.

47.71 percent at the end of 1974. Dividend Reinvestment Service In addition to shareholders indi- About 3,000 shareholders are par-

Customers Sales within the service area At the end of 1974, 21.3 percent of consumption per customer during 1974 amounted to 23.6 billion kilowatt hours residential units served by CP8rL were was 10,861 kilowatt hours, about 36 of electricity in 1974 compared with all-electric. Similarly, about 23 percent percent more than the natiooal average.

23.2 billion in 1973. of commercial and 12.5 percent of in-During the year the number of retail dustrial customers have total-electric customers served increased 2.5 percent facilities. Commercial to 648,253. Power for resale is supplied The Company's 93,293 commer-to 18 Electric Membership Corpora- Residential cial customers represented 14.4 percent tions, 24 municipalities and 2 privately The Company's 550,128 residential of the total retail customers and pro-owned utilities. These resale customers customers, representing 84.9 percent of duced 19.2 percent of operating reve-used 5 billion kilowatt hours in 1974, the Company's total customers, ac- nues.

which was 21 percent of the total Com- counted for 33.9 percent of the operat- Average annual usage by commer-pany energy sales. ing revenues for 1974. Average annual cial customers declined 1,163 kilowatt Average Price Per Kilowatt Hour Paid by Residential Customers (1974 and 1973)

(Prices shown are averages for the systems of companies which serve these cities)

Cents Per Kilowatt Hour 1974 1973 Place 7.70 5.20 New York, N. Y.

5.50 3.42 Newark, N. J.

5.06 3.57 Boston, Mass.

4.80 3.40 Philadelphia, Pa.

4.18 2.82 Nesv Haven, Conn.

3.99 3.06 Hartford, Conn.

3.67 2.63 Washington, D. C.

3.42 2.17 St. Petersburg, Fla.

3.06 2.29 Columbia, S. C.

3.04 2.32 Richmond, Va.

2.98 2.01 lackson, Miss.

2.89 2.27 Miami, Fla, 2.74 2.30 Tampa, Fla.

2.69 2.30 Lexington, Ky.

2.64 1.98 CRQE, 2.63 2.35 Fairmont, W. Va.

2.63 2.31 Covington, Ky.

2.61 2.08 CharlotteN. C.

2.55 2.02 Roanoke, Va.

2.53 2.01 Guifport, Miss.

2.52 2.05 Ashland, Ky.

2.48 2.02 Atlanta, Ga.

2.44 2.08 Birmingham, Ala.

2.37 2.06 Pensacola, Fla.

hours in 1974 to a level of 37,961 lion, topping the previous one-year high the Company undertook during the year kilowatt hours. of $ 542 million established in 1971. The a system-wide training of customer ser-1974 announcements are estimated to vice personnel to help them communi-Industrial provide 13,100 new job opportunities *cate effectively to customers the com-The Company's 3,237 industrial with an annual payroll of $ 85.5 million. plex factors affecting the price of elec-customers used 8.3 billion kilowatt tricity.

hours in 1974, which represented an Customer Relations The Company's communications increase of 4.9 percent over 1973, and Customer reaction to the rapidly ris- efforts emphasized the necessity of pric-accounted for 29.4 percent of CP&L's ing price of electricity has been pro- ing service to cover fullythe cost of pro-operating revenues. nounced and, at times, vocal. Realizing viding it, and centered on the four basic In 1974, expenditures an'nounced that one means of creating better public areas of escalating costs: fuel, construc-for new and expanded industries in the understanding is to provide customers tion, capital, and environmental protec-CP8 L service area totaled $ 658.9 mil- with a continuing flow of information, tion.

AVERAGE ANNUALKILOWATT HOUR SALES AVERAGE PRICE PER KILOWATT HOUR TO RESIDENTIAL CUSTOMERS TO CP&L RESIDENTIAL CUSTOMERS 171.8 AND THE CONSUMER PRICE INDEX 6 319 154.8 1964 65 6 620 Price Index (19$ 7-$ 9>>t00)

'66 7 093 CP81 (lectric(ty 132.7

'67 7 454 (2.644)

'68 8 290

'69 9 027

'70 9 794 10 205 100 10 293 82A 11 276 10,861 1957 59 '61 >63 ' ' 't>9 '7 1 '73 '74 TOTAL-ELECTRIC RESIDENTIAL UNITS ENERGY SALES BY CLASSES (Cumu4tive Total) within rervlce area (Millionrol Kilowatt Itourr) ~~ Rerldentlal 1964

'65

'66 3,533 24,813 9,046 1964

'65 I

I 8/59 9,707

~

~

Commercial tndurtrlal Other

'67 31>584

'67 I

'68 40>234

'68.

'69 48,442

'69 I 15,617 70 58>1 89

'70 I 17@02

>71 71,879 '71 18,861 86,953 '72 20,517 73 106>525 73 I 23,229 117305 74 I 23,607

People Management Changes In December the board of directors and named to the board of directors in U.N.C. School of Law in 1956. He en-elected Sherwood H. Smith, Jr. execu- March of that year. Smith received his tered private practice in 1957 and was tive vice-president administration, W. A.B. and J.D. degrees with honors from appointed to the bench in 1969.

E. Graham, Jr., vice-president and gen- the University of North Carolina where McDuffie, who has been associated eral counsel, and M. A. McDuffie vice- he was a Phi Beta Kappa, Morehead with CP8 L construction projects since president. Scholar and editor of the Law Review. 1948, came to CP8L in 1970 from Smith, who will continue to func- Graham, after serving as a judge of EBASCO Services, Inc., a construction tion as a group executive while relin- the North Carolina Court of Appeals, firm which has built a number of CP&L's quishing the responsibilities of general joined the Company in 1973 as a vice- plants. He was graduated from North counsel to Graham, came to CP&L in president and senior counsel. He re- Carolina State University in 1948 with a 1965 as an associate general counsel. ceived his A.B. degree in economics B.S. degree in civil engineering.

