ML19323H943
| ML19323H943 | |
| Person / Time | |
|---|---|
| Site: | Hatch, Vogtle  |
| Issue date: | 02/28/1980 |
| From: | GEORGIA POWER CO. |
| To: | |
| Shared Package | |
| ML19323H938 | List: |
| References | |
| NUDOCS 8006170318 | |
| Download: ML19323H943 (38) | |
Text
{{#Wiki_filter:._ _ _ - _ _ _ _ _ _ _ _ . 4 Georgia Pou er Company HigMights 1979 1978 % Change Yinancial/in:housamis ofdollars) Total Operating Revenues. . . . . . . . . .... .. .. 51,519,W2 51,475,024 3.0 Total Operating Expenses. . . . ... ... . .... 51,255,258 51,231,990 1.9 Net income After Dividends on Preferred Stock. . . . ... 5145,512 5136.014 7.0 Dividends on Common Stock. . . . . . .. . . .. $131,100 5119.225 10.0 Gross hklitions to Utility Plant. . . . . .. ... . 5607,616 $500,719 21.4 Net Utility Plant 6 car-call. . . . . . . . . . . . . . . . 54,301,454 S3,882,792 10.8 Electric Operations Kilowatt 4mur Sales / millions /. . . . . 43,235 44,145 (2.1) Customers Served /nar<ml). . . .. ... .. 1,192,770 1.164,822 2.4 Capital Structure Ratioslycar-endj' longterm Debt. . ... . .. .. . .. . 57.0 8 57.29 Preferred Stock. . . . . ... .... .... . 9.35 8.45 Preferred Stock subject to mandatory redemption. . . . . . . . . . . . . . 1.95 2.06 Common Equity. . . . ... ... . 31.62 32.20 Coverage Ratios First Mortgage Bonds. . . . .. . . 2.34 2.37 Preferred Stock. . . .. . . 1.66 1.61
' Includes amounts due within one year
() Denote decrease CONTENTS 11ighlights.. 3 1.etter to Investors. . 4 FinancialIIcalth.. 6 l Rate Activities.. 8 Energy Sales.. 10 Operations.. 12 Construction.. 14 Financing..15 Load Management. . 18 Peopic.. 20 Management Reorganization.. 22 FinancialStatements.. 24 Directors and Officers.. 37 3 80061703\
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The Company continued toimproveit
; - overall condition in 1979 as we brougl-
. new generating units into service.
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- strengthened our organizational struc-
, ture and neared the successful conclu-
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sion to our 1978 retail rate case.
= Georgia Power had to seek court g: . ~ >
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tail rate case. As a result, we were final successful in obtaining 73 percent of tl l l l ,; _ g'. . Io . - . amount requested in the case fikd in
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1978.The total 5169 million award
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. came m two parts: 5123 million in Au 7 gust and an additional 546 million in tl l g .
first days of 1980. l
- . Other favorable action came frorr !
the Georgia General Assembly. While l i I.. . the Public Service Commission's attem a, . . i to alter our fuel adjustment clause was 4 .. 4 staved bv the court, the General Assen b -
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e - bly passed legislation which allowed fu. costs to be included in the base rate we
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- 'The 1980 sess' ion of the Georgia General Assembly considered signific ;(,' . 3, ;
3 # legislative approaches to improving th regulatory process in Georgia. Thougl
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both the House and Senate passed bilh i~~ - ~ that addressed a better regulato T~ 'sys-
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. tem, and a joint conference committet r . approved an acceptable compromise, the session ended before the measure Robert W.Scherer could le considered by either the House or the Senate.
TheGeorgia Energy Regulatory R form Commission was established by the 1980 General Assembly.We will work closely with this Commission in tl hope of new and constructive legislatis proposals for the 1981 Session. The Company's construction pror gram for 1979 totakd 5608 million. h addition, funds were provided by the Oglethorpe Power Corporation (OPC) the Alunicipal Electric Authority of l Georgia ( AIEAG)and the City of Dalt. for units in which they have partial ow 4
LETTER TOINVESTORS ership. At the end of the year, negotia- vals during peak demand times. portions of our state were affcctul by tions were continuing for the sale of 60 Even with all of these kud manage- hurricanes David and Fr deric, but percent of Plant Scherer Units 1 and 2 ment activities, we recorded a new terri- Gmrgia Ibwer respondal to the neals to OPC and the consolidation of torial peak demand of 10,213.000 kw of its neighbors. The Company's assis-MEAG's 15.1 percent ownership of all during 1979, dramatically illustrating tance in power restoration to surround-four units into a 30.2 percent participa- how our dependence on ekttricity has ing states was the largest movement of tion in Scherer Units I and 2. increasal over the last half century: in men and machinery in the Companis We alsoentered intodiscussions 1929, the peak demand was only history. with several Florida utilities regarding 287.000 kw. In addition, the Company Finally, recognizing that the '80s the sale of portions of Units 1 and 2 of legan off-system energy sales in Febru- will require more creative approaches to the Vogtle nuclear plant now under con- ary which helped improve our 1979 earn- solving problems, u e undentent a major struction near Waynesboro. In order to ings, supplial surrounding oil-basal rmrganization in mid-year. following a finance construction, the Company mar- utilities with much-naded ekttricity comprehensive study by a national
, keted during 1979 550 million of pre- and helpal to decrease our nation's consulting firm. ' ferred stock and 5225 million in first dependence on foreign oil.To ensure The reorganization, simply stated.put mortgage bonds. adequate electricity for the 1980s, we greater emphasis on external affairs and Two new generating units were remain committed to a strong load man- strategic planning, consolidated all day-placed in service during the year to help agement program integrated with a to-day operations into a more cohesis e us meet current and future energy neuls. sound program for growth. unit and created a four-man Of fice of the Unit 2 of the ilatch nuclear plant near The Tluee-Mile Island incident in Chief Executive. Ilaving worked within Liaxley began supplying ekttricity to Pennsylvania underscored the impor- this framework for the past several customers in Septemltr and thereby tance of ensuring the reliability of all months. I am confident that it is e much doubkd our nuclear capabilities.The nuclear safety systems. As a result, improvalorganization with which to Company's portion of the twoIlatch Gmrgia Ibwer actively participated in solve the problems we face in the '80s.
units now represents 7.2 percent of our the Southern ekttric system's Nuclear instalkd megawatc caprity.The first Safety Task Force which reexamined unit of Georgia Power's pumped storage safety systems within the Southern sys-hydroekttric facility at Wallace Dam tem and made remmmendations for Robert W. Scherer came on line in mid December.The additional safety measures where neces- President and Chief Executive Officer pumped storage facility is the first of its sary.We are committal to nuclear power February 28,1980 kind in the Southern ekttric system and as a means of cenerating ekttricity, and represents an innovative approach for we strongly believe that it is our respon-meeting our energy needs. sibility to make the nuclear option as Ioad management activit ies moved safe as possible. ahead in 1979 and saw customers heed- The year also provided the oppor-
- ing our conservation pleas by rulucing tunity to see our people perform under
{ their usage. Majorload management adverse conditions. Fortunately, only
, efforts during the year included the l introduction of aerial surveys using j infrared scanning equipment to det(rt , heat loss, ad campaigns urging customers t to budget their energy costs, programs l with businesses and cities to bring about j reductions in their energy use and the ! initiation of a load control pilot projttt 3 involving 6,000 customer volunteers.
I Under this program, customers' central 4 air conditioning units will be equipped l with a remote-control device that will j turnoff thecompressorat varyinginter- 5 i t
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_..- - =- . - 5 RNANGAL HEALTH Gmrgia Power's financial posture was Where Our Dollar Came fem in 1979 strengthenul during the year. despite the l
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7 percent over 1978.
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f7 E 71422425 li Operating resenues rose 3 percent a5 M ' 5 - to S t.5 billion, although for the first time r 1 lf i ,. ., in the Company's histog 'here was a h 7j "w d .h1 l
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dareaw in kilowatt-hour sales. The in- E 71t422 425 E cieasnl earnings can tv- tracal to higher 5 . 9:uy 5J ;i retail and whoksale rates and holding _. Q,y,g,y,,(,M# ) ,,3 ;"4% JA & w n;' operating costs to a modest 1.9 percent
--T' increase over 1978.The dropin toral / / / // _ !
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kilowatt-hour sales is due primarily to Rnamtiai Rnenues 2m l conservation and a decline in sales to re- commeraal Rnenues 23 I"d"*i^ sale customers because of their increasal " {j ,, p 7 generating capabuities. R- n . Although the Company receival a 1I ng Artoc n retail rate increase in 1979, we continual to experience dif ficulties with the rate making process.The 1980 session of the Gmrgia General Assembly consideral a broad program of impmvement in the regulatory process in Georgia. Ik>th the Where Our Dollar Went in 1979 1 louse and Senate passed legislation that ' would have providul more and better / , , , , , , _, ',, m ;,n,,,c,,,',___ _
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activities. if $9 h,, E 71 422425 E L.p,l A combination of theIlouse and Y 5 a5 I
? ' Senate passed bi!!s faikd tobe considered ( / . g' q lin the last minutes of the 1980 legisla- f ; ;~
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. tive session.The 1980 legislature did es- -
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. tablish the Georgia Energy Regulaton 5%ag 4ggw;A2e5[p1
. Reform Commission to report to the --
_,r, g iIe) a e t m/E= 3 m\W i 1981 session.1rgislative intere:t and in- r 1 l volvement in impros ing the regulatory / // /// / // / /
; process, therefore, continues. Fuel 3n. I Purchased and Interchanget! Ruer 2'".
Taxes 11".
; Depreciation 87.
I Retainn! Earnings 17 Interest 101 Comnen Disidends 8% Preferral Dnidends 2% Operation and Maintenance 10'".. Wages </".
'.The first unit of Georgia Pbwer's pumped
{ stor:ge hydroelectric facility at Wallace Dam I
- ccme on line in 1979.
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??'E'Y Promises PSC Not to=.Seek
$46 Million Qf . . :-
Power Wins Ga. s.~
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s RATE ACT V T ES
.: The Company's 1978 retail rate case was in wholesale rate matters the Com-y # J finally concluded on January 10.1980. pany saw the conclusion of its 19"
,.. The Georgia Public Service Commission wholesale rate case when the Federal 3
- i awarded Georgia Power S46 million in Energy Regulatory Commission (FERC)
%. addition to the 5123 millior, granted in approved a $16.9 inillion increase in
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- August 1979.This compares with our wholesale ratesin June 1979.
3 The Company's S18.7 million 4 J n original 1978 request of $225.6 million "X % for base rates and 54.5 million in cus- wholesale rate case filed in December
- 1 tomer. service charges. 1978 was revised from 58A million due i The successfulconclusion to the to settlement and approval of the Decem-case did not come easily. On March 16. ber 1977 case and revised in April to f~
reflect certain FERC adjustments. An + 1979. the GPSC dismissed the case in its
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- 1 entirety stating that the Company had agreement in principle among all parties W7Ume failed to prove its need for an additional for approximately 56.7 million was GCfj- .
rate increase.The Company subse- reached in November 1979 and is to quently appeakd the case to the Fulton le fikd with FERC in early 1980. Another rate matter resolved in , na
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,; County Superior Court and on May 24.
1979,the Court remanded the case to 1979 was fuel adjustment. While a court the Commission for funher review. Add- order stayinc he Commission's attempt
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- t a alter the tuel adjustment taritf was still
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itional hearings were held in which the Company and intervenor witnesses pre- in effect. the Georgia General Assembly i n sented additional testimony. On August passed the Fuel Recove:y Act of 1979.
"~ "* 15.1979, the GPSC permited the Com- Under the new law. fuel cost is included i
pary to raise its retail rates by S122.9 in the base rate charged for electricity. i " million annually. Adjustments to the rate can be made The Company again fikd an appeal after public hearings. which may it re-
- with the Fulton County Superior Court. quested by either the Company or the
' On October 12.1979, the Court ordered Public Service Commission.The new the Commission to reconsider the evi- law enables the Company to recover all dence and issue a decision within 90 of its fuel costs in a timely manner. O days.The GPSC reexamined the case and in Januarv 1980 granted the Com-pany an additional S46.1 million. l 1 i 4 The Company received a $169 million rate in- i
- crease in two parts
- 5123 million in August 1979 and an additional 546 million in January i 1980.
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ENERGY SALES Despite a daline of slightly more than Combined kwh sales toindustrial tric Authority of Georgia (MEAG)and 2 percent in kilowatt-hour sales, operat- and commercial customers rose by 452.6 the City of Dalton (Dalton) was a pri-ing revenues for 1979 rose 3 percent to million kwh or 1.8 percent to 24.9 bil- mary reason leading to the declinein 51.5 billion. lion kwhin 1979 compared to 24.5 bil- sales for resale of 10.4 percent in 1979. Saks to allclasses of customers lion kwh in 1978. Revenues from these Thecombinaldemandof theCom-totakd 43.2 billion kilowatt hours, a 2.1 customers increased by S54.7 million in pany,OPC,MEAG and Dalton reached a percent decrease from 1978.The aver- 1979 to S874.2 million or a 6.7 new peak of 10.213 mw on August 8, age price pe- kwh for all classes of cus- pcreent increase. surpassing the 1978 mark of 10.113 Sales to the Metropolitan Atlanta mw. Despite this increase, the territorial tomers rose from 3.31 cents in 1978 to 3.48 cents in 1979. Iligher retail and Rapid Transit Authority (MARTA ) reg- growth rate has slowed considerably in wholesale rates bilkd during the year istered as a significant amount for the recent years, due in part to conservation contributed to the rise in revenues as did first timein 1979. MARTAs special efforts by customers, load management
" train rate" makes it a separate class of and a downturn in the economy.The higher fuel costs recovered through the fuel recovery rates. Retail revenues to- customer which purchased over 13 mil- projected territorial growth rate in peak lion kwh last year. Sales are expected to demand for the coming year is approxi-taled approximately 51.3 billion and resale revenues were 5205.5 million grow as the railline expands. mately 4 percent.This projection is for 1979. An incrmse in the retention of gen- contingent on many variables, including Sales to the residentialclass de- erating capacity by Oglethorpe Power changes in business and economic creased for the first time in five years. Corporation (OPC). the Municipal Ekt- conditions.
There was a 4.5 percent decline from 10.8 billion kwh in 1978 to 10.3 billion kwh in 1979.This can be traced to economic conditions, price elasticity, conservation Total System Peak Demand 10,213 efforts and weather. Revenues from the fy yjffjoy, ofgjfyyw, i,,, 9,631 class decreasal to 5414.5 million in
- 1979, compared with S417.7 million in 8,745 3,793 1978. _i Conservation efforts, while difficult 7,w3 to measure exactly, are becoming increas-ingly important to the residential class, 6,469 6m and this is encourging to both the cus- g' g tomer and the Company. It indicates l the consumers are attempting toget I
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the most out of their energy dollar wh le the Company will experiencelower growth in the residential customer cete-gory, which has thelowest retum on investment. Refkrting the declinein energy sales, the average annual kwh use per residentialcustomer dropped from 10,719 kwh to 9,953 kwh. Although , increased rates and escalating fuel costs raised the average residential price per kwh from 3.86 centsin 1978 to 4.01 cena in 1979, the Company's rates re-main within the lower 20 percent of the nation's major utilities. Ener;y sales totaled 43.2 billion kilowatt-Il hours during ihe year.
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/d stable in 1979, increasing only 1.9 per-T w .fY i. (.m.g_ . fM 1,.j}> , .
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2,. i cent. Total operating expenses were 51.!
, ' / billion. up S23 million from 1978.
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J. portion of Georgia Pbwer's operating expenses, reached 5598.3 million, an in
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crease of 8A percent orcr 1978. Most
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r of thisexpensewasforcoal,of which
- ? ; 16.7 million tons costing 5572A mil-l lion were consumed in generating plant:
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g - 1 in 1979. k .- j!' . The average price per ton of coal i JII tillIElli - a
- increased from 531.11 in 1978 to 534.31 D. .. I _
- in 1979. Coal costs were up in part be-
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wages under the United Mine Workers of America agreement reached in 1978 g '5 -
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OPERATIONS
' fuel charges in Gwrgians' ek ctric bills. decreased greatly, from 579.5 million in decreased to 5186.2 million in 1979 . The 1,630,000 kilowatt Ilatch Nuclear 1978 to $28.5 million in 1979.The compared with $192.3 million in 1978.
Plant near Baxky produced aluut 9.9 major reasons for the decrease were im- The major reasons for &treased income percent (5.1 million megawatt-hours) of prom! plant availability. additional gen- taxes wt re changes in income before the total ekctricity supplied by Company- erating capacity and increasal credits income taxes and a reduction in the operatalplants in 1979.The cost of from energy sales to non affiliated corporate f(deral inmme tax rate.The
, nuclear fuel was 522.3 million including companies. Company's faleral income tax was percentages owned by OPC, ME AG arxl Depreciation and amortization in- 5103.8 million compand with 5112 mil-Dalton.To have produced the same creased $15.7 million or 13.3 percent in lion in 1978. State income tax amounted amount of power at the nxxlern Ibwen 1979. The increase is attributable to to 514.6 million, a 2A percent decrease plant would have cost 570.5 million for additions to depntiable plant in service from 1978. Other taxes, including gross coal. and an increase in depatiation rates dur- receipts and property taxes. torakd 567.7 Following theacci&nt at theThree ing the year. million in 1979, up from 565 A mi' lion . Mile Island nuclear plant in Ibnnsyl- Georgia Power's total tax expense in 1978.
vania, the Southern ekttric system Nuclear Safety Task Force was formed, with Georgia Ibwer playing a major role in recommending and carrying out Sources of Territorial Generation operating, training and procedural changes that would ensure customers of y.: :c - consistently nreiving this lowrost ( , source of power in a safe and efficient '+___ manner. .,...g Nudeu 5.8*. The direct and indintt costs of ma- _ g, g,y, terials, supplies arxl lalor related to the M; - 3 'i ' d 4 5"* generation and transmission of ekttric-ity rose to 5298.2 million in 1979, a -- oil o.4*. X - 1 d.8 percent increase over 1978. Of major f
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significance was the 595 million spent on - - g gg,, the Compcoy s mam, tenance program,
' which helped achieve higher fossil steam 3 'q. /
generating plant availability and assured _f greater reliability of ekttric service for t s.t customers. Availability at fossil steam units in
' 1979 rose to 81.2 percent, nearly a 5 ' percent increase over 1978. At the Hatch plant, availability was 60.5 per-l cent compared with 71.2 percent in
{ 1978.The primary reason for the de-
; cline was a four-month shutdown of ; Unit I for refueling, maintenance and re-i placement of anchor boks in response to a Nuclear Regulatory Commission 7
ratuirement.
, Net purchased power expenses I 13
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1 l l CONSTRUCTION Construction expenditures for 1979 Power.The total construction cost for operation in Dwemitr 1979.The sw-totaled $608 million.This includes in- the 3,272-mw facility is exptted to be and unit went commercialin January i vestments in major generating projects 52.2 billion. 1980, and the four remaining units are l and constructing and upgrading of trans- Plant Scherer is owned jointly bv scheduled for completion in mid-1980. ' mission and distribution lines, substa- Georgia Power, AIEAG and the City of When all six are completed, the plant's tions and other facilities. During the Dalton. At the end of 1979, negotiations capacity will total 321.300 kw. ) year, work continued at four major gen- were continuing for tha sale of 60 per- Construction work is continuing at crating projects-Vogtle, Scherer, cent of Scherer Units 1 and 2 toOPC the Rock) Alountain site. Ikrause of Wallace Dam and Rocky Alountain. and the consolidation of AIEAG's 15.1 alterations in Georgia Power's hud At Plant Vogtle, a S3.4 billion percent ownership of all four units into growth projections. the 675.000 kw hy-nuclear facility near Waynesboro, the a 30.2 percent participation in Scherer drockttric pumgd storage fxility near principal construction activities included Units 1 and 2. Rome is now scheduled for commercial concrete placement arxl sttel reinforce- The first unit of the Wallace Dam operation in 1987. The estimated total ment for various structures.Through hydmekctric pumped storage facility cost of the project is anticipated to be the end of 1979, S552 million had been near Eatonton. went into commercial in excess of $400 million. invested in this plant,of which 5294 million came from Georgia Power. Employment at the plant increased to 1,750 workers during the year and is Construction Expenditures exgtted to peak at 5,000 workers in the w,616 fy g,ousands ofdollar, carly 1980s. Plant Vogtle, the largest construction project in the Southern 534,is3 ekttric system, will have two 1,160 mw 500,719 units. Unit 1 is schedukd to go into com-458' " mercial operation in 1981, with Unit 2 schaluted for cr miercialoperation * '455 in 1987. GeorgiaIbwer owns 50.7 percent of Plant Vogtle, OPC owns 30 percent, AIEAG,17.7 percent and Dalton.1.6 Itercent. Negotiations continued into 1980 with several Florida utilities which have expressul an intenzst in nurchasing portionsof theplant. Construction activities at Plant Scherer, a coal-fired facility near Forsyth,
- continued during 1979. Units I and 2 are schedukd for completion in 1982
, and 1984, resgttively. Target dates for commercial operation have been revised to 1987 for Unit 3 and 1989 for Unit 4. 13y the end of 1979, S413.7 million had lwn spent at Plant Scherer,of which
$350.3 million came from Georgia i
' Construction escalated during 1979 at Plant
- Vogtle,the Company's $3 billion nuclear facil-l ity near Augusta. 15
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( FINANCING The internalgeneration of fuixls to traditional methods during 1979.The considerably less than comparable first finance facility expansion, improvement Company negotiated a " sale-lease luck" mortgage financing. and replacement increased significantly of its new corporate headquarters buik!- Establishing a greater degree of fi-during 1979. Approximately 67 percent ing in downtown Atlanta.The building, nancial flexit;:ity was one of the Com-of the Company's construction ex[rndi- which will utilize unique energy efficient pany's goals during 1979. In January. a tures were generated internally, which design, was sok! to One Atlanta Associ- 5400 million revolving cndit coramit-compares favorably with the 42 percent ates, a limited part nership. Upon its com- ment was negotiated with a consortium in 1978 and 21 percent in 1977. Never- pletion in early 1981, Georgia Power will of banks. The three-year agreement is in theless, new external financing of 5300 lease the building luck from its owners. addition to the Company's long standing million was requins! to help undenvrite The favorable aspect of a 40-year lease lines of credit and will allow more P xi-construction exirnditures arxl meet re- agreement is the cffective cost to the bility in the timing of future security funding requirements of maturing debt. Company of approximately 8.25 percent, issues. In Februarv, the Company saised 550 million from the sale of two mil-tion shares of Class A preferred stock ( S25 statul value) and S100 million from Interest Rates the sale of 303ear first mortgage boixls. Em/vddedout o//ongIcnndch am The preferred stock, paying an annual s j dividend of S2.56 per share, had an effec- w 7.n - - 7.97 s tive annual cost to the Company of 10.58 = percent atxl was the first preferred issue sina 1976.The loixis, carning an annual coupon rate of 10.50 percent, have an effective annualcost to the Company of 10.59 percent. In August, Gmrgia Power's largest . . single lorxl issue matured. The Com-pany had sold the 5130 million issue in ,
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1974 at an interest rate of 11 percent, ~; and at maturity. S126.1 million was out-standing. The balance of the issue had been presiously nduced through the sinking furx!. In anticipation of this ma-turity, Georgia Power sok! S125 million - - - - of 30 year first mortgagelondsin April with an 11 percent coupon rate, having an effective annual cost to the Company of 11.12 percent. A(klitionally,The Smthern Company made capital cont ri-
, butions of $25 million to common equity.
