ML19350A718

Annual Financial Rept 1980

ML19350A718
Person / Time
Site:	Fort Saint Vrain
Issue date:	02/06/1981
From:	Person R, Walker R PUBLIC SERVICE CO. OF COLORADO
To:
Shared Package
ML19350A716	List: ML19350A715 ML19350A718
References
NUDOCS 8103160703
Download: ML19350A718 (52)

Text

g ..

u .

7 ,

.* %J 9

e

'9 p  %

\' - ) ,

. a id,_ $ y . W . , ,; , _

A

, _ ,,i -

.Em

, ;, , , , , _ ; _4_ .

, . . r .~,A g ; ,..

- .- ,~ a- . . .

.p Y

CD:mpDTU D1 u LwnBD .

J:

.~ ,

,1

, s' +

m 4 y

• s Y.6 ~

.4 ,y m-

'A

+

/l * -

,1

• - 4 e . - -

h [

' 4 h e a ;. .

~

f'

,\ s. w* .- -

4 N ..t

. (<, \

,, es <- -} >

• s- -

- 'i

.;. v. w , ,  ;.  ; , ~

_- U-j

-). --. g

~

4 ,

_ 4 , i.

s

• y 1 *y-

, e 1 ). -

i *, -

\ i. Eg

, . c d Tr  % {

i s ,,

t s $

• c r

s. r,

• +. ,

, i y  %-#

4 7

i t

+-

a g

l Y W On.f% h 44 * - ~ ^*4 %m =

y

Contents Public Service Company:

A Regulated Utility 1 Year in Review 2 Management Commentary 4 Service Territory 6 Electric Service 7 Natural Gas Service 11 Regulation 16 Financing 18 Corporate Outlook 20 Selected Financial Data 22 Electric and Gas Statistics 23 Service Territory Map 24 Consolidated Financial information 25 ShareholderInformation 47 ~

d Directors and Of ficers 48 J

' The 1980 Annual Report is designed to inform you about the Company in an easy-to-find, easy to read manner. The Year in Review section on Page 2 highlights the important events and trends of 1980.

Detailed information about those and other important developments are categorized by subheads in the appropriate sections.The Management Commentary on Page 4 presents a candid overview of the state of the Company.The Corporate Outlook on Page 20 briefly discusses how management views the current year and a few years beyond.

The Cover: The photo symbolizes the rising demand for energy placed on Public Service Company as Colorado embarks on the dawn of a dynamic new decade.

f

Annu;I Meeting Public Service Company of Colorado is an Public Service Tha Annual Meeting of Shareholders will be investor-owned electric, natural gas ant

• Company:

h2ld April 15,1981 at 2 p.m. (MST)in Phipps steam utility. It is the largest energy A Regdcted Auditorium, at the Denver Museum of utility in Colorado with a system electri Nituril History,2001 Colorado Blvd., generating capability of approximately Utility DenvIr, Colorado. Notices of the Annual 2,600 megawatts and daily natural gas Meeting, proxy statements and forms are availability of 1.425 billion cubic feet. The mill;d approximately 30 days prior to the Company provides steam service to Annut! Meeting. Management sincerely downtown Denver.

hopes that all shareholders who can do so will ettend. Public Service Company includes four operating subsidiaries. Cheyenne Light, A copy of Public Service Company's 1980 Fuel and Power Co. provides electric and annuri report to the U.S. Securities and natural gas service to customers in the Exch nge Commission on Form 10K and Cheyenne, Wyoming area. Home Light and ths 1970-1980 Financial and Statistical Power Co. serves electricity to residential Revi:w are available without charge upon and business customers in the Greeley, requist to Shareholder Services, Room Colorado area. Western Slope Gas Co.,

1048, P.O. Box 840, Denver, Colorado 80201. operating entirely in Colorado, is engaged in the tiansmission and wholesale supply of natural gas. Fuel Resources Tribut] to Employees Development Co., which is not a utility and, Minigement acknowledges the therefore, not subject to regulation, is comm:ndable performance throughout the involved in the exploration, development y;tt of the 6,000 men and women who are and production of oil and natural gas Public Service Company. Their cooperation primarily in the Rocky Mountain region.

as ws imposed stringent cost cutting

, policits and other economy measures was in 1980, Public Service Company's service essential to the restoration of a strong territory embraced 820,500 electric l financial position. We feel that customers and 680,600 natural gas j shinholders should be aware of these customers. Approximately 70 percent of l Efforts, and we express sincere these customers are concentrated in appreciation. metropolitan Denver, and the rest are located in hundreds of incorporated and unincorporated cor6munities throughout

! Colorado and southern Wyoming.

The Company operates as a regulated utility. It has the right to provide service in specified areas subject to the jurisdiction of state anti federal regulating bodies.

Public Service Company, Western Slope Gas and Home Light and Power are regulated by The Public Utilities Commission of the State of Colorado (CPUC). Cheyenne Light, Fuel and Power Company is regulated by the Public Service Commission of Wyoming. Public Service Company's wholesale electric operations are subject to regulation by the Federal Energy Regulatory Commission.

1

Earnings Rebound Additional Rate increase Year in Review Late in the year, the Company was granted Public Service Company's earnings per share, which fell 25 cents below the $1.60 an additional $28.3 million rate increase annual dividend rate during 1979, effective January 4,1981. The combined rebounded to $1.92 per share in 1980. The amounts allowed represent 48 percent of impetus for this turnaround came from rate the total $177.5 million requested. The increases in November 1979 and in May CPUC increased the return on common 1980 and, to some extent, from regulatory equity to 15.45 percent, allowed the revisions in fuel recovery and other revenue Company to continue to include 40 percent policies, cutbacks in capital spending and a of the construction costs for Pawnea in the stringent corporate cost-cutting effort. rate base but denied the request to include the full cost. The CPUC also turned down a Unprecedented Emergency Relief one percent rate-of return attrition Management took unprecedented action allowance. Significantly, the CPUC allowed early in 1980 to deal with the Company's the Company to base its request on cost eroding financial condition by filing for data using the last six months of 1979 and emergency rate relief. An increase was the first six months of 1980, essential if the Company was to continue p n.svi.1,on. Page 16) construction of the Pawnee Electric Generating Station near Brush, Colorado.

The CPUC granted $57.4 million of the $67 million requested.

e e n.svi.e.on. Page 16) 1980 1979 % Change Financial

$1.92 $1.35 42.2 Earnings Per Average Share of Common Stock

$1.60 $1.60 -

Dividends Paid Per Common Share Shares of Common Stock (000): 36,412 31,225 16.6 Average 32,326 23.7 39,990 Year End

$1,155,644 5 926,510 24.7 Total Operating Revenues (000) 23.5

$1,033,316 $ 836,766 Total Operating Expenset. (000) ,

$ 55,809 52.4

$ 85,027 Net income (000)

$2,516,433 $2,270,283 10.8 Gross Utility Plant investment (000) $ 320,806 Gross Plant Construction Expenditures (000) $ 262,604 (18.1)

Operations

! 640,749 3 507,587 26.2 Electric Operating Revenues (000) 14,659 3.6 15,194 Electric Kilowatt-Hour Sales (millions) 620,512 794,533 3.3 Total Electric Customers

$ 502,919 $ 410,537 22.5 Gas Operating Revenues (000) 213,274 203,262 (4.7)

Gas MCF Sales (thousands) 680,615 658,219 3.4 Total Gas Customers 2

i Financing Totals $211 Million Labor Union Settlements During 1980, Public Service Company On July 1.,1980, an arbitration board Mid two issues of common stock, one awarded a 12 percent wage increase to I., sus of preferred stock and two issues of Public Service Company employees d;bt s:curities. Financing totaled $211 belonging to the International Brotherhood million. Proceeds were used for of Electrical Workers (IBEW). The increase construction programs and the reduction of was retroactive to November 26,1979, the short term debt. date the contract expired.

e r.a.nciao. P.o. is>

The Company and the IBEW reached Adjustments Spur Revenue Flow agreement on a new contract, effective Th3 Company received CPUC approval to November 26,1980, providing members impl: ment in September an Electric Cost with a 10.5 percent wage increase.

Adjustment (ECA)in place of the Fuel Cost Adjustment (FCA) and Firm Purchased Eerning. .no oi,ioenoc-Pow';r Adjustment (FPPA). The ECA enables s2.25 th3 Company to recover fuel costs and purchised power costs more efficiently, 2.00 cnd include costs for transportation of fuel.

Sinco the ECA became effective,it has trs

)

add:d about $3.3 million of revenues in the list three months of 1980. i so cs n.gui.t.on, e.o. isi

$1.25 Natur:I Gas Deregulation .yo .73 72 73 74 75 7s 77 7s 79 8o Der:gulation of natural gas prices charged m Earnings per average share by the producers has improved D'vid'ad* P*id P Sh*

considerably the supply situation for Public

, Servica Company customers. Customer return on Equity - Anowed vs. Earned l rit:s reflect these higher production costs, ies , _

. but natural gas rates are now only 15 m n -

l beginning to reach the levels charged for 14 E cth r energy fuels. 3 L

• ~

(S Natur1 Gas Servic.. P.g. I f) N _

J l

11 #

Purchased Power Hits A New High 'O 1 --

Tha Company purchased reccrd amounts of ,

8 pow;r from other utilities during 1980 to 7'

meet periods of peak customer demand and 7d m?:Intiin reasonable margins of service y7",,[,e ,[,q,,J,3,n,,,,]Puh rali bility. The Company expects to mus Return on everage equity earneo continue to purchase power from n:lghboring Ltilities to offset the deficiency p ,en. o pe,e, _ g es rei., rie ,,,, neq,i,e.eni, in its own system generating capacity 24 %

c:used by construction delays. 22 r 2

is tene s.nnew r.o. n 8 16 K Con:iruction Setbacks 54 m Th] Company delayed the in service date of 12 sur- E Pawnee to late 1981 because of cutbacks in 10 E e

construction funds necessitated by its , y-l welk;ned financial position, labor 4 g _ m. g I difficulties and inclement weather early in 2s n , a n-1980. At year end, the plant was 70 7i 72 73 74 75 76 77 78 7s 80 appr;ximately 85 percent complete.

cs tene s.r* e.o.n j ;

j 3

l R T. Person, Chrirm:n of ths Board, lift, tnd

! A F. W::Ihr. Pr:sidint cnd Chi 1f Executiv2 officer. 4 The improvement in the Company's M:nagement financial condition was assisted by the Commentary it

%w/G belated arrival of the much-discussed

<N*'- a M. recession. How ironic that the same forces q W that adversely affect other industries g

[ -

, provide electric utilities with a breathing i spell by reduc,mg customer connections, construction requirements, financing, and,

-pi g above all, interest rates.

W. e, This breathing spell was short. lived and the improvements in our financial condition, I while substantial, are still insufficient to y position us for the future. We must alter our growth plans and develop a strategy for 4 g ,\ continued corporate vitality within the 6 _

limitations placed upon us: i!mitations

.-f , w imposed by inflation, by the scope of our dy,9

1. + 4 GA I d %w . m. M Mg '4 capital requirements and by regulations that are not in harmony with the realities of the economy in which we operate.

)

Public Service Company is financially stronger than it was a year ago at this time. Regulatory Changes The downward slide in earnings, which Our most recent rate case, filed in May and bottomed out at $1.35 per share at the end decided in December, is a case in point of of 1979 and remained at low ebb through these restraints. In addition to seeking the first quarter of 1980, has been reversed. higher rates, we specifically included in the filing three major regulatory principles that To be sure, the increase to $1.92 in represent the best opportunity for us to earnings per share in 1980 is a welcome make significant progress in the years improvement. We have weathered a severe ahead: an advanced test period, the financial and economic storm. But, put in inclusion of additional construction work in perspective, earnings are still short of progress and an attrition allowance.

being enough to provide shareholders with the return on their investment allowed by We requested total annual increases in j

regulation. Furthermore, it is still , revenues of $177.5 million. We received unrealistic for us to implement the $85.7 million. The CPUC did permit us to spending patterns necessary to build the base cost data on a historic test period new electric generating facilities this state more current than used in prior rate cases; must have in the 1980's and 1990's. that is we used the last six months of 1979 and the first six months of 1980. We feel Rate Increases this change toward basing rates on more Several accomplishments contributed to current cost information is significant.

the eamings improvement. The most significant cf these were the successful We asked that we be allowed to include 100 pursuit of a general rate increase put into percent of Pawnee construction costs in effect in late 1979 and emergency rate relief current rates. The CPUC said we could in May 1980. Without the emergency relief, continue to put 40 percent of those costs in construction on Pawnee would have been the rate base.The request for a one percent stopped and the stage set for possible attrition allowance, which serves as a power shortages. hedge against increased inflation between the time of the request and the time the Management initiatives to cut spend'ng rates actually are put into effect, was were also instrumental in putting ou* denied.

financial condition on a positive tract.

I Construction expenditures were part d by The CPUC also ordered that we place in

$40 million to $263 million. We reduc ed escrow earnings from the Fort St. Vrain niring and discontinued merchandising Nuclear Generating Station, subject to the operations. plant meeting prescribed performance standards. We object to this in principle.

i

^

P00R OR K it

Th3 d: cision is shortsighted in scope. It We are seeing this concept demonstrated t mporarily appeases customers by limiting in the natural gas industry. Deregulation rats increases, but it sacrifices long-term has provided incentives to companies to sn:rgy availability and reliability, find and develop untapped reserves in an Min:gement has appealed certa % M the effort to improve what was a precarious (for mentioned portions of the decision in supply situation. Consumers are paying the th3 Denver District Court. higher rates, but natural gas rates today are just beginning to reach the levels Purchased Power consumers pay for other energy fuels. The in 1980, Public Service Company had to higher rates consumers pay today are purchtse from neighboring utilities more helping to assure us of an abundant supply 61:ctric power than ever before. We do not for many years to come. And so it should hav3 the electric generating capability to be with the electric industry.

meet peak demand periods nor to meet the d; minds our service territory will impose It becomes increasingly important for us to on us in the growth years ahead. be persistent and clear in communicating our situation to customers. We must bring Mrks no mistake. Purchased power is a the issues into sharper fe us because solution only as long as it is available. As utility problems are not '.) lack and white.

th3 cconomy of Colorado grows, the We must convince customers that they are tvritability of excess power will disappear. best served by a healthy utility.

Wa c nnot camouflage the fact that new g n rating capability is critical. For us, The CPUC has ordered a management audit th:1 tr:nslates into a billion and a half of the Company. We will comply with this dollars just to undertake a new generating decision and cooperate fully with the pt:nt project. We will keep "on hold" selected auditing firm. We feel that these any d: cision to begin construction on such studies, conducted properly, could shed a proj ct until it makes good economic light on the difficulties utilities face today sens3 to do so, and will face in the future. They can be developed into a firm platform from which Strted simply, our financial strength still customers, regulators and the utility can does not measure up to the financing jointly step into the future.

! requir:ments of building new electric gin: rating facilities. Adequate revenues This 1980 Annual Report di,scusses in detail and erInings are a key to that future. all of the important events and trends Rev:nues improve cash ft tw and increase affecting our Company. We encourage you cur internal generation of Funds. Earnings to read it.

help us to come closer to .eaching the clisw:ble return on common equity. Then, For the Board of Directors, ws will be better able to attract the large sums of capital needed, at more reasonable N costs, from potential investors. It is __

fundamental that we operate on the basis R. T. Person

' cf whit we can afford.We're no different Chairman of the Board thin any other business. We cannot subst:ntially increase the scope of operations without adequate revenue cash ft:w and higher camirgs. , h

! Shared Responsibility R. F. Wilker i But the issue runs deeper. Perhaps the Presiderd and Chief Executive Officer i singla most important concept underlying i the changing utility industry today is that l the customer must pay the full costs of pr;viding service on a long-term basis. In February 6,1981 cth r words, customers must pay rates that Denver, Colorado l

j will Enable us to not only provide quality service today, but ample reliable service l tom rrow.The burden of building our future mu;t be a shared responsibility.

l l 5

4 Downtown Skyscrapers Eve symbolic Of the Public Servica Company's service tstrutory us a deveIOpment ct Denver as cn an:rgy c<nt3r. contrast I., urban and rural chsrscranstics.

Service Territory Colorado is a state hurrying toward the 21st .

century. The metamorphosis is evident ,s u m .awrMC .T .

everywhere as the remnants of a colorful and romantic past clash with the potential gj(@Cy$MM[R

- - sav f

W" Q J.Y

-ji l, V

of an emerging energy megalopolis.

$7UMWM;M ~ S N q. nyyg 4, The signs of change are most profound in g% *. , ' M k3' 1-Denver, a bustling, youthful metropolis b $ 1

~

'K.

ka s

embracing all the signs of 20th century 4 ,i

~ -\

\

progress - new skyscrapers racing each other to the sky, a revitalized urban core, vy s

4g}1 1

I 3 A

sprawling self-sufficient suburbs and new I hl 3 '

housing developments. ~J ,

L

'% ^

b Downtown construction has claimed some -O k $ hf apX*

of the landmarks that remind us of the '

,4 bawdy, gold rush days that put Colorado on i g#ppy the map. In their place, condominiums and "y {* - p a, office buildings are springing up as A Mk w; symbols of the new era being ushered in by the development of Colorado as a vital energy corridor in the West. To be sure, the lure of a potential energy boom in Colorado is responsible, in part, A plume of white smoke rising into the blue for the state's f aster than-average growtn.

Colorado sky is only a subtle hint of the Federal government operations, vast and turbulent forces at work in the manufacturing and tourism also add to mountains west of Denver. The smoke is rising employment levels and help spur from an experimental facility where a growth in the service industries. All the substance called kerogen is being steamed economic indicators - unemployment out of a deposit called maristone. Oil shale. rates, personal income, labor force and An industry with a future as big as retail sales - point to more of the same.

the state itself. Add to this the state's geographical ,

attributes, abundant skiing and other Oil shale is only a part of the story. There's recreational facilities, and an enviable a frenzied search for coal, oil, natural gas; climate, and it is easy to see why Colorado uranium and other minerals, all part of seems destined to stay on a course of surging efforts to make the nation energy growth in the 1980's.