He was elected senior vice-president from the University of North Carolina and general counsel in January of 1971 and was graduated with honors from the W. E. Graham, Ir. M. A. McDuffie Employees At the end of 1974, the Company ployees from all levels of the organiza- juries per million man-hours, which sur-had 4,742 employees compared with tion participated in 11 different courses passed the old record of 1.24 established 4,397 employees in 1973. This increase and seminars designed to upgrade job in 1973. As a consequence, CP&L re-in employees primarily reflects two as- performance. In addition, the Company ceived the top safety award from the pects of the Company's operations: ad- through its Educational Assistance Pro- Southeastern Electric Exchange in the ditional technical people to meet the gram continued to assist employees in category of electric utilities having requirements of nuclear regulatory pursuing academic and technical 3,000 or more employees. CP&L also bodies in the licensing and operating of studies aimed at increasing on-the-job placed first in vehicle safety with a fre-nuclear power plants, and the use of competence and efficiency. quency rate of 5.20 accidents per mil-in-company personnel rather than con- CP&L maintained its record as one lion miles driven.

sulting firms in the management of con- of the safer utilities in the country. Em- The Company continued to de-struction projects. ployees of CP&L set an all-time safety velop its long-standing policy of provid-CP&L continued to emphasize the record by completing 9,072,525 man- ing equal employment opportunity.

development of its human resources. hours with only 11 lost-time injuries for During the year, more than 900 em- a frequency rate of 1.21 lost-time in-

Directors Officers AtJanuary 1, 1975 AtJanuary 1, 1975 Year shown in parenthesis indicates begin-ning of period of service as a director SHEARON HARRIS M. A. McDUFFIE President Vice President J. A. JONES DARRELL V. MENSCER RAYMOND A. BRYAN, Chairman of the Executive Vice President Vice President Board, T. A. Loving Company, Goldsboro, (Group Executive)

ALBERT L. MORRIS, JR.

N. C. (1957) SHERWOOD H. SMITH, JR. Vice President DANIEL D. CAMERON, SR., President, At- Executive Vice President (Group Executive) J. R. RILEY lantic Telecasting Corporation, Wilming- Vice President ton, N. C. (1970) EDWARD G. LILLY,JR.

Senior Vice President R. S. TALTON FELTON J. CAPEL, Regional Manager, Cen- Vice President tury Metalcraft Corporation, Southern (Croup Executive)

Pines, N. C. (1972) W. J. RIDOUT, JR. EDWIN E. UTLEY Senior Vice President Vice President FULTON B. CREECH, President, Creech Lumber Company, Sumter, S. C. (1946) (Group Executive) J. L. LANCASTER, JR.

WILLIAME. GRAHAM, JR. Secretary E. HERVEY EVANS, Farmer, Laurinburg, N.

C. (1946) Vice President and ROBERT M. WILLIAMS General Counsel Assistant Secretary SHEARON HARRIS, Chairman/President of the Company, Raleigh, N. C. (1961) SAMUEL BEHRENDS, JR. JAMES S. CURRIE Vice President Treasurer L. H. HARVIN, JR., President, Rose's Stores, Inc., Henderson, N. C. (1958)

E. M. CEDDIE J. R. POWELL Vice President Controller KARL G. HUDSON, JR., Executive Vice President and General Manager, Hudson- WILLIAMB. KINCAID C. D. MANN Belk Company, Raleigh, N. C. (1967) Vice President Assistant Treasurer J.A. JONES, Executive Vice Pr'esidentof the Company, Raleigh, N. C. (1971)

EDWARD G. LILLY,JR., Senior Vice Presi-dent of the Company, Raleigh, N.C. (1971) Transfer Agents SHERWOOD H. SMITH, JR., Executive For Common Stock:

Vice President of the Company, Raleigh, N.

C. (1971) Wachovia Bank & Trust Company, N.A., Winston-Salem, N. C.

HORACE L. TILGHMAN, JR., Real Estate Bankers Trust Company, New York, and Investments, Marion, S. C. (1961) N. Y.

JOHN B. VEACH, Chairman of the Board, For Preferred Stock:

Bemis Hardwood Lumber Company, Asheville, N. C. (1958) Wachovia Bank 8 Trust Company, N,A., Winston-Salem, N. C.

JOHN F. WATLINGTON,JR., Chairman of the Board, Wachovia Bank & Trust Com-pany, N.A., Winston-Salem, N. C. (1970)

Registrars For Common Stock:

First-Citizens Bank & Trust Company, Winston-Salem, N. C.

Morgan Guaranty Trust Company of New York, New York, N. Y.

For Preferred Stock:

First-Citizens Bank & Trust Company, Winston-Salem, N. C.

Auditors'Opinion To the Board of Directors and Shareholders of Carolina Power & Light Company:

We have examined the balance sheet of Carolina Power 5 Light Company as of December 31, 1974 and 1973, and the related statements of income, retained earnings and source and use of financial resources for the years then ended. Our examination was 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 next to last paragraph of Note 5, the Company has eliminated from its authorized construction budget five proposed new generating units in connection with which approxi-mately $ 13 million (including $ 6 million land costs) had been expended. Additionally, the Company will incur costs, the amounts of which are presently undeterminable, arising out of contracts related to the units. The Company will seek regulatory approval to allocate any charge-offs related to the units over a period of years and to recover them through rates. Should such approval not be granted, results of operations for 1974 would be adversely affected. The ultimate accounting and disposition of these matters are not presently determinable.

As discussed in the last paragraph of Note 5, at December 31, 1974 the Company had billed approximately $ 30,444,000 since September 30, 1974 under provisions of a fossil fuel adjustment clause and had deferred approximately $ 29,500,000 of fossil fuel cost to be billed to customers in January and February 1975. Such amounts are subject to regulatory review and approval and the amounts billed may be subject to refund with interest to the extent not allowed by the appropriate regulatory commissions. The ultimate accounting and disposition of these matters are not presently determinable.

In our opinion, subject for 1974 to the effect, if any, of the final determination of the uncertainties described in the preceding two paragraphs, the financial statements referred to above present fairly the financial position of the Company at December 31, 1974 and 1973, 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.