Innovative financing augmented One of ahe two,355 ton reactor sessels for ihe i Vogile nuclear facility is transported from the ! Savennah River to the plant site. Uccause of l their mammouth sire, the veswls traveled
, oser 2J00 miles of waterways o reach their destinition. I7
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( LOAD MANAGEMENT Involvement in new and existing k ad load control devices and interrupt the energy management program. management programsin 1979 enabled air conditioner compressor for seven to Efforts with industrialcustomers the Company to maintain its icadership 14 minutes. have led to increased usage by business role in an area of increasing importance Since residentialcustomers will of off peak generation, use of second to the Company arxl its customers. account fc,r nearly half of tne ptak shifts where energy costs are lower, and
' develesmental work on an interruptible Tsvo of the most dramatic demand in 1980. other programs con-eiKIcavors, an aerial infrared Tan of tinued to Work toward lessening their service rate.
Athens / Clarke County, and a voluntary impact on demand in the future. At the Company's new headquar-pilot load o'ntrol program were designed Participation by nearly 200 builders ters. under construction in Atlanta, solar priraarily to assist residential customers. enabled the G(xxl Cents I lome program collector installation is scheduled to in Athens."thermograms"showed to enjoy its most successful year of quali- trgin in April 1980. The proposed nearly 4.000 residents theamount of heat fying new homes constructed in the state. photovoltaic system at the Company's escaping through poorly insulated attic Nearly 600 single family homes were South Fulton Operating i leadquaners space of their homes. Widespread cus- certified and, more than 150 apartments has been cancelled while Company and tomer acceptance may lead to a similar and condominiums received the Good Department Of Energy officials evaluate program for the Atlanta area. Cents seal under a new program for a more economical. advanced application The 51.2 million load control multi-family dwelling. at another facility. project, which was introduced in Decem- Customers also showed great inter- The solar project at the Bleyle knit-ter, involves customers with central air est in the Company's newest advertising wear plant at Shenandoah. is on schedule conditioning who use more than 2.000 campaign. Over 200.000 customers with full scale operation planned for kwh a month. Initially, the Company received "Ilow to Budget Your Energv July 1981. sought 6.000 volunteers. but more the Way You Budget Your Groceries'l than 8.500 had applied by mid-January. a brochure encouraging customers to Scheduled forimplementation this read their own meters, establish an summer in all seven Company divisions, energy budget and learn electricity usage the projwt features radio-activated of household appliances. i devices that will be installed on the cen- Commercialengineers assisted l tral air conditioning units at the volun- approxir 1ately 30.000 businesses with teer residences. After evaluating system load management recommendations, demand. the main power dispatcher can energy and financial analyses. building activate the entire system from Atlanta. management recommendations. and the ; A radio signal beamed to a transmitter in implementation of kilowatt demand l etrh of the seven division office points control equipment. will relay the signal to the individual Assistance toover half of the 187 school systems in the state was initiated in the summer, and the Company had
. surveyed approximately 100 schools at the end of 1979. A joint project between ' the Citizens and Southern National i
Bank arxl the Company resulted in national recognition for a commercial l l Ceromers, healing conservation pleas, are re-ducing iheir energy usage. And, a new load i control program may help to cut usage even more. 19 A
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PEOPLE People continue to be Georgia Power's While the report brought some The chairman of one utility aided most important resource. Although gen- problem areas to management's atten- by Company employees wrote: " Georgia crators produce the electricity that is tion. overall results paint a picture of a Power Co. crews came down there with distributed through mile after mile of company whose people like what they are the attitude they were the best and could power lines, employees are the key to the doing. feel their jobs make good use of handle anything. and they proved they Company's success in providing our their skills and abilities, and rate their job were. . All we had to do was point them prmluct to the people of Georgia. security and co-workers favorably. in the right direction. and we were The number of Georgia Power em- One of the most positive effects of assured the job would be done" ployees increase i from 12.067 in 1978 job satisfaction is employees' willingness The Company's outstanding safety to 12.522 in 1979. and S228.3 million to gotheextramile:'InSeptember 1979 performance in 1979 further evidencul in wages was paid during the year. tbis was vividly demonstratal when employee professionalism. Three WagenegotiationsbetweenGeorgia 1.275 line crewmen and support person- Georgia Power generating plants. as we!! Power and local 84 of the International nel were called on to help restore service as three work units. rn ived the Edison I3rotherhoal of Electrical Workers ex- to storm-ravaged areas along the Atlantic Electric Institute Safety Award for com-tended into 1980 for the Company's seaboard and the Gulf Coast. pleting nwre than one million man-5.407 covered emplosces. Georgia Power employees took less hours witnout losing one workday due to An employee opinion survey con- than 24 hours to restore power to most of a discbling injury. In the Southeastern ducted by an independent research firm the 9.200 customers left without power Electric Exchange's Safety Performance in 1979 gave Georgia Power manage- after Hurricane David hit the South- Contest Standings. the Company placed ment insight on what empkwees think eastern coast. Repair work was not to end second during competitic., with eight about their Company. With 75 percent there. however. utilities having a similar-size work force. of the work force using this forum to Even before the pieces were picked Georgia Power's safety record impros ed express their opinions, participation at up from David. a storm swept along the for the fourth consecutive year with the Georgia Po ver was above average com- Gulf Coast. Termed a worse storm for frequency rate of disabling injuries show-pared to results of similar suneys utilities than I furncane Camille:Tiurri- ing a raluction of almost 21 percent l thrcaghout the nation. cane Frederic devastatal electrical sys- from 1978. l tems in Alabama. Florida and Alissis- I sippi. The ensuing deanup-spanning several weeks-was the most massive ! movement of men and equipment the Company had ever undertaken. llesides working exhausting 12-and 16-hour days. employees lived with the same hardships and inconveniences as residents. Ilurricane Frederic's victims, however, did not fail to sa. "thank you" to the men who had tirelessly climbed poles and connected lines to restore their power. Convoys of Georgia Power tmcks rolled into storm-crippkd areas amid cheers from grateful townspeople. Alany wrote to Company officials and news-papers throughout Georgia expressing their appreciation for a job well done. , Employees such aslineman Randy Sewell are i he t Company's most important resource. 21
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MANAGEMENT REORGAN ZAT ON Top management was reorganized in brought customer-oriented functions Also reporting to AlcKenzie will be 1979 to enhance the Company's ability to closer together. a yet-to be named senior vice president of address luth internal and external needs Thus, a management organization strategic planning. who will identift in a more efficient and cronomical man- was adopted incorporating greater atten- strategic issues and assist senior manage-ner. A comprehensive organizational tion to external affairs and strategic ment in long-term corporate planning. study by a nationally recognized con- planning as well as consolidating opera- The financial area. headed by sulting firm, formed the basis for the re- tions and creating a four-man Office of Wilson. continues its role in external organization. the Chief Executive. financing and maintains a close relation-The shaping strategy in the re- The chief executive team is com- ship with the financial community. organization plan was to" improve profits posed of President Robert W. Scherer Wilson oversees the accounting. pur-through more efficient management, and three executive vice presidents- chasing. internal auditing. treasurv and aggressive initiatives for rate increases, James iI. A1 iller,Jr. operations: 1Iarold corporate secretarv functions. Ioad management. .and longer-term C. AlcKenzie. Jr.. external affairs and Orher management activity during diversification" strategic planning and Allen B. Wilson, the year included the election of two new An important early recognition of financial. members to the Company's board of the study was that external demands The operations, or internal side of directors. would play an ever increasing role in the the business headed by A1 iller. brings L G. Ilardman,III, chief executive Company's ability to meet responsibili- together areas dealing with day-to-day officer and treasurer of i larmony Grove ties to its customers and shareholders. operations of the Company and senice Alills, Inc., was elected to fill a luard No matter how efficiently operated,it to customers. Reporting to A1 iller are vacancy. Robert Strickland. chairman was apparent the Company could not four senior vice presidents-W.E. of the board of Trust Company of continue to operate successfully unless Ehrensperger, power supply:11.G. Georgia, was elected to succeed Gmrge it could create a positive regulatory cli- Baker. Jr. customer service: J. A. Gantt, S. Craft, who retired in November mate and an understanding attitude division operations, and R.P. Ilead. after 14 years of service. among customers, legislators and administration. opinion leaders. Ilead's responsibilities were ex-At the same time. the study re- panded to include general services and realed a need toget operations into a risk management in addition to his prev-working unit that incorporated all me- ious duties over employee and labor rela-chanical aspects of the business and tions and management information systems. Baker's duties now encompass energy services as well as transmission and distribution operations. Ileaded by AlcKenzie,theexternal affairs and strategic planning area focuses on outside forces and long-range issues that ultimately can deter-mine the success or failureof the Company. Reporting to AlcKenzieis a wnior vice president of external affairs, G.W. Edwards, Jr. Ilis responsibility encompasses public affairs. economic services and consumer affairs. M:nagement reorganization resulted in a four manofficeof the Chief Executive. Surround-ing President Robert W. Scherer are executive vice presidents liarold C. McKenzie, Allen B. Wilson and James 11. Miller. 23
SesnennaryGfCpe %: In thousands 1979 1978 1977 19'76 Years Ended December 31 51,519,942 51.475.024 51.301,237 51,170.046 Operating Revenues. . .. .. . .... .. .. .. Operating Expenses 690,953 935,210 921,465 813,987 Operation and maintenance. . . . . . . . . .. . . . 133,888 118,208 109,944 100,347 Depreciation and amortization. . . . ...... . . . 67,736 65,364 58,939 53,630 Taxes other than income taxes. . ... . ... .... .. 118,424 126.953 118.514 94.645 Federal:uxi stareincome taxes. .... . ... .. . 1,255,258 1.231,990 1,101,384 939.575 Total Operating Expenses. . . . . .. . .. 2M,684 243,034 199.853 230,471 Operatis.g income. . .... . ... . .. .. ..... Other Income Allowance for funds used during construction'
- - - 49,871 Debt and equity. . . . . . . ...
40,224 36,774 29,792 - li uity. l . ....... . .. ... ... 12,986 26,895 15.736 37,608 Other income les deductions. . . . . .. . 331,803 295,%1 267,253 293,328 income llefore interest Charges. . . . . . . 189,587 1 6 ,117 150,383 144,348 Interest charges. .. . . . ... .. . (38,082) _ 32,067)
- (25,2%) -
Allowance for debt funds usal during construction * . . . 180,298 166,494 142,166 148,980 Net Income. . . . ... . . . . 34,786 30,480 30.480 27.862 Preferred dividends. . . .. . . 5 145,512 5 136.014 5 111,686 5 121,118 Net Income After Dividends on ' referred Stock. . .
- Eifective Januaq I.1977 FERC specified a procedure for de. ininterest charges and the equity portion be credited to other termination of the rate). computing the allouanceforfunds income. Prior to 1977the entire allouance u as creditedto other used during construction and directed that the portion of the income.
allouance allocable to borrou edfunds be reportedas a reduction () Denote decrease MANAGEMENT'S DISCUSSION OF
SUMMARY
OF OPERAT ONS The 1979 results of operations are discussed in detail in other Operat ion and Maintenance. The significant increases in oper-sections of this report.The following factors had a significant ation and maintenance expenses occurring each year since 1976 effeet on the results of operations for the thne years since 1976. ha e resulted primarily from escalation in the cost of fuel for electric generation and variations in purchasul power expenses. Operating Revenues. Although kilowatt-hour sales de- Total fuel costs increased 546.3 million or 8.4% in 1979. This moderate increase was a result of increasul plant availability, creased 2.1% in 1979, comparn! to increases of 0.7% in 1978 arxl 6% in 1977, revenues increased in each period as a result of long-term fuel contracts and the addition of a second nuclear rate increast s arx! rnuvery of increasal fuel and purchased power unit during the last foui months of the year. Fuel costs in cents costs.The du-line of kilowatt luur sales is primarily the result per kilowatt-hour generated were 1.27C in 1977,1.37C in 1978 of the steady increase in generating capability of our resale cus- and 1.42c in 1979, tomers, as well as conservation price elasticity, arxl general eco- Purchasal power costs increased substantially in 1978 over nomic conditions.The average revenue per kilowatt-hour sold 1977 because of fewer sales to the Southern System Power Pool and increased contractual obligations for the purchase of capacity has increasul from 2.91C in 1977 to 3.31c in 1978 to 3.48C in 1979, and energy from jointly owned plants. 24
Georgia Power Company 1975 1974 1973 1972 1971 1970 1969 S t.079,175 5 787.919 S 603.116 5 511.361 5 429,414 S 379.529 5 334.242 615,343 515,497 338,966 287,370 246,993 203,285 166,447 89,677 80,087 68,552 57/)11 49.403 42,502 38,957 46.548 37,203 30,806 27,154 26,304 23,810 20.935 109.007 8.213 33,145 29.421 20.870 31.092 38.590 860,575 641.000 471,469 400.986 343.570 300.689 261.929 218.600 146.919 131.617 110,375 85.844 78.840 69.313 56,837 63,683 45,867 31,053 19,469 13,902 7.070 18.351 1.948 2.072 1.882 2.624 2.831 2.200 293,788 212.550 179,586 143,310 107,937 95,573 78.583 136,207 126,665 91.525 67.866 52,070 38,942 28,863 157,581 85.885 88,061 75.444 55.867 56.631 49,720 18.451 17.I90 17.190 12.299 10.954 8.131 6.3% 5 139.130 $ 68.695 5 70.87I S 63.145 5 44.913 5 48.500 S 43.324 l In 1979, purchased power &treased S51 million or 61.1% Taxes or her t han Ina>me Ta xes. Increases in each period since due to impromi plant availability. additional generating ca- 1976 are due primarily to increases in the property tax base, and. l pacity, arxi cndits from off sy :,em energv sales to non-affiliated in certain instances. to t he rates applicable to property raxes. gross companies. Fuel and purchased power costs are bilkd to custom- nteipts arxl franchise taxes (based on res enue) and pay roll taxes. l crs by law tbrough base rate tariffs which are adjusted as txtrssan-by the Cavrgia Public Sen ice Commission to refkct increases or Income Ta xes. The variations in inn ..ie taxes are due primarily decreases in such costs. to changes in income before irxume taxes arxl to a reduction in All other increases in operation expenses were attributed the fale al income tax rate in 1979 from 48":. to 46": principally to escalating costs of labor. materials, arxl senices, together with the adlition of facilities. Other Income.The uguity ivrtion of alkmance for funds usul l Alaintenance extwnses increased significantly in 1977 due to during mnstruction increased during each perial bec..uw of ihe implementing a continuous maintenance program desigrxd to increasul level of constmetion work in progress. Other inconw improve generating plant unit availability. Alaintenanceexpen<es increases in 1979 are due to an increase in interest inmme on have only slightly increasul in years 1978 and 1979 as a result remivrary cash investnwnts and. in 1977, are due to a gain on of new facilities being placulin senice. sale of facilities, net of income taxes. Depreciation and Amortization. Increases are due principally Interest Charges and Preferred Dividends. Inctrases in inttr-to additions to depreciable plant in service each year and an in- est charges and prefernd dividends since 1976 are due to the creaw in depreciation rates in 1979.The composite straight line issuance of additional securities at higher intenst and disideixl depreciation rates were approximately 3.7% in 1979. 3.6% in rates in order to finance the Company's mnstruction program. 1978 and 3.3% in 1977. 25
WA 1979 1978 1977 1976 Years EndedDecember31 Customersemlofferiod 1.025,914 997,8M 974,018 Residentia!. . . . . . . . . . . ....... . .. . . 1,052,129 127,203 125,324 128,297 133,410 Commercial. . . . . . .. . .. .. ... 2,786 11,913 12,096 10,860 hidustrial. .. .. . .. .. . . . .. . 1,525 1,488 1,449 1.819 Other. .. . ..... . . . . .. ... 1,192,770 1,164.822 1.138,470 1.!!2.063 Total Customers. . . . . . . . .. .. . . Kilowatt-hour Sales thouram/s 10,829,488 10,470,674 9,512,592 Residential. .. .. .. . . . . . 10,340,375 8.827,281 10,278,012 9,712,599 Commercial. . . . .. .. .. . . ..... 8.735,947 15,682,025 13.236.290 12,629,263 hidustrial. . . .. ... . .. ... ..... 16,225,971 226,113 216,621 213,058 Alunicipal street lighting. . .. . . 232,629 Rapid transit authority. . . .. . . 13,426 - 8,580.211 9,617,229 9,262,454 Sales for resale. . . . .. .. 7,632,216 44,145,118 43.818.826 41,329,966 Total Territorial sales. . . . . .. . . . 43,180,5M Sales to utilities outside territory. . . . . . 54,128 - 43,234,692 44,145.118 43,818.826 41.329.966 Total Sales. . . . .. . . . . . Revenues thousam/s 5 414,500 5 417,6 % 5 358,933 5 315.226 Residential. . .. . ... . . .. . 386,176 369,808 385,889 355,405 Commercial. . . .. . . . . 290,983 488,014 449,719 328,407 Industrial. . . . . .. . . . . . . 8,542 10,530 9,856 8,957 Alunicipal street lighting. . . Rapid transit authority. .. 441 - 201,280 213.319 203.914 191.110 Sales for resale. . . . .. 1,460,398 1,286.100 1,161,266 TotalTerritorial Sales. . . .. 1,503,971 Revenues from sales to utilities outside territory. . 1,261 - 1,505,232 1,460,398 1,286,100 1,161.266 Total Revenues from Sales. . . . 14,710 14.626 15,137 8,780 Otherresenues. . . . . . 51,475.024 51.301.237 51,170,046 Total Revenues. . . . . . . . . . 51,519,W2 10,719 10,654 9,892 Average Use per Residential Customer kuh . . . . 9,953 4.01 3.86 3.43 3.31 Average Revenue per Kwh residentialsales.? . . 3.31 2.94 2.81 Average Revenue per Kwh tota / sales.c . . .. 3.48 Electric Energy Generated and Received thousands ofluh Generated-after station loss and use: 42,168,722 40.380,035 41,761,207 38,736,551 Fuel. . . . . . ... . 1,540,014 1,6 % ,374 1,979,727 Ilydro. .. . . . . . 1,990,518 4.902.837 2.842.631 3,575,959 lbrchased and interchange (Net). . . .. 1,890,693 46,019,933 46.822.886 46,300,212 44.292.237 Tota 1. . . ... ... ... . .. .. . . . Cost of Energy Generated and Purchased thousam/s 5 598,254 5 551,971 5 531,384 5 435,551 ! Fuelgeneration-Fuel. . .. . . .. .. .. . 133,602 131,847 125,840 %,474 {}ther... . . . . ..... . .. . 3,736 4,592 4.153 3,556 f lydrogeneration. . . .. . . .. .. ... 28,519 79,470 11,466 33,542 Purchased and interchange (Net). . . . . . . . . .. . .. 5,2% 5,346 5,201 4,622 Other production expenses. ...... ...... .... 5 770,263 5 772.787 5 677,450 $ 573,925 Total Cost of Energy Generated and Purchased. . Average Cost of Fuel per Kilowatt. hour 13.67 12.72 11.24 Generation / mills /. . . . . . .... .. ....... . . 14.19 26