Independent. It's too early to call it a boom, although all the signs a e there.The As a utility with a mandate to provide the problems and circumstarces surrounding energy needs of much of this growing

, these industries are volcanic in nature and population, Public Service Company is the timing of the eruption has yet woven into this pattem of progress. Just as to be decided. the state's govemment, business and the l

public grapple with Colorado's potential as t

x .

an energy c7rridor, so must Public Service Company ard the state govemment that 2 5e

~~~ ~ 2 ';;.

m regulates it encounter the problems of p ,

adequate utility service.

a  : .t

2. ' 9' There is a distinct parallel between the future of Colorado and the role of Public 2; sa Service Company in that scenario. The

%' l1 challenge of building adequ& : tility plant, 1'

" ^~ % g @' ' '~

like the challenge of build' M vii,:r energy-

i / g -.

related facilities, is bathes % X. JI,

- ,. _g environmental and financial con 0* ns. It, Q:-:-:'*_3,&

fi seems that the sc:Utions to these problems E wl:1 have to go hand in hand.

? . :. g 300RORGNa

.- .gy - ------

' h m, .y F Y"- - %Tf " 5 - - # -

e

-..y 1

m

~

9

( Uh-**'i. * )N f

%:d'3 ' 's .*) I%- i '} b

.. .m kj I;Q?% U '%, . ~5?II,1&m.

)N1!!:fD.Ti%,)l&

ilIIiG '&, < !. !

M:$ir'Q Q ? ;& :l,{lnQ:r! lChf0ff.4YT'7)l-b?r

~

' ^

h  :=

$U})!W@ '11n!W %k3W BMWiDV

'~

.?g

~

jg6t s%;g n.;;#MQ@Gpp O W H!;1&b,8 m ;t m#ofy  !  % % 2r:n % i % .tDy .p::nwm m.w ::yn9ia s

• Qy&

Mi dif3]!WL l@D -iiQ$UlGV .

~filQ);i?s[s1@ ':WiUDW:bliiQi?friW

~

' ^

'*', lly r;+;!ll. h2g';19,.y S Q+g@ ab

'l)Y,.'

Mllh.@Dtk 7 'jipf ; . .'tip)! -T,yi) if - '. '

Q, .- .- n .

]4 .} ;&kQ Q'Rfi Qc ;'t,$'g* ydlg][Vp'@-

i }% }~ TIC )?.@C bi! 80W M O M L G lW M ItT?

n.1'MI:s ,

~i gM.).W~gt.Jng

%.:U .

g  :!

. . . . t .-

m; eQif.19l 93 m T!WDyDf.;,

't h 9'P fg- lt '. *.t 'l ; ' '. I -  :

7) -)tr+ _Jg!M$l ~ . . '

1b  ! ~

n ag),imff,' m. te.;7 e : $;Jtp,., F &;,2i~k! , .j %"!~:qa

^

1. .te'A;,,4, .

. ~ - .

. s - i ;p+@

T f $[*?.dlb$1I*h ..

2 i .' . i,f. -,

\.,j. .

. 1 av . ~

~

1,. ,c '.#- a

. w-y ,

l

,. s - . g;

, _ "= fa , J. ~

• = - -

., g* 4

, .: . . i e c.f 4 .

l .* ', . . , , . ,

• W,  ;

y' ..

I ., ,j 1, g' . ,,

,s .

. .. I'l C

.& 's$y? ' i.en

.y *. 2; L'f}

, is : .. . s L 4 i.

y & - 1' p v.,.

~

~ ; ,, -

,(

i -

l qp )8 "

% F j

j

,M

,j e-M .' if 4/I, '

/ h ,c .s h

Q . Q j ['***

y , - ~

'~l w m'Ir $

l b

.))t r7[,h.ye  ; M yg N,k.y'g% -

. :jk g 4

.y,g ' 7nnal(w U , N.. ~ fn$M_a.

..w t,

(.,.-

7 .

U .1. W D(. Mu1,df 4 -

+' <. , cr .#

(. ,

s.

s

% gm . .,

1 . ,

%u,. -., e1y- -

er . T* s. .%. . A p f if

+-

i .

e t

. , - e. y .A a- ,. <-

N- '

k^', . N

.Y x '4 -

.m. tot._ s. = w.  ;

.c......,.&,.e.

zx u

.. / ..ci , , _

~

i.g.

p%%

m 6+--t,.p%, kvm r v- t. m,

- h.o,.%=3.-q\>:)

-/

^ - 3. . .

4 .

u n e% + y . y w'b m -i e >t s

-,; , % -r,- g;?

.. y .

~ n- -~**} q \..

-i,(. .

is* - -

' .:s. f - -- A K'.

q g 9Ty - L l,  ;'

) t l '. Q _ f

- .Q:?,'.* -

'n." I. j

, s y",o, ,

• %{ .?.J%., W g ac L.. ,

7 ,'j :f. . ,S. . ~~

0  ! prf

' 1 fs ' ' ' ' O.+ ,/ Q

- 3

}-

bn. x. y{ c n - , - - -

c ..

JY y..n }P n1-:G ..

,;, }.

.i.

2. >

+ ,f_ i-

, 9ny '1ll y.- i;...; .Q~f t ,ow% w d " #*  ?'

~ . . . .3;

-ld s j f;.

w. <gg*T"Y',** -. <c i .

v l .. _

L:* ,.

m,,, -

s.. . ..

.- e - . - - . . .,

' , - , ' , [g ' + , W_

l ++ . .  % em __

• • m:; .;., " 5 *T- ,

,, 3

Tha Company trct tII of its 1980 dem:nds ,ar clectric sirvics Lithough it 1:ced a tight supply situ: tion.

Electric Service ,m , m m 7 The Company purchases power through 31 g ,l7 ,

both firm and non-firm arrangements. Firm r ,;< 3 :'. M '

/[s ,[v . _ . c y4 ggy' purchased power means the Company NC . s gf"M f/7A *D/j v contracts for a specific amount of power available upon demand. Through non firm N , ' g - ]f WCQyN purchases, the Company buys available 1M

,gR 3

• 4pb M/if~

M4 M.

power as the need arises or when it may be most economical to do so.

4)1<$.,  %.' -

Fort St. Vrein m Q ., . J $p/ The increased electric energy generated at

< 3- -

I J '; . the Fort St. Vrain Nuclear Generating g , .jp i Station northeast of Denver was another important development in the supply gy picture. Despite scheduled and nonscheduled shutdowns for testing, WV; ;-

• - . 1 e

( fMC maintenance and repairs, the plant generated 667 million kilowatt-hours in 7  %%' <J, 1980, compared to 203 million kilowatt-hours

.T gg d. ,J h Nesi J generated in 1979.

[$Nhe The Nuclear Regulatory Commission (NRC)

Never before has Pubile Service Company has limited the output of Fort St. Vrain to faced such a stern test of its ability to meet 70 percent of its capacity because of the mandate to deliver all the power its temperature fluctuations in the reactor core customers demanded. Essentially, three and other problems. The Company believes factors combined to create a tenuous the problems have been solved.

supply situation throughout 1980. The Consequently, it has asked the NRC to lift number of customers grew 3.3 percent in the limit on the generating capacity so the 1980. Electric sales increased 3.6 percent, plant can proceed with testing toward its being somewhat tempered by conservation. full licensed capacity. Fort St. Vrain is Construction of Pawnee was delayed designed to generate 330 megawatts,130 because of the Company's financial megawatts above the current operating condition. level.

Purchased Power < Fort St. Vrain is scheduled for a second Electric power purchased from neighboring refueling in 1981. The first refueling was in utilities helped the Company to keep its 1979. The reactor is designed to operate demand supply situation balanced under a fuel cycle that requires one-sixth of throughout the year. Approximately 22 the core to be replaced at each refueling.

percent of the Company's total electric energy requirement of 16.4 billion kilowatt- As part of the settlement agreement hours was purchased from other utilities. effective in January 1979 with General Atomic Company (GAC), the primary in addition to its own generating capability contractor, Public Service Company of 2,568 megawatts, the Company receives this fuel through 1984 at no cost purchased 504 megawatts of capacity to and at GAC's cost of manufacture from bririg the total to 3,072 megawatts available 1985 through 1992.

for a maximum demand on the system. On August 7, the Company reg stered a record. Conservation increases setting net firm system peat load of 2,772 Conservation, too, had a part to play in the megawatts. At the time of this peak, the demand-supply situation in 1980. Although Company had a reserve capacity of 300 there were 3.3 percent more customers, megawatts, or 10.8 percent. each residential customer, on the average, used approximately 5,900 kilowatt hours Purchased power will be available as long during the year, about the same quantity  !

as neighboring utilities have excess used in 1979. General conservation capacities k p,ojections for growth trends, such as adding insulation, become realities, the amount of excess weatherizing existing buildings and making 1 power is likely to diminish. more efficient use of energy, played the key 8

l

Costs for pollution control equipmint tuve becoma a sizeabt) portion of tot 11pt nt innstm:nt.

^

.J.. L..

s.y,- +W. .gc %' 3T M..,_m-.;> w ' 7 % p

- ~ 2.1 i$$ JJi C .

, .__-D r

'# $- [k g ~

- .p, . .m m, g  % , ft((N)Q.(9 jj N

+ s+ -

,. w n u ,;w Q& ng g&&~ -

. M, ,, ,u A.At..M- A A- ,e % w6 ^ ;W M

$$u, g$M. wAk,N pm%ir-y3 p gh ghfj

~

. jA --

g!%

p. "-

h M .A Ws $5Myg$fg J

&y.

. ', ynm .

9 f?

. y p; a g Q . y -

, - Q,-

Q.+.b g b % w --

qQ

@ % g + 4 n $ $ ^ g* *n i

h a 2s  ;

y, z.;

- - L y%' y31p/2b MR&.*. WF ~

MrM%d" AY w-g<

/ 4pt: p wg;gy g 'c g

y- i K DN, QuTy p .  % 4 R. [gMeiR  ? M$$k $ 47

^

y 3S JH "

j@}

h m. A4 , M M.

he.m[. n N  ;, *'

Public Service Company initiated a number Even projections that show minimum of conservation programs designed to offer increases in electric demand reflect the customers information and assistance in importance of having Pawnee in operation impitmenting energy-saving measures, by late 1981. Without Pawnee, or the Through the Home Energy Audit program, availability of additional purchased power, Company representatives help customers the Company could not meet projected ch;ck the energy efficiency of their homes. peak load requirements in the summer of I Home Energy workshops help consumers 1982. The Company expects that up to cvaluate their homes for energy efficiency 20 percent of its projected electric l cnd then provide advice on how to requirements during '

1981 will be purchased l impi ment needed improvements. The l

Company also has special programs for Public Service Compar.y spent $218 million l senior citizens and for helping customers of its total 1980 construction budget on budget for rising energy costs. Pawnee and other electric facilities. These expenditures were to streamline Construction Delays maintenance programs, introduce advanced M nigement took several other steps to computer technology to improve system dzl with its tight supply situa. ion. The monitoring, control and dispatching, and to Company's determination to maintain construct transmission lines to increase its construction progress at Pawr ee will have ability to import power from other systems.

c significant impact on near t'srm supply. Without these new facilities, Public Service Although forced to cut back dollars and Company could have experienced difficulty mtnpower because of its financial in meeting its customers' demands in 1980.

situition, construction work by year end 1980 was about 85 percent complete. Management decided to keep the Southeast Pawnee is scheduled to be brought into the Project "on the shelf" for the time being.

syst;m in late 1981 and will add The postponement of construction is 470 megawatts to the Company's necessary until the Company's earnings totil net capability, improve further and its financial condition is equal to the size of the commitment. The plant would consist of two 500 megawatt electric generating units.

P00lfDRGNAL ,

Th2 m:Jorportion of construction sxpsnditur:s was Although total usage c's dan on 1980, coalis still spent on clictric gsnsrtting 1 cilitits. ths primary fust ussd in ci ctric generation.

i The Company will continue engineering _, .

,- , - , 3 ,s _

design work but will not commit any .w s:9 m ,

funds to construction work until it is E%: , -

ycWMl-p 7 y? N W confident it can successfully finance this U huge undertaking. ( W';( ' ::b '

4: m q' 'y : ,

y Pollution Control Costly Ss

• a

,I ,.,

Pollution control equipment-spending in ,

1980 totaled $42 million. To date, the _> n .l Company has invested $153 million in air

1. si pollution control devices and $34 million for

.> ; M 7 P;( ,'_-[ -

l water treatment equipment. Costs to meet p' y '

environmental regulations represent about L=' D5J n 12 percent of the Company's total

DEW U ~

investment in electric f acilities. .Q n91 was g

The most significant projects started in Q G y@v <

1980 were those to install a fabric filter particulate control device at several plant M 2.~f l

' locations. Fabric filters, as they are .g~ [pMH.g;.

commonly called, look like giant vacuum pgg%9:gp .

cleaner bags. They represent the new breed  %-

in technology to eliminate visible emissions ]QF y

from power plant stacks.The fiberglass - vf!JfM ~

l bags, housed in a metal building, catch the .

W.kM' om M ' ^ ,

solid particulates as they are emitted from '<

the plant's boilers. The dust is then N f MD%

removed from the bags and buried in Mf M .[y; wg.:lyl distant landfills. h...

Public Service Company tested the new technology at its Cameo Plant near Grand Coal Usage Decreases Junction and is in the process of installing Almost 5.4 million tons of coal were bun 3d fabric filters on units at Cameo, Arapahoe at the Company's fossil fueled generating in South Denver, and Cherokee in North , plants during 1980,16 percent less than in Denver, at a cost of $27 million. Although 1979.The reduction resulted from a shift to costly, the new system is gaining popularity purchased energy and the use of natural among western utilities that use a low gas as the primary fuel during the time the I sulphur coal as a more eff.elent method to Company was retrofitting plants with I deal with air pollution control. required pollution control equipment and while several large generating units were undergoing maintenance programs.

, _ q .g y

+ _ _ -.

_ -y It in an effort to minimize the impact 'f fuel rg- -

s.g cost increases on customer bills ano 5 assure itself of adequate supplies of coal,

. , Ad =- _; which is the primary fuel source, the i

l

.g' , J ' '

, i Company has long term fuel supply contracts at favorhble prices.

~'e Continued delays in constructing new I facilities in addition to Pawnee and the

- unpredictability of long-term availability of

-  % surplus power makes the Company's long-n term supply situation uncertain. Customers l nn fall to realize that they will have to bear a

, l; r part of the burden of increased electric

, generating costs sooner or later. They can pay now or pay later, but later the costs will Y' , be much hl cher.

.n.. -

10

, ' - -., ; .. '- . . .pte - . - '. . .. .n .' . . . .- , a. - % . m. - -

. . . - . 3 .. y. ,

sj l

l

--' 7 " '-

"' '"' ~

re s & r..

. g...- e, 6

~

l g t w" ,

g \ .A.

.Y * * *J .b

p. ',y-g

>~  ; *^

. .y , . n' e * . ,-

sv _.< _

w WE-.,**.-.u9s#

T.*h .me **^4O a-. +.#-w 4-

~

--Een a - * 'N ~

eq <a - ' * ~+',

-..,pw

,4

• sse vysa s ns; * * -

4

~

t

{ '

N a mwnmo

yupwwg ax y - us vc - ~

V..

y -

.y --+

u, w n

;.w m ;.n ' ..;%

s., -

g ~6 ma*

n

",.- . ??%

, a k y .e. =- -r,--

, u.a.m.,. y -

• Y. ' $,

~

" .l.'

Wf

, Q.  ;  : -= 2 lG hh .+ $$ O Q%.-&shddl a94hwe ' & Qef;Q,L QhQ,'! q N'jffG hM+$ YL(i &@# i . _

Q..

~ ~ '

7 a.

k

• y ..y

'~

[

. , , *4biti w~.

.,7 Q' + r aq***  %

.y ~ QETI y '

9= N\

Lr ,: m.

i faa; za@r ;a m,a%g,wkq Qqw_ n =: , C [Y % l.,:ji . :: ~. @,jp'K . f+:c,# 'Y >

e &.+- e D o- _e pf_ ,* tm._ gl qn :yy *

-~

m ,

x .

Wo . . ~, . oce

@.$"O; . . : . -

• o A -

' or Er e.

1,, .

'Y TN'l '4 n.u-.t "1DF,, ve p&,#ygM - v.wk m'iM TS e .

_  %& ~

,,g'n , .

a..- J ,M'&,%. - . Nw..,;,3;u .

,. y y - '

m. ,_ r - . ; \.5 p v p y

~J 1

.. , a - -

k, -

+*

• D(* g,

,, / s ' (L.

• 1 a .,

"^-

~ ..  %.'*;[ -

Q)[ 's

~

. M.? -

~

. % ',4 -y .

s ,

~ i;,g.v. ... -

y -, A . x{

- . > , >  ; & g, '. . ': ,

g;-% k /* ? . "* _ ,, l 1

'h,,, _ , . *

,. )

A s W , , -

~'

s

- e_. '}

o  ? <a r _' ,

e' . .. . . , ., , _/

,Q3

' w

, . . , i" , , , w -

p_de _ y-

. v .

n - ,

• 'g

~

, i, .,%_ A . g . , ,^ -

__,s Q I" [- b [

- -- . x g=Q v, . -

- m ,-

g

..w g -

c, ~. *_-f. , . , ,,, ,,, f.- ,7 -

2

'*6 N' .; "

(s ,, k/m $_ %,9 ~ 4 ,.

? y *_' A u , m **

_ 4 ,

~

.9 J, *g%

7 ,g..

s , -

. h,;

.c. rrr 4 --*'s-

,Qs. ,

N- , j ~4 *'** % '

A r-+._,,'%( ' . We

..3 ' ,,. 4 - ,,,,

2

'3 (i.

, N. ( r d.

>v

+

.; --y -,_

,, [ St '

Y #' . '% ,. . ,

( n. c. \ Nr.w y;~ - -

u: - $,.

r

~~

' ' . g

y ofl _

1

' V.  : a. v .

2 _e~ ,

, .,. , .. ~4, . nt . S , *_,. 5.- ,

g faseW4-s h., g u 'Y D

• *1 -

, p . ). _ % _. ,

• t p*  :{ g(..'*b ; .gn.--' af.A b ~ h gg i ; - - (

p] , g. -

L &F ^ f k,k_... +*

k.(l; ?..

y -

p '

qf yy: $ ~ . "~ -

qo . , - (A _ r,y y; g ,ss e ;;g f4 4 .j 1 q 79 , y ,:j 4 s

m . ,..: *

c. wf ~

p . u'

'T ;* '

l-.

, .B-h.,,-

, j, ' ' .a  :

3, ' m. -_'-L

~

,"-=m,".,,'..W'. s >q . .> J)

V J [. + % ' B f #

g

e. .~ ' ,f e~m. . . [, ' .

.p .

T w ,, ;,r  :;y>n%

n pv

m -

f ' / .'jQ ~ .-) l * - W l

.. .n -

_ _ + ,

, m m?> ' OP v 1 o.c .

ga , ,

.c Q'.)

' T

• M. nl -- .,4.- -G','i.y+G * < ' , $ % ;.L . m

--W, . - . - es - .: - - - _

3.i-t -

~ .'

t.M ~ , W, y  ;&x sa#'M, y~

l%p*!

v V;'n Cf. 4 p..j m.

t

_ . ;., , y

. y;.

~

.  %,f, e."y:,

r

-

ce ,-

,2~.

s;

,ry' w , . ..

o

..} 2

,q_,

w , , R ; w8 .G..aY'y 7 ;..

s 7..

f A

. .y i* ~ , , , , e. .s.3 ww- . . *< -c,, ,

a

}{ 1 & ** {} , -A.{ ( li' " n?f,.-l3 ",  ; ,

% h ug mu:m

~

4.

~

.yMQ Ep'Ml.[f j{.& M g- d ~ ;p

&q;[f& e ,

5 ge n NM.=

' l. S Q :ix-& $ W Q, i i. F e we~

i y

7

~^

}jn~?wg,,

e. '. . - r#, e' n-c iy jer {

~- M g ., 7 . .

. , . V .se

. vor

• ; f. -, * * *

• e 18, w

l' O : +

.g 3 s . Q N

• i " -h _' 13,'N ,J , k 4 +- l c ______ QN,(. j p $., 'M

~~ ' ^"

. . NN: . pi -M '

p gl o

Th2 m tur:I g:s supply outlook his brightin1d considerably because of deregulation.

Phased deregulation has swung the door in 1980, Public Service Company purchased N:tural Gas open to a new era of increased supplies of 90 percent of its natural gas used for resare ServiCG natural grs. Pas 9qe of the Natural Gas from Colorado Interstate Gas Co. (CIG). The balance is obtained from Western Slope Policy Act in 1978 lif ted the lid on what Gas Company, a subsidiary of Public were unrea'istically low prices for natural Service Company.

gas. Economic incent!ves to explore for and develop natural gas reserves and, to some Unlike other geographical regions of the degree, conservation by existing customers country where there is a strong trend to has dramatically reversed the dwindling convert from other fuels to natural gas, the natural gas supply situav that Company operates in a service territory characterized the 1970's where natural gas has been the primary Preliminary reports indicate that gas-well energy source for residential space heating and water heating for many years. In spite

• completions in 1980 reached the highest of a housing construction slowdown, the level in history. Long-range drilling plans indicate that the expanded interest in Company added nearly 22,400 customers to domestic oil and gas exploration is the distribution system in 1980. The total number of natural gas customers now expected to continue over a long period. stands at well over 680,000.