Raleigh, North Carolina February 13, 1975

Statement of Income FOR THE YEARS ENDED DECEMBER 31, 1974 AND 1973 1974 1973 OPERATING REVENUES Electric (Notes 5 and 6) .. $ 460 977 024 $ 341 206 167 OPERATING EXPENSES:

Fuel for electric generation . 235,842,050 106,190,728 Deferred fossil fuel expense (credit) (Note 5) (35,028,046)

Purchased electric power . 14,493,620 7,846,834 Other operation expenses 46,549,415 41,910,188 Maintenance . 28,591,432 29,748,949 Depreciation . 35,544,206 31,845,000 Taxes other than on income 40,683,529 28,706,296 Income tax expense (Note 4) 16 946 789 21,268 097 Total operating expenses . 383,622 995 267,516 092 OPERATING INCOME . 77,354,029 73,690,075 OTHER INCOME:

Allowance for funds used during construction . 54,608,879 38,092,921 Income taxes credit (Note 4) . 16,067,820 10,476,889 Other net 775,762 392,856 Total other income 71,452,461 48,962,666 GROSS INCOME 148 806 490 122,652,741 INTEREST CHARGES:

Long-term debt 69,877,700 50,148,867 Other. 6,658,234 6,504,940 Total interest charges . 76,535,934 56,653,807 NET INCOME 72,270,556 65,998,934 PREFERRED STOCK DIVIDEND REQUIREMENTS 20,672,481 13 017,020 EARNINGS FOR COMMON STOCK . $ 51,598,075 $ 52,981,914 AVERAGE COMMON SHARES OUTSTANDING 23,324,111 20,554,182 EARNINGS PER COMMON SHARE $ 2.21 $ 2.58 Statement of Retained Earnings FOR THE YEARS ENDED DECEMBER 31, 1974 AND 1973 BALANCE AT BEGINNING OF YEAR:

As previously reported $ 110,81 6,532 $ 90,673,379 Adjustments (Note 8) 5,246,508 4 159,988 As restated 116,063,040 94,833,367 NET INCOME 72,270,556 65,998,934 Total . 188,333,596 160,832,301 DEDUCT:

Cash dividends declared:

$ 5 preferred stock 1,186,295 1,186,295 Serial preferred stock:

$ 4.20 series . 420,000 420,000

$ 5.44 series . 1,360,000 1,360,000

$ 9.10 series . 2,730,008 2,730,008

$ 7.95 series . 2,782,523 2,782,522

$ 7.72 series . 3,860,000 3,860,000

$ 8.48 series . 5,986,655 Preferred Stock A, $ 7.45 series 3,725,000 678,195 Common stock (at annual rates of $ 1.52 a share for the first two quarters of 1973, and $ 1.60 a share for the last two quarters of 1973 and for 1974) . 37,374,994 32,691,198 Total cash dividends declared 59,425,475 45,708,218 Capital stock expense 145,395 147,563 Total deductions . 59,570,870 45,855,781 BALANCE AT END OF YEAR . $ 128,762,726 $ 114 976,520 See notes to financial statements.

Balance Sheet December 31, 1974 and 1973 Assets 1974 1973 ELECTRIC UTILITY PLANT:

Electric utility plant other than nuclear fuel:

In service . $ 1 I364 1 83~273 $ 1,283,703,978 Held for future use 7,542,840 394,822 Construction work in progress 826,012,064 588,760,026 Total . 2,197,738,177 1,872,858,826 Less accumulated depreciation 256,659,461 227,645,192 Net 1,941,078,71 6 1,645,213,634 Nuclear fuel 55,117,915 84,869,269 Less accumulated amortization 11,466,631 21,888,857 Net 43,651,284 62,980,412 Electric utility plant, net . 1,984,730,000 1,708,1 94,046 OTHER PROPERTY AND INVESTMENTS 3,828,783 6,123,560 CURRENT ASSETS:

Cash 9,517,174 5,585,578 Accounts receivable:

Refundable income taxes (Notes 4 and 8)........ 14,942,360 7,258,736 Other, net 30,677,344 18,492,256 Deferred fossil fuel inventory costs (Notes 1 and 5) . 35,028,046 Materials and supplies:

Fuel . 84,244,486 19,150,044 Other. 13,434,110 9,193,580 Prepayments, etc 1,787,436 1,293,959 Total current assets 189,630,956 60,974,153 DEFERRED DEBITS:

Unamortized debt expense 1,253,151 1,126,554 Other 5,624,404 3,950,844 Total deferred debits . 6,877,555 5,077,398 TOTAL $ 2,185,067,294 $ 1,780,369,157 See notes to financial statements.

Carolina Power L Light Company 1974 1973 Liabilities CAPITAL STOCK AND RETAINED EARNINGS (Notes 2 and 8):

Preferred stock $ 288,118,400 $ 223 800 900 Common stock 41 9,701,904 416,321,036 Retained earnings 128,762,726 114,976,520 Total capital stock and retained earnings 836,583,030 755,098,456 LONG-TERM DEBT:

Principal amounts (Note 3) . 1,036,914,31 0 884,282,925 Less unamortized discount and premium, net 2,819,037 1,481,904 Long-term debt, net 1,034,095,273 882,801,021 CURRENT LIABILITIES:

Notes payable 131,657,046 28,355,799 Accounts payable 59,412,183 19,101,865 Customers'eposits 2,818,650 2,229,460 Taxes accrued 11,276,899 3,583,620 Current portion of deferred income taxes (Note 4) 13,577,543 Interest accrued . 19,321,270 16,343,570 Dividends declared . 19 240 143 16,141,105 Other. 1,823,299 1,368,472 Total current liabilities 259,127,033 87,123,891 DEFERRED CREDITS:

Investment tax credits (Notes 1 and 4) . 4,514,126 10,755,425 Customers'dvances for construction . 125,873 52/162 Other 115,406 107,436 Total deferred credits 4,755,405 10,915,023 RESERVE FOR INJURIES AND DAMAGES 724,920 661,238 CONTRIBUTIONS IN AID OF CONSTRUCTION (Note 9) 5,175,879 ACCUMULATED DEFERRED'INCOME TAXES (Note 4) .. 49,781,633 38,593,649 COMMITMENTS AND CONTINGENCIES (Note 5)

TOTAL $ 2,185,067,294 $ 1,780,369,157 See notes to financial statements.