d Georgia Pouer Company 1975 1974 1973 1972 1971 1970 1969 918,638 942,801 916,156 886,292 860,195 853,932 838,476 129.931 130A38 130,792 127,785 123,804 119,749 116.547 3,291 3,282 3,258 3,026 2,591 2,544 2A59 1,783 1,699 1,636 1,581 1,556 1,498 1,391 1,083,646 1.078.223 1,051,842 1,018,684 988.146 977,723 958.876 9,260,034 9,013,966 9,147,452 8,193A56 7,773,% 7 7A03A31 6,569,322 8,795,788 8,508,118 8,506,755 7,686,139 6,924.334 6A07,297 5,M7,680 11,654,106 12,2 %,202 12,270,130 11.390.884 10,432,550 9,740.259 9,247,359 2nt,009 197,065 184,263 175,388 168,651 160,010 151,741 9,095,581 8,590,G15 8,305,918 7,146,068 6,297A99 5.886.650 5.111,087 39,009,518 38,605,396 38A14,548 34,591,935 31,597,001 29,597,677 26,727,189 157,013 211.246 548,773 105AS4 39,009,518 38.605,396 38,414.548 34,748,948 31,808,247 30.146A50 26,832,673 5 301,541 5 223A17 5 185,171 5 155,614 5 134,534 5 121.8 % 5 108,168 317,879 233,342 187,624 158,709 132,932 117, % 9 101.589 275,591 191,% 2 143,129 121,132 102A70 88.226 80.202 8,012 6,688 6,327 5.689 5,002 4,670 4A00 166,777 122,316 74,527 61,938 47,761 37,960 32,938 1,069,800 780,725 596,778 503,082 422,702 370,721 330,297 2.977 1,813 4,375 862 1,069,800 780,725 596,778 506,059 424,515 375,096 331,159 9,375 7,191 6.338 5,302 4,899 4A33 3,083 51,079.175 5 787,919 5 603.116 5 511.361 5 429A14 5 379,529 5 334,242 9,817 9,677 10,142 9,395 9,146 8,732 7,910 3.26 2A8 2.02 1.90 1,73 1.65 1.65 2,74 2.02 1,55 1,46 1,33 1.24 1.23 32,288,305 31,998,279 29,733,077 28,303,645 24,586,89.$ 22,360,236 20A36.115 2,116,597 1,875,116 2,205,114 1,785,098 1,S07.115 1,336,695 l',669.588 7,561,458 7,812,592 9,580,615 7,641,013 8,095,268 8.930A34 7,149.193 41,966,3g 41,685,987 41,518,806 37,729,786 34A89,276 32,627,365 29,254.8 % 5 359,549 5 292,238 5 157,767 5 132,879 5 110,966 5 82.878 5 63.616 57,193 39,007 26,730 20,916 16,632 12,889 12,712 3,010 3,402 2,725 2,171 2.227 1,914 2.757 86,580 84,128 73,794 66,741 58,361 53,728 40A35 3,875 3,236 975 559 488 406 299 5 510,207 5 422.011 5 261,991 5 223,266 5 188,674 5 151,845 5 119,849 11,14 9.13 5.31 4.69 4.51 3.71 3.11 27
Georgia Power Company . BahnenaShes@r In thousands 1979 1978 Decemher 31 ASSETS Utility Plant 54,415,038 53 861,928 Ibot in senice, at original cost. . . . . . . less- Acamulated provision for depreciation. . . . . . 1,006A39 390.394 3,408,599 2,971.531 46,795 49,563 Nuclear fuel, at amortized cost. . . . . . 846,060 861.675 Construction work in progress (Note 3). .. . . . .. 4,301,454 3.882.792 Other Property and Investments Southern Electric Generating Company (Note 4 ). . . . 16,400 16A00 Nonutility property. at rost. . . .. ... .. .. 3,254 3.251 19,654 19.651 Current Assets Cash. . . . . 6,081 6.395 51,690 241,902 Temporaq cash investments, at cost. . . . Receivables,less accumulated provision for uncollectible accounts of $ 1,200.000 in 1979 and $1.220.000 in 1978. 179,321 135,535 Fossil fuel stock, at average cost. . 245,341 198.894 Alaterials and supplies, at average cost. .. .. 27,700 21.985 Prepayments- . . .. . . 2,388 2.173 512,521 606.884 Deferred Charges Debt expense, being amortized. . . 6,992 6,574 Aliscellaneous. . . . . 6,576 8.514 13,568 15.088 54.847,197 $4.524A 15 CAPITALI7.ATION AND LIAlllLITIES Capitalizatien (see accompanying statements) Common stock equity. . . . . 51,210,868 51.173.036 Preferred stock. . . 357,844 307.844 Preferred stock subjeu to mandatory redemption. 71,250 75.000 long-term debt. . . .. .. . . . 2,168,272 1,953.553 3,808,234 3.509A33 Current Liabih. .ttes Sinking fund requirements on preferred stock (Note 8 ). 3,520 - long term debt due within one year. 17,169 133.977 Acmunts payable. . .. ... . . . 162,177 125,025 Revenues to be refunded (Note 2). . . . 5,067 6,999 Customer deposits. . . . . . 26,282 24A64 Taxes accrued-Federal and state income. . . . . 23,679 11,095 Other. .. .. .. . .. . . .. 28,791 26.338 Interest accrued. .. . ... . . . . . . 52,036 49.685 13,280 11,441 Aliscellaneous. . . . .. .. . .. . 332,001 389.024 Deferred Credits, etc. Accumulated deferred incot,e taxes. . .. . . ... 501,009 438.885 Accumulated deferred investment tax credits. . . . . ... 193,980 181.% 2 Aliscellaneous. . .... .. .. . ... . . . , 11,973 5.111 706,962 625.958 Commitments and Contingent Atatters(Notes 2,3,4 and 9) 54,847,197 $4.524.415 The accomtunying notes are an integraltart of these statements. 28
i 4 Stankennerou ofCapitalizations In thousands Georgis Pbuer Compn.r December 31 1979 % of Toul 1978 % of Total Common Stock Equity Common Stock (without par value) authorind 15,(XX),(XX) sharss, outstanding 7,761,500 shares. 5 344,250 5 344.250 Other paid-in capital. 652,800 627.800 Premium on preferm! stock (Note 8). 1,101 889 Earnings retainalin the business ($29.248.(XX) restrictal against payment of cash common dividends). . . 212,714 200.097 Total common stock cquity. 1,210,868 31.8% 1.173.036 33.4 % Cumulative Preferred Stock (without par value) authorind 14.(XX).000 shares, outstanding 6,578A39 shares Class
$100 statal yalue-
$4.60 to $6.60 Series. I17,&i4 117.&14 57.72 to $7.80 Series. . 105,(XX) 105.000 58.20 to $9.08 Series. 35,000 35.000 525 stated value-52.52 Series. 50,000 50.000
$2.56 Series. 50.(XX) -
Tot al (annual dis iderx! requiren ent
$27.3?O.000at 12/31/79). 357,&i4 9A 307.R14 8.8 Cumulative Preferred Stock (without par value),
subjat to mandatory rak mption (Note 8) authorind 3.000,000 shares, outstanding 2.990.800 shares 525 stated value-
$2.75 Series. . . 74,770 75.(XX)
Irss amount due within one year. 3,520 -- Total (annualdividend requirement
$8.225,000 at 12/31n9). 71,250 1.9 75.(XX) 2.1 long-Term Debt First mongage bonds-(Note 7.
Maturity Interest Rates August 1,1979. . I1%. . 127A00 April l,1980. . . . . 25% 15,tXX) 15.(XX) 1981. . .. . 38 2%to 3%% . 20,tXX) 20.857 July 1.1982. .3%%. . 20,000 20.(XX) 1983. . . .. . 34% to 37a%. 8,073 9.258 1981. . 3th% to 34% . I1,(XX) 11.903 1985-1989.. .. .. . 31a% to 5 u% . 56,966 56.966 19901991.. . 4%% to 47 8 1. . 103,000 103.000 1995-1999.. . . . 4%% to 8!s1. 246,868 246.868 2(XX12001. . 7%% to 11%% 952,239 959.757 2(X)5-2009. . .95s%tollh %. 565,968 347,500 Total first mortgage bonds . 1,999,114 1.918.509 Other long-term debt (Note 6). . . . 199,820 181.673 Unamortized debt premium (discount) net. . . (13A93) (12,652) Total long<erm debt (annual interest raluirement $183,310,000 at 12/31/79).. 2,185A41 2.087.530 Less amount due within one year. . .. 17,169 133.977 long term debt, exchaling amou.:t due within one year. 2,168,272 56.9 1.953.553
' 55.7 Total capitalizatiort . ... .. . . 53,808,234 100.0 % $3.509A3; 100.(r:,
The accomfunying notes are an integralprt of these statements. 29
Georgia Pouer Company Stakmenk ofIncome in thousands . 1979 1978 Years EndedDecember 31 51.519,N2 5 1.475,024 Operating Revenues. . ...... .. . . .. .. .. Operating Expenses Operation-598,254 551,971 Fuel. . .... .. ... . . . 28,519 79,470 Purchased and interchanged power net. . . . . . . 182,386 168,761 Other. . . ...... . ... . . . 1 5,051 121,263 Maintenance. . . . .... . ... . .. . . 133,888 118,208 lkpreciation and amortization. . . .. . . . . 67,736 65,364 Taxes other than income taxes. . . . . . .. . I18,424 126,953 Federal and state income taxes (Note 5). . .. . 1,255,258 1.231.990 Total operating expenses. .. . . . . . 264,684 243,034 Operating income. . ... .. ... . . .. Orher income - 40,224 36,774 Allowance for equity funds used during construction. 3,323 4,421 Gain on sales of f acilities(Note 4). . 34,472 18,336 Interest income. . . . .. . . . Other. net. . . . ... .. . . . . 3,415 2A73 Income taxes applicable to orher income. . . . (14,315) (9A94) Income before interest charges. . . . 331,803 295.544 Interest Charges I85,029 158,460 Interest on long-term debt. . . . Allowance for debt funds used during construction. (38,082) (32.067) Other interest expense. . . . ... . . 4,558 2.657 Net interest charges. . . 151,505 129.050 Net Income. . .. .... .. . . . 180,298 166A94 34,786 30A80 Dividends on Preferred Stock. . . .. . . Net Income after Dividends on Preferred Stock . .
$ 145,512 5 136.014 Statements ofEarnings Retained in the Business in ihousands 1979 I978 Years EndedDecember31 5 200,097 5 183,308 Balance,beginningof period. . . .. . . .
Add (deduct): 145,512 136,014 Net income after dividends on preferred stock. .. . (l19,225) Cash dividends paid on common stock. . . . . . (131,100) Preferred stock issuance expense. . .. .. . . (1,795) - Ilatance, end of period (restricted as indicated on 5 212,714 S 200.097 statements of capitalization). . . .... . .. . . . l Statements ofOtherPaid-In Gspital in tbousands 1979 1978 Years Endedi%mber 31 l Ilalane, beginning of period . . . .. .... . ... ... . 5 627,800 5 557.800 25,000 70.000 Cash contribution to capital by parent company. . . . . . . 5 652,800 $ 627.800 Balance, end ol period. . . . . . . . . . .. .. . .. .... . The accomtunsing notes are an integralpart ofthese statements. 30
, Statennersis ofSonsreesGf Georgia Pouer Compny Eusedsfer Gross PropertyAdditiores in ihousands Years EndedDecember31 1979 1978 Sources af Funds for Gross Property Additions: Net income. . . . .... . s180,298 5166.494 Irss-Dividends on common stock. . 131,100 119.225 Dividends on preferred stock. . . . 34,786 30.480 165,886 149.705 14,412 16.789 Principal noncash itcms-Depreciation and amortintion. . . 153,962 132.925 Deferred income taxes. net. . . 80,286 77.909 Investment tax credits. . 32,395 57.220 Alknvance for debt and equity funds used during construction ( AFUDC -Gross) . (78,306) (68.841) 202,749 216.002 Decrease (increase) in net current assets, excluding long-term debt and preferred stock due within one , ear - Cash and short-term investments. 190,526 (21.752) Receivables. . (43,786) (l6.079) Fossil fuel stock. . . (46,447) 12.602 Materials and supplies. . (5,715) t3.139) l Revenues to be refundal. . (1,932) (6.434) Accounts payable. . 37,152 7.6ni Taxes accrued. 15,037 (41.663) Interest accrued. 2,351 4.337 Other, net. 3,442 2.926 150.628 (61.598) Other. net including allowance for debt and equity funds used during construction. . . 53,210 55.269 1 Total funds from internal sources. . 406.587 209.673 Saleof securities-First mortgage bonds. 225,000 200.000 Bonds reanluired and retired. . (144.395) (14.019) 80,605 185.95I Preferns! stock. . 50,000 - Preferred stock reacquired. , (230) - Capital contribution by parent company. . 25,000 70.0(X) Increase in other long-term debt. . . 18,147 2.598 Sale of facilities. net book value. .
, 27,507 32.497 Total funds from external sources. . 201,029 291.n16 .
Gross Property Additions (including AFUDC net in thean.ount of l i 560.171 in 1979 and $52.879 in 1978). . .. 5607,616 S500.719 Tbc accompn ning notes are an integralprt of these statements. 31
r
]
fits at Decembr 31.1979.The unfundal prior service cost NOTES TO under the plan and supplemental contracts amountui to approxb maely at DnemW UM anOs king anw December 31.1979 STATEMENTS gf9m tinx! over a period of approximately 15 years. Depreciation. Depreciation is provided on the original cost of
- 1. SU313I ARY OF SIGNIFICANT depreciable utility plant in senim. principally on a straight line ACCOUNTING POLICIES: basis over the estimated composite seniu life of the progrrtv.
General. The Company is a wholly owned subsidiary of The The depreciation provisions approximated 3.7"L and 345"o of the Southern Company u hich is the parent company of four crerat. average cost of depreciable utility plant during 1979 and 1978. ing companies ami a system sen ice company. The operating com. respectively. Such provisions inc!ude a factor to pro.ide for the panics are engaged in the business of prosiding electric utility expected cost of decommissioning nuckar facilities. The Com-senice in tour southeastern states. O twrating contracts among pany's portion of the cost of decommissioning these jointly owned the companies covering interconnection arrangements. inter. facilities. based on current price levels and decommissioning chance of electric poner and joint ownership of generating facil. pmmptly after the unit is taken out of senice. is estimated at ities. are subject to regulation by the Federal Energy Regulatory Commission (FERC) and/or the Securities aa! Exchange Com-arrrmimately 525JXXUXX) each for the two units at Plant I latch. This estimate will be adjustedi rriodically to reflect chang-mission. The ssstem sen ice company pros ides at mst. technical ing price levels and technok3gv. When property subject to de-and ether socialind services to the parent company and to each
~
preciation is retired or otherwise disposed of. its cost, together of theoperatingcompanies. with its cost of remcxal less salvage, is charged to the accumu-The parent company is registered as a holding company lated provision for depreciation. under the Public Utility lolding Company Act of 1935 and it and its sulx liaries are subject to the regu!aton provisions of the 31ainten nce. The cost of maintenance repairs, and replace-Act. The Company is also subject to regulation ly the FERC and nwnt of ruinor itenu of property is charged to maintenance ex-ihe Gmrgia Public Sen ice Commission (GPSCl and follows gen. pense ccounts.The cost of nylacements of property (exclusise erally acupted acmunting principles and the accounting policies of minor items of property)is charged to the utility plant accounts. and practices prescribed I y the respective commissions. income Taxn Bw Company follows deferred income tax ac-Utility Plant. Utility plant is stated at original cost. Such cost munting for all signdicant income tax timing differences. Fhe includes applicable administrative and general costs. payroll- Company is included m the consolidated federal income tax re-related costs such as pensions. taxes and ot her f ringe benefits and turn filed 15 The Southern Company. See Note 5 for further the estimated cost of funds used during construction. mformation regarding income taxes. Revenues. Resenues are included in inconw as bilhl monthly Allmvance for Funds Used During Const ruction ( AFUDC). to customers on a es cle billing basis. AFUDC nyresents the estimated debt and equity cost of capital funds which are applicable to utility plant while mxler construc-Fuel Costs. Fuel costs aw e sirnsed as the fuel is consumed. tion.The composite rate used by the Company in 1979 and 1978 The Company is allowed by state law to ntorer fuel costs and to capitalize the cost of funds devoted to construction was 7.5"L net purchased energy costs through a fuel cost recovery me- (net of income tax) as directri Iw the GPSC.The Company
~
thanism which is adjusted as necessary ly the GPSC to refk.ct accounts for the income tax effect ot capitalized debt cost as a increases or decreases in such costs. charge to income tax expense associatal with operations with a The cost of nuclear fuel, including a prosision for the esti- corresponding credit to allowance for debt funds used during mated cost of permanent storage of spent fuel. is amortiini to mnstruction.' fuel expense based on the quantity of heat pnxluced for genera-tion of electrit energv. Such amortization was Sil.153.(XX)in 2. IIATE PROCEEDINGS: 1979 and 56.358.000 in 1978. Finaldisposition of the spent fuel On December 1.1978. the Company fikd new wholesale rates with the FERC.The new rates were placed into effect on July may require future adjustments to fuel expense. Ibxling ulti-1.1979, subject to refund, and were designed to increase whole-mate disposition. sutficient storage capacity for spent fuel is asailable at Plant ilatch through 1985.The Company is cur- sale revenues b' appnximately 518.7 mittion annually (revisal fro.n 58A mdlion due to settlement of the December.1977, rently exparxling its storage facilities and upon mmpletion there wholesalecase:andrevisedin April,1979 toreflectcertain will be suf ficient storage capacity through 1999. adjust ments dictated by the FERC). The Company has reached an Ibnsion Costs. The Company has a trusteed and noncontrib- agreement in principle concerning this rate proceeding with its u holes de customers, subject to final approval from the FERC. As utory pensen plan which covers sulutantially all regular em-part of the ,greement in principle. the Company would retain ph) sees.The policy of the Company is to fund each year's on an annual basis approximately 55.9 mi!! ion in rates.The Com-accrued pension costs for the plan which amounted to pany has excluded from income the wholesale revenues ar plicable 516.501.000 in 1979 and 513 AS6.000 in 1978. Of these to 1979 which are exgtted to be refuixled in 1980 in addi-amotmts. 510.709.(XX) in 1979 atx! 58.519.000 in 1978 were tion to the 55.9 million the agreement in principle would pro-charged to operating expeuses and the balance was chargul to construction and other acmants.The pension fund assets are ex- vide the Company approximately 5750.00() annu.dly from supplemental contracts. pectal to excent the actuarially computed value of vested bene-32
Effative August 15,1979, the Company wasgranted new discussions with'sonn Florida utilities regarding the sale of addi-retail rates by the GPSC designed to increase annual retail rev- tional interests in Plant Vogtle.The construction additions enues $122.9 mi!! ion. After an appeal to the Fulton County shown in Note 3 have not been reduced in anticipation of the Superior Court, the case was remanded to the GPSC for furtlwr proposed sale of additional interests in Plant Vogtle.The mn-
' proaedings. Effective January 10,1980, the GPSC granted an summation of any future sales is subject to all requisite regu-additional 546.1 million in annual retail revenues. latory approvals, the completion of agrwments satisfacory to the respective parties, and completion of satisfactory financial agree-
- 3. CONSTRUCTION PROGRAh!, FINANCING AND ments by the proposed purchasers. At December 31.1979, FUEL CO51511T51ENTS: Gmrgia Power Company's percentage ownership and investnwnt The Company is engaged in a continuous construction in these jointly owned facilities were as follows:
program and presently estimates construction additions to be Totai construmon S675,271.000 for 1980 and additional amounts of $799,136,000 Megawant Percent Plant wor k in for 1981 and $761.344,000 for 1982.These additions include cam ownense in senic Pnmeu E. I. f latch '"" "M capitalized allowance for funds used during construction and ex.
. Nuclear Plant t.Mo 50.l* 5469,416 $ -
clude amounts applicable to portions of facilities sold. Also ex- 4. w.vo,o, cluded from these estimated additions are the portions of Plant Nuclear Plant 2.42o 30.7 - 29 t.se
. Plant scherer 4.272 83.5 -
350.139 Scherer proposed to be sold (see Note 4). The construction pro- Piant wansiey t ,7 50 33.3 273.969 _
' gram is subject to periodic review and revision, and actual con-struction costs to be incurred may vary from such estimates The Company provides for its own construction financing b-cr se of various factors such as revis(d load estimates the and includes its proportionate share of plant operating expenses availability and cost of capital and the granting of timely and in the corresponding operating expenses in the Statements of In a ne. Company is mntraaually oMgated to mmpgte adequate rate increases by appropriate commissions.