Production Costs Escalate Supply Outlook Bright The escalation in wellhead prices has Public Service Company is confident that it dramatically affected consumer gas bills. will be able to provide natural gas to Deregulation is setting in motion a process virtually all new residential and small that will allow natural gas rates to reach a parity in the marketplace with rates charged commercial customers in the foreseeable future. The Company has operated under a for other energy sources. Distribution companies, such as Public Service Gas Attachment Schedule since 1973 whereby new firm customers are limited to Company and their suppliers, pass on these a maximum hourly demand of 7,500 cubic higher costs t" Justomers. At year end, feet. New customers applying for service nearly 79 cents out of every dollar Public were placed en a waiting list until there Service customers paid for natural gas was a balance between supply and the service was attributed to gas purchase additional demand. At year end, there was costs. The remaining 21 cents reflects the sufficient supply to enable the Company to Company's distribution costs, franchise and connect customers as applications for other taxes, and related expenses.

service were received.

Some normal, weather-related curtailment 3;;;g  ;

N k;R't%ngf7kM of service to Interruptible industrial hM[h, W "

> ^

WpQg customers may be necessary from time to ggv..a '- time but the Company anticipates no 7%-4 problemsrequirement in meeting firm customer

= in the foreseeable future.

4. m.#

%QQ

+

e .bg i Total natural gas sendout during 1980 was 5

_ _: g* o .s 2 ' 203 million MCF, a 5 percent increase over A

J "

N@, the preuous year. The highest 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> sendout occurred on January 28,1980 when g

2

) the average temperature registered 4

• $ th. degrees. This peak was 9 percent higher than the previous highest single day record f

in 1979 of 1.143 MCF set on January 1 when gQ the temperature averaged -1 degree.

Q l The rapid upswing in natural gas production and the emergence of Colorado as an energy center put more focus on Public Servics Company's subsidiaries, Fuel Resources Development Co. (Fuelco)

Cont nued Gnsrgy davslopmsnt in the Wsst brightzns tha prospects for ths Compzny's gas subsidiariss.

Fuel Cost inden nea Coat

.y g.; ,

,.' -"&ht y gJ 5b " T p 7- D;.gIb^f' 1300 ar.a Gas f gg' I>

uma o.1 g 3,. MQdj uMJ yNi h 1150 m Gas Purchased for Resale f} [ *g' h 2 850 /

l $$k' %

h.'b'[k b-'

l k.

hh$$ l E ,f'* l Q ;p.

,L{gy  ;;egti;Q' '"

700 J w : ,,:, ; 7 a

'TL ; I .b % 3 139?-

s50 7 j., ,p; ,. 4 77 1 . . . .~. , .,

-[ t .

Fuel Costs - % of Revenues he, "22~

y 58 % gy J K: t

• h.

+0 '~

N% 10 % 31 % 33 % u -= **

70

_.._ ~ . . _

'71 "r2 73 '74 75 '76 77 78 79 %0

,e U$[g

' #f d.M aN a-- p[ " .

' Fuelco ok Furico was organized in 1970 as a wholly WWW ~ ]EP Khdg own:d subsidiary princirny to develop  % 5.sv nitural gas reserves for Public Service P .

.sh - d PR , .

Company. Fuelco has evolved to where it is .i now engaged in the development and ,d , _ , , MkPj50 production of natural gas and crude oil ~'% '

v w,O m R_

, res:rves in Colorado, Montana, Texas, Utah '

l cnd Wyoming. Net lease holdings on l November 30,1980 totaled 499,321 net Total gas sales volume increased more than l acr:s, of which 40745 net acres were 36 percent to 2.7 million MCF. The average

! und:veloped. unit price per MCF increased to $1.64 in i

1980 from $1.48 in 1979. Crude oil sales Fu:Ico gives right of first refusal on any volunie .ccreased 83.1 percent to 90,908 natural gas discoveries in Colorado to barrels. The average unit price per barrel, W: stern Slope Gas, Public Service before Windfall Profits Tax, increased to Company's gas transmission subsidiary. If $31.51 in 1980 from $17.10 in 1979.

W: stern Slope Gas does not exercise its option within a timely period, Fuelco sells in spite of increased revenues, Fuelco's net this gas, as well as all of its other gas and losses for 1980 were $892,326, compared crud) oil, to the best available markets. with a $5.9 million loss in 1979. Operating expenses decreased nearly 50 percent Fu Ico's sales in 1980 7 Western Slope because of non-recurring costs associated G s cccounted for 1c.d percent of its with dry hole charges, well and lease rev:nues. Fuelco's operating revenues in impairments, lease abandonments, and 1980 increased to $9.2 million from $5.7 geological and geopnysical expenses.

million in 1979. Natural gas sales totaled Interest expenses increased because of

$4.4 million, crude oil sales reached $2.9 higher prime rate interest levels.

milli:n and the balance came from other income.

P00RORGNA!.

13

Fu:Ico operati:ns to dmlop End produca natur:I g:s and crude oil will becorne increasingly signibc"nt.

> p Expenditures in 1981 are budgeted at $16.3

'" million.These monies are expected to be

[

provided mostly from other companies by bringing them in as partners.

l By year end, Fuelco had $34.3 million 1

g invested in natural gas and oil properties with proven developed net revenue interest i

/' S /

I \

14.,,

T reserves of 113.6 bef of gas and 775,000 c- barrels of oil. Proven undeveloped net

" revenue interest reserves of gas and oil

- were 79.8 bef ar.d 130,000 barrels, l

/ respectively.

• As Fuelco enters 1981 it has an interest in

_ di 266 wells: 175 wells that are produr:ing,30 1 under contract for imminent hookt. and 61 d shut in and waiting for future in.okup.

7 ~ -

d 4

Management is placing increased emphasis "k

V.E jw"*. on maximizing Fuelco sales to all available

'. # markets. While Fuelco expects to improve g its earnings in 1981 and operate profitably,

,AW its contribution to the consolidated earnings of Public Service Company are

1. gM] expected to be minimal.

y,p$ Western Slope Gas Western Slope Gas is a wholly owned

1. g' ?-

g'r

• subsidiary operaWg entirely within ,

Colorado. It is engaged in the purchase, transmission, storage and sale of natural The newly enacted Windfa!I Profits Tax on gas. Western Slope provides wholesale service to six distribution companies, three oil, which is an excise tax deducted before' municipally owned distribution systems and l profits are computed, amounted to 33 industrial customers. Approximately 71

$287,366. percent of its total 1980 sales were for resale, with 80 percent of the resales going Capital expenditures for drilling and lease to Public Service Company. ,

acquisition were $5.3 million h 1980, )

compared with $7.7 million in 1979. Fuelco Gas sales in 1980 were affected by warmer- l i

budgeted $15.5 million in 1980, but in line than normal weather, consumer with its objective to become self sufficient conservation, and reduced usage of natural by financing through cash flow and gas in Public Service Company's electric independent external funds, drilling generation. Sales for resale declined 14 activities were reduced to match the percent from 1979 figures. Direct sales ,

financing available. dropped nearly 16 percent.

Revenues increasec' 14 percent to $145 million in 1980. This increase stemmed in large part from a 15 percent increase in purchased-gas expense that thL CPUC allowed Western Slope to pass on to customers under its Purchased Gas Adjustment tariffs. Net income amounted j to $2.4 million, virtually the same as in 1979.

. ,4 P00RORBINAL

Roundup. W:st rn Slope's und;rground gis storag2 unit gears tha Company for peak wintxt months.

- .. zm ~- - , . -.-.--_n

~

, a- Q c* f,7a-.,.~.

'~

E 3 >x A

( 7 l BEN3

- S,& "

Ng5L - v ,

m: v y 'e-*' om

' 3 3.. f^ g N

?

sL Fym n. L. ~t uy

%' .g;N~.?qr m- -,

W l

a , -2Wg w-g m3, \ .

- si e A i

i s<

-, gg a 4

W: stern Slope's wel\ head reserves at year Prospects for higher sales are brightened eno totaled 293 billion cubic feet under by the oil shale development in contracts covering 364 wells connected to northwestern Colorado. Western Slope l Its systems. During the year, Western Slope currently serves, either on a direct or resale l ccquired production rights to 78 new wells. basis, all residential, commercial and l At y:ar end,38 of these were connected industrial natural gas customers in the tnd the other 40 awaiting connection. Piceance Basin area. Service in that area W: stern Slope purchased 64,000 million includes three oil shale projects the are MCY of natural gas in 1980. harbingers of the potential growth n the l energy-rich West.

l During 1980, Western Slope completed the ,

conversion of a depleted natural gas r:sirvoir into an underground gas-storage unit in northeastern Colorado. This unit, cLll d Roundup,is capable of providing 50 million cubic feet oer day during peak winar mc.iths. Cost of the project totaled

$19.7 million. Other 1980 major capital cxp nditures, amounting to $3.7 million,were for reinforcements to supply l growth in the Grand Junction market area

&nd to connect a record number of new w lls.

P00RORGNN. 15

On March 26, the Company filed an Regulation Management devoted extraordinary time and effort to the regulatory process in 1980. unprecedented emergency rate increase request for $67 million. After abbreviated Rightly so, because these are no ordinary hearings, the Commission authorized a 5.6 times for the utility industry and the regulatory changes needed to steer the percent increase in annual revenues, or Company through the 1980's and beyond $57.4 million. The major difference between the amount requested and the amount are immeasurable in importance.

authorized represents the revenue in the process of seeking constructive requirements related to the cost of debt securities sold in February 1980. The regulatory change, the Company, like most utilities, has to deal with serious public emergency increase forestalled a complete misconceptions about the draining effects halt in construction activity at Pawnee.

of inflation, the utility profit concept in a

The Company filed for a general rate regulated monopoly, the real value to increase on May 7 for $177.5 mimn. T!/

customers of a fiqancially healthy utility request included the $67 million emergency and the critical need for consumers to request. As a result, $57.4 million was share in building our energy future by 1educted from the general filing, leaving a paying the full cost of providing service. Jalance of about $120 million, which These misconceptions underlie an 1 translates into a 12 percent increase in confuse the search for sensible regulation. annual revenues. On December 12, the CPUC authorized a 2.2 percent increase, or Regulation must serve the public interest, but that interest must include the public's $28.3 million.

need and demand for energy. The Com;.iny can no longer operate with inadequate Although public attention f' cused on the revenues and attract the large amounts of rate increases, managemer t was pursuing, capital needed for new generating capacity. as part of the general filing, changes in Sufficient revenues, improved financial regulatory principles and policies needed in markets and responsive regulation are the 'hese turbulent economic times.

Company's passports to a vital place in Colorado's dynamic future. Test. Year Period In response to the CPUC's willingness to consider a more current test year in Public Utilities Commission determining rates, the Company based the Company operahns within the state are regulated by The Public Utilities general rate increase filing on costs

' incurred during the last six months of 1979 Commission of the State of Colorado and expected to occur during the first six (CPUC).The CPUC consists of three full- months of 1980. While this approach time members appointed on a staggered continues to use the historic test period basis to six year terms and approved by the Colorado Senate. Only two members may concept,it makes Company cost data more be from the same political party.The current by six months by 'he time rates become effective. This is significant in a chairperson is selected by the governor. time of fast-changing inflation rates.

Dr. Edythe S. Miller, a Democrat, whose Construction Work in Progress term expired in January 1981, has been I' The regulatory treatment of the Company's reappointed by Governor Richard D. Lamm, and confirmed by the Colorado Senate to a investment in facilities under construction is a widely debated issue and one of the new six year term. Dr. Miller is currently most important regulatory issues today. In chairwoman. The other CPUC members are the past, utilities were allow 'd to earn on Daniel Muse, Democrat, whose term expires in January 1985 and Duane Woodard, the plant af ter it went into ' eration. The cost of capital for such cons.ruction was Republican, whose term expires in recovered through depreciation over the life January 1983.

Focus on Rate increases in today's economic climate, the Company Public attention in 1980 centered on the simply cannot afford to make the large Company's requests for higher rates and the increasing frequency of these requests. Investments it needs without ass'Jrance that it will have the cash to pay interest and dividends on the required capital The CPUC previously allowed the Con pany to include 40 percent of the capital .:osts of 16

l Regul: tory treatm:nt of s:ectnc 1:cilitics under construction is wt:1 to the futur2 of utihttas.

I Nuclear Regulatory Commission or for m

_m scheduled maintenance and refueling. The

.M. !n $a. Company opposes this part of the decision

• YM in principle.

N y Management ha' 1ppealed the rate case to

-- g the Denver Distr c; Court. The Ls,moany dW . feels the rate portion of the decision fails M@,pgw ff[g.,.,hg-( to come to grips with its cash flow m, g&gg fgEi difficulty. The appeal will place emphasis on the construction work in progress,

-g, win

<M y. W " "

attrition allowance and Fort St. Vrain M*WMM " ' issues.

.Aw%

y m ---

4

.m Other Rate Cases ljk E~ In 1980, the Company and its utility gQ subsidiaries requested electric, natural gas agc 'w 79Up and steam heat rate increases on six

+ ,;

separate occasions. The Company received P OT c-a wholesale electric rate increase of 59.2 million, subject to refund. In additien to the P wnee in its rates. In the general filing, emergency and general rate increase th3 Company requested that it be allowed requests, the Company's subsidiaries, to be compensated fully for that Western Slope Gas Co. and Cheyenne inv:stment. The request was denied, but Light, Fuel and Power Co., were granted a tha 40 percent principle was retained. combined total of $2.7 million. A $2.1 million case was filed in December and is Retum On Equity pending for tne Home Light and Power Co.

An adequate rate of return on common equity is a fundamental requirement of Electric Cost Adjustment r;sponsible utility regulation. The CPUC The Company succeeded in receiving CPUC has not allowed the Company the approval, effective in September, to include r qu sted rates of retum. In the recent an Electric Cost Adjustment (ECA)in its filing, the Company requested an increase electric tariffs. The ECA consolidates the 1317 percent from 14.6 percent. The CPUC Fuel Cost Adjustment and Firm Purchased authorized 15.45 percent. Power Adjustment into a more precise cost tracking and recovery mechanism. ECA i Attrition Allowance enables the Company to recover costs for l Thg Company requested a one percent rate- transpottation associated with generating

( cf-r turn attrition allowance to help its fuels and non-firm electric power purchases j cffort to earn the rate of return granted by when such costs are at levels higher than th] CPUC. The allowance would partially those included in base rates.

compensate for rising costs between the tim] the rate request is filed and the time it The Company also was given permission actudly goes into effect. The request was during the year to charge customers for denied but the Company will continue to electric appliance service calls and for non-pursue this principle because of its emergency natural gas services for significance in combating inflation. furnaces, water heaters and gas appliances.

These services previously were gratuitous.

, Fort St. Vrain l In addition to the aforementioned Public Service Company's future rests, in I decisions, the CPUC also ordered the part, with the regulatory process. Improved Company to put in escrow earnings derived ways of conducting and regulating the from the Company's investment in Fort St. utility business are essential. The cost of Vrnn. These eamings, estimated at $9.7 energy is going up. The consumer must million annually, would be refunded to share part of the burden by paying the fu!I customers if the plant did not operate at an costs of service. The utility must be diligent average of 50 percent of capacity, based on and persistent in streamlining its operation.

200 megawatts, ovet a 12-month period flegulation must be responsive to the winds before the end of 1982. The tim Lsed in of economic change.

calculating the capacity factor would not include out of-service time required by the 17

Public Service Company turned a downward Limited Expenditures Financing eamings trer:d around in 1980 in the face of Until it is feasible tc forge ahead with new economic and regulatory adversities. But it electric generating plant construction, is unrealistic to expect that the Company is major capital expenditures will be limited to now able to embark on the huge capital the completion of Pawnee, the continued installation of pollution control equipment, expenditure venture that is needed to build the maintenance of existing equipment and new electric generating facilities. To the contrary, the 1980 construction the addition of transmission and expenditures were trimmed to $263 million distribution facilities to connect new from the $304 million budgeted at the end customers. Capital expenditures for Public of 1979. The Company turned to capital Service Company and its subsidiaries in markets on five separate occasions during 1981 are estimated to be $262 million, 1980 to obtain additional funds for current about the same as in 1980.

projects and meet borrowing commitments.

Bond Rating Downgraded Financing Grosses $211 Million The Company's debt securities rating was in total, the Company attracted $211 million lowered by two rating agencies in February from the 1980 sales of common and 1980 because of the lackluster financial preferred stock and debt securities. Two picture that prevailed at year end 1979.