Statement of Source and Use of Financial Resources For the Years Ended December 31, 1974 and 1973 1974 1973 SOURCE OF FINANCIAL RESOURCES:

Current resources provided from operations:

Net income $ 72,270,556 $ 65,998,934 Items not requiring (providing) current resources:

Depreciation and amortization 45,391,668 40,430,347 Noncurrent deferred income taxes net 11,187,984 7,430,192 Investment tax credit adjustments net, (6,241,299) 2,947,920 Allowance for funds used during construction . (54,608,879) (38,092,921)

Total current resources from operations... 68,000,030 78,714,472 Other resources provided:

Additions to plant accounts representing capitalization of the net cost of funds used during construction........ 54,608,879 38,092,921 Proceeds from assignment to lessor of internal combustion turbine generators 44,455,470 Proceeds from sale and leaseback of nuclear fuel ......... 47,593,386 Miscellaneous net . 3,994,354 108,555*

Total resources provided from operations and other . 218,652,11 9 1 1 6,915,948 Financings:

Sale ofFirst Mortgage Bonds 150,978,924 199,754,486 Preferred stock . 64,230,667 49,9II8,929 Common stock . 3,380,868 63,449,118 Increase in short-term notes payable 103 301,247 16,356,097 Total resources provided from financings 321 891,708 329,508,630 TOTAL 5540,543,825 $ 446,424,578 USE OF FINANCIAL RESOURCES:

Gross property additions, excluding nuclear fuel** ............... 1 $ 359,055,71 7 Nuclear fuel additions** 39,939,431 37,610,243 Dividends for the year. 58,047,475 45,708,218 4,050,400'382,602,01 Net increase in working capital, excluding short-term notes payable 59,954,908 TOTAL $ 540,543,825 $ 446,424,578 INCREASE (DECREASE) IN WORKING CAPITAL, EXCLUDING SHORT-TERM NOTES PAYABLE, BY COMPONENTS:

Materials and supplies (principally fuel) . $ 69,334,972 $ 105,302 Deferred fossil fuel inventory costs 35,028,046 Accounts receivable 19,868,712 2,900,135 Accounts payable (40,31 0,31 8) 3,557,515 Current portion of deferred income taxes . (13,577,543)

Taxes accrued (7,693,279) 3,035,876 Interest and dividends payable (6,076,738) (5,153,436)

Other net . 3,381,056 Net increase in working capital, excluding short-term notes (394,992)'4,050,400 payable . $ 59,954,908

• Amounts for 1973 have been reclassified to conform to 1974 presentation.

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

See notes to financial statements.

Notes to Financial Statements

1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES System of Accounts. The accounting records of the Company are maintained in accordance with uniform systems of accounts prescribed by the Federal Power Commission and the regulatory commissions of North Carolina and South Carolina Electric UtilityPlant. Electric utility plant is stated at original cost. The cost of additions, including replacements of units of property and betterments, is charged to utility plant. The Company includes in such additions an allowance for funds used during construction (8% for 1974 and 1973). 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 depreciation. Utility plant is subject to the lien of the Company's mortgage.

Allowance for Funds Used During Construction. In accordance with the uniform systems of accounts prescribed by regulatory authorities, an allowance for funds used during construction is included in construction work in progress and credited to income, recognizing that funds used for construction were provided by borrowings, preferred stock, and common equity. This accounting practice results in the inclusion in utility plant in service of amounts considered by regulatory authorities as an appropriate cost for the purpose of establishing rates for utilitycharges to customers over the service lives of the property.

Depreciation and Amortization. Depreciation of utility plant, other than nuclear fuel, for financial reporting purposes is computed on the straight-line method based on estimated useful lives and charged principally to depreciation expense.

Depreciation provisions as a percent of average depreciable property other than nuclear fuel approximated 2.8% in 1974 and 1973. Amortization of nuclear fuel (1 974, $ 8,757,000; 1973, $ 7,694,000) is computed on the unit-of-production method and charged to fuel expense.

Revenues. Customers meters are read and bills are rendered on a cycle basis. Revenues are recorded when billed, as is the customary practice in the industry.

Deferred Fossil Fuel Inventory Costs. On February 6, 1974, pursuant to state regulatory commissions'rders, the Company

'put into effect retail service fossil fuel adjustment clauses to recover increased fuel costs. The provisions of the clauses result in a time lag between the date increased fuel cost is incurred and the date such cost is billed to customers. Accordingly, to properly match increased fuel costs with the related revenues, the Company is deferring the increased fuel cost when incurred and expensing it in the month the related revenues are billed. Therefore, operating expenses in the statement of income have been decreased and Deferred Fossil Fuel Inventory Costs in the balance sheet has been increased by $ 35,028,046, representing the normalization of such cost. Related deferred income taxes have been recorded by increasing income tax expense in the statement of income and are reflected in Current Portion of Deferred Income Taxes on the balance sheet. See Note S concerning status of the fuel adjustment clauses.

Income Taxes. Deferred income tax provisions are recorded only to the extent such amounts are currently allowed for rate-making purposes. 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. See Note 4 with respect to certain other income 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. At December 31, 1974 the Company had generated but not utilized investment tax credits totaling

$ 9,800,000 (See Note 4 for prior years'nvestment tax credits eliminated in 1974 and included herein).

Preferred Dividends. Preferred stock dividends declared and charged to retained earnings include amounts applicable to the first quarter of the following year, except for the Preferred Stock A, $ 7.45 Series, issued in 1973,'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 th(,

costs accrued under the plan. Retirement plan cost for 1974 and 1973 were approximately $ 2,421,000 and $ 1,748,000, respectively. In 1974, the Company amended the plan by changing, among other things, the accrued benefit determination method, the interest assumption from 4% to 4t/z%, and the amortization of the unfunded prior service cost over a period of twenty years from January 1, 1974 instead of from January 1, 1971. The effect of these changes on periodic net income is not material. The unfunded prior service cost at January 1, 1974, the date of the latest actuarial valuation was approximately $ 9.6 million and as of December 31, 1974 is estimated at $ 17 million. As of December 31, 1974 the actuarially computed value of vested benefits exceede'd assets of the plan by an estimated $ 5 million.

Other Policies. At December 31, 1974, the Company had available lines of credit with various banks and maintains account balances in connection with certain of such lines. Other property and investment's are stated principally at cost, less accumulated depreciation where applicable. Materials and supplies inventories are stated at average cost. The Company maintains an allowance for doubtful accounts receivable (1974, $ 427,876; 1973, $ 335,384). Bond premium, discount and expense are amortized over the life of the related debt.