The Company's coristruction allitions are expected to be those plants stdl under construction and acts as agent with financed from the issuance of preferred stock and long-teim debt, repect to opuating and mamtaining the plants. the receipt of common equity contributions from The Southern In nnection with these sales, the Company has entered Company notes payable, asset sales and from intemal sources. int greements whereby the Company is required to purchase The Con 5,pany incuhred no short-term debt during 1979 or 1978. declining fractions of OPC's and MEAG's capacity and energy of At the beginning of 1980, the Company had 5445.000.000 of the respective generating units during a period of up to eight unused lines of credit, 5400,000,000 of that amount in re. years following commercial operation, such purchases to be made volving credit for a period of three years under agreements with whether or not any capacity or energy is available.The cost of several nonterritorial banks and $45,000.000 in lines of endit such capacity and energy is a function of each ent rys carrymg subject to annual review from territorial banks. In connection and opuation costs and is included m purchased power in the with these lines of credit, the Company has agreed to par cer- St rements of income. tain fees and/or maintain certain average amounts on d$ posit The Company and one of its affiliates. Alabama Ibwer, own with the banks.These deposits are not legally restricted as to equally all of the outstanding capital stock of Southern Electric withdrawal by the Company. Average compensating balances dur. Generating Company (SEGCO) which c,wns an electric generat-ing 1979 were airroximately 516.000.000 and at December ing plant with a total rated capacity of 1.019.680 kilowatts. to-31.1979 were approximatelv S2.000.000. gether with associated transmission facilities.The capacity of the To supply a portion of'the fuel requin ments of its generat. plant has been sold equally to the Company and Alabama Power ing plants, th'e Company has entered into various long-term under a contract expiring in 1994 which, in substance. requires commitments for the procurement of fossil and nuclear fuel. In p yments sufficient to provide for the operating expenses, taxes most cases, such contracts contain provisions for price escala. and debt service, including a retu~. on investment, whether or tions based on the suppliers' cost and/or other factors. Addi- n t SEGCO has any capacity and energy available.The Com-tional commit ments for coal and for nuclear fuel will be required p ny's share of such amounts totaled 565.946,000 and in the futuk to supply the Company's fuel needs. $51,210,000 in 1979 and 1978, respectively, and are included m purchased power in the Statements of Income. At December 31,1979, the capitalization of SEGCO con-
. FACILITY SALES AND sisted of $32.800.000 of equity and 549.120,000 of long-term JOINTOWNERSillP AGREEMENTS: debt on which the annual int $ rest requirement is 53.138.000.
Through December 31,1979, t:ie Company has sold undivided Through December 31,1979, SEGCO has paid dividends equal interests in Plants Ilatch,Wansley,Vogtle and Scherer in varying to its net income. amounts, together with transmission facilities to Oglethorpe Ibwer Corporation, a cooperative of ciectric membership cor- 5, INCOME TAXES: porations in Gmrgia (OPC), the Municipal Electric Authority A detail of the federal and state income tax provisions is set of Gmrgia, a public corporation and an instrumentality of the forth as follows(in thousands): Stre of Gmrgia (MEAG) and to the Gty of Dalton, Gmrgia g, g, (Dalton).These sales resulted in gains, after income taxes, of - g ,, , 51,503.000 in 1979 and 5375,000 in 1978. In addition to hese curreno, embie. . s n.m s n.r,7 n sales, the Company is negotiating to sell an interest in Plant [*;;(,
, ,,ggg y . pg Schenr Units 1 and 2 to OPC(60%) and a 50'7 interest in Units inveserneni tau rnha s2. m 57.22o 3 and 4 to affiliated companies. Also, the Company has bek! i nom 12o.2s7 33
included in utility plant in service was $28,414,000 and
- 6. m 6.99, Nu'r7enti raubie. to.872 ::.o 6 527,158,000 at Demmber 31,1979 and 1978, respectivdy. The txterrea ....
nevermiin erwr mes arcain . i9sm i ta i21 current portion of the capitalized lease obligations for each year.
' 6"? 16 39" through 1984 is as follows: 51,952,000 in 1980: $2,125,000 in
~ ~
!!$iUsb Yd4}, 1981; $2,315,000 in 1982; $2,524,000 in 1983; and IIe'lI s ia ome u ses inLeM inoThe r in.ome 52,752,000 in 1984.
e caer.1 ana sute income uses dargea so ope rat ions. . . . . . sl18. 424 5f 26.913
- 7. SINKING FUND REQUIREMENTS OF Investment tax credits are deferred and are amortim! over FIRST MORTGAGE BONDS:
the estimated average life of the property which gave rise to the The annual first mortgage bond sinking fund requirement ( 1% of credits. Such amortization is applied as a credit to reduce deprecia. the bonds authenticated prior to January 1 of each year) due on rion in the Statements of Income and amounted to $4,197,000 or before June 1,1980, amounts to $24,513,000, whih may be in 1979 ars! S4.610,000 in 1978. Investment tax credits totaling satisfied by use of bonds specifically authenticated for such pur-approximately 532 million at December 31,1979, have not been poses against unfunded propeny addi: ions equal to 166-2/3% of utilized and are available to reduce income taxes in future ~ tears. such requirement. During 1979, the Company reacquired The provision for deferred income taxes results from the $12,050,000 of its first mortgage bonds to partially satisfy the Company's deduction for accelerated methods of depreciation 1980 sinking fund requirement. and other write-offs of property costs, as provided for by the The Company's First Mortgage Bonds 11-5/8% Series due income tax laws, being greater than the book depreciation of'such August 1, 2000, is subject to a mandatory sinking fund in the costs. Income taxes deferred in prior years are credited to income annual amount of $5,000,000 commencing August 1,1981. when the book depreciation of those property costs exceeds the related tax deductions. The total provision for federal income tax as a percent of 8. REDEEM ABLE PREFERRED STOCK incorry before income tax amounted to 39.3% and 4197o for (Subject to Mandatory Redemption): 1979 and 1978, respectively. The difference between ihese rates The Company issued 3,000,000 shares of $2.75 Preferred Stock and the federal statutory rate of 46% in 1979 and 48% in 1978 in 1975. On or before November 1,1980 and annually there-after,150,000 shares of the $2.75 Preferred Stock must be re-was due primarily to the exclusion from 'axable income of the allowance for equity funds used during construction (6.2% for deemed through the operation of a cumulative sinking fund at the stated value of $25.00 per share. During 1979, the Company both years). reacquired 9,200 sharesof its $2.75 Preferred Stock tobe used to
- 6. OTIIER LONG-TERM DEBT: partially satisfy the November 1,1980 sinking fund requirement.
Details of other long-term debt are as follows: The gain on the reacquisition is included with premium on pre-ferred stock in the Statements of Capitalization. 1979 1978 08heaions incurrea in tonocition .ith un inom eau g g g 3. gg.g g* the sale in pubhc authorsties of tax exempt pollution control and inaustrial aevelopment The Company is a member of Nuclear Mutual Limited, estab-lished to provide insurance coverage against property damage to
s"M NufE~ovember 1. 200 t s itam s sta m 9 tm aue seriember 1. 2005. wm wm members' nuclear generatir.g facilities. The Company is contin-jiy[ gently liable for retrospective insurance premiums in the event of
$NNe*"Yuff.
6xs .aue Aprii i. 2008 . . 7 jty[ 2taoi 2 i .ra) a loss bv a member company. The Company's maximuni assess-et wd k e n e l'y W d h 7saxx) 7s;>oo 7.lo~.aue twember 1. 2tnis. S,$ In addition, under the Price-Anderson Act, the Company t en tunas on aerour mih Trustee. . $U s m7.820 m.ms maintains private insurance and agreements of indemnity with the Nuclear Regulatory Commission (NRC) to cever thirdprty orit hica lease obhniions-Ne't,uaings . , y@, M liability arising if a nuclear incident were to occur at the Cor pany's nuclear power plant.The Act limits public liability claims 29.o5: 27aos that could arise from a single nuclear incident to $560 million. wes niobie. 2.9 m _ Each reactor at the Company's nuclear plant is insured against si99.82o s i s t.67, this liability to a maximum of $160 million by private insurance (the maxinium amount presently available) and the remainder is provided by indemnity agreements with the NRC. In the event of The Company has authenticated and delivered to the an incident, a company could be assessed 55 million per incident trusteer, with respect to such pollution control and industrial for each reactor owned (maximum $10 million per reactor in a development bonds, an aggregate of $232,500,000 of its first year). On the basis of its ownership interest in the two nuclear mortgage bonds which are piedged as security for its obligations reactors now in service, the Company could be assessed a maxi-under pollution control and industrial development contracts. mum of $5,010,000 for any such incident, but not more than No interest on the first mortgage bonds is payable unless and until 510,020,000 in any year. a def ault occurs on the installment purchase or loan agreements. No principal payments are due on the contracts prior to 1988. C pital lcases are recorded in the Company's Balance Sheets 10. QUARTERLY FINANCIAL DATA /Unaudited/: as utility plant in service and the related obligation is classified Summarized quarterly financial information for 1979 and 1978 as other long-term debt. The net book value of capitalized leases is as fo!!ows(in thousands): l i= .M ?
3,,,,,,,,, ; quate for purposes of maintaining the purchasing power invested Operatsng Operating Af ter Dis miends by the Comrnon stockholder and the related cash flows are in-Quarter Fnded Revemnes Irwome ~ on Preferred stock March 31.1978. . . ...s %4.145 556.444 540,739 adequate for replxing the property.The impact of this ratemak-s June 30.1978. . . . . , 344.539 47.976 21.815 Ing process on the common stockholder is
. mitigated totheextent
' seriemter30.1978.. . . 449.464 82.21s 54.22: that depreciable property is financed with debt which can be re-Decemler 31.197H. . . 426.876 56A77 29,209 .
paid with dollars of less purchasing power. March 31 ' 1979. . . % 4,296 55.127 26.315
' June 30.1979. . . . . . . . 35 4.H2O 54.529 24.249 .
septembrr30.1979.. . 4 % 755 84,564 54.845 - Decomier 31.1979 3, . %5o71 71A65 41.114 Statement of Income From Continuing Operations Adjusted for Changing Prices
. SUPPL.EMENTARY INFORM ATION TO DISCLOSE ro,is, r,,,Esa,a convencionat constani Dottar current cosi THE EFFECTS OF CH ANGING PRICES /Unaudited/ D"'a^" J' 2979 l i""c'l ^'"*** ^'"dx' (Isr 7hsords/ Cost 1979 Dollars 1979 Dollars The following supplementary information, made consistent with opoa,in, ,evenues . si.5 9.942 si.5 9.942 si .si9,912 Stcement No. 33 of the Financial Accounting Standards Board o rnai.on and mainiena. ice 935,2:o 935.2 o 935.2io
~( FASB), is intended. to set forth the effect of both general in- Samortaation P'"i'!i " *"d 133.H88 254.842 401.682 flation and changes in specific prices ori Georgia Power Conrany. Taxes other than income
"_... 67.736 67,736 67.736 It should be viewed as an estimate of the aIE.roximate effat Federaland stateincome of inflation, rather than as a precise rneasure. As stated by the taxes. lisA24 1:s.421 lisA24 FASB. the measurement and use of information on changing he O'gg'gom'*ad... , , m7,9, g ,9, g,g 9, prices will require a substantial learning promss on the part of ininesi charges and all concerrud.The FASB makes no pretense of having solvd P'"'d divid'ad5 is6.29: is6,29: ia6.29:
all of the implementation problems and intends to review the re- 's "4 A 5" ' A*84 ' # 2'224
,,,, ,,g,,,,,
quirements of this statement on an ongoing basis. iinuing opuarions ex. Constant dollar amounts rtiresent historical cost stated in clu5*' o' r'duc'ia 'a net recoverable amount s 145.512 s 24,558 s (22.2H21
. terms of dollars of equal purchasing power, as measured by the Consumer Price Index fo All Urban Consumers (CPI-U). Cur- equiry . . 12.2 n. 2. ora o .87 n.
rent cost amounts reflect the changes in specific prices of plant la"*gialP"dic 3 ,,g gg from the date the plant was acquird to the present, and differ neduciion to nei from constant dollar amounts to the extent that specific prices "a'"*bi, amont . s (33msi i6.269, increase in general have increased more or less rapidly than the general rate of in- ence ies ei, i926.949, flatbn. The current cost of utility plant, which includes land, land nights,~ intangible plant, property held for future use, and con. Excesa of increew in struction work in progress, was determined by indexing the sur- [,*"*,'a[i,N's";'c"p',*,'n viving plant by the Handy-Whitman Index of Public Utility a" r'd*t>= to nei re
"""'b'*"*"'
Construction Costs. Since the utility plant is not expected to be '2 * *2*' rtplJCed prWisely in kind. current Cost does not neWssarily repre-Reduttion of purchasing sent the replacement Cost of existing productive capacity. pourr loss through Depreciation was determined by applying the current depre- *[' ,'g'f'"'ed "' y 3 y,,, 3, 3 y,,, ciation rates to the indexed plant amounts. x, . s <2i.702i 5 25.i ta Fuel inventories and the cost of fuel usd in generation have not been restated from their historical cost. Regulation limits the ta) At December 31. 1979, current cost of utilirs plant. net of accumu-
' recovery of fuel Costs to actual costs through the operation of a ia,ca a, pry;.n,on was 38.2 harion hiie anco,;cai co , or ne, amoun ,e.
fuel cost reco cry mechanism. For this reason, fuelinventories micrable through depreciation was s 1. 4 billion. are effixtively monetary assets. Since only historical costs are deductible for income tax Five-Year Comparison of Selected Supplementary Financial !
- purposes, the income tax expense in the historical cost financial Data Adjusted for Effects of Changing Prices statements was not adjusted. l
/Restatedto Accrage 1979 Dollars / 1 Revenues and other operation and maintenance expenses al- _ , , .
,,, ,,,., ,,,, ,,.. ,,,,, ,,.. l ready include the average effects of inflation during the period in ' -o-~~~+-~ " - " - ~ "" ~ 1"m tem
'" i historical dollars and, therefore, no adjustments have been made *--A'"'""'"" '
> "s - e i. - u m i " ~ * "i"r to them.
""J. l*.7 .".,"._*,,t""
Under the raremaking prescribea by the regulatory commis-. u - ,es- u n,- n 2.ni n 'm - i
" o n ms
^~" ~ '" "' '' " "
sions to which Georgia Pbwer is subject, only the historic cost of plant is twoverable in revenues as depreciation.Therefore, the excess of the cost of plant stated in terms of constar:t dollars l i or current cost that excitds the historic cost of plant is not pres-ently recoverable in rates as depreciation, and is reflecwd as a rWuction to net recoverable amount. Because only the historic cost of depreciation is recmerable
'in races, present and future depreciation prmisions are inade-35
AUDITORS' REPORT REPORT OF . Te ,1- n-d a Di-s a c-xia r- C me-We bas e examinal the tulatwe sheets and statements of capitali-MANAGEMENT The management of Georgia Ibwer Company has papand aalis ution of Georgia Power Company (a Georgia corporation aal a responsible for the financial statements and related financial in-who!!y owned subsidiary of The Southern Company) as of formation incluad in this report.The financial statements were December 31.1979 and 1978, and the related statements of papared in accordance with generally acapasl accounting princi-inconw. carnings retained in the business. other paid in capital aal sources ot Iunds for gross property additions for the years ples appapriate under the circumstances, and necessarily include amounts that are basul on best estimates .nl judgements with then caled. Our e aminations were made in accordance with appnyriate consideration to materiality. Financial information gen rally acupted auditing standards and, accordingly, included inchidal elsewhere in this annual aport is consistent with the such tests of the accounting records and such orher auditing pro-financial statements. cedures as we considered neassarv in the circumstances. The Company maintains a system of internal accounting In our opinion. the financial staten.ents referred to alute controls to provide reasonable assurance that assets are safe present fairly the financial pnition of Georgia Power Company as of Dwember 31,1979 and 1978, and the results of its oper- guarded and that the books and records refktt only authoriad transactions of the Company. Limitations exist in any system of ations and the sources of funds for gross paperty additions for internal control based upon the recognition that the cost of the the yea.,6 tlwn endal, in conformity with generally accepted ac-system should not excud the Irnefits derival.The Company counting principles a[ylial on a amsistent lusis. believes its system of internal accounting controls, augmental bv its internal auditing function, appropriately tulanws the cost / Anhur Andersen & Co. trnefit relationship. The independent public accountants prmide an objective Atlanta. Georgia. assessment of the degree to which management muts its te February 15.1980. sponsibility for fairness of financial aporting.Thev regularly evaluate the system of internal accounting amtrols and perform such te,ts and other proadures thev deem nwessary to reach and expnss an opinion on the f airness of the financial statements The Board of Directors pursues its responsibility for re portal financial information through its Audit Committw.com pr,ed of Directors who are not employees.The Audit Committu meets periodically with management, the internal auditors and the indtrendent public accountants to assure that they are carry ing out their asponsibilities and to discuss auditing, interna' control and financial nporting matters. Both the independeni accountants and the internal austors have free access to the Audit Committee at any time. We believe that these policies and procedures provide rea sonable assurance that our operations are conducted with . high standard of business conduct and that the statements rc tiect fairly the financial position, results of operations anil source-of funds for gross property additions of Georgia Power Cotopan) I x
DIRECTORS WALTER G. ALTTREY +11AROLDC. AkKENZIE,JR. ROBERT STRICKlAND Presklent Exetutise Vice President Chairmanof Board llamilton Turpentirr Co.,Inc. Georgia Ibser Company Trust Company l_nk l (navrj stores) Vaklosta,1972 Atlanta,1972 (banking) Atlanta,1979 ; (elected 11/21/79) " N. N. BURNES, JR. + J AMES I1. MILLER, JR. Vice Chairman Executive Vice President '" WILLIAM B. TURNER Rome Manufaouring Company Gtorgia Ibwer Company President (textiles) Rorne,1(X25 Atlanta,1975 W. C. Bradlev Company 1 (industriahsts) Columbus. I'X>5 " GEORGE S.CRAIT WILLIAM S. MORRIS.111 Direstor Trust Company of Georgia Presi&nt ALVIN W. VOGTLE, J R. , thanking) Atlanta 1965 Morris Communicatiom Corporation l'.csident ' (retired 11/13/79) (publishing) Augusta,1(X>7 The Southern Company Atlanta,1968 E Li 1NSPERGER ' f,IAl a m no Ik rd CARL WARE l Georgia Power Company Gerdeeimestinent Company \ ict+res&m i 3*g'*397 (realestate & investments) Coca Cola. U.S. A. Atlanta.1%5 (soft drink company) Atlanta,1980 " WILLIAM A. FlCKUNG,JR. * "* 11. G. PA1TILLO (elected 2/20/80) Chairmanof theIbard Chairman Charter Medical Corporation Patiillo Construction Co:npany Inc. ALLEN B. WILSON (medical facihtics) Macon.1973 (construction) Decatur.1972 Extrutise Vice President-Finance Georgia Power Company
- ROBERT W. SCIIERER
^'"
J. A.GAN1T Senior Vice President President Georgia Power Companv ' Georgia Power Company Atlanta.1976 Atlanta,1970
. ExerutiseCommittee ;
" Audit Committee L G. llARDMAN,Ill DR. GLORIA M. SilATTO President & Treasurer President iIzrmony Gros e Mdls. Inc., Berry College and Berry Academy (textdes)Comnwrce.1979 (education) Rome,1980 l (cittsal 6/25/79) (elected 2/20/80) 1 l
RICIIARD L KATTEL * " EDWARD D. SMITil l Kartel Enterprises Inc., llansell. Post, Brandon aM Dorsey timestnwnts) Atlanta 1973 (attorneys) Atlanta,19(o HONORARYD RECTORS JOE B. BROWDLR Atlanta,1976 EDWIN I. IIATCil Troutrran.Sarmk-rs,inkerman & Ashmore Artmta,1978 l l 37
GENERAL ' OFF GRS GERALD T. IlORTON ROBERT C. FORD RO15ERT W. SCIILRER Asst. Secretary and Asst. Treasurer Presak nt and Chiet Eututise Of ficer Vice President Age: 5 i Public Af fairs (ektted 1/1/80) Years ot Sen ice:33 (ektted 8/4/79) E. RAY PERRY II AROLD C. 4 KI NZlli jR. Asst. Secretarv and Asst. Treasurer C. C. JONES Esnutise Vkr President Vice Presaknt Esternal Atfairs Prou..cment and Alaterials JON M. JETA10RE Asst. Secretarv Age:18 (resignal 8/1/79) Yean ot Sen ke: 22 RICilARD J. KELLY Vice President Power Generation WILLIAM A.DUNLAP J AAILS il. .\llLLL R. JR. Asst. Snretarv and Asst. Treasurer i usurise Vke Presi&nt J. WYA1AN LAhlB (resigned 1/1/80) O is rations Age:57 Yke President Yunof Senkc:33 Risk Management ALLEN B. WILSON C.B. AkMANUS.JR. Vice Presi&nt h M W w I m utis e Vice Presi&nt Iinante Power Delis en Age:62 Yearsof Senice:45 WADE S. MANNING Vice President i1. GRADY BAKER. JR. Land BEN I1. WILLIAMS Senksr Vice President Vice President
- Custonrr Sen kr F. G. MITCllELL J R. Athens Division Age: 50 Vice President Yearsof Senice: 29 Generating Plant Construction E. A. YATES.JR.