issues of common stock, one for 2.75 million shares in February and another for 4 Moody's investors Service, Inc. lowered the million shares in September, netted $84 bond rating from double A to single A and commercial paper from Prime-1 to Prime-2.

million. An additional $11 million was raised from the Dividend Reinvestment Plan Moody's maintained its single A rating of and employee stock purchase plans. A sale Public Service Company's preferred stock.

of 250,000 shares of preferred stock in July Standard & Poor's Corp. reduced its rating of the Company's first mortgage bonds netted $25 million. from double A-minus to single A and The Company sold $50 million of seven- lowered the commercial paper rating from year, first mortgage bonds and $37 million A-1 to A-2. Standard & Poor's also cut its of two-year Adams County, Colorado, rating of the Company's preferred stock Pollution Control Revenue Notes.The from A-plus to A.

Company is paying a record 15 percent interest on the mortgage bonds and 9.5 in explaining their decisions, both rating percent on the notes. ,

agencies cited inadequate earnings, declining measures of interest expense protection, low electric generation reserves, Proceeds from these sales were used insufficient rate relief and a low percentage principaPf for Pawnee and the installation of internally generated funds. As a result of of pollution control equipment required to lower ratings, the Company is forced to pay bring facilities at other generating plants into compliance with governmental higher interest rates to securities holders, as exemplified by the 15 percent interest standards. Short term debt was reduced rate incurred in the February bond safe.

from $62.2 million at the beginning of 1980 to $9.1 million at year end.

For the L..npany to make a major increase The only other financing was by Fuelco, in its construction expenditure program,it will have to generate approximately half of which drew down $4 million on a term loan.

the total construction costs from internal sources, namely depreciation and retained eamings. The Company generated 44 percent of 1980 gross construction funds internally and expects to generate about 60 percent in 1981. Both percentages, however, are based on reduced capital expenditures programs.

18

I Con truction Expenditures and Internal Generation (5 milhons) Projected Construction Expenditures ($ melhons)

$330 A $550 300 f -500 EO N 450 f 20 180 _ __ M 150 # M __ _

~ ~^

~*"

to M __ . ~ u p " 200 K 60 B .# - -

~~ 150 g 530 L - - . . _

s100 E_. _ _ _ _ _

% internal Generat:on . . .

ud g out ast oe )

'70 '71 '72 '73 '74 '75 '76 '77 '78 '79 '80 m Gross Construction Excenditures e Gross Construction Expend:tures (excluding Southeast Project)

b. Gross Intemal Generation Book Value vs. Market Price Per Share Capitalization Ratios

$2d 60 %

A 22 i g 3a r- p

/ 40 ,

18

~

M E 16 / .

f 3

. J n A C # ,e f

'70 '71 *72 '73 '74 *75 '76 '77 '78 '79 '80 LLLLLLL

'72 h 76 '78 1 '80 tr Average Annual Market Price Per Share muu Long-term Debt Ems Average Annual Book Value Per Share M Preferred Stock M Common Equity Tha remaining half of total construction costs would then come from outside While there was a surge of optimism by the sources, the capital markets. A long. Company's improved performance in 1980, standing objective of the Company's the future must be kept in proper fintncial philosophy is to maintain a strong perspective. The Company's financial capital structure made up of debt not strength still does not measure up to the

, excteding 45 percent, common equity of at financial challenge in Colorado.

l:ast 40 percent and preferred stock of not Responsible regulation is sorely needed to l lift the Company into a strong financial 1 more than 15 percent.

position where it can borrow at reasonable Dividend Policy interest rates. But unless the country as a Management continues to recognize its whole can remove the shackles of an responsibility to provide its equity investors unbridled inflation and the government policies that keep feeding it, capital may i

a rats of return that will compensate .nem for the risk of their investment. As part of never be available in the amounts needed this responsibility, a sound, consistent to keep pace with the demand for energy dividend policy is essential. Meaningful that will characterize the late 20th century.

dividend growth and regularity of increases en justifiably expected by the common shtr holders for this willingness to invest funds for necessary plant and equipment.

The Company is committed to such a policy, but, of course, such direction can be followed only if financial Strength and st bility can be accomplished.

19

A turbulent economy and the forceful Natural Gas Sales and Customers C:rporate Natural gas sales are expected to increase Outlook patterns of change prevalent throughout Colorado blur any forecasts relating to at a slower rate than the increase in new Public Service Company. customers because of the sharp increases in gas prices charged by Company Company analysts continually chart trends suppliers. Use per customer is trending in all operating categories and in those downward, influenced by conservation economic indices that weigh heavily on efforts Gas sales growth, therefore, will )

performance. Forecasts presented below depend mostly on new customers.

are based on data compiled in late 1980 and must constantly be reevaluated and revised Electric Reserve Margins in response to changing economic The addition of Pawnee in late 1981 will increase substantially the Company's conditions. These forecasts are intended to provide a sense of direction and to show generating capacity and thus alleviate the how management currently views the years somewhat tenuous reserve margin levels just ahead. expected to exist throughout 1981. The Company will continue to purchase power in the coming years to augment insufficient inflation Company-owned generating capacity.

The prices Denver area consumers paid for goods and services as measured by the ideally, the Company should have sufficient generating capacity to have enough power Consumer Price Index (CPI) increased less to cover an outage equivalent to its single than the national average in 1980. The Metro Denver CPI increased 11.5 percent in largest generating unit, about 500 1980 compared with a 15.3 percent increase megawatts, or approximately 15 percent.

In 1979. The CPI increase for the nation in 1980 was 13.5 percent. The steady flow of Capital Expenditures and Financing people moving to Colorado is projected to The cost of building the facilities to provide continue during the next three years, ample service to its customers is immense.

keeping the CPI at or be!ow the national During the last three years, the Company rate. The core inflation rate for the Metro spent nearly $800 million, a significant Denver area is expected to average about portion of which was used to built Pawnee.

10.5 percent during that time.

The Company expects to maintain these Population spending levels during the next three years.

Colorado is one of the fastest. growing e Construction expenditures are currently states in terms of population. Population projected at about $900 million. The growth in Public Service Company's service Company has postponed building the two territory is projected at an annual rate of 500 megawatt coal fired units of the about 2.3 percent between 1980 and 1983, Southeast Project.

more than twice the expected national rate During the past three years, the Company of growth. had to finance some 60 percent of its capital needs. Moreover, the Company was Electric Sales and Customers required to finance at record Interest rates Electric sales will continue to be influenced by customer conservation and weather and sell common stock below book value.

i conditions in the service territory as well as This resulted in a weakened financial by customer growth and consumption condition.

l rates. Management projects that electric sales growth will be stimulated mostly t'y Because of improved cash flow and l i

earnings, the Company anticipates having the influx of new customers. to finance at least a third of its projected I

capital expenditures. In anticipation of spending $262 million in 1981, the Company is planning for two sales of new long term securities later this year. The offerings are likely to be the sale of common stock for at least $50 million and the sale of first mortgage bonds, also expected to be in the

$50 million range.

20 I

Aversgo inflation Rate - Consumer Price Inden Financial Objectives 18 0

• Management remains firm in its commitment to maintain strong financial 110 policies in the face of many economic and regulatory adversities. Among its principal 2.0 long-term objectives is maintenance of a )

- strong capital structure of at least 40 00 6.o%

/  ;

L percent common equity, no more than 45 percent total debt and t.c balance in rotecast preferred stock. The Company expects at b -

least half of its annual capital needs during

'75 '76 '77 '78 '79 '80 '81 '82 '83 '84 periods of major Construction to Come from E 0's"?"*" internally generated cash. The Company will continue its efforts to raise pre-tax Electric sales and Customers (% Change) Coverage of interest expenses to a o% g minimum of 3% times, seek to increase its return on average common equity to the 8

b\ return allowed by the CPUC and, more 7

E1 T appropriately, to the costs of equity in the e

1 p% marketplace.

5 f X 4 g y T Employees The challenges in the next few years make e

3

b. it apparent that Public Service Company 2%

L rorecast must intensify its efforts to attract and

'73 '76 '77 '78 '79 '80 '81 *82 '83 '84 keep highly qualified individuals and E "

f,"8,', **'$ develop a motivated work force that is prepared to deal with the changing N1tur:1 GH sales and Customers (% Change) demands on the Company. The 1980's will ss ( , see more employees in managerial and 4 & ,s executive positions reach retirement age 3 I f - than at any time in Company history. As a a "

result. Mcreased emphasis is being given a g g g 4 to hunen resources planning and (4 1 K 1 .E management development programs. Salary F 1_J RE and benefits policies are constantly being (3) 1s W reevaluated and ttpdated to keep the

(') W E Company competitive in the midst of the k 7s 7s 77 78 '79

[

'80 'ei go,,c 3,

'82 '83 '84 Rocky Mountain energy boom and its inherent demand for employees.

m C.3tomers

" * ' " The rampant course of inflation and the uncertainty of regulation make the future Not Ettectste Capablllty and Net Peak Demand difficult to predict. The Company will

• • • • continue to alterits strategies and change 3500 ,f direction as economic and government j' actions dictate. The light at the end of the 3%0 (jf y tunnel that the Company continues to pursue is a financial position that will put it 2 son gd$mj bW k } more in control of its own destiny.

& O;YE.. N b). '? ?&L U ~

1500 p Reserve Margin (%)

5% 11 % 2% 1%.4% 11 % 8% 6% 12 %

'75 '76 '77 '78 '79 '80 '81 '82 '83 '84 m Electric Net Effect19e Capabihty (megamatts) m Electnc Net Ptak Domand (megawatts) 21

l r

Year Ended December 31, Selected 1979 1978 1977 1976 1975 1970 1980 Fin:nClal Data (Thousands of Dettars)

Oper: ting Revenues: $ 640,749 $507,587 $421,732 $362,062 $322.102 $281,727 $135,117 Electric 410,537 303,300 246,059 197,549 174,612 83,807 502,919 G:s 4,746 5.178 2,503 3,842 1,370 Oth;r _ 11,976 8.3o6 729,778 613,2 9 522,154 460,181 220,294 1,156,1.'3 926,510 Total 836,766 636,515 525.146 434,508 378.309 174,504 Oper ting Expenses 1,033,316

( 89,744 93,263 88,153 87,646 81,872 '

45,790 122,328 l Oper; ting income 13,162 6,196 2,902 7,634 10,152 2,575 21,832 l Other income and Deductions 47,097 41,758 39,918 40,621 37,151 17,915 Interest Charges 59,133 57,701 51,137 54,659 54,873 30,450 85,027 55,809 Not locome Dir8dend Requirsments on 13,536 10,784 _10,596 3,669 15,020 13.536 13.536 I Pr;ferred Stock $26,781 Earnings Available for Common Stock

$ 70,007 5 42,273 $ 44,165 $ 37,601 5 43,875 5 44,277 Common stock shares outstanding (000): 25,884 23,290 23,213 15,458 39,990 32,326 29,250 Ystr-end 36,412 31,225 26,572 23,976 23,240 21,409 14,700 Avtrage Earnings per Average Share of $1.57 $1.89 $2.07 $1.82 Common Stock Outstanding $1.92 31.35 $1.66 Dividends per Share of Common Stock: $1.46 $1.38 $1.22w $1.10%

$1.60 $1.60 $1.53 l Declared f t.49% $1.46 $1.34 $1.20 $1.09

$1.60 $1.60 l PIid _

2,011 1,746 1,576 1,465 1,378 763

$2,216 Total Assets (millions) 555 516 460 411 400 231 Common Equity (millions) $656 Preferred Stock (millions): 140 140 140 140 105 80 Not subject to mandatory redemption $140

$89 64 64 64 64 64 -

l Subject to mandatory redemption 711 647 602 640 356

$840 767 Long. term Debt (millions) 1,456 1,341 1,265 1,211 689

$1,751 1,591 T tal Capitalization (millions) l Capitalization Ratios - End of Year: 3.9 1.5 1.3 0.5 0.0 3.1 Short term Borrowings 0.5%

49.0 49.2 50.9 53.0 51.8 48.9 % 48.3 Long-term Debt (inci debt due within 1 yr.) 12.9 14.1 15.2 16.1 14.0 11.6 13.1 %

PrIferred Stock 37.5 % 34.9 35.4 34.3 32.5 33.0 33.5 Common Equity l Rates of Return Eamed: 6.4 6.6 6.9 6.8 6.6 7.0 % 5.6 l Total Capitalization (Opar. Income) 9.1 8.6 10.8 12.1 12.4 11.6 % 7.9 Avg. Common Equity (Net to Common) 2.74 2.54 2.87 2.97 3.51 2.86 2.50 Pro. Tax Coverage of Interest Expenses .

6088 5931 5666 5592 4856 8,238 6284 Number of Employees (Average)

Payout Ratio - Common Stock 118.5 90.1 93.0 70.9 58.0 59.9 83.3 %

Dividends Poid Book Value Per Share of Common 17.63 17.77 17.63 17.21 '4.96

$18.40 17.18 Stock - End of Year 18% 19 16 23 %

$14% 13% 16 %

Market Price Per Share-Year.End Close Ratio of Indicated Annual Common Dividend Rate to Market Price Per 7.7 7.7 8. 4.8 11.2 % 12.0 9.6 Share - End of Year 22

Electric Serdce Statistics 1980 1979 1978 1977 1976 1975 1970 Total Kilowatt Hour Sales (millions) 15,194 14,659 13,754 12,877 11,890 11,316 7.260

% Change 3.6 % 6.6 6.8 8.3 5.1 6.7 8.4 Tct_I Electric Customers (thousands) 820.5 794.5 764.8 733.0 676.1 657.4 500.1

% Change 3.3 % 3.9 4.3 8.4 2.8 2.6 4.4 Average Annual Residential Consumption - KWH 5,927 5,913 5,724 5,520 5,480 5,387 4,826 Average Residential Revenue Per KWH (c) 5.12 4.19 3.75 3.60 3.50 3.35 2.58

% Change 22.2 11.7 4.2 2.9 4.5 14.7 (2.6 Average Annual Revenue Per Residential Customer $304 248 215 199 192 181 124 '

% Change 22.7 % 15.4 8.0 3.7 6.0 18.6 1.6 Per:ent of Electric Generation by CI:ss of Fuel:

Coal 76.1 % 79.2 85.0 83.8 75.5 67.1 63.8 Oil 0.8 % 1.8 2.9 2.7 2.9 4.6 1.2 Natural Gas 17.8 % 17.6 12.1 13.5 21.6 28.3 35.0 Nuclear 5.3 % 1.4 - - - - -

Net Effective Capability at Time of Peak - Kilowatts 3,072 2.743 2,594 2,492 2,484 2.203 1.883 N:t Firm System Peak Load-Kilowatts 2,772 2,642 2,559 2,437 2,237 2,108 1,377

% Change 4.9 % 3.2 5.0 9.0 6.1 9.6 7.3 Reserve Margin at Time of Peak (%) 10.8 % 3.8 1.4 2.3 11.1 4.5 36.7 Annual System Load Factor (%) 67.4 % 68.0 66.4 65.2 65.9 66.1 64.7 Fuel Used for Generation (millions) S'184.1 176.4 117.5 105.0 86.7 75.4 20.6 Average Cost Per Unit of Fuel (Dollars):

Coal - Ton $18.81 16.60 13.90 12.31 10.24 9.31 5.56 Nitural Gas - MCF S 2.68 2.00 1.30 1.03 0.79 0.60 0.20 Oil - Barrel $26.37 17.19 13.03 15.20 14.59 14.37 2.55 Natural Gas Service Statistics Total Gas Sales (MMCF) 203.3 213J 206.7 198.3 209.7 215.4 184.8

% Change (4.7)% 3.2 4.3 (5.4) (2.7) 4.9 4.5 Total Gas Customers (thousands) 680.6 658.2 633.6 609.5 589.6 575.0 459.1

% Change 3.4 % 3.9 4.0 3.4 2.5 1.8 3.7 Average Annual Residential Consumption - MCF 1 A0.1 157.3 151.2 146.3 160.3 172.3 185.9 Average Residential Revenue Per MCF $2.70 2.08 1.64 1.43 1.11 0.97 0.60

% Change 29.8 % 26.6 14.8 29.1 14.8 17.2 4.7 Average Annual Revenue Per Residential Customer $378 327 249 209 178 166 111

% Change 15.4 % 31.7 18.7 17.8 6.9 23.1 4.9 Daily Availability -(MMCF) 1,425 1,371 1,304 1,275 1,282 1,245 952 Maximum Peak Day Sendout (MMCF) 1,246 1,143 1,160 1,129 1,161 1,067 864

% Change 9.0 % (1.5) 2.7 (2.8) 8.8 (0.1) 0.5 ,

23

~

- ,~  ; ..

Service e--- g y m y ; g g -

Tcrritory Map r uA s : rA. 2- A. Ade . .% A zu h, s. AAf,:.,A

>- A ., /, ,

u .m AAd-/i/

A s J w 2 s,.,sa n t s n Wyoming A A A 2*.ic A A Jhb sb. w ds M. d 24 d AmAAAAA A S&A~.A A AL Nebraska a em J:a .cs 2; L A F 4:v A A, A

- ,s u w .O.

A u c. A A f 9'""'

r ,.

.q mg,., m du%e & A ,e y V } j ,ay, ;g g;,g z.mk sc.. .m. n **

u :n v L&&s w -f b eeteC . :

,A A.A,q/42.FzV, x2 e . - g%y. w e v v vvvf VV g A P' V VVV  ?;% . .hN ,.

'/ < VV VV '1 i

7 VVy niragr y r

- , : VVy '

V ltcotorado 4- **E V

%gg Utah ,

..f. .p

~

..s-.:_ q' ", . .f-ggv -N Ktnsas s w A ~ sis.Ao A AA4J J ,,-,

r;A

! A A ja / c 4'^

i .A di A R 2, L L A a 3

~

A /~ A sL sa

~ A. A a. t. .+

~ s.l}  : ~~* ,

• AAAA4, c:A:laMSW

, L. .L . L . Aa Jt .

Y_Y_M -

/~.. 21~j.;. 4. /.+ Oklahoma f.g ,.s 4 su 4 , sem A 4;. A A A A., /h & /-

A fx si_ A A A t. A A r

~

A & sh A AL '

4. A b. A Arizona

^ s[,,. N .

A.. New Mexico Texas

. -J

f. kk A.. A s A. a

• .Ls & A ab H JA A AA A A A f l

J . 2 4L. ai A i

/a 6./ - i 4 A A 3

~

sh *'"1.a. 4 AAA A _A A A a. . _ _ _ . _ a%_ .__ . . _

L m. - -

_/_

CAPABILITIES (kilowatts) G Pawnee - coal. fired unit under Net construction for service in 1981 - 500,000 Effective kilowatts Na of Year.End At Tirne of Plant Units Gross 1980 Peak Name NOTE: Net effective capability recognizes seasonal capability 706,000 reductions due to weather, stream flow. fuel avaitabitity, and 4 775,000 station housepower requirements for air and water quarity

@ Cherokee 660,000

@ Comanche 2 725,000 control equipment.

2 324,000 90,000

@ Cabin Creek 5 301,100 247,000

@Valmont 236,000

@ Arapahoe 4 256,500

• One unit unoergoing extensive repair 2 115,000 107,000

@ Zuni 75,200

@ Cameo 2 77,000 Public Service Company's service terntory.

210,000 200,000 4 Fort St. Vnnin 1 Additional capability from 4 steam,10 g Approximately 70 percent of the Company,s electric hydro,6 combustion turbine and 7 diesel and natural gas customers are in the Denver area.

units owned or leased by PSCo 286,000 246.800 3,069,600 2,568.000 TOTAt. 1 24 P00R 01B M -

PSCO Sh^rch2l dor Survoy

Dear Reader. 10) Please rank by number (1,