2. CAPITAL STOCK 1974 1973 Preferred Stock, without par value, cumulative:

$ 5 (authorized, 300,000 shares; outstanding, 237,259 shares) $ 24,375,900 $ 24,375,900 Serial (authorized, 10,000,000 shares):

$ 4.20 Series (outstanding, 100,000 shares) . 10,000,000 10,000,000

$ 5.44 Series (outstanding, 250,000 shares) . 25,000,000 25,000,000

$ 9.10 Series (outstanding, 300,000 shares) . 30,000,000 30,000,000

$ 7.95 Series (outstanding, 350,000 shares) . 35,000,000 35,000,000

$ 7.72 Series (outstanding, 500,000 shares) . 49,425,000 49,425,000

$ 8.48 Series (outstanding, 650,000 shares) . 64,317,500 Preferred Stock A (authorized, 5,000,000 shares)-

$ 7.45 Series (outstanding, 500,000 shares) . 50 000 OM 500000M Total $ 288 118 400 $ 223 800 900 Preference Stock (authorized, 2,000,000 shares; none issued)

Common Stock, without par value (authorized, 60,000,000 shares):

Outstanding (1974, 23,438,844 shares; 1973, 23,233,763 shares) . $ 419,458,687 $ 416,321,036 Subscribed but not issued 19,875 shares . 243 217 Total 4

$ 419 701 904 5416 321 036 Common stock outstanding increased $ 3,137,651 in 1974 and $ 63,545,175 in 1973 from the sale of 3,000,000 shares in 1973 in a public offering and the sale of 205,081 shares in 1974 and 109,247 shares in 1973 under the Company's Stock Purchase-Savings Program for fmployees. At December 31, 1974, 965,460 shares of unissued common stock were reserved for issuance under the Program. The preferred stock account increased $ 64,317,500 in 1974 and $ 50,000,000 in 1973 from the sale of 650,000 shares in 1974 and 500,000 shares in 1973.

In January 1975 the Company sold 4,000,000 shares of common stock in a public offering for proceeds of $ 56,000,000 before expenses of issuance.

The preferred stock is callable, in whole or in part, at redemption prices ranging from $ 102 to $ 115 a share plus accumulated dividends. The Preferred Stock A, $ 7.45 Series, has a sinking fund requirement, commencing in 1984, to redeem 20,000 shares annually at $ 100 per share plus accumulated dividends. In the event of liquidation, the preferred stock is entitled to $ 100 a share plus accumulated dividends.

The Company's charter and the indentures relating to the First Mortgage Bonds contain provisions limiting payments of cash dividends on common stock under certain circumstances. At December 31, 1974, $ 21,035,987 was so restricted under the charter provisions, which restriction was removed in January 1975 upon the sale of 4,000,000 shares of common stock.

3: LONG-TERM DEBT PRINCIPAL AMOUNTS First Mortgage Bonds:

3$/0% Series, due 1979 .. $ 20,100,000 7'%eries, due 2001 70,000,000 3$/0% Series, due 1979 43,930,000 7%% Series, due 2002 100,000,000 23/0% Series, due 1981 15,000,000 7%% Series, due 2003 ............. 100,000,000 3$/3% Series, due 1982 20,000,000 8V6$ % Series, due 2003 ............. 100,000,000 4$/4$ % Series, due 1988 20,000,000 9y0% Series, due 2004 .............

4r/$ % Series, due

$ 1990 25,000,000 125,000,000'86,680,000 4y2% Series, due 1991 25,000,000 Total .

4'%eries, due 1994 30,000,000 Six-year note payable to a bank, due 11Y0% Series, due 1994 july 31, 1978, at a fluctuating rate 5$/6$ % Series, due 1996 27,650,000'0,000,000 (11.7% at December 31, 1974) related 6)S% Series, due 1997 40,000,000 to the bank's prime rate 50,000,000 63/0% Series, due 1998 40,000,000 By0% Series, due 2000 40,000,000 Miscellaneous promissory notes 8'%eries, due 2000 50,000,000 (1973, $ 252,925) 234,310 7%% Series, due 2001 65,000,000 Total long-term debt at December 31, 1974 .. ...$ 036 1 914 310

'Issued in 1974 The bond indenture, as amended, contains requirements that additional property be certified or that specified amounts in cash and/or principal amount of bonds be delivered annually to the Trustee as an improvement fund. Current liabilities do not include the current improvement fund requirements (approximately $ 6,100,000 at December 31, 1974) since the Company meets such requirements by the certification of additional property.

The Company sold and issued $ 22,350,000 principal amount of First Mortgage Bonds, 11'/a% Series due 1994, in January 1975. Bonds of this Series (11 3/e%'Series due 1994) shall be redeemed under sinking fund provisions at $ 2,000,000 each year commencing on December 1, 1976, at the principal amount without premium plus accrued interest.

4. INCOME TAXES Year Ended December 31, 1974 1973 Income tax expense is composed of the following: (Amounts in Thousands)

Included in Operating Expenses:

Provision (credit) for currently payable (refundable) taxes $ (1,578) $ 10,890 Provision fo'r deferred taxes, net 24,766 7,430 Investment tax credit adjustments, net (credit) . (6,241) 2,948 Total charged to operating income 16,947 21,268 Reduction in currently payable taxes allocated to Other Income (16,068) (10,477)

Total income tax expense . $ 879 $ 10,791 Provisions for net de/erred income taxes result from timing differences in the recognition of the following items for tax and financial reporting purposes and which tax effects were as follows:

Excess of accelerated depreciation deductions over straight-line depreciation otherwise deductible . $ 14,513 $ 7,430 Deferred fossil fuel inventory costs . 16,814 Taxable gain on sale and leaseback of properties. (3,325)

.Accrual of franchise taxes on books but not .

deductible until paid . (3,236)

Total provision for deferred taxes, net $ 24,766 $ 7,430 Reconciliation of an amount, computed by applying the federal income tax rate of 48% to pre-tax income (net income plus income tax expense):

Amount derived by multiplying pre-tax income by 48% . $ 35,112 $ 36,859 Add (deduct):

Investment tax credits (utilized) eliminated (See Note 1) 5,706 (5,386)

Other specific reconciling items multiplied by 48%:

Allbwance for funds used during construction . (26,212) (18,285)

Differences between book and tax depreciation for which deferred taxes have not been provided. (3,523) (3,020)

Taxes and fringe benefit costs capitalized (4,022) (3,856)

State income taxes and other differences, net . 59 1,531 Provision for current and deferred taxes . 7,120 7,843 Investment tax credit adjustments, net (6,241) 2,948 Total income tax expense $ 879 $ 10,791

At December 31, 1974, the Company had recorded income tax refunds receivable totaling $ 14,942,360 and correspond-ingly reduced provisions for federal income tax expense payable currently for the year then ended. The amount represents estimated tax recoveries to result from the carryback of the 1974 net operating loss (see Note 1 for accounting policy for Investment Tax Credits and Note 8 with respect to income tax refund for years 1961 through 1968 totaling $ 4,159,988).