Vice President Atlanta Disision GEORGE W. EDn ARDS.JR. JGilN A. ROBERTS Senior Vice President Vice President Esternal Atta rs
~
Energy Services B. W. RAINWATER Age: 10 Vice President Years of Sen kr: 10 ROMNEY Z. SCOTT Augusta Division Vice President WILLIAM E. Li!RENSPERGER Economic Services ANDREW B. SPEED Senior Vkr President Vice Presi&
- ROBERT B. SYMONETTE Columbus Ditsion Pouer Suirh h :57 Vice President and Assistant to President ican of & n n*: 37 (retired 2/1/80) B. S. MOSS Vice President J. W. TALLEY. JR. Mxon Disision J. A. GANTi Vice Pr~sident
% nnir Vke Presi&nt E J. ALLEN, JR.
Area Derekyment Doision Oprations Vice President
.gge: 5-ALVIN W. VOGTLE. JR. Rome Disision 'Yean et Service: 31 \ ce President L T. WANSLEY R Pil'RCEIIEAD.JR' CilARLES F. WillTMER Vice President I
Mnior Vice President \ we President Valdosta Division Admimstratne Senices Engineering ggy. 52 Years et Sen ke: 32 J ACK K. WIDENER. JR. Vice President WARREN Y. JOBE Regulatory Atfairs Vice President and Comptroller W. A. WIDNER I S. MllCllELL. Ill Vice President
\ we President and Saretan Gen. Mgr. Nuclear Generation W. L WESTBROOK Vice Prei&nt and Treasurer CilARLES R. MINORS Assistaut Vwe President R. E. CONWAY Consumer Atfairs
, Yke Presi&nt i Generating Plant Proints W. D. DeBARDELEBEN. JR. Assistant Comptroller A. W. DAlILBERG Vwe Presi&nt J. A. PARRAMORE,JR. Oprations Planning and Control Assistant Comptroller Rkstal 8I449)
- I1.M.IlUG1(ES GEORGE F. IlEAD Assistant Secretarv Vice President Gen. Mgr.. Fossil & i ls dro Cwnerat ion C. L RATTERREE lektta! I/1A8(h Assistant Saretarv 38
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SOUTHERN COMPANY SERVICES, INC. Officers Directors Alvin W. Vogtle, Jr. Richard E. Conway Tommy Chisholm Edward L Addison Chairman of the Board Vice President Secretary Pensacola Age 61; 39 years of service Age 41; 23 years of service Age 38; 15 years of service Age 49; elected 1977 William B. Reed William A. Dunlap Therrell Murphy, Jr. George B. Campbell President Vice President Treasurer and Assistant Atlanta Age 51; 10 years of servica Age 46; 20 years of service Comptroller Age 57; elected 1970 Bill M. Guthrie Robert C. Ford V. J. Daniel, Jr. Executive Vice President Vice President Clarence B. Grund, Jr. Gulfport Age 46,28 years of service Age 43; 14 years of service Assistant Vice President Age 63; elected 1973 D>uglas L McCrary S. R. Hart, Jr. Joseph M. Farley Executive Vice President Vice President W. Dean Hudson Birmingham Age 50; 26 years of service Age 52; 30 years of service Assistant Comotroller Age 52; elected 1970 Age 32; 7 years of service George B. Campbell James C. Ludwig James H. McGuire Financial Vice President Vice President E. Ray Perry Atlanta Age 57; 40 years of service Age 43; 21 years of service Assistant Comptroller and Age 64; elected 1967 Assistant Secretary Robert F. Ellis, Jr. James H,. McGuire Age 54; 29 years of service William B. Reed Senior Vice President Vice President Birmingham Age 57; 34 years of service Age 64; 45 years of service Malcolm D. Sanders Age 51; elected 1972 Assistant Comptroller William B. Harrison William A. Maner,111 Age 45; 20 years of service Robert W. Scherer Senior Vice President Vice President Atlanta Age 57; 10 yeac of service Age 40; 14 years of service Nell H. Justice Age 54; elected 1S.'8 Assistant Secretary Thomas A. Nunnelly Dwayne Summar Age 52; 26 years of service Alvin W. Vogtle, Jr. Senior Vice President Vice President Atlanta Ago 47,21 years of service Age 40; 16 years of service Houston L Welch, Jr. Age 61; elected 1966 Ruble ;_ Thomas Assistant Secretary Age 44; 19 years of service Vice President Age 58; 31 years of service Lee C. Williams Assistant Secretary E. L Williamson Age 63; 23 years of service Vice President Age 55; 30 years of service Ormond W. Frazier Assistant Treasurer William O. Reece Age 49; 17 years of service Comptrc!!ct Age 50; 15 years of service
, 39
a.. . CORPORATE INFORMATION The Southern Company The Sou' hem Company is the Perimeter Center East The Dividend Reinvestment . parent firm of Alabama Power, Stock Purchase Plan provid. P.O. Box 720071 Georgia Power, Gulf Power, Atlanta, Georgia 30346 economical, convenient met Mississippi Power, and Southern Telephone: (404) 393-0650 for stockholders to acquire r Company Services, Inc. These shares of Southem Compan companies -in terms of assets common stock through the i
- make up the nation's largest vestment of quarterly divider investor-owned electric utility and through optional cash p system.
ments. The price of shares I The Southern Company was chased with reinvested divid
' the first holding company to be is discounted five percent fr(
sanctioned under legislation the average of the high and known as the Public Utility trading prices as published ir Holding Company Act of 1935. This legislation established Wall Street Journa! for the di dend payment datt The pric specific principles regulating the stock purchased wth option 2 ownership of eler ic and gas cash payments is nual to 1C utilities. The cor ny's first full percent of this averige. Optic year of operatic, was 1949. cash payments can be made Today, The Southern quarterly from a minimum of Company's common stock is the to a maximum of $3,000 per most widely held electric utility count. The company charges stock in the nation and is amon service fee or commission. A the 10 most widely held corpo g stockholders are eligible to p2 rate stocks in America. ticipate. A prospectus describ the plan and an enrollment ct The Common Stock of The may be obtained from The Fir Southem Company is listed and National Bank of Atlanta, Divi-traded on the New York Stock dend Reinvestment Service, F Exchange. In addition, the stock ! Box 3260, Atlanta, Georgia is traded on regional exchanges 30302. across the United States. Cassette Recordings of the 19 The 1980 Annual Meeting of annual report are available Stockholders will be held on without charge as a service to Wednesday, May 28, at 10.00 the blird. Requests should be a.m. (CDT) in the Panama City directed to News and Corporat Municipal Auditorium, Panama information, Department 343. City, Florida. A Copy of Form 10-K as filed with This Annual Report, issued by l order of the board of directors, the Securities and Exchange submitted for stockholders
- infc ,
Commission will be provided with-out charge to stockholders upon mation. It is not intended for us in connection with any sale or written request to the office of purchase of, or any other solicit the Corporate Secretary. tion of offers to buy or sell, securities.
Future Projections Indicate became apparent that -if nu- the Department of Energy, we Slower Growth in Demand clear power were to survive - reported that SRC l could be fur-The year just past marked the then electric utilities must con- ther processed into gasoline and sixth anniversary of the Arab oil sider the application of even home heating oil. embargo. Since that watershed stricter safety standards. I hope you will take the time to event in our country's energy .And to help reassure the nine turn to page 20 to read more history, conservation efforts have million people served by our about the development of this made a significant impact in system The Southern Company promising synthetic fuel. Cvery sector of the economy, and established a top-level nuclear rapd increases in the peak de. safety task force on April 3. The mand for electricity have given group was asked to conduct a way to a slower rate of growth. thorough analysis of the technical Certainly, it's an understate-In the 1960s, for example, our and design criteria for the nuclear ment to say that the past decade companies experienced growth in power plants operated by Ala. has been a time of change - a the peak demand for electricity bama Power and Georgia Power. time of reevaluation and redirec-averaging 9% percent a year. The task force completed its tion. I believe The Southern Com-From 1970 through 1979, the in. review in January of this year, pany has emerged from this crease in peak energy demands and its work is discussed in detail period as a stronger, more resil-slowed to an average rate of just on page 8. Based on findings ient organization - an organiza-over five percent a year. For the compiled over 10 months of tion which looks with optimism to 1980s, we're now projecting a study, I can state with conviction the challenges of the 1980s. growth rate of approximately four that our present designs and ex. Please be assured that the percent annually, isting procedures are sound - Southern electric system's 26,000 This moderation in growth has and that they provide a high employees will do everything in allowed us to delay over the past degree of protection against a their power to maintain your con-several years the completion nuclear accident. fidence and support. dates of many of the generating , For the future, our companies units which our companies have will continue to adhere to a policy of stringent self-regulation - a under construction. In addition, it has made it possible for us to policy which dictates an intensive, A* j limit construction work to only ongoing effort to safeguard those projects that were under against human error and me- Alvin W. Vogtle, Jr. way in 1974. chanical failure. President I believe it's also important to The Southern Company point out that no work will be initi. SRC-I Research Advances March 10,1980 ated on any additional power plant One final area which I would like i construction unless we are rea- to mention is our continuing work ( sonably assured of eaming an with the solvent refining process adequate return on the investment - a process capable of turning which would be required. high-sulfur coal into a clean- I burning synthetic fuel known as l Nuclear Power Essential SRC-l. As I mentioned at the beginning Nearly a decade ago, when of this letter,1979 was a year of the Southern electric system first ! t: sting. Certainly, it was a year began research into this tech- l which brought crucial questions nology, SRC-l was regarded only J about the future development of as a solid fuel for industrial use. nuclear power in this country. However, in August, at the con-After the serious accident clusion of a year-long study for which occurred on March 28, 1979, at Three Mile Island, it 3
FINANCIAL RESULTS . noesaoome (mmrM dosars) 3 na The Southern Company's con. The remaining portions of the solidated net income for 1979 dividends for 1979 qualify as a - was $219.1 million - an in- non-taxable return of capital. crease of 8.7 percent over the At their January 21,1980, - 8 meeting, the directors of The depressed results of 1978. Based on 145,038,087 average Southern Company again de-shares of common stock out- clared a quarterly dividend of - - - - standing for the year, earnings 38% cents per share, payable per share were $1.51. This com- March 6 to stockholders of _ _ _ _ta pares with earnings of $1.45 in record February 4. 1978, based on 139,005,117 The Southern Company now _ ~ average shares outstanding. has paid a dividond to its com- " System earnings began to re- mon stockholders for 129 con-cover in the fourth quarter, end- secutive quarters. ing a severe, two-year decline in ,, the company's financial perfor- Revenues Top S3 Bilh,on on om mance. However, December Although kilowatthour sales for marked the 17th consecutive 1979 declined slightly from the _ 2 2e month in which earnings re- previous year, revenues rose to mained below the current annual $3.1 billion. The 7.6-percent dividend rate of $1.54 per share. growth in revenues resulted from The difficulties of the regulatory increases in certain retail and - _ process during a period of aggra- wholesale rates and from the - ~ ~ - _a 7 vated inflation, a small decline in recovery of higher fuel and pur- ,
-f 4 l' '
energy sales, higher operation chased energy costs. and maintenance expenses, and _ _ _ _ _.m the increased cost of new capital
, , _{
were major fcctors which contrib- mw s 952,085 s 91T625
,,7, 444.1~ # ~t.c-5
[ uted to the less than satisfactory
,inancial performance in 1979.
y g2g 689 - . -h , saaes for res i. 32s,2s4 ase sn <2.2) Other 47,280 43.599 8.4 ' w su2ves s2m72 7.e Dividend Rate Maintained ; During 1979, dividends totaling g o ,no,,,o ,c,, .
$1.54 per share were paid to the mm%
company's common stockholders At December 31,1979, ap- on am
- the same amount which was proximately $19 million of paid in 1978. revenues billed during the year t
First quarter dividends were were subject to refund pending - m F fully taxable as dividend income; final regulatory or court decisions however, only 82 percent of sec- on three rate increase requests. __ _ _ _ a ond quarter dividends and 62 in addition, some $29 million of percent of third and fourth revenues billed during the period 1974 to 1976 are still subject to _f _ _ _ _ _ u i quarter dividends were taxable. . , , refund, pending a final decision [ -
- ~ ~ -
from the Federal Energy Regula- t i tory Commission. However, man- p ! agement feels that substantially l p all of this amount will be granted. g 74 75 76 77 78 79 4
RATES Retail Rate increase Applications Annual Amount Date By Which Company Requested Date Filed Status Decision is Due Alabama $288.8 milhon 12/20/78 $208 mWion - As the cost of providing electricity Power granted 7/19/79' has accelerated over the past $122.3 miEon 12/28/79 Hearings scheduled 7/28/80 decace, management has fo- to begin 3/24/80 cused its efforts on improving Georgia $225.6 millson' 11/20/78 $122.9 mEion - productivity and obtaining rates Power granted 8/15/79 which will offset the impact of in- *'$fgg 3f
" P "
fet Gulf Power $46.4 million 3/3/80 arin not yet 11/3/80 n ve t ent Alabama Power Granted fo7, 8 ' 4 3 *" " " #"5 $ - gg3mEpg9,
.d s $208 Million; Additional $23.9 miEon 9/1o/79 $16.8 mWion -
Rate Increase Requested granted 3/7/8o In mid-July,1979, the Alabama Wholesale Rate increase Applications Public Service Commission Some $8.4 rnton h wholesale rate increases b5ed subject to refind during 1979 was pending Federal granted Alabama Power a three- Energy Regulatory Commissbn feal decisions step, $208-million annual in- noi s: crease. This ruling made perma- m A trreeesse, s2o84nson increase granted m in May,1976, the state put$c serwce by the stak pd* sette c rnrnstbn has e grankd approdnakh 42 pwcent nent a 9.5-percent emergency been app 3aied by abana Power e tne or tne amount requested. Mssissippi Power rate increase which the company supreme coat or abama. The company a appeaied the oecean to tne chancery court or as@g that the hd $288.84nnon incesse be Hods County, Masssopi, anNed the had begun billing in early March and added a five-percent increase m GNPower latw nweed thb rgest to sute d refund t fina s217 rnson. reached on August 7,1979. effective July 19. The final step of the rate order - an additional eight percent increase - was not Georgia Power Receives The court also imposed a dead-scheduled to go into effect until $169 Million in Higher Rates line of January 10,1980, for the January 1,1980. setting of new retail rates. On March 16,1979, the Georgia Alabama Power appealed the On January 10,1980, the com-Public Service Commission dis. commission's ruling to the mission granted Georgia Power missed in its entirety Georgia Supreme Court of Alabama, ask- an additional $46.1-million rate Power's request for a permanent ing that the full amount of the increase. ' rate increase of $225.6 million.*
$288.8-million request be granted. The company appealed the deci- . . . .
On October 19, the court made Mississippi Power Awarded sion to the Fulton County Supe. , an interim ruling and allowed the rior Court and, on May 24, the S16.8 Million; Gulf Power company to implement the eight- Seeks $46.4-Million Increase court remanded the case to the percent increase 2% months Mississippi Power began placing commission with instructions to ahead of the January,1980, date hold additional hearings and to a $23.9-million annual rate in-which the commission had or- set "just and reasonable rates" crease into effect, subject to re-dered. For the 2%-month period, no later than August 15. fund. on October 10. On March 7, this increase was collected sub- The commission's August 15 1980, the Mississippi Public Ser-Ject to refund. ruling authorized Georgia Power vice Commission granted the As the year ended, Alabama to begin collecting a $122.9-mil- company $16.8 million of this Power filed with the state public Ion permanent rate increase. amount. The permanent increase service commission a request for That decision also was appealed will be applied as of October 10, an additional $122.3 million in an- by the company and, on Octo- 1979. nual revenues. The company will ber 12, the Fulton County On March 3,1980, Gulf Power review this request in light of the Superior Court again returned the
, filed a request for a $46.4 million final decision on its court appeal. case to the commission - this annual increase in retail rates. At time with more formalized guide- the date of this writing, hearings lines for evaluating the request. on this request had not yet been scheduled.
*Georga Power later revlSed Its request to $217 melhon.
5
OPERATIONS . Sources of System Power , Generation (percent) Although inflation continued to af- run through the concrete floors, , j fect the cost of producing and ceilings, and walls of the plants f 4 f m delivering electricity, the increase The examinations were con- J - in operation and maintenance ex- ducted in response to a Nuclear . m penses - from $1.8 billion in Regulatory Commission bulletin 1 .~* " 1978 to $1.9 billion in 1979 - - issued to all operators of _ was held to 5.1 percent. nuclear power plants in the United States - requiring verifi- + One factor which contributed . cation that these piping supports 2 ~5n 3 7 to the slowed rate of increase in _ these expenses was a further im- were adequate to withstand ex- , provement in the unit perfor- traordinarily severe earthquakes. - f " mance at the system's 20 coal- In addition to the analyses - fired power plants. In the which were performed at the two mid-1970s, a maintenance pro- nuclear units a! ready in service, " gram was initiated specifically to testing was conducted at the sec- - achieve greater availability of ond unit of the Hatch Nuclear ~ f',cd .A Electric Generating Plant. The 8*c 6 these units. , Each year, this maintenance work was completed prior to - program has produced positive placing this new facility in com-results. At the end of 1979, mercial operation in September. 30 average operating availability of the system's coal-fired units had Coal Dorainates Fuel Mix risen to 83.5 percent. This com- For the past four decades, coal ao pares with ratings of 82.7 percent has been the primary fuel of tne /- [/5*/*- at the close of 1978 and 78.2 per- Southern electric system. # cent at the close of 1977. The Reliance on this energy source to current level of performance will continue through the 1980s
~
5' / compares very favorably with the and into the 1990s. The total availability records of other com- amount of coal burned in 1979 f*w5 d _ ,,, [ . o panies in the industry and ap- exceeded 33 million tons, making _ #j proaches the goals which this the system one of the nation's s* % _, system has set. three largest users of coal. The tera iero Improved availability, as well average cost per ton of coal as the addition of new generating delivered to system power plants capacity, enabled the sales of during the year wac $37 - some - the impact on 1979 earnings significant amounts of energy to 14 percent higher than in 1978. was limited 'o the $1.2 million in neighboring utilities during the repair expe ses incurred by Ala-year and reduced the system's Hurricane Frederic Damages bama Powe and a loss of reve-dependence on purchased power. Gulf Coast Service Area nue during the power outages. Purchased and interchanged in mid-September, nearly 20 per-power expenses dropped from cent of the system's 2% million
$112 million in 1978 to $8 million customers were lef t without elec- Tne soutnern eiectric system operates near-in 1979. ly 27,000 miles of transmission lines which tricity in the wake of Hurricane car'x e'ectc'tv ' rom se"*' t'"9 p' "t$ to Fred Nuclear Units Tested Tt e ull cost of repairing - and N*Nre y n dio $t7ny 6 nN which l the lines might have sustained. When repairs t Two operating nuclear units were in most cases replacing - the a
kept out of service throughout the oower de:ivery system in the ah$s I"hed fE f-l summer and into fall for extensive storm-damaged areas was some h rices across the region. l ! testing of piping supports whsh $30 million. But, because new equipment must be capitalized - with the cost spread over the 25-to 30-year life of the equipment 6 ,
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NUCLEAR SAFETY . On March 28,1979, a series of report also outlined 20 cpecific Headquartered in Atlanta, INPO malfunctions occurred at unit two recommendations to further im- will function with a budget of ap-of Metropolitan Edison's Three prove the safety of these facili- proximately $11 million in 1980. Mile Island nuclear power plant ties. The recommendations Fundr.g is being provided by near Harrisburg, Pennsylvania. In ranged from improving the lock- electric utilities with nuclear the days and weeks following this ing mechanisms on critical valves power plants in operation or serious accioent, questions were to expanding mandatory operator under construction. raised about the safety of all training through the use of nuclear power pants in the nuclear power plant simulators. Nuclear Power To Supply United States. To resolve the 15 Percent of Requirements justifiable concerns of the public, Reconunendations Implemented The Southern electric system has ; the electric utility industry began As the recommendations were three nuclear-powered generating an intensive review of the safety being implemented, the task force units in operation - one at systems which are in place at the began the second phase of its Alabama Po.ver's Plant Farley 72 operating reactors across the work. In all,10 areas related to and two at Georgia Power's Plant country. plant design, operating pro- Hatch. A second unit at Plant cedures, and personnel training Farley is planned for completion Task Force Established were addressed. In addition, the in 1980. Two other nuclear units The Southern Company was task force initiated work on ex- - expected to be in service by among the first to initiate its own panded emergency communica- 1984 and 1987 - are under con-nuclear reexamination. Less than tion plans - plans which detail struction at Georgia Power's one week after the Three Mile improved procedures for ensuring Plant Vogtle. No additional Island accident, a top-level task that accurate information is nuclear-powered facilities are force of nuclear experts was relayed immediately to company planned at the present time. formed. Made up of engineers personnel, to local, state, and By the late 1980s, nuclear and consultants from both private federal agencies, to the news energy is expected to provide ap-industry and the academic com- media, and to the public. proximately 15 percent of the munity, the task force was The task force completed its electricity for the system's four-established to conduct an in- work in January and made a final state service area. dependent analysis of the techni- report to company management cal and design criteria for in February,1980. Copies of both Alabama Power's Plant Farley the Phase I and Phase 11 reports and Georgia Power's Plant Hatch are available to stockholders upon hhe ants ""j"at r and Plant Vogtle. In addition, the written request to The Southern and Georgia Power, the southern electne Company, Department 343. system task force recommended that even task force was asked to review m re stringent procedures be fonowed to the operating procedures which " '* are in effect to minimize the Exarninations To Continue "$[E8 2t a7E$e"s*$** "'*$t $e*.S possibility that human error could Continuing scrutiny of all phases independent examinatons must be made on v*
- contribute to an accident. of nuclear operations - with em- th*
n,cSt jSn anua[Nhn$ans aYt$ in July, the first phase of the phasis on overall design, plant system s nuclear units. study was completed, and a full procedures, operator training, and report was released to the public. emenency preparedness -is The overall conclusion was that beint arovided by company per-the nuclear power plants of the sonnei and by nationwide grouos l Southern electric system are de- which have been established for signed and operated with large the purpose of enhancing nuclear margins of safety and that ex- safety. isting procedures provide a high One of these organizations, the degree of protection against a Institute of Nuclear Power Opera-nuclear accident. However, the tions (INPO), was created in the latter part of 1979 to set in-dustrywide benchmarks for excel-lence in nuclear operations. 8
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ENERGY USAGE . Energy Seles (minoro d MegawattttourW ton For the first time in its history, the 1979. And the energy needed for a Southem electric system experi- street and highwar Mhting and j/ s _ eg enced a decline in the sales of for all other uses increased by -
# J" five percent, to 460 million
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electricity. Overall energy sales e for the year totaled 86 billion kijo- kilowatthours in 1979. - - - - - - -8 watthours,1.2 percent less than _ _ _ _ _ _. _sg the record usage which occurred System Peak Demand - ~ ~ ~ ~ ~ , ~~ .o in 1978. Down One Percent This decrease can be attrib- -' # The decline in overall energy ~ ~ - - uted to a number of factors. sales was matched by a small -- - - - a - J2 decrease in the peak demand for - as Sales to Wholesale, electricity. Peak demand - the Residential Sectors Lower - 9y9V- " nighest requirement for electricity Sales to wholesale customers as measured over a one-hour 74 is re 77 rs re declined from 12.9 billion kilowatt- period - traditionally is recorded hours in 1978 to 11.6 billion by the Southern electric system kilowatthours in 1979, as these during the summer months when Peak Demand customers - municipalities and air conditioning usage is at its
._ m cooperatives with their own elec- heaviest. In 1979, the maximum tric distribution systems - pro- demand from system customers f f duced an increasing portion of was 18,015,300 kilowatts - a ,, / r ,
their energy requirements. drop of 0.9 percent from the - Sales to residential customers record which was set on June 28, were affected by response to the 1978. conservation ethic, resistance to 1-The difference in weather pat- - - - - - - increases in the priCO of eleC- terns between the summers of tricity, and the comparatively mild 1978 and 1979, widespread com-weather which was experienced pliance with the Administration's _ _ _ _ _ _ _s during 1979. Tctal residential guidelines for thermostat settings sales for the year were 23 billion in offices and public buildings, kilowatthours - down 4.1 per- and customer reaction to higher o
- / ~/ 7 7 V 7 cent from 1978. However, the electric rates contributed to this 78 77 78 average use of electricity in departure from the historical rate 74 75 7' households across the four-state of growth in peak demand!