2.3. etc.) those sections We want to make our communications with you as of the Annual Report wnich were most important to effective as poss:ble. You can provide valuab:e help by you.

taking a few minutes to answer this > .af Questionnaire. T eP 'n Review _ RegJaron No postage stamp is required to return it to us. You do Management Commer"a*y Financeg E:ectoc Operat:ons _ Financia' inforr".a!>cn not need to sign your name. Thank you. _ Natura' Gas Operators _ Sharemotder infermaten

11) How wou!d you describe PSCo's shareholder communications program?

O very good C Adecsate

[dk-- O Good C Inadesate Ricnard F. Wa!ker 12) How much of PSCo's Quarterly Shareholders President Report do you usuany read?

O AM C very httre O Most O None Snamholder Profde OSwe

13) Do you feel the informat.on included in the Annua:

1) Are you O mafe O temate Report and PSCo's cuarter!v <eports is keeping you

2) is your account adequately informed about Company activit;es?

O Indiv&al C Broker C Yes O Mostty O No O Not entrety C Joint C Bank or Nominee O Custod,ai O Other MISCellanOUS

3) What is your primary reason for holding PSCo stock? 14) Would you attend a regional shareholder meeting O Current income O Short term ga.n in your area?

O Total retum C Other C Yes U No 9 *"

14) What is your Zip Code?

4) Which of the fo!!owing was most influential in your decision to purchase PSCo stock?

O Personal research C Financial pubhcanon O Broker advice O Amnce of a fr'end or relatrve SUDDiemental & DUDlicate Mailings O Brokerage firm research "! Other o +

5) How long have you owned PSCo stock? To supplement information contained in tnis Annua!

O 1 to 2 years 011 to 20 years Report, shareholders can also receive a Ststec J G 3 to 5 years C Over 20 years Review 1970-1980 ancor a copy of Annual Report C 6 to 10 years Form 10-K filed with the U S. Securities and Exchange i Commission. For these and add.tional materia!s pfease

{} ha s, your age? g check the appropriate box, fill in name and address,  ;

5 b 26-44 0 65 or over and mail this postage-paid, self-addressed card '

O Statistical Review 19701980 i

] rg1

7) About how many shares of PSCo stock do you K p,

Do not want to receive more than one copy of I C 50bW "" ' $' '" ""

C 101-500 0 More than 1,000 num r -

Snareholder Roports B) About how much of PSCo's 1980 Annual Report NAME flj l

[g{ " # O % to w SHAREHOLDER ACCOUNT NUMBER O % or more O tess than % (See Annual Report Mailing Label) 7 0 % to % O none

9) How would you describe the readability of PSCo's STREET AND NUMBER Annual Report? b O Very readable O Somewhat d.fficult O Somewhat readable O Very c:fficult CITY STATE ZIP ,

. . - . - - - . . - . . .. - -r

(Before mailin0, told here and secure bottom edge with a staple or tape)

NO POSTAGE NECESSARY IF MAILED IN THE UNTTED STATES e

BUSINESS REPLY MAIL First Class Permit No. 265, Denver, Colo.

POSTAGE WILL BE PAID BY ADDRESSEE m

PUBLIC SERVICE COMPANY muunummum -

OF COLORADO ..

SHAREHOLDER SERVICES, ROOM 1048 t

DENVER, COLORADO 80201 M k

. _ _ _ _ _ _ - _ _ . - . _ . _ -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ ~

A

, j .' I, . me y

~

I- e',

,..,e+

s-a l

m;

, e ""

P. , o , m, g.7 .,y 3

, f t ,t.h )

. . ii e

• g ab a \ s s ,,s a,144 3 .y

. g I . -

y..

g

, ',.,. ' ~ 1. . i-fy " 1

+

,i '. *i t, CT.

aa"1f

,, r -

4 *f ,e es e 4; a

a 74 - - w

• 1-

.,%.; A,.3,: . a s..- ~s % 'l. .-

"%de ', f . 'p # ~~~*; .

~~t mia .  %,g *i T T C 'M'H"'t'*4

. 3 .l1

'D.7. . -

yrg

-  %;{.p q.~ ,L

'.ge, a- .];

• A r

[

^9,

• ,,. ~~,p - ,(v , ei 9: - e.l% .,s, .

a'.I=de.

• ibC2 ^

g*p!;Im'" ~,

+;,. w _

ye- .

. fs -

~_ j

v. .,. o..v.it.ev  ;. m.rw w ..er . '

~~ *-

• t X'j i . ll k lg;r ei.

%.;p .~)~w .y

', e a  : , , -.y '

Q[+ ' "

.s w n..s..w.,.

o e c..p.., w .~;,);.3.-

'Y. ,.p%.

,o g.3  %,-

i" - - 1

~g,,w~ m. i-tr ,p ap e . *,ei g l . a 1:** g)'

s -

r e e , U;1 's s AR e,i.1'

-v, ,., g ,

, fN. ,Q' G p= g: *w -

,,,'*a #$

~- . '* .

3 _y ' . Qg' '

e

,% s. w. . p -

J;+>h..u.l,

~5 *, >Jr. -:W ,, En

'- . .'~ ..~f

_r

. .~

s

-.J.J. >

f t ,.

-y ,.

(9

.s

, ., p EY.. , Y

. s.

l s.y s .,

M

e,,/, f -

..f .. -t , - ,2 j ( s. ,

qip

1. 7 ,1,

't

f. 1)J,

,P .'#

+- r= M . .,

7, ,4 ;- f.,#.,s.s~".,,

- /

• g . . A yt,1 r'  !!' "? I . J(;

/ / ,. U r,

e d is h. .n . s ,

~-~~.

a ' )

j, l l4 L s; ~

nf<; ;k * -

t ^: 'y ;

2-(,,.}:f <f M  ? J..r3,:

.y. y. a-

[ f-l^ A g i WQ, .x N,J'."' f,, , ~

[ \ /'-I,d .l.T

~

'~ "'

T

• K, 2.A W d'M F'.a:O %M%~==~_ {i

[,. _ . . n l

> > . d&.%?,

e r~~$:l}Q g;'( _

f. 1

\ m, g )

c--. , . }

. , ,. u.. _.

l '

p-

,f  % Q ,a, .-d* R., (b, ~ .

,,f.

y t 4 3,.

%n 4 u.,.

g t ~. L

'a?

f' 4, 1.-- :s j.

[,f

(, ._ ; M_ o.mman, rr:rnge:n.f- a_

o;g% w ,7'

.,***5 ,

f , ,, p

~

e.. -.

b ,t -r pu ur m . F ~",:'a ;gv. ,

.~ i ) .;;.s. nm...:y; .. . , - -

'9. , 4

--.4<, a . . - F, . i L

,W2 g, 3 ,

u

r

e gn V ~, , , cr-an% f*C ]g c %gy ( .----r..# e- i=,e. .,)

'M p:v:'. ~~~

j g. ; e GM. t '

,,m .

q N--a.: 5s

, ,1 y l-f b ,e 5, ,. ,hi ,b, y ,]J %.~h #g .-

g ,t , , ,

%s - . s

~ _' S. . '""'"'"",*

. E. 75h I p i

~

. &' . . ,s ,f[ . -

l -l i ,. .

1 r-4 ~"

-m N T- A s y_ Jm::tatad.4.. m .- _ _eh~;.ar. g q &- 3. 5- yL4'/t-. g

~+3 1 .

l

- , G '%c &_- r.5_ y'A(""",J__=_.hp,A m ~ W,, c.,

_ , , _ m 1_y ,_

Q [ - i' e--wr--

i

+. - i% /+- .

%n.

m

. . K. ,, f. n- .7.. .; v~.

n,- , a , < -

%u4 ,,._ g es. . g

. n.. ~.r. w,= .n m.,. ,n. . J ;w*. .c,, n

,. s_

,x.,x,.u,, .

y-

.b%.. .> A.~-c,$*%y$s %O&$a%

es y . w .*L l w~ =w -+ . ' ., . . .

., an~ =s a,. i , \,l, .N. C: E.A~'*? a. -f WJ,, v

?.! L n'.5 -.&~$d,m f' ' i kW V;e.n.Q,,,,%,

w.;. e.<

%. 4, r, . .

L-,

e r.m.c,.c

-c L':ll'.u,~m%y -.

f.- .- a j #,m; .

.Iv - .. g Nc,.m

\

A *=="'

wn .

8 y ;=,.,r , < ~. m_ .

y. y-;n,,_gc. --,:x<_ a, ,,. .- .

y if *. h %0. - 500

. h ** k- _'- :* * $. A ~

1

);a.>. p- . w~. . s..a2, ye7,- >esM

+e A .. r., .

--a 1 l <;; . -

v m.j

, 1 o n mw - . 1 O '.4 R lpE p_ .- -- m;

,.y , -

~ a,

.. s - L.. ~C - .:. c...j.a Om% u a g e!* -r .u .

~.

v -[~fLr,.MN.7 e, a. .---k's wm:, -

,F._%.c W '6,~j . .'

a - s v m . ,. :. u..w

~ -. .

s.,._.~._

h' m . = w' , n a s s w a

• m e f

P i

• [

l l

The following factors, which may not be The increase in net income in 1980 as Management's indicative of future operations or earnings, compared to prior years primarily resulted Discussion and from base rate increases granted in have had a significant effect upon tne November 1979 and May 1980, and to some An: lysis of results of operations during 1980,1979,and Financial extent, a revision in the Electric Cost 1978. Adjustment clause which allows the Cc idition and Company to recover more efficienth fuel R .2uits of Results of operations costs and purchased power costs. The Operations Operating revenues continued to increase increases in long term debt, preferred and significantly each year primarily as a result common stock and the corresponding of increases in base rates, customers and increase in the number of average shares of the recovery of increased cost of fuel used coramon stock outstanding is the result of in generation and gas purchased for resale the need for continued financing to support through the adjustment clauses of both the the Company's construction program. The electric and gas tariffs. changes in earnings per average share of common stock outstanding are a result of The following table sets forth the amounts the changes in net income and increases in by which electric and gas revenues during the number of shares outstanding.

the last three years exceeded the revenues for the preceding year, together with the Liquidity and Capital Resources estimated increases attributable to the The Company's construction program for major factors. 1961,1982, and 1983, is estimated to be 1980 1979 197a cuimons of oonmi

$262,000,000, $273,000,000, and

$360,000,000 respectively. The Company's Electric revenues Base rate increases s 52.4 5 19.6 $29.3 objectives for the financing of these i "' ' expenditures include: internal generation of kaYes votub and o her21.0 27.2 21.3 at least one half of the funds required; changes maintenance of a sound CapitallZetion

$133.2 3 85.9 559.7 Net increase structure consisting of not less than 4v s 9.7 percent common stock, not more than 45 Base 1 ate $ncreases s to.s s 10.1 84.7 42.1 percent long term debt and the balance in Gas cost adjustment 99.7 preferred stock; and, the maintenance of Sales volume and other changes (18.1) 12.4 5.4 high Credit ratings for its securities.

S 92.4 5107.2 557.2 Net increase

' If these objectives cannot be attained The increases (decreases) in operating without significant equity share dilution expenses were as follows: from the sale of comrcon stock below book 1980 1979 1978 value, the estimated construction (wimons of oonm) expenditures previously set forth may be Fuel used in generation S 7.7 $ 58.9 $ 12.5 reduced. Under such circumstances, construction will be limited to I

hurcka ed$ow Other operating expenses 5.3 30.2 27.2 Commitments previously made, such as the 9.5 8.8 1.0 completion of the Pawnee Generating Maintenance 3.4 Station and minimum expenditures Depreciation 5.s 6.5 Taxes ( ther than income allocated to the So.:theast Generating 2.4 16 (8.9) Stathn project, to the installation of 25.4 1.2 9.5 income taxes pollution control equipment required to Net increase S196.6 $200.2 5111.3 bring the Company's facilities into compliance with various governmental The increase in operating expenses is standards, regulations or variances, and to primarily the result of significant and the maintenance of existing facilities.

continuing increases in the cost of fuel used in generation, the quantity of power The Company's indenture Permits the purchased, and the cost of gas purchased issuance of additional first mortgage bonds for resale. Other factors includ? annual to the extent of 60 percent of the value of wage increases, normal system expansion, net additions to the Company's utility a reduction in contractor reimbursements property, provided net earnings before for the Fort St. Vrain Nuclear Generating depreciation, taxes on income and interest Station in 1978, and acceptance of the plant expense for a recent twelve month period for commercial operation, effective January are at least 2.5 times the annual interest 1,1979. requirements on all bonds to be outstanding. The amount of net additions at 26

1  :

b  ;

l i .

1 Dec:mber 31,1980, would permit (and the The accompanying financial statements of Report of nit Carnings test would not prohibit) the Public Service Company of Colorado and Management l

Issurnce of approximately $266,000,000 of subsidiaries have been prepared by ,

J additional bonds at an assumed annual Company personnel in conformity with y int:rsst rate of 15.0 percent. generally accepted accounting principles l

consistent with the Uniform System of i- Tha Company's Restated Articles of Accounts of the Federal Energy Regulatory

{ incorporation prohibit the issuance of Commission. The integrity and objectivity

. additional preferred stock without preferred of the data in these financial statements shirgholder approval, unless the gross are the responsibility of management.

inccme available for the payment of Financial information contained elsewhere 4

. int: rest charges for a recent twelve month in this Annual Report is consistent with

] period is at least 1.5 times the total of (1) that in the financial statements. r

! th) Ennual interest requirements on all j ind:btedness to be outstanding for more The Company maintains and enforces a l

thin one year and (2) the annual dividend system of internal accounting controls,

! requirements on all preferred stock to be which is designed to provide reasonable cutstanding. At December 11,1980, gross assurance, on a cost effective basis, as to i inccme available under this requirement the integrity, objectivity and reliability of

would permit the Company to issue the financial records. This system includes  !

a program of internal audits to assure approximately $356,000,000 of additional

, prefstred stock at an assumed annual management that proper procedures and -

I dividInd rate of 13.0 percent (assuming no methods of operation are used to  ;

! additional long term debt is issued). implement the plans, policies and l directives of management.  ;

j, Arrangements for bank lines of credit I i

tstiled $124,447,000 and arrangements for The accounting and internal control

! banktra' acceptance facilities amounted to procedures of the Company are reviewed by

$15,000,000 at December 31,1980. The the Audit Committee of the Board of t cntira amount of these arrangements was Directors. The Committee, which is  !

l tvrilable to the Company at December 31, composed Of directors who are not  ;

employees of the Company, meets regularly

[ 1980.

with the Comptny's management, the Impact of inflation and Changing Prices internal audit staff and the independent l Th3 financial statements are prepared in accountants. ,

! accordance with generally accepted acc:unting principles and are based on the The accompanying financial statements

' rIsults of business transactions as have been examined by Arthur Young &

rec 3rded in actual amounts of dollars at the Company, independent accountants, whose tim 3 of each transaction. However, during report is on page 46.

periods of rapidly changing prices, these  :

financial data based on actual historical

• c:sts tend to become distorted and fail to n '

reflect real economic costs or value. For - ,

7.7t.X 6

cximple, in capital intensive industries, such as the utility industry, the cost of D. D. Hock miintaining productive capacity has been Vice President and particularly affected by significant long- Chief Accounting Officer -

t:rm inflation. Very simply, depreciation cxpense on utility property, plant and equipment which is charged against current -

i eamings for assets acquired in the past -

does not reflect the inflated cost of R. F. Walker acquiring similar assets at current prices. President and e As a result, higher profits may be reported Chief Executive Officer on a continuing basis with no accompanying gain in real purchasing

i. pow:r or economic value (See Note 12 of l

N:tes to Consolidated Financial 1 Srtements)- i 27

_7-.-_. . _..

nn; _ 77 _ _ _ _

Consolidated Assets B:1 nce 1980 1979 Sheet (Thousands of Dollars)

December 31,198o and 1979 Property, Plant and Equipment, at cost: $1,512,304 $1,416,386 Public Service Company Electric 441,747 409,539 Cf Colorado and Gas 9,696 9,688 Subsidi ries Steam and other 90,652 85,486 Common to all departments 451,788 339,794 Construction in progress 2,506,187 2,260,893 593,879 537,284 Less accumulated provision for depreciation 1,912,308 1,723,609 Nuclear fuel,less accumulated provision for amortizatinr, 8,266 8,874 (1980-$1,980; 1979-$516) (Notes 1 and 11) 1,920,574 1,732,483 377 270 investments, at cost Current Assets: 8,909 2,117 Cash 3,951 12,923 Temporary cash investments Accounts receivable, less provision for uncollectible 122,840 124,156 accounts (1980-$2,131; 1979-31,656) 317 2,556 Notes reesivable 60,679 40,210 Fuel inventory, at average cost 39,833 45,499 Materials and supplies, at average cost 30,693 26,843 Cost of gas delivered but not billed to customers 8,528 1,944 Gas in underground storage, at cost (LIFO) 3,852 5,161 Prepaid expenses 279,602 261,409 Total Current Assets Deferred Charges: 7,415 6,895 Debt expense (being amortjzed) ,

8,459 10,207 Other 15,874 17,102

$2,216,370 $2,011,264 See accompanying notes.

28

C:pital and Liabilities 1980 1979 (Thousands of Dollars)

Common Equity: .

Common stock (Note 2) $ 514,566 $ 419,108 R;tained earnings 141,248 136,314 Total 655,814 555,422 Pref:rred Stock (Note 2):

Not subject to mandatory redemption 140,008 140,008 Subject to mandatory redemption at par 89,400 64,400 Long term Debt (Note 3) 839,749 766,656 Total Capitalization 1,724,97! 1,526,486 Current Liabilities:

Notes payable (Note 4) 9,110 62,186 Lcng term debt dua within one year 17,226 2,250 Accounts payable 162,309 146,159 Dividends payable 20,164 16,319 Customers' deposits 12,837 24,169 Accrued taxes 39,426 41,347 Accrued interest 17,798 13,776 Customers' refund - 10,817 Other 23,629 16,973 Total Current Liabilities 302,499 333,996 Deferred Credits:

Customers' advances for construction 24,958 25,060 investment credit (being amortized over the productive lives of the related property) 105,763 80,991 Accumulateo deferred income taxes (Notes 1 and 8) 42,454 30,818 Other 15,725 13,913 188,900 150,782 Commitments and Contingencies (Note 6)

$2,216,370 $2,011,264 l

l l

l l

l

. 29

1980 1979 1978 Consolidated (Thousands of Collars)

Stat: ment of Operating Revenues: $ 640,749 $ 507,587 $ 421,732 ins!me Electric 410,537 303,300 502,919 Years ended Gas 8,386 4,746 Dec:mber 31,1980,1979 11,976 and 1978 Other 926,510 729,778 1,155,644 Public Service Company cf Colorado and Subsidiaries Operating Expenses: 184,073 176,413 117,491 Fuel used in generation 388,852 310,129 224,840 Gas purchased for resale 91,414 29,425 22,722 Purchased power 168,114 162,858 132,647 Other operating expenses 46,646 37,092 28,249 Maintenance 61,594 55,990 49,5(1 Depreciation (Note 1) 40,433 38,033 35,424 Taxes (other than income taxes) (Note 9) 52,190 26,826 25,601 income taxes (Note 8) 836,766 636,515 1,033,316 122,328 89,744 93,263 Operating income Other income and Deductions:

Allowance for equity funds used during 14,947 10,893 10,506 construction (Note 1) 6,885 2,269 (4,310)

Miscellaneous income and deductions-net 144,160 102,906 99,459 Interest Charges: 65,108 50,717 44,811 Interest on long term debt Amortization of debt discount and expense 528 239 224 less premium (Note 1) 7,757 4,123 2,879 Other interest Allowance for borrowed funds used during (14,260) (7,982) (6,156) construction (Note 1) ' 59,133 47,097 41,758 85,027 55,809 57 '01 et income 15,020 13,536 1: 536 Dividend Requirements on Preferred Stock 8 70,007 $ 42,273 $ 44,165 Earnings Available for Common Stock Shares of Common Stock Outstanding (thousands): 39,990 32,326 29,250 Year end 31,225 26,572 36,4J Average Earnings Per Average Share of Common Stock $1.92 $1.35 $1.66 Outstanding _