5. COMMITMENTS AND CONTINGENCIES It is estimated the Company's construction program for 1975 thrpugh 1977, excluding nuclear fuel, willcost approximately

$ 1,143 million. At December 31, 1974, firm commitments for construction aggregated approximately $ 400 million plus approximately $ 264 million for initial and replacement nuclear fuel. In addition, the Company has a contract with the Energy Research and Development Administration for nuclear fuel enrichment requirements through June 30, 2002, which is cancelable without penalty upon five years written notice. Payments for enrichment services are anticipated to approximate

$ 79 million during the next five years. Many contracts include escalation provisions.

The Company has entered into an agreement with Pickands Mather 8 Co. (PM), a firm engaged in owning, operating and managing mineral properties, to develop through a subsidiary a deep coal mine in Pike County, Kentucky. As of December 31, 1974, the Company had advanced $ 1.7 million to the subsidiary. The subsidiary is owned 80% by the Company and 20% by PM. The currently estimated maximum capital cost of the mine of $ 50 million will be financed by the subsidiary through equipment lease arrangements and long-term borrowing. The Company and PM have entered into coal purchase contracts for 80% and 20%, respectively, of the subsidiary's production at prices sufficient to meet all of its costs. The Company has a contingent liability to lend funds to the subsidiary for development cost overruns and for operating cash requirements during any full calendar quarter during which no coal is delivered.

During 1974, the Company assigned its rights to eleven internal combustion turbine generator units and related equipment for approximately $ 44.4 million and sold certain nuclear materials for approximately $ 47.6 million and subsequently leased these properties from their new owners. Under certain circumstances, the Company is contingently liable to repurchase the properties.

Electric utility plant at December 31, 1974, includes approximately $ 15 million representing cost less accumulated depreciation of four hydroelectric projects licensed by the Federal Power Commission (FPC), which licenses expire in 1976, 1993, and 2008. 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 Company would be paid its "net investment" in the project, not to exceed fair value, plus severance damages, if any. No provision for amortization reserves as required for the determination of "net investment" has been recorded as such amounts, if any, are considered immaterial. In 1973, the Company applied for a new 50-year license for the Walters Hydroelectric Project which original license expires in 1976. A competing application has been filed by a group of rural electric cooperatives.

The Company has committed a total of $ 3,450,000 for research concerning development of the Liquid Metal Fast Breeder Reactor payable in ten equal annual installments which commenced in 1972.

There are certain claims pending against the Company; in the opinion of the Company, liabilities arising from these claims, if any, would not have a material effect on the financial position or results of operations of the Company.

Annual rentals under long-term leases are not considered material.

Federal income tax returns through 1970 have been examined and closed.

During 1974 the Company's construction program was reduced, including the elimination from its authorized construction budget of five proposed new generating units. The Company expects to retain for future use as much value as possible from the approximately $ 13 million (including $ 6 million land costs) it had paid or accrued in connection with such units. (Of the total amount, approximately $ 7 million is included in plant held for future use land approximately $ 6 million is included in construction work in progress.) Additionally, the Company will incur costs of an undetermined amount arising out of related contracts for generating equipment. The Company willseek regulatory approval to allocate any charge-offs related to the units over a period of years and to recover them through rates. No provision has been recorded in the statement of income for any losses which may result because the significance and amounts are not presently known, although they could be substantial, and the final accountingdisposition is not presently determinable.

Operating revenues for the year ended December 31, 1974 include $ 30,444,000 which was billed during October, November and December of 1974 to retail customers in North Carolina under the provisions of a fossil fuel adjustment clause.

Those billed amounts are subject to further regulatory review and refund with interest ifsuch review so requires. Deferred fossil fuel inventory costs at December 31, 1974 of $ 35,028,046 represent approximate amounts to be billed customers during the following two months. On February 3, 1975, the North Carolina Utilities Commission issued an interim'order (to remain in effect until a final order is issued but in any event for not more than 60 days) requiring the Company to reduce by 25% the amount of fossil fuel clause charges on bills rendered on and after February 1, 1975 to the Company's North Carolina

fuel cost residential customers. Such order could result in approximately $ 1,119,000 of the December 31, 1974 deferred fossil not being billed during the interim period. It is uncertain ifthe Company will be authorized to bill such reduced amounts in the future or ifsuch reductions will become permanent. Approximately $ 29,500,000 (including the 25% reduction of $ 1,119,000) of deferred costs are subject to further regulatory review and approval which may necessitate adjustments if such reviews so require.

6. RATE INCREASES Operating revenues include amounts (1 974, $ 113,316,000; 1973, $ 2,233,000) attributable to rate increases placed in effect during 1974 and 1973, including for 1974, $ 30,444,000 subject to further regulatory review and refund with interest if such review so requires (see Note 5).

7. PROPOSED ACCOUNTING RULES The Federal Power Commission has under consideration certain proposed revisions in its Uniform System of Accounts relating to the deferring or normalizing of interperiod income taxes. The revisions would bring the accounting for interperiod income tax allocations into conformity with generally accepted accounting principles for non-regulated businesses and would provide an accounting basis in the Uniform System of Accounts for the inclusion of such deferred taxes for rate-making purposes, except where a regulatory body having rate jurisdiction requires something less than full deferral, in which case, only the lesser amount would be recorded for accounting and rate-making purposes. The ultimate effect, if any, on the Company's earnings is not presently determinable pending definitive action on the proposals by the Federal Power Commission and any actions which may subsequently be taken by rate regulatory bodies.

8. ADJUSTMENTS TO RETAINED EARNINGS During 1974 the Company received a $ 4,159,988 refund of federal income taxes paid with respect to the years 1961 through 1968. The balances of retained earnings at December 31, 1972 and 1973 have been restated by such amount. Received also in connection with the tax refund was $ 2,089,461 of refunded interest and interest earned applicable to years prior to 1974.