area was 10,332 kilowatthours for the year - a level which remains Growth Projected for 1980s On June 30,19/9. the Metropohtan Atlanta well above the national consump- Updated projections indicate that Rapid Transit Authonty (MARTA) opened the tion rate. systemwide growth in peak de- first ameiectric nign-speed raii kne in the southeast. During the first six months of mand will average approximately ' " Energy Usage Increases four percent a year over the next $*TA nta n he n In Other Customer Categories decade. The overall use of eleC- Atlanta's downtown area and its eastern tricity also is expected to grow at su s Reflecting the strength of the St hne was opened to the public in economy in the Southeast, the an average annual rate of about late December, expanding operations to 12 combined energy requirements of four percent through the 1980s. miles across the heart of the city. By the These projections are reviewed early 1990s. MARTA plans to have more that commercial and industrial cus- . tomers grew by 2.5 percent, from regularly and take into account sogs g *h d"e into a long-50.1 billion kilowatthours in 1978 many factors which affect the term agreement to provide electncity for to 51.3 billion kilowatthours in use of electricity, including the powenng the MARTA trains. l economic growth of the region, population trends, and the de-creasing availability of oil and natural gas as industrial fuels. l 10
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CONSTRUCTION . Generating Estimated 'l Capacity Date of Type of } The Southern Company and its Company Plant (kilowatts) Completion Fuel / Plant j operating subsidiaries invested Alabama Farley, Unit No. 2 880,000 1980 Nuclear ! Power Bouksin Dam, Unit !
$1.2 billion in 1979 for the con. 225,000 Hyh j Nos.1, 2, and 3 1980 tinuation of power plant construc. Harris Dam, Unit j tion and for the building and up- Nos.1 and 2 135,000 1983 Hydro -
grading of transmission and distri- Maer, Unit No. 2 660,000 1983 Coal j bution lines, substations, and Mitches Dam, Unit , Nos. 5,6, and 7 150,000 1985 Hyh ! other service facilities- Miler, Unit No. 3 660,000 1985 Coal i Miner, Unit No. 4 660,000 1987 Coal , P Geor9e wanace cam, Unit Pumped The system's first pumped stor- Power Nos. I and 2 104,000 1980 Storage ! age hydroelectric generating unit wanace Dam, Unit ; was brought into service during Nos. 3 and 4 113,000 1980 Hydro , wanece Dam, Unit Pumped the year, and a third nuclear
. No.5 52,000 1980 Storage generat.ing unit also began opera- Scherer, Unit No.1 192,Ouu' 1982 Coal tion. The completion of these Scherer, Unit No. 2 192,000' 1984 Coal facilities added 463,020 kilowatts Vogtle, Unit No.1 588,000' 1984 Nuclear ,
of capacity, and, at year-end, thp My5Nos aE 100,000 1985 Hydro system s total generating capacity Rocky Mountain, Unit Pumped was 22.904,435 kilowatts - Nos.1, 2, and 3 675,000 1987 Storage more than any other investor- Scherer, Unit No. 3 683,0008 1987 Coal Vogtle, Unit No. 2 588,000' 1987 Nuclear owned electric utility group in Goa R k the United States. , in the latter part of 1979. Scherer, Unr2 No 4 683,000* 1989 Coal Alabama Power was able to Gulf Power Daniel, Unit No. 2 500,000* 1981 Coal resume full construction work on two of its most critically needed y'g,,,,, ,, c,,,c,,, ,, ,, 7, 3,,,,n, en,,, ,, ,onici,,no,. ,nti,, in,,,,, in projects - the second unit of the intwests soid, or propowd to be soid, to co- Plant ScherW Unit Nos. 3 and 4 and in turn apow men m paham an addenal pwaWes and meicipahus in Gewgia. Farley Nuclear Electric Generat- (2) Excludes the capacity of the 49.3-percent 15.1. percent interest in Unit Nos.1 and 2. ing Plant and the Bouldin Dam. Intwests sold to cooperatives and (4)When completed, the Daniel Electhe munc@ ales in Gewgia. Genwating Plant, consisteg of Unit Nos 1 Alabama Power's poor financial (3) Excludes the capacity of the 16.5-percent (placed in service by Mississippi Power in intwests soid to municipalities in Georgia. 1977) and 2, win be owned jointry by Guit condition had forced that com- Howeyw, Gewgia Poww has oMwed 2 pur. Poww and Mississ@pi Poww. pany to sharply curtail its con-struction work in December, 1978. However, after Alabama interest in the Vogtle Electric construction plans are being Power was granted a permanent Generating Plant. The Florida reviewed continuously - and rate increase in July,1979, a utilities, which are heavily depen- may be revised -in light of both major portion of its bank credit dent on oil, could join the Vogtle the system's ability to obtain was reinstated and a limited nuclear project by the end of 1980. necessary financing and the pro-amount of construction work in addition, Gulf Power and jected demand for electricity. was resumed. Mississippi Power are considering Also during the year, Georgia joining with Georgia Power in the Power began negotiations with a construction of the Scherer Elec- Eacn of tne two nuciear generating units group of electn,c utilities in Florida tric Generating Plant - a coal- under construction at the vogtte Electric
- negotiations which could lead Gmatog Plant will be capable of producing fired facility located in midd!e '*
to the sale of up to a 30-percent Georgia. [t,o$,$a* *ahYerNs*teYn$r-gia these units will be the largest in the Construction Budget Set southern eiectric system. unit one is sened-ufed for service in late 1984. The second unit For the three-year period is planned for completion in 1987. Georgia 1980-1982, systemwide construC- Power oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, and tion expenditures currently are
- budgeted at $4.3 billion. However, ylgf,*as a j $"prNt 12
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l FINANCING , Pdncipal Amount 1979 Date of Net Annual To provide a signifi cant portion of Type of Financing of Offering Offering Cost
- the money needed in 1979 for p, new construction, $424 million First Mortgage Bonds $100,000,000 February 21 10.56%
was raised from outside financing Preferred Stock 50,000,000 February 21 10.58 and $28 million from the sa!) of First Mortgage Bonds 125,000,000 Apri 18 11.10 facilities. Funds from these exter- yrs gage scnds 30,000,000 Apri 2 4 10.41 nal sources accounted for 39 per- Preferred Stock 10,000,000 Apri 24 9.62 cent of the $1.2 billion needed for construction. The remaining 61 'Excbdes all neceseneous expenses hvsed in issuing secunks percent, or $713 million, came from internal sources. For the second consecutive Bonds, Preferred Stock Sold; 1980 Plans Outlined year, there was no public offering Short-Term Loans Obtained Systemwide financing plans for of Southern Company common During 1979, Georgia Power and 1980 tentatively call for public of-stock. However, some $82.8 mil- Gulf Power sold to the public ferings of first mortgage bonds lion in equity capital was raised through underwriters $255 million totaling $510 million and pre-during 1979 through the dividend of first mortgage bonds and $60 ferred stock totaiing $100 miiiion. reinvestment plan and the million of preferred stock. In financing construction ex-employee savings and stock As Alabama Power entered penditures, The Southern Com-ownership plans- 1979, its construction activity had pany's goal is a capital structure The Southern Company's cur- been cut back severely because of 55 to 57 percent debt,10 to 12 rent Dividend Reinvestment and of the company's deteriorated percent preferred stock, and 31 Stock Purchase Plan for stock- financial condition. to 33 percent common equity. At holders was established in 1975. Without sufficient earnings, the the close of 1979, the company's in each successive year, par- company was unable at any time capital structure was 60 percent ticipation has increased and, in during the year to raise construc- debt,9 percent preferred stock, 1979, the plan provided the com- tion capital through the sale of 2 percent preferred stock subject pany with $60.9 million in new first mortgage bonds or preferred to mandatory redemption, and 29 capital. Reinvested dividends ac- stock. percent common equity. counted for $39.7 million of this As reported on page 5, Ala- To achieve the targeted capital amount, and suppiemental cash bama Power was granted a per- structure and to provide the purchases of stock provided manent rate increase in July. The operating companies with the
$21.2 million. More than 23 per- company's credit lines were equity funds needed to continue cent of the company's stock- reopened in September but have their construction activities, addi-holders were enrolled in the pro- been subjected to limitations im. tional offerings of Southem Com-gram at year's end. posed by the Securities and Ex- pany common stock will be The Employee Savings Plan change Commission and the lend- necessary. However, the timing and the Employee Stock Owner- ing banks. These limitations have and amount of the next public ship Plan provided the remaining restricted Alabama Power from sale of Southern Company shares $21.9 million in new common resuming its full construction have not yet been decided.
equity capital which was raised program. during 1979. internal sources of funds, the sale of property, and tne use of In 1979. the building and upgrading of long-term leases provided the re. transmission lines, substations. and distnbu-ti n facdites gired $245 mdlion - ap-mainder of the financing which proximately 20 percent of the southem was required for 1979 construc- electric system s totai expenditures on new tion activit,es. i construction. Projects under way include a 75-mde-long high-voltage line which will run from the Mdler Electric Generating Plant in central Alabama across the western half of the state to Mississippi. At that point. the transmission line wili interconnect with the Tennessee valley Authonty and strengthen the system's ties with that utdity. 14
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STOCKHOLDERS . s in national and regional adver- A cross-section of 1.300 stock- holders, nearly 90 percent of tisements and in other efforts to holders was selected at random those interviewed expressed communicate with the public, The by Louis Harris and Associates. satisfaction with the company's Southem Company has empha- Interviews were conducted by annual and quarterly reports. sized the positive, necessary sup- telephone and by mail in late However, some 60 percent in-port.that investors provide for the January. dicated they would like to read building of an electric supply sys- more information in these reports tem which will serve today's cus- Results Reported conceming government policies tomers and their needs tomorrow. The statistical profile which was and regulations which might af-During the 1970s, those who developed from the survey shows fect the operations of the com-invested in Southern Company that the average Southern Com- pany. In addition, a majority of common stock provided more pany stockholder is 60 years of those who were interested in tnan $1.4 billion in new capital for age. Mere than 40 percent of the receiving more information felt the Southem electric system. The stockholders are 65 or older. Ac- that management's views should
- 10. year period from 1970 to 1979 cordingly, more than 40 percent be provided.
also saw the total number of are retired. In the majority of the A number of other topics also stockholders in the company remaining stockholder house. were addressed in the survey, grow from 109,000 to more than holds, the main wage earners are and management believes that 340.000. empbyed in professional and the findings will be extremely As a result of this increase, managerial positions or own small helpful in formulating company Southern Company common businesses. The average house- policy and oroviding stockholders stock is now the most widely held hold income of Southern Com- with timely, useful information electric utility stock in the nation pany stockholders is $29,000 per about their investment. and is the eighth most widely year. Forty four percent of the The Southern Company ap-held corporate stock in America. stockholders have annual family preciates the cooperation of incomes of $25,000 or less, those who participated in the Stockholders Surveyed Approximately 95 percent of study. As The Southern Company's base Southern Company stockholders of ownership has expanded, the own stock in other publicly held number of individual stockholders American companies, and some During 1980. several of the company's in the company has increased 78 percent hold shares in other stockholdrs are being featured in a series dramatically. At the close of 1979, electric utilities. of advertisements which make the point that individuals had voting control of The average individual stock- 7,(Ea N>r behNNc!thn an approximately 85 percent of the holder owns between 100 and effort to reach readers in the system's four. outstanding shares of Southern 500 shares of Southem Company state service area. the advertisements are Company stock. a ' d* th stock and has held shares in the To obtain a demographic pro- company for five years or less. In hNnd $ the k[ ENDS *s'"of number of national magazines. file of the company's individual their initial purchase of Southern The southem Company is grateful for the Company stock, the majority of assistance of the Barrett famdy from Toom-stockholders and to determine 8"ba how their needs and interests stockholders were seeking both r s $e s$aharNuh ey might be better served, The immediate incoma through divi- Hutchison, a Panama City. Flonda. charter Southern Company commissioned dend payments and long-term ap- boat captain: Frances Pledger, a florist from Louis Harris and Associates - preciation in their investment. Ap- A m ke' " *inYa'rIn*ezNeo'r $ anna *n one of the country's most - proximately half of the company's spear, a rurai manman from Lapine, respected research firms - to stockholders have bought addi- Alabama. conduct a nationwide survey in tional shares since their first early 1980.* Southern Company common stock was acquired, and one-third increased their holdings during 1979. inoveuais wno noto snares ,n a street name in response to questions about NNe$*0cMtIs"amj,, the material which The Southem tor macticai reasons. Company provides its stock-16
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l It took three generations to bring you theelectncityyouusedtoday. I Many years ago, Henry Barrett urged his sons to supply you with electric energy in the coming l invest in the future, years. l Bob and Bill .ook his advice to heart and Look at it this way. ' passed it along to their sons and daughters. Because we can count on people like the Soon the entire Barrett family had a share of Barretts, nearly nine million people Henry Barrett's wisdom. People. across the Southeast can l And shares of Southern Company stock. The real power count on electricity. Today, three generations of Barretts are behind electricity. Southern Company stockholders. With their investment, this Mississippi family is helping to assure that millions of peop e have the SouthemCompany A electricity they need. ; During the past four years alone, the Barretts u soumneu sysern and tho,usands like them have inve,sted more than ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
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You see, investors pay most of the bill for new power plants. And all the other things we need to The s.rrett r mily or Toom.ub.. Mississippi.
ENERGY CONSERVATION . In 1979, the operating companies and determine the most efficient Conservation Booklet Offered ~ of the Southem electric system sizes for heating and cooling All of the operating companies continued to seek innovative equipment, this computer pro- have prepared energy conserva-ways of helping their customers gram also has proven extremely tion literature for their customers. use electricity more efficiently, helpful in work with builders and in 1979, Georgia Power and Gulf The immediate impact of these contractors. Power promoted the concept of cfforts is likelj to reduce the RJsponse to the energy audits budgeting energy usage "the way growth rate of total energy sales. has been favorable - more than you budget your groceries." Cus-However, conservation programs 9,000 had been performed by the tomers were offered a free book-hola the promise of limiting in- end of 1979 - and the cperating let which explains how to read an creases in the peak demand for companies plan to continue urg- electric meter, how to determine clectricity - and, thus, minimiz- ing their residential customers to the energy usage of various ing the need to build costly new take advantage of th,s i service. home appliances, and how to electric generating plants, make - and stay on - an ener-Audits Also Performed gy budget. By the end of 1979, Home Audits Computerized For Commercial, more than 260,000 requests for For the past several years, 'me Industrial Customers copies of the booklet had been Southern Company's op^ rating Advice on how to use energy received. (Stockholders may units have offeted personalized more efficiently also is offered on request a copy by writing home energy audits to their cus- an individual basis to commercial The Southem Company, Depart-tomers. During 1979, the use of a and industrial customers. During ment 343.) specially developed computer pro- 1979, Georgia Power made ener-gram enabled these analyses to gy management recommenda-be prepared more quickly and tions to more than 1,000 of these with far more detailed information. customers, ranging from a Alabama Power. Georgia Power, and Gulf With a portable terminal, data Pow "$" newspaper firm which was ad-
, , p m hr ,d gh sjss Pw now can be fed into the Southern v: sed to use waste heat from its through its E 3 campaign - have provided electric system's centralized printing presses to a bank which builders with guidelines for the construction computer center while a com- n s 1nch $ L was shown how to renovate its ofg'9#nEui'I$ n bnE h 9 i2 pany representative is work,ng i ,n i heating, cooling, and lighting incnes of batted insulation in cedings -
a customer's home. Within a few systems to achieve a 40-percent combined with other energy-saving features minutes, the termina! prints out a reduction in energy costs. such as double-paned glass for windows "d " complete energy / economic analy- Alabama Power entered into n,d",Sj'ngl$nfe'a'uIer$tNf
, 7 sis which shows the customer an agreement with the Alabama new home by as much as 50 percent. At what energy-saving improvements Energy Management Board to the end of 1979. more than 2.000 singie-could be made in his home, the f s 1han apart-provide energy audits for schools, g',Y ho u ad ,,
i amount these changes and add,-i hospitals, units of local govern- specifications. l tions will cost, the resulting sav- ment, and public care institutions. ing on electric bills, and the The primary function of the pro-perioc' ci time over which he will gram is to identify low- or no-cost recowr his initial investment. Operating procedures which will With its capsoility to produce help reduce an institution's recommendea insulation plans energy consurnption. In addition to conducting many of the audits, Alabama Power representatives assisted in the preparation of a comprehensive energy audit workbook and conducted semi-nars for the certification of energy auditors. 18
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RESEARCH AND DEVELOPMENT . Another significant milestone oc- late 1980, with initial operation converting the sun's rays into en-curred dunng 1979, advancing planned for mid-1984. ergy for homes and office build-the development of one of the na- During the next year, equip- ings. Alabama Power and Georgia tion's most promising synthetic ment, procedures, and operating Power have built demonstration fuel technologies - the solvent conditions which are expected to homes which utilize solar space r; fining of coal (SRC-l). Through- be in place at the demonstration and water heating systems, and out the 1970s, The Southern facility will be tested by Southern Alabama Power has equipped its Company has guided the re- Company Services at its SRC-l Montevallo office with solar-search and testing of this process pilot plant near Wilsonville, assisted heating, cooling, and which turns raw coal into a clean- Alabama. Funding for this work water heating systems. burning fuel. will be provided by DOE and the Solvent refined coal originally Electric Power Research Institute Testing Continues on was regarded only as a solid fuel (EPRI)- the research and devel- Environmental Technologies for industrial use. But, in August, opment arm of the electric utility A growing number of projects at the conclusion of a year-long industry. also are focused on finding the study for the Department of Ener- Management believes that the most cost-effective means of gy (DOE), The Southern Company development of solvent refining meeting requirements for reported that solvent refined coal technology will make a significant clean air and clean water. could be further processed into contribution toward reducing the Research is under way to im-gasoline and home heating oil. nation's serious dependence on prove the performance of cooling This would be accomplished with imported oil. towers and electrostatic the addition of a liquefaction pro- precipitators, and testing con-cess, enabling an SRC l refinery Solar Research Coordinated tinues at the Scholz Electric to convert even the dirtiest high- In addition to seeking ways which Generating Plant in Florida to sulfur coal into liquids that are will allow greater use of develop more reliable and more essentially equivalent to conven- America's coal reserves, the economic scrubber systems than tional crude oil. Southern electric system is ccm- now exist. mitted to furthering the develop-Demonstration Plant ment of solar technology. In 1979, To Be Constructed a solar energy committee was The development of synthetic fuels has The report to DC5 also contained established to coordinate the become a key element in the effort to for-conceptual designs, economic numerous projects which the mu! ate a workable national energy plan. analyses, and environmental system companies have under *# [ncQ7Qn9,e s soutn
, ess" Nh tN coat studies for the world's first large- way to study the use of soMr into a clean-burning syntnetic fuei known as scale SRC-l demonstration plant. power. solvent ref,ned coal (sRCl). Dunng 1979, a The committee held its first trade delegation from Japan was one of Major funding for construction of " " " * " $ '"
this plant, which is expected to meeting in Shenandoah, Georgia, * ",Y o, 9Ea$ *he sRC p ot p a near cost $650 million to $725 million where the world's largest com- wasonviiie. Alabama. - in today's dollars - will be mercial solar energy installation is provided under a cost-sharing being built. This 500-kilowatt agreement with government and solar-powered generating plant is private industry. The facility will expected to provide 60 to 90 per-be located in Newman, Kentucky, cent of the total energy needs of near the geographic center of the a major knitwear factory. Georgia nation's high-sulfur coal reserves. Power is working with DOE in the : Groundbreaking is scheduled for development of the project. The present schedule calls for con- l struction to be completed in the ! early 1980s. Other solar projects in which the system companies are in-volved test various applications of ; 20 i
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MHOWRATE VIEWPOINT - that there's no light at the end of In looking to the problems and the
, . M. *~ the tunnel - no let-up in the in- promise of the next decade, one creases which foreign oil pro- prominent observer of the
- i. f (/ : - -
ducers will demand? And, isn't it frightening to realize that the American scene noted that our future rests on whether we can p .' ' ,,. response of our government has come to grips with serious ques-
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F N' CN ~ amounted to little more than the rhetoric of presidents and the tions of regulatory and economic policy.