Dividends Per Share of Common Stock: $1.60 $1.60 $1.499 Paid $1,60 $1.60 $1.53 Declared See accompanying notes.

I t

30

1980 1979 1978 Consolidated (Thousands of Dollars) Statement of Ret:Ined Earnings at Beginning cf Year $136,314 $145,853 $144,828 Retained Earnings N:t income 85,027 55,809 57,701 years ended 221,341 201,662 202,529 December 31,1980.1979 and 1978.

Public service Company Dividends: of colorado and On cumulative preferred stock: subsidiaries

$100 par value:

4.20% series 420 420 420 4%% series 744 744 744 4%% series 293 293 293 4.64% series 742 742 742 4.90% series 735 735 735 4.90% 2nd series 735 735 735 7.15% series 1,787 1,787 1,787 7.50% series 2,250 2,250 2,250 8.40% series 2,890 2,890 2,890 12.50% series 2,005 - -

$25 par value:

8.-D% series 2,940 2,940 2,940 15,541 13,536 13,536 On common stock:

$1.60 per share in 1980 and 1979,

$1.53 per share in 1978 60,21] 50,421 41,172 75,758 63,957 54,708 Expense of issultig Stock 4,335 1,391 1,968 80,093 65,348 56,676 R:t:Ined Earnings at End of Year $141,248 $136,314 $145,853 see accompanying notes. ,

31 4

,. ....v._ + - . ~..---e.-~~ -

1980 1979 1978 Consolidated (inousands or oonars)

Stat: ment of Source of Funds:

Funds from Operations: $ 55,809 $ 57,701 Source of Funds 'get income

$ 85,027 for Plant Non cash Cha:ges (Credits) Against income Construction Not involvirg Working Capitalin the Expenditures Current Period: 61,594 55,990 49,541 Years ended Depreciation charged to operating expenses 881 1878 Depreciation charged to clearing and 4,065 y'Q' 31- other accounts 6,324 5,105 Public Service Company Allowance for funds used during (16,662)

• ^# (29,207) (18,875)

No$,*n#,, construction 24,772 20,213 13,599 1.n.ee: ment credit-net of amortization 13,387 2.018 8,178 Deferred income taxes 120,260 116,422 161,897 Funds from Operations Dividends: (15,541) (13,536) (13.536)

On preferred stock (60,217) (50.421) (41,172)

On common stock 56,303 61,714 86,139 Funds Retained in the Business Funds from Financing - Net Proceeds: 91,262 48,012 52,573 Proceeds from sale of common stock 24,861 - -

Proceeds from sale of preferred stock 49,448 - 49,369 Proceeds from sale of first mortgage bonds Proceeds from safe of pollution control bonds 40,380 1,392 37,073 and notes 2407 16.353 14.773 Proceeds uc= issue of long term notes 205,451 104,745 118.105 Funds from Financing 2,357 60,000 -

Funds from Settlement Agreement (Note 11) (2,246) (2,240)

(17,200)

Reduction in Long term Debt 6,340 18.327 12.771 Other Sources - Net 283,087 237,1?9 100,350 Total Funds Available 49,690 (64.802) (2.937) increase (Decrease)in Working Capital _

, 233,397 301,931 193.287 Not Plant Construction Expenditures ,

29,207 18,875 16.662 Allowance for Funds Used During Construction $209,949

_ $262,604 $320,806 Gross Plant Construction Expenditures increase (Decrease)in Components of Working Capital:

Current Assets: $ 6,791 $ (13,190) $ (7,751)

Cash (8,972) 9,918 (6,556)

Temporary cash investments (3,554) 33,919 22,987 Accounts and notes receivable 20,469 6,918 (1,667)

Fuel inventory (5,666) 16,014 6,528 Materlats and supplies 9,125 9,167 7.375 Other 18,193 62,746 20.916 Current Liabilities: (53,076) 40,004 5,182 Notes payable 14,976 18 (10,920)

Long term de';t due within one year 16,150 63,641 27,542 Accounts payable 2,102 7,048 3,016 Accrued liabilities (10,817) 10,817 (12,834)

Customers' refund (832) 6,020 11.867 Other 127.548 23.853 (31,497) 5 49,690 $ (64.802) $ (2,937) increase (Decrease) in Working Capital See accompanying notes.

32

1. Summary of Significant Accountbg assigned cost of nuclear fuel is amortized Notes to Policies to fuel expense based on the quantity of Consolidated heat produced for the generation of electric Financial energy with a like amount credited t Consolidation:

miscellaneous income. The Company's Statements Tha Company follows the practice of j

c:nsolidating the accounts of its policy is to include in the cost of nuclear $cQg880-g significant subsidiaries, fuel a provision for spent fuel disposal

' costs. The Company expects that the Public Service Company J

Depreciation policy: reimbursement from the supplier of the Q',[,a o and Tha Company and its subsidiaries, except nuclear fuel (see Note 11)is adequate to Fu;l Resources Development Co. provide for the disposal costs of the fuel (Fu;lco),use straight line depreciat!on for presently in use.

accounting purposes. Composite rates are used for the various classes of depreciable Deferred income taxes:

ass;ts. In an order dated November 1,1977, The Public Utilities Commission of the State of DeprIciation rates include provisions for Colorado (CPUC) allowed as an operating disposal and removal costs of property, exoense a provision for certain deferred pirnt and equipment, including the nuclear income taxes resulting from the use of pt:nt. Total depreciation expense accelerated depreciation on property approximates an annual rate of 3.4% on the additions made on or after December 1, cv;r:ge cost of depreciable properties. 1975. Effective December 1,1977, the Fusico uses the unit of-production Company began providing for these d;preciation method for accounting deferred income taxes. Deferred taxes are purposes. For income tax purposes, the not provided on other book-tax differences, Company and its subsidiaries use except for differences in amortization acc:ltrated depreciation and other relating to certain pollution control cicctions provided by the tax laws. facilities, the nuclear fuel, and spare parts.

R; placements and betterments in an order dated November 14,1978, the r&pr:senting units of property are CPUC allowed Western Slope Gas Company capitalized. Items that represent less than to include as an operating expense the units of property are charged to operations provision for deferred income taxes as miintenance. The cost of units of resulting from the use of accelerated property retired, together with cost of depreciation on property additions made on r;moval, less salvage, is charged in full or after April 1,1977. Deferred taxes are not agilnst the accumulated provision for provided on other book tax differences.

depreciation.

In accordance with an order dated June 13, Amortization of nuclear fuel: 1969, from the Public Service Commission Und;r the Settlement Agreement with of Wyoming, Cheyenne Light, Fuel and Gen;ral Atomic Company, the prime Power Company provides for deferred c ntractor for the Fort St.Vrain Nuclear federal income taxes on the difference Gen; rating Station, the Company received between depreciation as computed for c n:rship of the reactor core and all fuel accounting purposes and tax purposes.

elem;nts at the Fort St. Vrain Nuclear Gin; rating Station as of January 1,1979, in accordance '.vith the requirements of the and the General Atomic Company agreed to Financial Accounting Standards Board, mak2 available to the Company, at no Fuelco provides for deferred income taxes charga (except certalc possible incremental applicable to exploration and development costs), nuclear fuel eiert,9nts sufficient to costs. Fuelco also provides for deferred operate the plant at 200 Mw ct 80% income taxes on certain other book-tax capacity through December 31,19tm, or differences.

until 16.166,400 Mwh thermal are produced, or c:uld have been produced, whichever is investment credit:

earli;r. The nuclear fuel has been assigned The investment credit provided by the Tax 0 fair value and recorded on the balance Reform Act of 1976, as well as investment sheet as property, plant and equipment, credits provided by previous tax laws,is with a corresponding credit to being deferred and amortized to income n.bc:llaneous deferred income. For income over the productive lives of the related tax prooses, the nuclear fuel and spare property.

parts ham been treated as income. The 33

=. . - - _

accordance with such system of accounts, The Employee 3tock Ownershio Plan was the Company capita'izes AFDC as a part of Not0s to established. , ,fective January 1,1976, to Consolidated enable the C ,mpany to claim under the Tax the cost of utility piant,with a credit to non-Financial operating income for the portion of AFDC Reduction Act of 1975 and 1he Tax Reform attributable to equity funds and a reduction Statements Act of 1976 an additional one percent (continued) of interest charges for the portion of AFDC investment credit on its consolidated attributable to borrowed funds. The federal tax return for contributions to a capitalization of AFDC results in the trustee for eligible employees.

inclusion of AFDC in rate base and the Contributions are made in cash or the recovery thereof through future billings to Company's Cor-mon Stock and,if cash, are customers. In its November 1977 order, the invested in the u., ~ y's Ccmmon Stock. CPUC directed that in the future, the The Plan also enabl 6s the Company to Company is to capitalize AFDC at its claim an additional one half percent authorized rate of return, but not to exceed iNstment credit to the extent of employee the amount allowed by the formula cor,: :butions which are to be matched by the Company. The Plan also permits limited prescribed by the FERC. Accordingly, the rates used by the Company in 1978 were additional contributions by employees. 8.77% for the first eight months and 9.14%

Amortization of debt premium, discount and for the last four months. For the first eleven months of 1979, the rate used was 9.14%

expanse: and for Docember 1979, the rate used was Debt premium, discount and expense is 9.53%. For the first five months of 1980, the being amortized by charges to income over the respective originallives of the Ctc used was 9.53% and for the last seven months the rate used wat 9 57%.These applicable issues. rates rer/esented the Company's Allowance for funds used during authorizemates of return at that time and did not exceed the amount alloweo by the construction (AFDC): formula prescribed by the FERC.

AFDC, which does not represent current

' cash earnings,is defined in the system of accounts prescribed by the Federal Energy Revenues:

The Company reads customerr/ meters on a Regulatory Commission (FERC) and the cycle basis, and renosrs bi!!s each month.

CPUC as the net cost during the period of Revenues are recorded wnen the customers construction of borrowed funds used for are billed.

construction purposes, and a reasonable rate on funds derived from other sources. In

2. Capital Stock 1980 1979 Shares Amount Shares Amount (Tb 'isands (Thousands

= Jollers) of ooltars)

Cumulative proforref .sck, $100 par value: 3,000,000 3.000,000 Authorized issued and outstanding:

Not subject to mandatory redemption: $ 10,000 100,000 $ 10,000 100,000 4.20% series 4% % series (includes $7,500 17,506 175,000 17,508 175,000 premium) 6,500 65,000 6,500 65,000 4%% series 16,000 160,000 16.000 160,0C0 4.64% series 15,000 150,000 15,000 150,000 15,000 4.90% series 150,000 15,000 150,000 4.90% 2nd series 25,000 250.000 25,000  !

250,000 7.15% series $105,006 '1,050.000 $105.008 l 1,050,000 ~

Total Subject to mandatory redemption: $ 30,000 300,000 5 30,000 300,000 34,400 7.50% series 344,000 34,400 344,000 1

- 1 8.40% series 250,000 25,000 -

12.50% series 894,000 8 89,400 644.000 $ 64.400 Total 34

1 C:pital Stock (continued) 1980 1979 Shares Amount Shares Amount (Thousands Uhousands of Dollars) of Dollars)

Cumulative preferred stock ($25),

$25 par value:

Authorized 4,000,000 4,000,00t issued and outstanding:

Not subject to mandatory redemption:

8.40 % 1,400,000 $ 35,000 1,400,000 $ 35,000 Common stock, $5 par value:

Authorized 80,000,000 40,000,000 issued and outstanding 39,989,753 $ 199,949 32,326,418 $ 161,632 Pr:mlum on common stock 314,442 257,358 Installments received from employees on subscriptions aggregating

$416,259 for 34,441 shares at December 31,1980, and $247,922 for 15,375 shares at December 31,1979 175 _

118 Total $514,566 $419,108 Chinges in common stock and premium on common stock for 1980,1979 and 1978 are cs follows:

Premium Price range Common on common per share stock stoclr Ghousands of Dollars)

Balance, January 1,1978 $129,420 $185,744 206,345 shares sold under Dividend d Reinvestment Plan $16.13 to 18.25 1,032 2,443 105,845 shares sold under Employees Stock Ownership Plan $16.66 to 17.61 529 1,252 13,901 shares sold to employees $18.13 70 182 3,040,255 shares sold to the public and employees $16.13 15,20'. 33.823 i

l Balance, December 31,1978 146,252 223,444 l 322,627 shares sold under Dividend Reinvestment Plan $13.44 to 16.81 1,613 3,326 219,981 shares sold under Employees -

Stock Ownership Plan $13.31 to 16.71 1,100 2,401 1,177 shares sold to employees $18.13 6 15 2,532,289 shares sold to the public and employees $16.13 12.661 28,172 Balance, December 31,1979 161,632 257,358 781,497 shares sold under Dividend Reinvestment Plan $11.04 to 14.75 3,907 c/11 46,726 shares sold under Employees l Stock Ownership Plan $12.44 to 1a 19 234 366 l 11,080 shares sold to employees $16.13 55 123 2,806,534 shares sold to the public and employees $11.50 14,033 18,242 4,017:498 shares sold to the pubhc a1d employees $13.13 20,088 32,642 Balance, December 31,1980 $199,949 $314,442 35

- - ~ ~ - - - - - = - - - - . - . --- -

j On July 10,1980, the Company received Starting in 1984 and in each yr at thereafter, N:tes to $25,000,000 from the sale of 250,000 shares the Company will offer to rept rchase up to Consolidated of 12.50% cumulative preferred stock, $100 12,000 shares of the 7.50% c .mulative Financial par value. The shares were placed in a preferred stock at $100 per rc.1are, plus St:tements private transaction with a group of accrued dividends to the Gte set for (continued) institutional investors. No other changes in repurchase; starting in 1985 and in each year thereafter, the Company will of fer to preferred stock occurred in the three years repurchase up to 13,760 shares of the ended December 31,1980. 8.40% cumulative preferred stock at $100 The preferred stock may be redeemed at per share, plus accrued oividends to the date set for repurchase; starting in 1986 the option of the Company upon at least 30, and in each year thereafter, the Company but not more than 60 days' notice, in will set asid6 in a sinking fund an amount ,

' accordance with the following schedule of sufficient for tne redemption of 50,000 r prices plus an amount equal to the accrued shares of the 12.50% cumulative preferred dividends to the date fixed for redemption: stock at $100 per share, plus accrued dividends to the date set for repurchase.

$100 per value: The corporation shall be entitled, at its Not subject to mandatory redamption:

4.20% series: $101; 4% % series: $101; option, on any one of the sinking fund 4% % series: $101; 4.64% series: $101; redemption dates, to redeem up to 50,000 shares of the 12.50% ccmu%tive preferred 4.90% series: $101; 4.90% 2nd series: $102 stock,in addition to the shares otherwise prior to March 1,1981, and $101 on and required to be redeemed on such sinking after that date; 7.15% series: $105 prior to fund redemption date, at C s00 per share March 1,1982, $102.50 thereafter but prior to March 1,1987, and $101 on and after that plus an amount equal to the accrued and unpaid dividends thereon to such sinking date. fund redemption date, provided, however, that the option of the corporation to so Subject to mandatory redemption: _ redeem up to 50,000 additional shares of

- 7.50% series: $112 on or prior to August 31, the 12.50% cumulative preferred stock may 1983, and $105 on or prior to August 31, be exercised only once.

1984, and reducing each year thereafter by I.25 per share until August 31,2003, after which the redemption price is $100; 8.40% $25 par value:

series: $112 on or prior to June 31,1984 Not subject to mandatory redemption:

8.40% series: $27.10 prior to December 1, (not callable under certain conditions prior to July 31,1981), and $105 on or prior to 1981 (not callable under certain conditions '

prior to December 1,1981), $26.50 thereafter July 31,1985, and reducing each year but prior to December 1,1986, $25.75 thereafter by $.25 per share until July 31, thereafter but prior to December 1,1991, 2004, after which the redemption price is

$100; 12.50% series: $106.25 on or prior to and $25.25 on or after that date.

July 1,1985 (not callable under certain conditions prior to July 1,1983), $105.21 on or prior to July 1,1986, $104.17 on or prior to July 1,1987, $103.13 on or prior to July 1, 1988, $102.09 on or prior to July 1,1989, and $101.05 on or prior to July 1,1990, after which the redemption price is $100.

l l

f 36

. .~ .- - -. .. -, -. - - - - - - . .- - e

3. Long term Debt 1980 1979 (Thousands of Dollars)

Pubile Service Company of Colorado:

First mortgage bonds:

3-1/4% series, due October 1,1981 $ - $ 15,000 3-1/8% series, due October 1,1984 20,000 20,000 15% series, due March 1,1987 50,000 -

4 3/8% series, due May 1,1987 30,000 30,000 4 5/8% series, due May 1,1989 20,000 20,000 4-1/2% series, due October 1,1991 30,000 30,000 4-5/8% series, dc3 March 1,1992 8,800 8,800 4-1/2% series, due June 1,1994 35,000 35,000 5-3/8% series, due May 1,1996 35,000 35,000 5-7/8% series, due July 1,1997 35,000 35,000 6-3/4% series, due July 1,1998 25,000 25,000 8-3/4% series, due September 1,2000 35,000 35,000 7-1/4% series, due February 1,2001 40,000 40,000 7-1/2% series, due August 1,2002 50,000 50,000 7 5/8% series, due June 1,2003 50,000 50,000 9-3/8% series, due October 1,2005 49,500 49,500 8-1/4% series, due November 1,2007 50,000 50,000 9-1/4% series, due October 1,2008 50,000 50,000 Pollution Control Series A,5-7/8%, due March 1,2004 24,000 24,000 Pollution Control Series B:

6-5/8%, due December 1,1985 10,500 10,500 7-1/8%, due December 1,1990 2,000 2,000 7-5/8%, due December 1,1995 2,500 2,500 8%, due December 1,2004 35,000 35,000 Less amounts held in construction fund -

(1,781)

Pollution Control Se Ss C:

71/4%, due October 1,2004 15,000 15,000 7-3/8%, due Octet,er 1,2005 1,960 1,960 7-3/8%, due October 1,2006 2,105 2,105 7-3/8%, due October 1,2007 , 2,260 2,260 7-3/8%, due October 1,2008 2,425 2,425 7-3/8%, due October 1,2009 26,250 26,250 Less amounts held in construction fund - (10,199) l Unamortized premium 1,469 1,572 l