Accordingly, such interest (net of income tax of $ 1,002,941) has also been added in 1974 to the December 31, 1973 balance but has not been allocated to 1973 and prior years since the effect on any one year is not material. Accounts receivable, net, as of December 31, 1973 was restated to include the refunded tax amount only.

9. CONTRIBUTIONS IN AID OF CONSTRUCTION In accordance with orders from regulatory authorities, contributions in aid of construction have been transferred to the electric utility plant section of the balance sheet as of January 1, 1974.

Statistical Review (Dollars in Thousands) I 974 1973 1972 1971 1970 1969 1964 Balance Sheet Data (End of Period):

Total Utility Plant other than Nuclear Fuel $ 2,197,738 1,872,859 1,524,238 1,212,822 981,571 820,865 "

480,407 Accumulated Depreciation .............. 256 659 227 645 200 190 178 096 161 827 147 407 93 215 Net Utility Plant other than Nuclear Fuel $ 1 941 079 1 645 214 1 324 048 1 034 726 819,744 673.458 387,192 Capitalization Common Stock and Retained Earnings'.. $ 548,465 531,297 447,609 299,852 260,154 230,964 149,222 Preferred Stock. 288,118 223,801 173,801 124,376 89,376 59,376 34,376 First Mortgage Bonds, Net'.............. 983,861 832,548 632,497 533,003 398,427 308,959 199,535 Other Long-Term Debt .................. 50 234 50 253 50 110 123 134 1 920 Total $ 1 8 7D 678 1 637 899 1 304 017 957 354 748 091 599 299 385 053 Ratio of Accumulated Depreciation to Utility Plant in Service.......:........... 18.8 17.7 18.4 18.9 20.9 20.3 20.2 Percent of Total Capitalization Common Stock and Retained Earnings'. 29.3 32.4 34.3 31.3 34.8 38.5 38.8 Preferred Stock........................ 15.4 13.7 13.3 13.0 12.0 9.9 8.9 First Mortgage Bonds, Net'.............. 52.6 50.8 48.5 55.7 53.2 51.6 51.8 Other Long-Term Debt .................. 2.7 3.1 3.9 .5 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Ratio Bonds to Net Utility Plant other than Nuclear Fuel ................. 50.7 50.6 47.8 51.5 48.6 45.9 51.5 Results of Operations Operating Revenues . $ 460 977 341 206 307,136 255,643 204,846 187,060 113,267 Operating Expenses Fuel for Generation of Power............ 235,842 106,191 88,549 84,749 69,014 49,101 Deferred fossil fuel expense (credit) ......... (35,028) 21,847',196 Purchased Power . 14,494 7,847 11,537 10,422 9,799 6,439 Other Operation 'Expense Maintenance .

............... 46,549 41,910 32,979 28,510 23,765 20,884 15,252 28,591 29,749 25,624 23,098 19,849 16,231 7,706 Depreciation. 35,544 31,845 27,280 22,820 Taxes 19,476 18,086 10,560 Income . 16,947 21,268 26,378 Taxes 14,328 8,289 18,920 17,258 Other 40 684 28 706 24 021 21 400 19 053 17 413 10 115 Total Operating Expenses ............. 383 623 267 516 236 368 205 327 169 245 147 074 87 934 Operating Income 77 354 73 690 70 768 50 316 35 601 39 986 25 333 Other Income Allowance for Funds Used During Construction . 54,609 38,093 24,759 14,708 Income Taxes 10,505 4,397 1,134 Credit................... 16,068 10,477 6,666 3,532 2,709 1,425 161 Other Income (Deductions)-Net......... 776 393 49 517 (337 3 366 Other Income. 71 453 48 963 31 474 18 757 13 181 5 825 .

1 661 Gross Income 148 8DI 122 653 102 242 69,073 48 782 45 811 26,994 Interest Charges Bond Interest 63,676 45,653 37,782 27,895 19,601 I4,543 Other Interest Charges .................. 12,860 11 001 3 931 3 704 4 356 3 884 7,027 337 Total Interest Charges................. 76 536 56.654 41,713 31 599 23,957 18 427 7 364 Net Income 72,271 65,999 60,529 37,474 247825 27,384 Preferred Stock Dividend Requirements .. 19,630 2D 672 13 017 9 612 8 371 4 699 2 966 6D6 Earnings for Common Stock ..............

Dividends Declared on Common Stock...

51,599 52,982 50,917 29,103 2D,126 24,418 1

18,024 37 375 32 691 27 174 22 122 19013 17 391 11 661 Earnings Invested in the Business ......... $ 14 224 20 291 23 743 6 981 113 7 027 6 363 Earnings Per Share Weighted Average.... $ 2.21 2.58 2.86 1.97 1

1.56 2.05 1.62 Dividends Paid Per Common Share ........ $ 1.60 1.54 1.47)$ 1.46 1.46 1.42 Payout Percent 7'2.4 2

1.00 60.0 51.6 74.1 93.6 69.3 61.7 Shares Common Stock Outstanding (000's)'ear-End 23,439 23,234 20,125 15,555 13,986 12,674 Weighted average during year ........... 23,324 20,554 17,814 14,776 12,934 11,920 11,279 11,146 Times Earned Bond Interest Before Income Taxes..... 2.35 2.92 3.23 After Income Taxes ...... 2.34 2.69 2.71 2.86 2.48 2.77 2.49 4.35 3.15 6.27 3.84 Preferred Dividend Requirements ........ 3.50 5.07 6.30 4.48 5.28 9.23 12.22

'As adjusted for years 1969 through 1973 for income tax refund received in 1974.

'Years prior to 1974 restated to reflect unamortized premium and discount.