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wrangling of congressmen? Unfortunately, the nation's tracF 7 Today, Americans want record in the 1970s has been g dec:sive actions - actions which marred by the same tendency for s will lead to the expansion of overkill which has characterized
~
energy production within the the government's approach to borders of th,is nation. regulation. Throughout the decade svin w. Vogue. Jr. we have seen that when a govern-In my opinion, the greatest retreat ment overtaxes a product or ser-Since no enterprise can succeed from reality is the Administration's vice, the end result is less of the without the ultimate approval of failure to grasp the critical impor- product or service which is taxed. the public, the management of tance of the role which nuclear We have seen that when a govern The Southern Company has com- power must play in meeting our ment creates too much money, mitted itself to an open discus- near term energy needs. The pro- each unit of currency loses its sion of the realities of producing duction of energy from the split- value. electricity in today's uncertain ting of the atom is one of only These were expensive lessons economic environment. two fully developed .echnologies for the America of the 1970s to Seeking public platforms and available to us today - one of have to learn. As tax rates have ; exchanging views with local and only two technologies capable of soared, " stagflation" has flour-regional opinion !eaders formed an freairg u from a growing threat ished. And, as the federal system important part of the company's e m' terrorism and of taxation has become more com communications efforts in 1979. ecu.onuc instability. plex and more repressive, the in-The following are excerpts from dividual's incentive to invest in his remarks presented during the year That's why I'm calling for a com- country has diminished. by Alvin W. Vogtle, Jr., president of mitment from a!! of those involved But, this year legislation was The Southern Company. in the nuclear industry to take a proposed which would grant a tax more active role in self-regulation credit for individuals who invest in In 1979, we relied on oil-burning - self-regulation that not only will the common stock of American generators to produce less than help allmiate the public's concern companies. one percent of ycur electricity. for nuclear safety, but add to our in my view, this is legislation , But our oil bill still added up to extensive knowledge of nuclear which makes sense. Legislation l some $30 million. And the price technology as well. I believe that which could help bring about a we'll have to pay for this black the only way to overcome what new period of renaissance in gold will jump by at least 25 per- some have described as "radia- America - a period in which in-cent in the next 12 months alone. tion hysteria" in this country is to dividual creativity and initiative are Isn't it frightening to realize prove that we are as genuinely encouraged to bring about what concerned about nuclear safety one of our former presidents ca!!ec as our customers are, and that "a rising tide that lifts all boats." we're doing everything possible to improve the state of existing technology. l
FINANCIAL REVIEW The Southern Company and Subsidiary Companies Substantially all of the corporate income of The Southem Company consists of equity in eamings of its operating subsidiaries, Alabama, Georgia, Gulf, and Mississippi power companies. Corpo-rate income and expenses for 1979 and 1978 are shown below: _ Corporate income Statement 1979 1978 (in thousands) locome: Equity in earnings of subsidiary companies $225,044 $207,600 Other income . 13,205 12.612 Total income 238,249 220,212 Expenses and Other Deductions: Expenses and taxes . 4,348 3,994 Interest expense _14,776 14,650 Total expenses 19,122 18,644 Not income $219,127 $201,568 Dividends from Subsidiaries $218,200 $259,150 Common Stock Price and Dividends Per Share Price of Common Stock Dividends Paid (Wall Street Joumal Composito) Per Share The Southem Company 1979 1976 1979 1978 High Low High Low First Quarter $14% $13% $17% $15% 38%c 38%* Second Quarter . 14 12 17% 15 38 % 38% Third Quarter . 14% 12 16% 15 38 % 38 % Fourth Quarter 13 M 16 13 38 % 38% Report of Management The management of The Southem Company has prepared evaluate the system of intemal accounting control and per-sad is responsible for the consolidated financial statements form such tests and other procedures they deem necessary and related financial information included in this report. The to reach and express an opinion on the faimess of the finan-financial statements were prepared in accordance with cial statements. generally accepted accounting principla appropriate in the The board of directors pursues its responsibility for circumstances and necessarily include amounts that are reported financial information through its audit committee, based on best estimates and judgments with appropriate composed of directors who are not employees. The audit consideration to materiality. Financial infc Tnation included committee meets periodically with management, the internal elsewhere in this annual report is consist int with the finan- auditors, and the independent oublic accountants to assure cial statements. that they are carrying out theli responsibilities and to discuss The company maintains a system of 11ternal accounting auditing, intemal control, and fi. acial reporting matters. controls to provide reasonable assurance that assets are Both the intemal auditors and tree ;@ndent public ac-safeguarded and that the books and rrcords reflect only countants have free access to the audit committee at any authorized transactions of the compa7y. Limitations exist in time. any system of intemal control based upon the recognition We believe that these policies and prordures provide that the cost of the system ehott,d not exceed the benefits reasonable assurance that our operations are conducted with , derived. The ccmny believes its system of internal ac- a high standard of business conduct and that, subject to the ; counting crtrov, augmented by its intemal auditing function, effect, if any, of the final outcome of the pending rate mat-appropriately balances the cost / benefit relationship. ters discussed in Notes 2 and 3, the consolidated financial i The independent public accountants provide an objective statements reflect fairly the financial position, results of assessment of the degree to which management meets its operations, and sources of funds for grtss property additions ) responsibility for fairness of financial reporting. They regularly of The Southern Company and subsidiary companies. F 23
FINANCIAL REVIEW . l 1 Consolidated Summary of Operations 1979 1978 1977 The Southem Company and Subsidiary Companies (in thousands)
$3,128,100 ,$2.906.672 $2.652,085 Operating Revenues ,
Operating Expenm: 1,816,508 1,629,709 Operaton and maintenance 1,906,448 , 304,188 269,012 216,060 Depreciation and amortization 129,956 171,174 157,127 Taxes other than income taxes 191,156 208,263 246.624 , Federal and state income taxes 2.592,073 2,433.803 2.222.349 Total operating expenses 536,096 472,869 429,736 Operating income 131,839 Other income, Not 122,673 110.018 658,700 582,887 561,575 Income Before Interest Charges 253,117 Not interest Charges .......... ... ..... 363,821 310,436 . Preferred Stock Dividends of Subsidiary Companies 75,821 70.883 63.391
$ 219,127 $ 201668 $ 245.067 Consolidated Not locome Weighted Average Number of Shares of Common Stock 125,846 Outstanding (in thousands) . ... ..........
145,038 139,005 Eamings per Share on the Average Number of Shares
$1.51 $1.45 $1.95 Outstanding . . . . . ..... .... .......
Cash Dividends Paid per Share of Common Stock . $1.54 $1.54 $1.48 Market Price per Share: Range (high-low for year) 14k11 17413 18415% 11 % 13% 17% Closing price Management's Discussion of Summasy of Opvations The results shown in the foregoing Consolidated 1977. This decline resulted primarily from conservation Summary of Operations are not necessarily indicative efforts by residential customers and a decline in sales of future earnings. It is expected that higher operating to wholesale customers resulting from their increasing costs and carrying charges on increased investment in ownership in generating facilities. Increased binings plant,if not offset by proportionate increases in operat- resulting from the recovery of increased fuel and ing revenues (either by periodic rate relief or increases energy costs and the results of rate relief have in-in sales), will adversely affect future eamings. Increas- creased the average revenue per kilowatthour from es in sales in the future will be af fected by the extent of 2.72 cents in 1976 to 3.08 cents in 1977,3.31 cents in energy conserwtion practiced by customers, the elas- 1978, and 3 61 cents in 1979. ticity of demand, weather, and the rate of economic Operation and Maintenance. The increases in growth in the system service area. In recent years, operation and maintenance expenses occurring each eamings of public utility emoanies, including those of year since 1976 have resulted primarily from escala-the Southem electric system, nave tended to decline tions in the cost of fuel for electric generation and the during periods following the full 12 months' realization cost of purchased power. Fuel cost in mills per of general rate increases and prior to receipt of further kilowatthour generated was 12.71 in 1977,13.62 in rate relief. The 1979 results of operations are discussed 1978, and 15.21 in 1979. Increases in fuel and pur-in detail in other sections of this report. The following chased power costs are recovered through base rates factors h9d a significant effect on the results of opera- or fuel and energy adjustment provisions c6ntained in tions for thJ three years since 1976. rate schedules. Increases in maintenance expenses Operating neues. Increases in operating were largely due to the addition of substantial new revenues in each period are attributable principally to facilities to the system, increased production rate increases, recovery of increased fuel and pur- maintenance resulting from a continuing program chased power costs through fuel and energy adjust- started in the mid-1970s to improve generating unit ment provisions contained in rate schedules, and, prior performance, and additional maintenance necessi-to 1979, increased energy sales. Kilowatthour sales tated by the installation of pollution control facilities on decreased one percent in 1979, compared to a two- generating units. percent increase in 1978 and a six-percent increase in 24
? 1976 1975 1974 1973 , 1972 1971 1970 1969
$2,199,531 $1,998.912 $1,488.995 $1,165,825 $983,233 $828.670 $738.064 $666.265 1,337,845 1.130.955 927,267 593,416 512,017 422,218 349,075 291,381 190,178 170,791 153,361 132,762 114,943 101,738 91,263 83.260 110,715 104,108 88.949 75,908 65,432 57,019 49,844 45,887 104,115 195,278 46,560 94.510 66,177 61,386 76,129 88.966 1,812.8 25o 0,601,222 1,216,137 896,596 758,569 642,361 566.311 509.494 386,675 397,690 272,858 269.229 224,664 186,309 171,753 156,771 169,574, 154.395 _ 121,086 85.632 52,807 33,979 22,384 13.809 556.249 552,085 393,944 354,861 277,471 220,288 194,137 170,580 303,487 273,316 233,406 176,175 132,265 102.851 79,370 63,514 58,189 40,600 37,672 30,488 24,701 _ 18 140 14,107 12.203
$ 194.573 $ 238,169 S 122,866 _$ 148,198 $120,505 $ 99,297 $100,660 $ 94,863 120.072 105,264 87,083 71,625 63,833 56,033 51,650 51,025
$1.62 $2.26 $1.41 $2.07 $1.88 $1.77 $1.94 $1.85
$1.41 % $1.40 $1.39% $1.34 $1.30 $126 $1.21 % $1.15%
16%-13% 15%-8% 17%-7% 20 %-14 % 22%-18 % 28 %-18 % 28%-19 29 %-24 4 16% 14 % 8% 16 20% 22 26 % 25 % Depreciation and Amofilzation. Increases each allowance for funds used during construction, and net year are due principally to the continued growth in book gains applicable to the sale of facilities by depreciable plant in service, and the amortization of Georgia Power to certain wholesale customers. costs related to cancelled generating plants (see Note Details of other income are as follows: 3 to the financial statements), amounting to $1,517,000 3979 3973 3977 3973 in 1977, $7,116,000 in 1978, and $8,540,000 in 1979. On mousands) The composite straight line depreciation rate was ap- Allowance for funds proximately 3.3 percent in 1976,3.4 in 1977, and 3.6 in ydjyn 1978 and 1979. Equity . . . . $ 73.082 $ 79.011 $ 89,771 $ - Taxes other than income Taxes. Increases in Debt and equity - - - 153,766 cach period since 1976 are attributable principally to Interest income 57,694 37,473 23.133 10.545 Ne increases in the property tax base and, in certain in- o s 1,646 1.446 23.777 4,905 stances, the rates applicable to property taxes, gross Other. (9.749) (7.912) (4.842) 358 receipts and franchise taxes (based on revenue), and Total $122.673 $110.018 $131.839 $169.574 payroll taxes. Income Taxes. Fluctuations in income taxes Effective in 1977, the debt portion of the allowance resulted from changes in income before income taxes, for funds used during construction has been reported cnd from the reduction of the federal income tax rate as a reduction in interest charges rather than as a from 48% to 46% in 1979, and differences in the tim- credit to other income, ing of deductions, for tax and book purposes, of a por. Interest Charges and Prefermd Dividends. The tion of certair' plant related costs for which deferred increases during each of the peri,s are due to the is-taxes were not provided in prior years. Federal and suance of additional securities to finance the system's state income tax provisions for 1979 and 1978 are ongoing construction program, offset beginning in detailed in Note 6 to the financial statements. 1977 by the inclusion of $98,577,000, $72,430,000. Other income, Net. Variations in orner income and $85,540,000 in 1979,1978, and 1977, respectively, since 1976 are attributable primarily to enanges in in- attributable to allowance for debt funds used during terest income from temporary cash investments, construction. 25
2 FINANCIAL RnVlEW - r : Consolidated Statistics , The Southem Company and Subsidiary Companies 1979 1978 1977 Customers (end of period) Residential 2,215,596 2,168,448 2,113,812 Commercial 287,751 285.234 284,616 Industrial 16,246 16,325 14,922 Other 2,689 2,639 2,589 Total custoraers 2,522,284 2,472.646 2,415,939 Kilowatthour T, ales (in thousands) 22,645,723 23,606.119 22,829,156 Residential . Commerc',al . 16,433,689 16,586,919 17,763.462 Industrial . .. 34,912,745 33,524,232 30,067,083 Municipal street lighting 404,696 395,922 380.584 Sales for resale 11,503,407 *12,486.242 13,338,339 56,312 43,313 39,903 Other Total territorial sales 85,956,572 86,642,747 84,418,527 Sales to utilities outside territory 64,102 392,240 934,978 Total kilowatthour sales 86,020,674 87,034,987 85,353.505 Operating Revenues (in thousands) Residential . $ 952,085 $ 914,625 $ 828,200 Commercial 742,865 689,349 689,945 Industrial . 1,056,675 922,288 773,447 Municipal street lighting 20,081 18,839 17,441 Sales for rese.le 326,309 324,351 298,834 1,969 1,413 1,319 Other Total revenues from territorial sales . 3,099,984 2,870,865 2,609.186 Revenues from sales to utikties outside territory . 2,955 12,460 19,846 To' 'sevenues from sales of electricity 3,102,939 2,883,325 2,629,032 25,230 23,347 23.053 C.ner revenues Total operating revenues $3,128,169 $2,906,672 $2.652,085 Average Use per Residential Customer (kilowatthours) 10,332 11,035 10,944 Average Revenue per Kilowatthour-Residential Sales (cents) .... ......... 4.20 3.87 3.63 Average Revenue per Kilowatthour-Total Sales (cents) 3.61 3.31 3.08 Energy Generated and Received (thousands of kilowatthours) Generated-after station loss and use: Fuel 84,651,261 82,770,600 80,756,684 Hydro . . .. . 6,882,736 4,678,845 5,842,9u6 Purchased and interchanged, net 571,831 5,494,866 4.387,858 Total energy generated and received . 92,105,828 92,944,311 90,987,450 Cost of Energy Generated and Purchased (in thousands) Fuel generation-Fuel $1,287,516 $1,127.127 $1,026.600
-Other 264,670 247,457 217,500 l
l Hydro generation ... 10,317 10.540 9.907 Purchased and interchanged, net 8,393 112,356 94,959 Other production expenses . 9,102 9.353 9,582
~ Total cost of energy generated and purchased . $1,579,998 $1,506,833 $t,358,548 Average Cost of Fuel per Kilowatthour Generation (mills) . 15.21 13.62 12.71 26
3 e 1976 1975 1974 1973 1972 1971 1970 1969 2,067,203 2,016,109 1,991.734 1,939,688 1,873,885 1,815,933 1,778.070 1,741,911 286,972 279210 277,949 276,445 270,145 261,315 252,536 245,989 6,703 7,038 6,929 6,8 54 6,470 5,953 5,843 5,696 2,939 2,859 2,722 2.632 2,540 2,498 2,393 2,304 2,363,877 2,305,216 2,279,334 2,225.609 2,153,040 2,085,699 2,038,842 1,995,900 20,985,791 20275,134 19,404.815 19,587,400 17,675,269 16,387,731 15,465,589 13,701,597 16,741,455 11,556.668 14,797,312 14,687,449 13.316,030 11,917.346 11,055,649 9,802,722 28,334.488 2',:,955.374 26,719,209 26,569,020 24,909,785 23,238,793 22,010,460 21,197,812 371,633 356,262 342,207 317,743 307,163 296,057 279,502 266,918 12,745,214 12,429.959 11,774,960 11,816,266 10,146,343 8.799,517 8,610,815 7,806,173 38,606 35,927 34,010 34,582 33,402 31,339 29,654 27,221 79 217,187 74,609,324 73,072,513 73,012.460 66,387,992 60,670,783 57,451,669 52,802,443 1,138,673 931,397 799,691 50,917 303,390 416,938 1.093,219 215,690 80,355,860 75.540,721 73,872.204 73,063,377 66,691,382 61,087,721 58,544,888 53,018,133
$ 673,653 $ 632,765 $ 479,096 $ 400,182 $337.348 $290,081 $260,710 $234,861 589,680 531256 399267 324,884 273,517 229,935 202,851 182,899 619,640 558,704 416,653 312,037 262,234 221,756 192,552 181,370 15.374 14,265 12,352 11.454 10,458 9,478 8,816 8,211 265,957 233,603 160,606 104,584 83,454 64,164 55,801 50,405 1,142 876 725 534 484 431 401 366 2,165,446 1,971,469 1,468,699 1,153,675 967,495 815,845 721,131 658,112 19,050 12,844 8,518 565 5,855 3,643 8,717 1,762 2,184,496 1,984,313 1,477.217 1,154,240 973,350 819,488 729,848 659,874 15,035 14,599 11,778 11,585 9,883 9,182 8,216 6,391
$2,199,531 $1,998,912 $1,488,995 $1,165,825 $983233 $828,670 $738,064 $666.265 10,277 10.140 9.852 10.267 9,588 9.156 8,777 7,954 3.21 3.12 2.47 2.04 1.91 1.77 1.69 1.71 2.72 2.63 2.00 1.58 1.46 1.34 1.25 1.24 76,921,503 68,651,149 71,319,229 68,617,513 61,106,501 55,474.351 54,284,674 49,545,630 6,108,946 7,696,176 6.366,132 7,836,747 6,130,533 6.537,370 4,701,760 5,450,791 3,363,476 4,929,599 2,316.872 2,832,845 5,535,706 4,521,361 4,735,369 2,834.956 86,393,925 81,276,924 80,002,233 _79,287,105 72,772,740 66,533,082 63,721,803 57,831,377
$ 868,527 $760,380 $619,800 $339,177 $270,531 $222,623 $174,465 $141,677 171,515 111,386 84,184 60,852 47,612 35,761 28,638 26,047 8,552 7.988 7.154 5,158 5,079 4,764 4,543 5,153 47,359 39283 23,737 25,849 48,848 31,783 29,574 16.990 8,470 7,351 5,910 1,901 1,118 1,061 876 675
$1,104,423 $926,388 $740,785 $432,937 $373,188 $295.992 $238,096 $190,542 11.29 11.08 8 69 4.94 4.43 4.01 M 2.86 27 3 - -
1 FINANCIAL REVIEW . , J Consolidated Balance Sheets at December 31,1979 and 1978 The Seuthern Company and Subsidiary Companies 1979 1978 (in thousands) ASSETS Utility Plant (Notes 1,3 and 4): $8,815,194 Plant in service, at original cost . . S 9,587,816 2,270,150 1,996.315 Less-Accumulated provision for depreciation . 7,317,666 6,818,879 177,168 113,253 Nuclear fuel, at amortized cost 1,935,233 1,710,819 Construction work in progress 9,430,067 8,642,951 Total , 7,072 7,041 Other Property and Investments (Principally nonutility property, at cost) . Current Assets: 31,660 33,494 Cash (Note 5) . 166,510 398,979 Temporary cash investments, at cost ... Receivables,less accumulated provision or uncollectible accounts of $2,776,000 in 1979 and $2.421,000 in 1978 . 307,w7 240,883 Fossil-fuel stock, at average cost 450,398 393,928 Materials and supplies, at average cost 62,349 53,221 19,144 14,760 Prepayments 1,039,702 1,133,431 Total Defstred Charges: De: erred cost of cancelled plants (Notes 1 and 3) . 29,973 34,779 Debt expense bd.,g amortized
- 16,695 16.395 28,586 31,866 Misceliacaous 75,254 83,040 Total
$10,552,095 $9,866.463 Total Assets CAPITAllZATION AND LIABILITIES Capitalization (See accompanying statements):
Common stock equity . $ 2,499,422 $2,422,182 786,820 726,820 Preferred stock . . . 155,000 Preferred stock-subject to mandatory redemption (Note 8) , 149,750 4,769,066 4,522,888 Long-term debt 8,205,058 7,826,890 Total Current Liabilities: Interim obligations (Note 5) . . 352,478 219,253 Preferred stock sinking fund requirement (Note 8) . 5,020 - Long-term debt due within one year (Note 9) . 86,326 184,863 Accounts payable . . .. 322,310 233,411 5,067 11,927 Revenues to be refunded (Note 2) . Customer deposits 53,510 49,435 Taxes accrued-Federal and state income . 32,203 26,852 Other .. 52,645 49,915 116,403 109,550 Interest accrued . 34,401 27,796 Miscellaneous 1,060,363 , 913,002 Total Deferred Credits, Etc.: 990,181 867,404 Accumulated deferred income taxes . 254,518 230,292 Accumulated deferred investment tax credits 28,875 Miscellaneous 41,975 , 1,286,674 1,126,571 Total i Commitments and Contingent Matters (Notes 2,3,4 and 10) , Total Capitalization and Liabilities $10,552,095 $9.866.463 l l The accompanying notes are an integral part of these statements. 28
Consolidated Statements of Capitalization at December 31,1979 and 1971 The Southom Company and Subsidiary Companies 1979 1978 1979 1978 (in thousands) Percer.t of Total Common Stock Equity: Common stock, par value $5 per share-Authorized-185,000,000 shares; Outstanding-1979: 148,744,837 shares, 1978: 142,102.123 shares (a) . . ..