Unamortized discount (631) (656)

Uns: cured Pollution Control Revenue Notes, 9-1/2%, due March 1,1982 37,000 -

I Lcss amounts held in construction fund (11,416) -

l 763,722 691,236 l Chay;nne Light, Fuel and Power Company:

l First mortgage bonds:

! 3-3/4% series, due May 1,1985 915 938 l 5-1/2% series, due April 1,1990 1,353 1.386 7-7/8% series, due April 1,2003 4,000 4,000 i

W;st;rn Slope Gas Company:

l Unsecured promissory notes:

1 10%, due September 25,1986 5 -

l- 7-3/4%, due December 1,1997 20,000 20,000 l 10.35%, due December 1,1999 10,000 10,000 i 1480 Welton, Inc.:

4 3/4% securM notes, payable in equal quarterly instailm nts of $168,388 to June 1,1992 covering principal and interest 5,543 5,942 6%-7-3/4% mortgage notes payable, due in annual installme,1ts through 1987 73 112 37

1980 1979 Not:s to (thousands et ooiiers)

Consolidatea Financial Fuel Resources Development Co.:

Unsecured note payable (effective interest rate Stat:monts 71/4%), due in annual principal installments of 3,198 (continuem 2,132

$1,066,016 through 1983 71/2% unsecu~ id note payable, due in annual 500 1,000 pnncipal installments of $500,000 through 1982 Unsecured notes payable, due in twelve equal cuartr ,

principal installments beginnir.g March 31,1984, interest rate fluctuates with the prime rate (22.15% at December 31,1980 and 15-1/4% at 23,900 21,100 December 31,1979)

Home Ught and Power Company:

First mortgage bonds: 313 320 3-3/4% series, due August 1,1932 384 393 4% series, due February 1,1986 343 350 5-1I2% series, due September 1,1989 726 740 6% series, due April 1,1997 2,200 2,237 7-7/8% series, due December 1,2002 3,640 3,704 10-3/8% series, due January 1,2003

$839,749 $766.656 The 4-3/4% notes of 1480 Welton, Inc. are 4. Notes Payable Information regarding notes payable for the secured by a mortgage on land in downtown Denver and an assignment of the years ended December 31,1980 and 1979 is lease between 1480 Welton, Inc. and the as follows: 1979 1980 Company under which the latter is the w,m lessee of the office building located  %

thereon. Notes payable to banks (weighted average The aggregate annual maturities and interest rate 21.50% at December 31,1980 and sinking fund requirments during the five 15.35% at December 31, years subsequent to December 31,1980 a/e: $ 6,630 $ 7,236

$20,638,000 (1981), $42,638,000 (1912), 1979)

Commercial paper

$5,638,000 (1983), $25,438,000 (198 0, and (weighted average

$15,938,000 (1985) for the Compar and

$2,184,000 (1981), $2,513,000 (1982 i, interest rate 20.63% at December 31,1980 and

$1,686,000 (1983), $8,977,000 (1984), and 13.46% at December 31,

$10,488,000 (1985) for its subsidiaries. The 2,480 54,950 Company may satisfy its sinking fund 1979) g g,110 382,18s obligations through the application of property additions, and Cheyenne Light, Maximum amount Fuel and Power Company is satisfyMg outstanding at any l $60,000 annually through the application of

' month end during the

$12o.us,8 $70,908 property additions. period Weighted average amount (based on the daily outstanding balance) outstanding for the period (weighted average interest rate 13.64% for the year ended December 31, 1980 and 11.85% for the year ended December 31, 1979) $ 44,566 $29.937 38

5. Bank Lines of Credit, Compensating The C mpany has entered into various Bank Balances and Bankers' leases for transportation e:;uipment and Acceptance Facilities miscef:aneous office ecuipment which Arrangements for bank lines of credit would te classified as ca; ital leases as totded $124.447,000 at December 31,1950 defined by the Securities and Exchinge and $135,252,000 at December 31,1979. Commission and the Financial Accounting These lines of credit consisted of Standards Board in Statement No. 33,

$21,647,000 at December 31,1980 and " Accounting for leases". The Company has

$51,762.000 at December 31,1979, been advised by the CP11C that it has net maintained by :ompensating balances and adepted Financial Accounting Stan,dard No.

$102,800,000 at December 31,1950 and 13 and it has instructed the Company to

$75,000,000 at December 31,1979, continue to adhere to the existing Uniform maintained by fee payments in lieu of System of Accounts. Had these leases balances. At December 31,1979, been capitalized, the ba!ance sheet at noninterest bearing certificates of deposit December 31,1960 and 1979 would include in the amount of $715,000 were maintained in property, p! ant an:t e::uipment in support of $8,500,000 in bank lines of $10,694.000 and $470,000, respectively, credit. These time deposits were withdrawn representing capitaNed leases with an during 1980. The compensating bank accumulated amortization of $549,000 at balance arrangements provide that the DecetSer 31,1950 and $157,000 at Company maintain average compensating Decemties 31.1979. Long term debt would balances in the amount of $2,164,000 for include noncurrent cbligations under the period ending December 31,1980, and capitalleases of $9,563,C00 at Decemt,3r

$5,176,203 for the period ending Dece nber 31,1950 and $75.000 at Decem::er 31,1979, 31,1979, and do not legally restrict the and current liabilities would include current right of the Company to withdraw these cbligations under capitalleases of $672,000 compensating cash balances. These tank and $125,000, respective y.The charges to lines of credit are also used to support the the income statement representing tota' Company's issuance of commercial paper. lease payments recorded as rent expense Arrangements for tankers' acceptance were less by $57,000 at December 31,1953, facilities amounting to 115,000,000 were and exceeded by $77,000 at December 31, available at December 31,1960, and 1979, and $93,000 at December 31,1978, the

$20,000,000 at December 31,1979. These amount that would have been cha*ged as arrangements are not supported by either amortization and interest expense had fees or compensating balances. these leases been capitalized.

6. Commitments and Contingencies The Intemal Revenue Service has under Commitments made by the Company for examination the Federal income tax retums the purchase of various items of plant and of the Company and certain of its equipment ag;tegated approximately subsidiaries for 1973,1974,1975,1976,

$534,000,000 at December 31,1950, and 1977,1978, and 1979. The examiners have

$158,000,000 at December 31,1979. proposed to include in income Fcrt St.

Vrain Nuclear Generating Station contract The aggregate estimated annual refunds applied to piant costs. The commitments as of December 31,1960 Company is resisting the proposal and under long-tenn leases are as follows: believes that the final outcome of these rnatters will not have a material effect on Year Commitments the reported financial position or results of

%g% operations of the Company.

1981 $1,488 1982 1,471 7. Retirement Plan 1983 1,367 Total provision for pension expense under 1964 1,220 the Company's noncontributory defined 1985 1,090 benefit retirement plan covering a!! eligible 1986-1990 5,022 employees was $11,263,000 in 1960, 1991-1995 3,908 311762,000 in 1979, and $10,856,000 in 1996 2000 158 1978.The Company's policy is to fund pension cost accrued. A comparison of accumu!ated plan benefits and plan net assets as of the end of the plan's fiscal 39

_ _ _ . _ . . - .--~ m e

year, June 30,1980, is presented below (in the benefit valuation date and does not N;t:s to include anticipated future increases in Consolidated thousands of dollars): employee compensation. An evaluation of Financial Actuarial present value of accumulated plan benefits as of December St;t:ments accumulated plan benefits: 31,1980, was not made. However, the (continued) Vested $ 75,000 market value of the net assets available for 7,000 benefits at that date was approximately Nonvested $122,049,000.

Total $ 82,000 V ne sets Effective December 1,1978, the Company's Maavalk jab e f 9'980 Board of Directors began authorizing supplemental payments to retired employees and surviving beneficiaries for The weighted average assumed rate of employees who retired prior to January 1, return used in determining the actuarial 1977. These payments were approximately present value of accumulated plan benefits $506,000 in 1980, $529,000 in 1979, and was 9W% for the fiscal year ended June $46,000 in 1978. They do not constitute an 30,1980.The actuarial present value of employee pensi: ' benefit plan and are accumulated plan benefits is generally subject to appri 31 annually. Payments are based on employees' history of pay and made from the generalassetsof the Company.

service and other appropriate factors as 01

8. Income Tax Expense Total income tax expense was less than the amount computed by applying the federal statutory rate to pre-tax accounting income.

The reasons for this difference are as 1980 1979 1978 foHows:

i (Thousands of Dollars)

Tax computed at statutory rate on pre-tax $63,119 $38,012 $39,985 accounting income j Increase (decrease)in tax from: 2,368 736 (4,696)

Excess o' bx over book depreciation (8,682) (7,998)

Allowance for funds used during construction (13,413)

, (3,548) (2,714) (2,046)

Amortization of investment credit State income taxes, net of federal 1,209 1,136 2,166 income tax benefit 1,498 (1,735) (780)

Other - net $52,190 $26,826 $25,601 l

Total income tax expense ~

J income tax expense consists of the following:

Current income taxes: $13,080 $ 2,412 S 1,639 Federal 951 2,183 2,185 State 4,595 3,824 14,031 Deferred income taxes: 1,752 (5,042) -

Nuclear fuel and spare parts 237 683 (474)

Accelerated amortization 10,011 7,576 4,988 Accelerated depreciation 3,221 2,469 1,227 Intangible drilling costs -

(11) 38 Gain on installment sale 850 (3,963) -

Lease and well impairments - net -

21 -

Capitalized interest 8,178 13,387 2,018 Charge equivalent to reduction in income taxes due to deferred investment tax credit, 20,213 13,599 24,772 net of amortization $26,826 $25,601

$52,190 Total income tax expense a pany has investment tax credit carryovers of $18,758,000, expiring in 1987, 40 a -

• offset future income taxes.

9. Tcxes (Other Than income Taxes) 1980 1979 1978 (Thousands of Dollars)

Re:I cstate and personal property taxes $27,850 $25,643 $24,410 Fr:nchise taxes 1,443 1,204 1,719 Soclil security taxes 8,229 7,301 6,003 City end state use taxes 3,059 4,354 3,202 Misc:llaneous taxes 1,955 1,641 1,754

$42,536 $40,143 $37,088 Charged:

Directly to income:

Operating expenses $40,433 $38,033 $35,424 Other 193 118 63 To property, plant and equipment and virious clearing accounts 1,910 1,992 1,601

$42,536 $40,143 $37,08F

10. Segments of Business Segm:nt information for the year ended December 31,1980 is as follows:

Electric Gas Other Total (Thousands of Dollars)

Op;riting revenues S 640,749 $502,919 $11,976 $1,155,644 Oper: ting expenses, excluding d:preciation 455,211 457,452 6,869 919,532 Depr:clation 47,320 12,769 1,505 61,594 Total operating expenses 502,531 470,221 8,374 981,126 Operating income * $ 138,218 5 32,698 $ 3,602 $ 174,518 Pl:nt construction expenditures * * $ 221,146 $ 35,823 $ 5,635 $ 262,604 Id:ntifiable assets, December 31,1980:

Utility plant * * $1,585,703 $289,631 $45,240 $1,920,574 M?t;; rials and supplies, excluding e

$202 of merchandise for resale $ 32,688 $ 6,026 $ 917 39,631 i Fu;l inventory $ 60,503 $ -

$ 176 60,679 l

G:s in underground storage $ - $ 8,528 $ - 8,528 l

l Oth:r corporate assets 186,958

$2,216,370 Bef:re income taxes and interest expense

• • Includes allocation of common utility property l

i 41 I m

Segment information for the year ended December Gas 31,1979Other is as follows: Total Not:s to Electric Consolidated (inousands of corrers)

$ 507,587 $410,537 $ 8,386 $ 926,510 Financial St:tements Operating revenues 753,950 Operating expenses, 373,726 13,894 366,330 55,990 (continued) excluding depreciation 11,835 1,249 ,

42,906 Depreciation 809,940 409,236 385,561_ 1E.143 _

Total operating expenses $ 24,976 _$(6.757) $ 116,570

$ 98.351 Operating income (loss)* 3 35,334 $ 6,435 $ 320,806

$ 279,037 Plant construction expenditures" Identifiable assets, December 31,197E $268,707 $44,380 $1,732,483

$1,419,396 Utility plant" Materials and isupplies, excluding $ 7,050 $ 479 45,124

$ 37,595

$375 of merchandise for resa!c $ 217 40,210

$ 39,993 $ -

Fuel inventory - $ 1,944 $ - 1,944 Gas in underground storage 191,503 Other corporate assets $2,011,264_

• Before income taxes and interest expense

" includes allocation of common utility property Segment information for the year ended December Gas31,1978 Other Total is as follows:

Electric (Thousands of Dolfers)

$ 421,732 $303,300 $ 4,7fC $ 729,778 Operating revenues 561,373 Operating expenses, 272,246 280,035 9,092 939 49,541 excluding depreciation 37,708 10,894 610,914 Depreclation 309,954 290,929 _

10,031_

Total operating expenses , _

$ 12,371 5 (5,285) $ 118,864

$ 111,778 Operating income (loss)* $ 26,970 }$ 12,187 $ 209,949

$ 170,792 Plant construction expenditures" Identifiable assets, December 31,1978: $245,175 $ 52,516 $1,537,350

$1,239,659 _

Utility plant" 5 1,879 29,052 Materials and supplies. excluding 3 22,394 $ 4,779 _

$433 of merchandise for resale $ 60 33,292

$33,232 5 _

1,88f Fuelinventory _

- 5 1,885 $

Gas in underground storage 144,09l Other corporate assets $1,745,67;

• Before income taxes and interest empense

• • Includes allocation of common utility property Agreement satisfying and settling all

11. Fort St.Vrain Settlement contracts and claims between the Compar On June 27,1979, the Company and the and GAC relative to Fort St. Vrain. The prime contractor for the Fort St. Vrain terms of these Agreements include the Nuclear Generating Station, General Atomic following:(a) GAC paid to the Company, Company (G AC), which is an equal upon execution of the Settlement partnership of Scallop Nuclear Inc. (a Agreement,560,000,000 as an adjustment company of the Royal Dutch Shell Group) the plant cost for the reduction in the and Gulf Oil Corporation entered into a plant's capacity from 330 Mw at 80%

Settlement Agreement, a Services capacity factor to 200 Mw at 60% capacit Agreement and a Fuel and Fabrication 42 J

factor; however, GAC mr4de no warranty as The Constant Dollar method restates to th3 capacity of the plant;(b) GAC will historical financiai data to units of contribute to the Company, between 1980 equivalent purchaslag power by applying cnd 1984, $97,050,427 for the cost of the Consumer Prics index for All Urban r:plicing the 130 Mw reduction in capacity Consumers (cpi U) to 'he original historical ct Fort St. Vrain with future electric cost of the Company's surviving property, gen: rating facilities and $8,068,791 plant and equipment. Constant Dollar r imbursement for shipment, storage, adjusted information ir'JiCates how the hindling and disposal of spent nuclear fuel Company has been s'rected by the decline for which the Company will bear the in purchasing power of the dollar (general r:sponsibility and the cost;(c) ownership of inflation).

tha r actor core and all fuel elements at the pirnt was transferred to the company by The Current Cost method adjusts historical GAC rs of January 1,1979, and GAC will financial data to reflect changes in the m:ks available to the Company, at no specific prices of the Company's property, chrrgs (except certain possible incremental plant and equipment from the date these c:sts), nuclear fuel elements sufficient to assets were acquired to the present. This cperate the plant at 200 Mw at 60% estimated cost of replacing the productive c p city 'brough December 31,1984, or capacity of existing plant assets is until 16,166,400 Mwh thermal are produced, primarily determined by indexing surviving cr could have been produced, whichever is property, plant and equipment (including earil:r;(d) through 1992, GAC will provide land, land rights, property held for future or crringe to provide fuel fabrication use, and construction work in progress) by servicts to the Company, and the Company the Handy-Whitman Index of Public Utility will r: Imburse GAC for GAC's cost, for the Construction Costs. Current Cost adjusted minuf:cture of additional fuel elements for information indicates how the Company us2 ct Fort St. Vrain as the Company, at its has been affected by the increased cost of cwn discretion, may schedule;(e) GAC maintaining its existing productiv0 tr:nsf rred ownership of spare parts and capacity. Current Costs differ from i equipment for the plant, effective January Constant Dollar amounts to the extent that l 1,1979;(f) GAC will fund, up to $5,000,000, specific rrices have increased more or less th) study and resolution of certain plant than prices in general.

perf:rmance problems;(g) GAC will fund, up to $10,000,000, work related to certain As shown in the fo!!owing statement, cpen work items, documentation and income frora continfJing operations seismic studies;(h) upon execution of the developed Jnder both Constant Dollar and Setti ment Agreement but effective as of Currem Cost methods is lower than that Janu:ry 1,1979, the Company received title determintd under the historical cost to th; Fort Lupton Gas Turbine Units; and method used for the primary financial (1) upon execution of the Settlement statements. Of tha revenue and expense Agreement but effective as of January 1, elements from which the income figure is 1970, the Company accepted Fort St. Vrain derived, only depreciation expense har f r c:mmercial operation. been restated by applying the Company's depreciation rates to the indexed amounts

12. Effects of Char.ging Prices of Constant Dollar and Current Cost (Unaudited) adjusted property, plant and equipment. All Tha following supplementary information is other income statement items are supplied in accordance with the considered to have been effectively I requir:ments of Financial Accounting transacted at average price levels for the l StandIrds Board ("FASB") Statement No. current year, and accordingly have not been

33, " Financial Reporting and Changing restated.

Pric s,"in order to provide certain inform tion about the effects of general Fuel inventories, the cost of fuel used in infliti