Revenues (Thousands) 1974 1973 1972 1971 1970 1969 1964 Residential $ 156,134 117,559 103,254 89,711 75,990 67,920 45,593 Commercial 88,420 65,647 58,246 49,223 40,981 36,316 22,331 Industrial 56,661 36,689 33,438 26,725 21,174 18,713 10,561 Other Textile'ndustrial 78,649 47,677 41,161 34,096 28,889 26,133 13,734 Government and Municipal.............. 16,034 11,632 10,827 9,685 8,573 7,997 6,726 Sales for Resale 46015 43 827 35 396 31 643 25 794 22 506 13 212 Total Electricity Sales Within Service Area 441,913 323,031 282,322 241,083 201,401 179,585 112,157 Nonterritorial Electricity Sales ............ 13,499 13,608 21,040 11,967 1,225 5,557 Miscellaneous Revenues ................ 5 565 4 567 3 774 2 593 2 220 1 918 1 110 Total Operating Revenues ........... 5 460977 341 206 307 136 255 643 204 846 187 060 113 267 Load Data Electric Energy Sales (Millions):

Residential Kwh 5,917 5,937 5,208 4,974 4,634 4,150 2,516 Commercial 3,576 3,628 3,202 2,945 2,693 2,389 1,315 Industrial . 8,273 7,885 7,037 6,232 5,623 5,188 2,602 Other . 5 841 5 779 5 070 4 710 4 352 3 890 2 326 Total Energy Sales Within Service Area 23,607 23,229 20,517 18,861 17,302 15,617 8,759 Nonterritorial 469 853 1 584 796 246 1 068 Total Electric Energy Sales ............... 24,076 24,082 22,101 19,657 17,548 16,685 8,759 Company Uses, Losses and Unaccounted For 1 556 1 501 1,671 1 307 1,248 1,222 727 Total Energy Requirements...............Kwh 25 632 25 553 23 772 20 964 18 796 17 907 9 486 Electric Energy Supply (Millions):

Generated Steam Fossil .............Kwh 18,603 19,875 16,605 16,135 16,311 15,996 7,900 Generated Steam Nuclear............... 4,813 3,764 4,828 2,414 3 Generated Hydro 921 891 882 849 623 695 898 Generated Other Fuel ................... 215 113 210 257 315 127 Purchased and Interchange Net ........... 1 D80 940 1 247 1 309 1,544 1 089 688 Total Energy Supply ................Kwh 25 632 25 583 23 772 2D 964 18 796 17,9D7 9 486 Peak Demand of Firm Load (000's):

Within Service Area ................... KW 4,771 4,711 4,119 3,625 3,484 3,055 1,749 Nonterritorial 143 212 516 170 168 7 Total Peak Demand ................. 4 914 4 923 4 635 3,795 3 484 3.223 1 749 Total Capability at December 31 (000's):

Fossil Fuel Plants. .KW 5,014 4,453 3,833 3,482 3,040 2,961 1,632 Nuclear Plants . 700 700 700 700 Hydro Plants . 212 212 212 211 211 211 212 Purchased . 280 280 265 245 378 223 243 Total Capability'...................KW 6 206 5 645 5 010 4 638 3 629 3 395 2 087 Miscellaneous Customers at Year End Residential . 550,128 535,607 515,041 495,528 478,914 465,215 402,969 Other 98 179 96,844 95 020 90,561 86 511 82,584 67 228 Total . 648 307 632 451 610 061 586 089 565 425 547 799 470,197 Average Revenue Per KWH Residential .. Cents 2.64 1.98 1.98 1.80 1.64 1.64 1.81 Commercial . 2.47 1.81 1.82 1.67 1.52 1.52 1.70 Industrial . 1.64 1.07 1.06 .98 :89 .86 .93 Total Energy Sales Within Service Area...... 1.87 1.39 1.38 1.28 1.16 1.15 1.28 Residential Average Annual Energy Use ...........Kwh 10,861 11,276 10,293 10,205 9,794 9,027 6,319 Average Annual Bill $ 286.60 223.29 204.05 184.08 160.62 147.74 114.53 Steam Electric Generating Plant Fossil Fuel Average Annual Heat Rate (BTU Per Net KWH) .................... 10,090 9,739 9,946 9,832 9,785 9,626 9,853 Average Cost Per Million BTU.........Cents 116.7 50.0 45.7 48.0 41.2 31.0 28.0 Average Cost Per Million BTU All Fuels...... 96.6 44.6 39.6 44.9 42.1 31.5 28.1 Annual Load Factor, Service Area Load........ 60.2 59.9 61.3 63.5 60.8 62.9 61.7

'Includes yarn mills, weaving or cloth mills, finish ing plants (bleach ing, shrinking, dyeing and printing), knitting mills, and hosiery mills.

'Company now has 949,000 Kw. under constructio n for service in 197 5, 821,000 Kw for 1976; and 720,000 for 1978-or a total of 2,490,000 added kilowatts of generating capability.

Territory Served

.aJ Raleigh

~ Asheville N. C. 3 lhJ Sanford

~ Southern Pines S.C.

.U

~ Florence

.mk'olumbia

~ Sumter

enderso Goldsboro

.a'J

~ Jac sonv~le Wllmington Legend CpikL Service Area Electric Generating Plants At the end of 1974, CP&L was providing elec-4 tric service to more than 648,000 customers in an CPg L District Offices Hydroelectric 1.

2.

Asheville Electric Plant Blewett Hydroelectric Plant area of 30,000 square miles almost half of North Generating Plant 3. Cape Fear Electric Plant Carolina and about one-fourth of South Carolina.

4. Lee Electric Plant Conventional Steam Electric S. Robinson Electric Plant Total population of the territory is estimated to be sek Generating Plant 6. Sutton Electric Plant about 2.8 million. This territory is comparable in

7. Tillery Hydroelectric Plant size to the combined areas of Connecticut, Mas-Steam-Electric Generating B. Walters Hydroelectric Plant Plant With Conventional 9. Weatherspoon Electric'Plant sachusetts, Rhode Island, New Jersey and New and Nuclear Units 10. Roxboro Electric Plant Hampshire. It includes part of the Mountain and Nuclear Steam. Electric 11. Brunswick Nuclear Plant Piedmont regions, but is largely in the Coastal Generating Plant 12. Marshall Hydroelectric Plant Under Construction 13. Harris Nuclear Site Plains section. Service to customers is provided

14. Darllngton Plant through 5 division, 10 district and 40 area offices.

cQ Nuclear Steam-Electric Generating Plant Site Darlington County Electric Plant The 1975 Annual Meeting of Shareholders will be held in Raleigh, Annoy) Meetfngg North Carolina, on May 21 at 11 A.M. A formal notice of the meeting together with a proxy statement and form of proxy will be mailed about April 16.

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