n and changes in specific prices on generation, and gas purchased for resale the historical cost financial data of the have not been restated from their historical Company. This supplementary information cost in nominal dollars. Regulation limits should be viewed as an estimate rather the recovery of fuel and purchased gas than a precise measure. costs through the operation of adjustment clauses or adjustments in basic rate Two methods have been prescribed for schedules to actual costs. For this reason nessuring the effects of changing prices. fuel and gas inventories are effectively monetary assets. 43

percent under the Current Cost method for N:t:s to As prescribed in FASB Statement No. 33, 1980, both of which exceed the reported income taxes were not adjusted to reflect effective tax rate of 38 percent and the Consolidated the effects of changing prices. This Financial statutory rate of 49 percent.

requirement is appropriate, since current Stat:ments income tax policy ignores the effects of (continued) inflation in measuring taxable income and The Company and its consolidated subsidiaries have compiled with the the higher depreciation expense requirements of FASB Statement No. 39, experienced under Constant Dollar and which applies the provisions of FASB Current Cost accounting is not tax Statement No. 33 for measuring Current deductible. The Company's effective income tax rate, when taxable income has Costs to the mineral resource assets of mining and oil and gas enterprises.

been adjusted for inflation,is 69 percent under the Constant Dollar method and 146 Statement of Income from Continuing Operations Adjusted for Changing Prices For the year ended December 31,1980 Constant Current (Thousands of Dollars) As Reported Dollar Cost Historical Average Average Cost 1980 Dollars 1980 Dollars

$1,155,644 $1,155,644 $1,155,644 Operating revenues 184,073 184,073 184,073 Fuel used in generation expense 388,852 388,852 388,852 Gas purchased for resale expense 61,594 123,030 163,001 Depreciation expense 346,607 346,607 346,607 Other operating and maintenance expense 52,190 52,190 52,190 Income tax expense 59,133 59,133 59,133 Interest expense (21,832) (21,832) (21,832.

Other income and deduc^ ions - net 1,132,053 1,172,024 1,070,617 Income (loss) from continuing operations (excluding reduction to net recoverable $ ,85,027 $ 23,591* $ (16,380 amount) ,

increase in specific prices (current cost) of property, plant and equipment held $ 490,818 during the year" (414,899 Effect of increase in general price level $ (153,156) (189.104 Reduction to net recoverable amount (Note A)

Excess of increase in general price level over increase in specific prices after (113,185 reduction to net recoverable amount Gain from decline in purchasing power of 133,157 133,157 net amounts owed (Note B) $ (19,999) { 19,97J Net

• • At December 31,1980, current cost of property,

• Including the reduction to net recoverable amount. plant and equipment, net of accumulated the income (loss) from continuing operations on a depreciation was $3.842,314, while historical cost constant dollar basis would have been $(129,565) (or net cost recoverable through depreciation) was for 1980. 51,920,574.

Note A. Reduction to Not Recoverable Amount depreciation has been reflected as the Under the CPUC and FERC rate-making

" Reduction to Net Recoverable Amount."

provisions to which the Company is While the rate-making process gives no sebject, only the historical cost of plant is recognition to the current cost of replacing mcoverable in revenues as an amount equal pronerty, plant and equipment, based on to depreciatior.Therefore, the portion of post practices the Company believes it will

'.he cost of piant stated in terms of be allowed to earn on the increased cost o Constant Dollars or Current Cost which its net investment when replacement of exceeds the historical cost of plant and is facilities actually occurs.

44 not presently recoverable in rates as

- ~ _

l l

Not? B. Gain From Decline in Purchasing has been ustd to finance property, plant Power of Net Amunts Owed and equipmert. (In calculating this gain, This memorandum caption shows the net preferred stoch has been classified as a Eff;ct of inflationary value changes on monetary item, which is consistent with its those Company assets and liabilities treatment for rate-making purposes.) Such crfried on the balance sheet at fixed or amount does not represent funds available det:rminable monetary settlement for distribution to shareholders.

amounts. During a period of inflation, ,

hold;rs of monetary assets sustain a loss To properly reflect the economics of rate of g;neral purchasing power while holders regulation in the Statement of income from cf monetary liabilities experience a gain. Continuing Operations, the " Reduction to Tha Company's " Gain from Decline in Net Recoverable Amount" should be offset Purchasing Power of Net Amounts Owed" by the " Gain from Decline in Purchasing is primarily attributable to the substantial Power of Net Amoun'ts Owed."

amount of debt and preferred stock which Five Year Comparison of Selected Fi~nancial Data Adjusted for Effects of Changing Prices In Av: rage 1980 Dollars (except "As Reported" amounts)

(Thousands, Except Per Share Amounts)

Years Ended December 31, 1980 1979 1978 1977 1976 Oper: ting Revenues:

As reported $1,155,644 $ 936,510 $729,778 $613,299 $522,154 Adjusted to constant dollars 1,155,644 1,051,323 921,746 833,951 755,822 income (loss) from continuing operations (excluding reduction t) not recoverable amount):

As reported 85,027 55,809 Adjusted to constant dollars 23,591 15,501 Adjusted to current cost (16,380) (33,140)

Income (loss) per common share (af ter dividend requirements e on preferred stock):

As reported 1.92 1.35 Adjusted to constaat dollars (excluding reduction to net recoverable amount) .24 .01 i Adjusted to current cost (.86) (1.55) l Exc;;s of increase in general price lev;l over increase in specific priccs after reduction to n;t recoverable amount 113,185 138,320 l Gain from decline in purchasing power of net amounts owed 133,157 147,622 N:t assets at year end at net recoverable amount 624,922 595,216 l Cash dividends declared per common share:

As reported 1.60 1.60 1.53 1.46 1.38

! Adjusted to constant do;1ars 1.60 1.82 1.93 1.99 2.00 l

Market price per common i share at year end:

l As reported 14.25 13.38 16.75 18.88 19.00 l Adjusted to constant dollars 13.58 14.33 20.38 25.03 26.90 Average consumer price index* 246.8 217.5 195.4 181.5 17G.5

• Base year 1967 = 100.0 43 I

l Not:s to 13. Quarterly Financial Data (Unaudited)

Summarized quarterly data (in thousands of Consolidated dollars except for per share amounts) for Financial St:tements 1980 and 1979 are as follows: 1980 (continued) Three months ended March 31 June 30 September 30 December 31

$329,252 __ 5271,315 $233,229 $321,848 Operating revenues $ 25,867 $ 29.242 5 33,025 Operating income $ 34,194

$ 22,930 $ 15,922 $ 20,661 $ 25,514 Net income $ 19,546 $ 12,538 $ 16,574 $ 21,349 Earnings available for common stock Average common shares 35,417 36,962 39,890 outstanding (thousands) 3.377

$0.09 $0.35 $0.45 $0.54 Earnings per average common share

• 1979 Three months ended March 31 June 30 September 30 December 31

$274,782 $209,470 $181,709 $260,549 Operating revenues $ 22,023 $ 13,319 $ 23,746

$ 30,656 Operating income 5 12,463 $ 6,428 $ 15,417

$ 21,501 Net income $ 18,117 $ 9,079 5 3,044 5 12,033 Earnings available for common stock Average common shares 31,188 32,138 32,276 outstanding (thousands) 29,298

$0.29 $0.09 $0.37 Earnings per average common share * $0.62

• Due to rounding, quarterly fi0ures do not add to annual total.

in our opinion, the statements mentioned Report of Certified Public Accountants above present fairly the consolidated The Board of Directors and Shareholders < financiai position of Public Service Public Service Company of Colorado Company of Colorado and subsidiaries at December 31,1980 and 1979, and the We have examined the accompanying consolidated results of operations and consolidated balance sheet of Public source of funds for plant construction Service Company of Colorado and subsidiaries at December 31,1980 and expenditures for each of the three years in the period ended December 31,1980,in 1979, and the relaterd consolidated conformity with generally accepted statements of income, retained earnings and source of funds for plant construction accounting principles applied on a consistent basis during the period.

expenditures for each of the three years in the period ended December 31,1980. Our examinations were made in accordance whh generally accepted auditing standards M//w 7 / by y, ./

and,accordingly, included such tests of the accounting records and such other auditing Arthur Young & Company procedures as we considered necessary in Denver, Colorado the circumstances. Feb W 3,1981 46

Stock information During 1980 the DRP operated at 95% of Shareholder Public Service Company of Colorado the average price on each investment date Information c:mmon stock ($5 par value)is listed for with respect to reinvested dividends and at trading on the New York and Midwest Stock 100% of the average price on each Exchrnge under the symbol "PSR." It is investment date with respect to optional quoted as "PSvCol" in daily newspaper cash payments. At year-end 1980 there were stock table listings. There were 13,034,200 19,276 participants, an increase of 4,554 or c mmon shares traded during 1980, an 30.9% compared to year end 1979. A total cv:r:ge daily volume of 51,519 shares, of $9 618,191 in reinvested dividends and Th;re were 9,587,300 shares traded in 1979, optional cash payments was applied to an cy: rage daily volume of 37,894 shares. purchase 781,497 new shares, at an average At December 31,1980 the Company had cost of $12.31 per share.

71,409 common shareholders and 6,237 pr:f:rred shareholders compared to 63,094 Tne price of the Common Stock purchased c:mmon shareholders and 6,529 preferred with reinvested cash dividends will be 95 sh:rcholders at year end 1979. The total percent of the average of the high and low ,

number of common shares outstanding was sale prices of such stock as reported on 39,989,753 on December 31,1980 compared the consolidated tape on each investment ,

with 32,326,418 at year-end 1979. Date. In addition, preferred and common shareholders whose shares are registered Three series of Cumulative Preferred Stock in names other than in their own may cra actively traded. The 4% % series ($100 participate in the Plan for the reinvestment par v lue)is traded under unlisted trading of dividends provided the broker or privil:ges on the American Stock Exchange. fiduciary who holds such stock in nominee Tha 7.15% series ($100 par value) and name is willing to participate in the Plan.

8.40% series ($25 par value) are listed on tha New York Stock Exchange. All other Participants in the Plan can also make seri s of cumulative preferred stock are not stock purchases for cash in amounts of not activ;ly traded, and market prices are not less than $10 nor more than $5,000 per published. month. The price to be paid for each share of such stock purchased with optional cash

.Tutomatic Dividend Reinvestment Plan payments will be 100 percent of the Tha Company's Automatic Dividend purchase price on each Investment Date.

Reinv;stment and Common Stock Purchase PI:n (DRP) provides preferred and common A prospectus describing the plan and sh'r: holders with an economical and enrollment information is available from the c:nvinient method for purchasing Shareholder Services Department by writing additi:nal shares of the common stock of or by calling Area Code (303) 571-7514.

the Company without the payment of The accompanying tables show the ranges br;k;r:ge commissions or service charges. of closing stock prices and dividends paid on the common and preferred stock issues by quarter for 1980 and 1979.

Cumulative Preferred Stock Common Stock I Quarter 4th 3rd 2nd 1st Quarter Year 4th 3rd 2nd 1st l 4%% Series 1980 1980 High . . . . . 37% 39 39 36 % High . . . . . . . . . . . 15% 14% 14% 15% 14%

Low . . . . . . 26 34% 29% 28% Low .... ....... 11% 12 12% 11% 11%

1979 HiQh . . . . . 41% 44% 43% 47% Last Trade . . . . . . 14% 14% 13% 14% 11%

Low . . . . . . 34 40 40% 42% Dividends Declared 1.60 .40 .40 .40 .40 7.15% Series Dividends Paid . . 1.60 .40 .40 .40 .40 1980 High ... 59 89 68 61%

Low . . . . . . 55 57 59 59 1979 High . . . . . 74 gh . . ....... 17% 15% 16% 17% 17%

79% 78% 76%

[

Low . . . . . . 63% 74 69 71 Low . . . . . . . . . . . . 12 % 12% 15% 15% 1G%

Last Trade . . . . . 13% 13% 15% 16% 16%

8.40 Series ($25) Dividends Declared 1.60 .40 .40 40 .40

1900 High .... 17 20 20% 18% Dividends Paid . . . 1.60 .40 .40 40 .40 l Low...... 13% 15% 14% 14%

1979 High . . . . . 21% 22% 22% 23%

tow . . . . . . 18 21% 20% 21%

47 l

Executive Committee Directors and Board of Directors Robert T. Person Robert T. Person, Denver, Colorado (1957)

Officers Chairman of the Board, Age 66 Richard F. Walker William T. Blackburn Richard F. Walker, Denver, Colorado (1976) George B. McKinley President and Chief Executive Officer Nicholas R. Petry of the Company, Age 56 King D. Shwayder William T. Blackbum, Denver, Colorado (1965)

Resident Partner, Vaughey, Vaughey & Audit Committee Blackburn (Independent Oil Producers) Doris M. Drury Age 64 King D. Shwayder Doris M. Drury PhD, Denver, Colorado (1975) J. Michael Powers University of Denver Executive Officers Professor of Economics and Director Robert T. Person (44), Age 66 Public Affairs Programs, Age 52 Chairman of the Board A. L Feldman, Los Angeles, California (1977) Richard F. Walker (31), Age 56 President and Chief Executive Officer President and Chief Executive Of'Vr Continental Airlines, Age 53 ""' ^ $

bort i , Denver, Colorado (1978) h'Y,8"'

cuti Vice e and ee nse Fuel Supply and Gas Operations, Age 62 ,

George B. McKinley, Grand Junction, Senior Vice Pr2sident, Colorado (1976) General Administration President and C. Keith Millen (34), Age 58 ef P " ' Senior Vice President, Operations ra B]n o por tion,Inc., Age 53 Harvey P. Blichma.m (31), Age 53 John A. McKinney, Denver, Colorado (1979) Vice President, Strategic Planning and Chairman and Chief Execc41ve Officar Administrative Services Johns Manville Corp., Age 57 James N. Bumpus (16), Age 46 C. Keith Millen, Denver, Colorado (1969) Vice President, Finance and Treasurer Senior Vice President of the Company, Age 58 Clark 8. Ewald (21), Age 46 Vice President, Employee Relations Bryant O'Donnell, Denver, Colorado (1972) " J. Kenneth Fuller (32), Age 57 Executive Vice President and Vice President, Electric EngineerinJ and General Counsel of the Company, Age 55 Planning Nicholas R. Petry, Denver, Colorado (1961) Delwin D. Hock (18), Age 45 Chairman of the Board Vice President, Accounting Petry-Vappi Construction Co. and Secretary Managing Partner of Robert E. Kelly (34), Age 62 N. G. Ietry Construction Co., Age 62 Vice President, Fuel Supply and J. Michael Powers, Cheyenne, Wyoming (1978) Gas Operations President, Powers Builders' Supply, Age 38 Os '

King D. Shwayder, Denver, Colorado (1%7) yice Pres dent ilec ic Production Former Chairman of the Board, Robert T. Person, Jr. (9), Age 38 Samsonite Corp., subsidiary of Vice President, Public Affairs Beatrice Foods Company. Age 70 'I * "

Vice President, Rates a'nd Regulations

( ) Year elected to the Board of Directors Jeck W. Rouse (34). Age 60 Board Retirements: Vice President, Division Administration Frank S. Hoag, Jr. retired froi., the Board of i

/

Directors in June 1980. ( ) Denotes years of service with the Company through December,1980.

John N. Kerr resigned from the Board of Directors in December 1980 and retired from the Compaay in February 1981.

~

"B l n_J

Other Officers Managers, Subsidiary Companies Dan McNellis (28) Age 52 Michael J. Geile (16), Age 38 Assistait Vice President, Vice President and General Manager Governmental Affairs Home Light & Pvwer Company Richard R. Midwinter (31). Age 55 John M. Hassoldt (30), Age 51 Controller and Assistant Secretary Vice President and General Manager Robert C. Bryan (12), Age 73 Western S!cce Gas Company Assistant Secretary and James L Higday (19). Age 58 Assistrnt Tre& surer Pres' dent and Generai Manager F.Cilliam Beier (40), Age 63 Cheyenne Light. Fuel and Poner Company Assistrnt Secretary Manager, Northern Regi ?

Henry J. Johnson (40), Age 64 Robert F. Jonas (33). Age 57 Assistant Secretary Vice President and General Manager ira R. Adler (6), Age 30 Fuel Resources Development Co.

Assistant Treasurer Leo L Beem (33). Age 59 II

'.'$,'.*h'*M'*"""

Assistant Treasurer Richard L Hunt (13). Age 38 Legal Counsel Assistait Treasurer Kelly, Stansfield & O'Donnell Denver, Colorado Dougiss S. Robertson (2), Age 38 Assistant Trvisurer Auditors Arthur Young & Company

( ) Denotes yea s of sem:e aim me Comany 1670 Broadaay, Suite 2500 mroe cece-cer. N Denver, Colorado Managers, Geographic Divisinns Transfer Agents and Registrars for Robert J. Cottle (32), Age 58 AllIssues of Capital Stock Northeast Mstropolitan Principal Transfer Agent Registrar, Robert J. Fairchild (41), Age 59 Dividend Paying Agent Front Range Morgan Guaranty Trust Company of R nald L French (28), Age 53 Ne ok y

Manag:r, Southern Region Frank O. Hellwig (30). Age 55 Southeast Metropolitan United Bank of Denver, National Association Ross C. King (15), Age 39 Denver, Colorado High Plains Bank of America National Trust and Douglas C. Lockhart (16), Age 38 Savings Association Mount:?n San Francisco, California Robert E. Moninger (33), Age 60 Northern Co-Registrars M. Gordon Parker (32), Age 58 United Bank of Danver, National Denver Metropolitan Association .

1. ' I '^ We s Far'g 13a 1 National Association Bo er Manager, Foothills Region San Francisco, California Harold L Rust (25), Age 45 Dividend Reinvestment Plan Agent Platt) Valley Morgan Guaranty Trust Company of Lou'.s C. Supancic (29), Age 58 New York Southwest Metropolitan New York, New York N. James Temple, Jr. (34). Age 60 Western Manager, Western ' legion hubert J. Vidick (25), Age 53 Northwest Metropolitan James R. Wexels (15), Age 41 San Luis Valley

Bulk Rate Public Service U.S. Postage Company of Colorado re.o P.O. dox 840 Permit No.14

' . Denver, Colorado 80201 Denver, colo.

- .4303)

• 571 7511 --l *

. T.*....

k

= o.e '. . 4 e

o e

W_