$ 743,725 $ 710.511 Amount paid in for common stock in excess of par value . 1,125,823 1,076,213 Premium on preferred stock (Note 8) . . . . . . ...
1,756 1,541 Ermings retained in the business (1130998,000 restricted aga.nst payment of cash common dividends) . 628,118 633,917 Total common stock equity . . 2,499,422 2,422,182 30.5 % 30.9 % Cumulative Preferred Stock of Subsidiaries:
$100 par or stated value-4.20% to 5.96% 199,356 199,356 6.48% to 7.88% 147,000 147,000 8.04% to 9.52% 340,464 330,464
$25 stated value-
$2.52 Class A . 50,000 50,000
$2.56 Clas= A . 50,000 -
Total (annual dividend requirement-$60,115,000) 786,820 726,820 9.6 9.3 Cumulative Preferred Stock of Subsidiaries-Subject to Mandatory Redemption (Note 8):
$100 par or stated value-10.20% to 11.00% 80,000 80,000
$25 stated value-
$2.75 Class A . 74,770 75 000 Total (annual dividend requirement-516,815,000) 154,770 155,000 Less amount due within one year 5,020 -
Cumulative preferred stock-subject to mandatory redemption excluding amount due within one year . 149,750 155,000 1.8 2.0 Longterm Debt: First mortgage bonds of subsidiaries-Maturity interest Rates 1979 , 3% - 4,500 1979 11 % - 127,400 1980 2%% 3,000 3,000 1980 2%% .... 15,000 15,000 1981 3%% to 3%% 38,778 39,635 1982 3%% to 9%% 52,536 52 536 1983 , 3%% to 4%% . 23,006 24,193 1984 . .... . 3%% to 3.40% 37,915 38,818 1985 through 1989 . 3%% to 8%% 246,715 246,715 1990 through 1994 4%% to 5%% 243,146 256,260 1995 through 1999 . . . 4%% to 8%% 458,526 465,242 2000 through 2004 (Note 9) 7%% to 11%% 1,694,489 1,704,007 2005 through 2009 . 8%% to 11%% 1,300,968 1,052,500 Total first mortgage bonds 4,114,081 4,029,806 Other long-term debt (Note 7) . .. 770,192 70b,242 Unamortized debt premium (discount), net (28,881) 028.297) Total long-term debt (annaal interest requirement-$413,100,000) . . ... 4,855,392 4,,'07,751 Less amount due within one year (Note 9) . 86,326 184,863 Long-term debt excluding amount due within one year . 4,769,066 4,522.888 58.1 57.8 Total capitalization ,
$8,205,058 $7,826.890 100.0 % 100.0 % < (:) At December 31,1979, a total of 3,116,718 shares was reserved for issuance pursuant to the dividend reinvestment and stock purchase plan and the employee savings plan.
The accompanying notes are an integral part of these statements. g
FINANCIAL REVIEW . ! J j 1 Consolidated Statements of income j For the Years Ended December 31,1979 and 1978 4 1 The Southem Company and Subsidiary Companies 1979 1978 j (in thousands) Operating Revenues $3,128,180 $2,906.672 l Operating Expenses: Operation- - Fuel . . . . . . ... .... 1,287,516 1,127.127 f Purchased and interchanged power, Let 8,393 112,356 Other 367,440 340,940 1: Maintenance , 245,079 236,085 - Depreciation and amortization 304,188 269,012 l Taxes other than income taxes . . . . . . . 171,174 157,127 j Federal and state incor' e taxes (Note 6) . ___208,263 191,156 i Total operating expenses 2,592,073 2,433,803 - Operating income 536,096 472,869 Other income: Allowance for equity funds used during construction . 73,082 79,011 ; Other, nel 49,591 31,007 i Income bafore interest charges 658,769 582,887 j intwest Chelges and Preferred Dividends: Interest on long-term debt . 403,250 364.357 3 Interest on interim obligations . 34,070 5.624 . Other interest expense 25,078 12,885 ( Allowance for debt funds used during construction (98,577) (72,430) Preferred dividends of subsidiary companies 75,821 70,883 Net interest charges and preferred dividends 439,642 381,319 :j Con 4,olidated Not income (Note 2) . $ 219,127 $ 201,568 [ Weighted Average Number of Shares of Common Stock Outstanding (in thousands) . 145,038 139,005 ' Eamings per Share on the Average Number of Shares Outstanding $1.51 $1.45 Cash Dividends Paid per Share of Common Stock $1.54 $1.54 ! Consolidated Statements of Earnings Retained in the Business ; For the Years Ended December 31,1979 and 1978 The Southem Company and Subsidiary Companies 1979 1978 ; I (in thousands) -
$646,345 '
Balance at beginning of period . $633,917 Consolidated net income (Note 2) . 219,127 201,568 , 853,044 847,913 1 Cash dividends on commoni ock . 222,504 213,380 / l Capital stock expenso . 2,422 616 ? l Balance at end of period (restricted as indicated on statements of capitalization) . $628,118 $633,917 Consolidated Statements of Amount Paid in for Common Stock in Excess of Par Value For the Years Ended December 31,1979 and 1978 l < l The Southem Company and Subsidiary Companies 1970 1978 : (in thousands) , Balance at beginning of period .. . .. $1,076,213 $1,021,539 l Proceeds from sales of common stock over the par value , thereof-6,642,714 shares in 1979 and 5.330,135 shares in 1978 . 49,810 54,674 : Balance at end of period . , $1,125,823 $1,076,213 The accompanying notes are an integral part of these statements. k 30
x Consolidated Statements of Sources of Funds for Gross Property Additions For the Years Ended December 31,1979 and 1978 The Southem Company and Subsidiary Companies 1979 1978 (in thousands) Sourcas of Funds for Gross Property Additions: Consolidated net income .. ..
$ 219,127 $ 201,568 Less dividends on common stock . 222,504 213,380 (3,377) (11,812)
Add (deduct)-Principal noncash items-Depreciation and amortization 346,899 321,333 Deferred income taxes, net 176,515 160,442 Investment tax credits . . . . . .... ... 26,100 20,556 Allowance for funds used during construction (Gross) . (171,659) (151,441) 374,478 339,678 Decrease (increase) in net current assets, excluding interim obligations, long term debt and preferred stock due within one year-Cash and temporary cash investments . 230,635 (28,503) Receivables .. (66,924) (16,429) Fossil-fugl stock . . . (56,470) (36,917) Materials and supp!ies (9,128) (7,398) Accounts payable . . 88,899 38,193 Revenues to be refunded . (6,860) (23,283) Taxes accrued . 8,081 (19,647) Interest accrued 6,853 15,260 Other, net 6,296 (5,466) 201,382 (84,190) Other, net (including allowance for funds used during construction) . 137,117 119,728 Total funds from intemal sources 712,977 375,216 l Sales of securities-First mortgage bonds .. .. 255,000 433,000 l Less bonds retired and reacquired 170,725 30,609
)
84,275 404,391 J Preferred stock . ... 60,000 - Preferred stock, reacquired (230) - Common stock , 82,824 81,325 226,869 485,716 Proceeds from pollution control obligations-net 22,057 56,562 Sales of property, net book value . ... 27,935 32,673 increase (decrease) in other long-term debt 41,893 (26,799) Increase in inierim obligations . , 133,225 159.063 Total funds from external sources . 451,979 707,215 Gross Property Additions (includes net allowance for funds used during construction in the amount of $126,360,000 in 1979 and $116,738,000 in 1978) . $1,164,956 $1,082,431 The accompanying notes are an integral part of these statements. 1 i i l h 31 L _. . l
4 FINANCIAL REVIEW , The Southern Company and Subsidiary Companies Notes to Financial Statements , December 31,1979 and 1978 1, Summary of Significant Accounting Policies: availab!e at the respective nuclear plants until 1985 at Plant General. The Southem Company is the parent company of Hatch and 1991 at Plant Farley. Georgia Power is currently four operating companies and a system service company, expanding the storage facilities at Plant Hatch to facilitate The operating companies are engaged in the business of pro. storage capacity through 1999. viding electnc utility service in four southeastem states. Utility Plant. Utility plant is stated at original cost. Such , Operating contracts among the companies - covering inter- cost includes applicable administrative and general costs; connection arrangements, interchange of electric power, and payroll related costs such as pensions, taxes, and other - joint ownership of generating facilities - are subject to fringe benefits; and the estimated cost of funds used during regulation by the Federal Energy Regulatory Commission construction. (FERC) or the Securities and Exchange Commission (SEC). Aliowance for Funds Used During Construction.The The system service company provides, at cost, technical and allowance for funds used during construction represents the other specialized services to The Southem Company and to estimated debt and equity costs of capital funds w" -
- cach of the subsidiary operating companies. applicable to utility plant while under construct The Southem Company is registered as a holding com- posite rates used by the companies during 197 pany under the Public Utility Holding Company Act of 1935, varied from 7.5 percent to 8.8 percent.
cnd it and its subsidiaries are subject to the regulatory provi- Depreciation and Amortization. Depreciation of the sions of the Act. The subsidiary operating companies also original cost of depreciable utility plant in service is provided cre subject to regulation by the FERC and their respective using composite straight line rates which approximated 3.6 state regulatory commissions and follow generally accepted percent in 1979 and 1978 and include a factor to provide for accounting principles and the accounting policies and prac- expected costs of decommissioning nuclear facilities. The tices presenbed by the respective commissior.d. cost of decommissioning, based on current pnce levels and All subsidiaries have been consolidated herein except decommissioning promptly after the unit is taken out of ser. Alabama Property Company (a subsidiary of Alabama Powe0, vice, is estimated at approximately $25 000,000 per unit for the total assets and revenues of which are not significant. All Georgia Power's portion of Plant Hatch and $30,000,000 per material intercompany items have been eliminated in con- unit at Plant Farley. These estimates will be adjusted solidation. Consolidated retained earnings at December 31, periodically to reflect changing price levels and technology. 1979, include $384,960,000 of undistnbuted retained eamings When property subject to depreciation is retired or otherwise of subsidiaries. disposed of in the normal course of business, its cost, Revenues. Revenues, including those subject to possible together with the cost of removal, less salvage, is charged to r: fund (see Note 2), are included in income as billed monthly the accumulated provision for depreciation. The deferred to customers on a cycle basis, except for Gulf Power, which costs of cance!!ed plants are being amortized over a frve-accrues estimated unbilled revenues at the end of each year period. fiscal period to conform with the ratemaking treatment of Maintenance. The cost of maintenance, repairs, and revenues by the Florida Public Service Commission (FPSC). replacement of minor items of property is charged to Fuel Costs. Fuel costs are expensed as the fuel is con- maintenance expense accounts. The cost of replacements of sumed. The subsidiary companies' electric rates, with the ex- property (exclusive of minor items of property)is charged to ception of Georgia Powcr's retail rates, include fuel and net the utility plant accounts. purchased energy adjustment clauses under which fuel and Pension Costs. The companies have trusteed and non-purchased power costs above, or below, base levels included contnbutory pension plans which cover substantially all in the various rate schedules are billed, or credited, to regular employees. The policy of the companies is to fund customers. Georgia Power is allowed by state law to each year's accrued pension cost for the plans which recover fuel and net purcnased power costs through a fuel amounted to $36,241,000 in 1979 and $31,485,000 in 1978. cost recovery mechanism which is adjusted as necessary by Of these amounts, $23,630,000 in 1979 and $19.534,000 in the Georgia Public Service Commission (GPSC) to reflect in- 1978 were charged to operating expenses, and the balance creases or decreases in such costs. was charged to construction and other accounts. The pen-The cost of nuclear fuel, including the estimated cost of sion fund assets are expected to exceed the actuarially com-anticipated permanent storage of spent fuel, is amortized to puted value of the vested benefits at December 31,1979. fuel expense based on the quantity of heat produced for the The unfunded prior service cost under the plans and sup-generation of electric energy. Such amortization was plemental contracts amounted to approximately $45,957,000 $19,653,000 in 1979 and $31,303,000 in 1978. Upon final at December 31,1979, and is being amortized over a period disposition of spent nuclear fuel, adjustments for gains or of approximately 15 years. losses, if any, wi!! be made to fuel expense. Pending ultimate income Taxes. The companies provide deferred taxes for disposition, sufficient storage capacity for spent fuel is all income tax timing differences to the extent permitted by the appropriate regulatory agencies. See Note 6 for further information regarding income taxes. 1 32 l l
+
- 2. Rate Matters: hydroelectric generating facilities (225,000 kilowatts) at the An aggregate of $19,441,000 of revenues subject to possi- dam for an indefinite period. The costs of reconstruction and ble refund was included in income in 1979, consisting of repair were earlier estimated to be approximately
$16,098.000 related to Alabama Power's retail rate case and 337,062,000 and $20,000,000, respectively. However,
$3,042,000 and $301,000 relating to Georgia Power's and primarily as a result of the implementation of the construc-Mississippi Power's wholesafe rate cases, respectively. tion delays, such costs have increased and are now These revenues, after deducting applicable taxes, increased estimated to be approximately $42,565,000 and $22,180,000, consolidated net income by $9,788,000. The final outcome of respectively. Alabama Power is engaged in litigation with the the retail rate case cannot presently be determined. contractors responsible for construction of the dam and with Georgia Power and Mississippi Power have negotiated ten- certain all-risk insurers. Alabama Power has previously con-tative settlement agreements with their wholesale customers. summated a settlement with machinery breakdown insurance Such agreements are subject to final FERC approval; how- carriers for $1.850,000 and consummated a settlement dur-ever, Georgia Power has excluded from income $5,067,000 ing 1979 with certain all-risk insurers having $10,000,000 of of revenues which it has agreed to refund. the total $40,000,000 all-risk insurance cow ege for 85 per-
- 3. Construction Program, Financing, and Fuel cent of the face amount of the policies. Th( ontractor litiga-Commitments: tion, as well as the two cases seeking recovery of the re-The subsidiary companies are engaged in a continuous maining $30,000,000 of insurance coverage, remains pend-construction program presently estimated to total some $1.3 ing. It is the opinion of Alabama Power that a substantial por-billion in 1980, $1.5 billion in 1981, and $1.5 billion in 1982. tion of the earlier estimated costs of reconstruction and These estimates include capitalized allowance for funds used repair will be recoverable through the combined proceeds of during construction and exclude amounts applicable to in- Alabama Power's insurance and contractor litigations.
t; rests in facilities sold. Also excluded from these estimated To the extent possible, the subsidiary companies' con-add *ons are the portions of Plant Scherer proposed to be struction programs are expected to be financed from the sold to Oglethorpe Power Corporation (see Note 4). The con- sale of additional first mortgage bonds and preferred stock to struction programs are subject to periodic review and revi- the public; from the sale of pollution control bonds by public sion, and actual construction costs to be incurred may vary authorities; from the receipt of additional paid-in capital from from the above estimates because of factors such as grant- The Southem Company; from the lease of nuclear materials ing of timely and adequate rate increases, new estimates of by Alabama Power; and from asset sales in the case of increased costs, revised load estimates, and the availability Georgia Power (see Note 4). and cost of capital. These factors forced substantial reduc- The amounts of first mortgage bonds, preferred stock, and tions in construction programs in recent years, resulting in a common stock which can be issued in the future will, among combination of postponements and cancellations of other things, be contingent upon market conditions and main-generating units and other facilities throughout the system. taining adequate eamings levels. The eamings of Alabama , Construction of Alabama Power's Alan R. Barton Nuclear Power and Mississippi Power are presently insufficient to per- i Electric Generating Plant and Gulf Power's Caryville Electric mit the sale of additional preferred stock. Should The Generating Plant has been cancelled. Obligations related to Southem Company and the subsidiary companies be unable equipment design and engineering and termination of com to obtain funds from external sources in amounts which, , tracts applicable to these plants amounted to approximately together with intemally generated funds, will be adequate to
$34,000,000 and $12,000,000, respectively. .' $ Jama Power carry out the present construction program, further delays b:.s received regulatory approval to amortize and recover its and possible cancellations would be necessary. I costs as an operating expense ratably over a five-year To supply a portion of the fuel requirements of their period. This amortization is included in " Depreciation and generating plants, the subsidiary companies have entered in-amortization" and amounted to $7,145,000 and $7,116,000 in to various long-term commitments for the procurement of 1979 and 1978, respectively. fossil and nuclear fuel. In some cases, such contracts con-
- Gulf Power is presently considering an <emative to the tain provisions for price escalations. minimum production Caryville Plant (see Note 4). Gulf Power began to amortize its levels, and other financial commitments. Additional com-costs as an operating expense over a five-year period begin- mitments for coal and for nuclear fuel will be required in the ning in June,1979. Gulf Power's amortization is also included future to supply the subsidiary companies' fuel needs. in " Depreciation and amortization" and amounted to 4. Facility Sales and Joint Ownership Agreements:
$1,395,000 in 1979. The FPSC and FERC have approved Georgia Power has so!d undivided interests in certain gen-
- such amortization, but have reserved the right to review the erating plants and other related facilities to Oglethorpe Power accounting treatment in the context of a rate request, as Corporation (OPC), Municipal Electric Authority of Georgia they do with any other item of expense. In the event such (MEAG), and the City of Dalton, Georgia. The gain from these amortization is not allowed for ratemaking, appropriate ac- sales, after income taxes, amounted to $1,503,000 in 1979
, counting treatment will allow the remaining unamortized and $375,000 in 1978. In addition, Georgia Power is costs to be charged off at the time such determination is negotiating to sell an interest in Plant Scherer Units 1 and 2 made, or the full amount of such costs to be charged off as to OPC (60%), and Georgia Power is negotiating with af-of June,1979. The final outcome of this matter cannot filiated companies conceming the purchase by them of an in-presently be determined. terest in Units 3 and 4 of such plant. Georgia Power also has On February 10,1975, a break occurred at Alabama begun discussions with Florida utilities conceming the sale of Power's Walter Bouldin Dam causing extensive damage interests in Plant Vogtle. The consummation of any future
- thereto and resulting in the removal from service of the 33 l l
1
FINANCIAL REVIEW ' i 1' . I i sales is subject to all requisite regulatory approvals, the com- Unused credit arrangements with banks at the beginning p!etion of agreements satisfactory to the respective parties, of 1980 totated $850.923,000, of which $210,000,000 expires I and completion of satisfactory financial agreements by the on September 30,1980, and $240.923,000 at various times , proposed purchasers. There can be no assurance that any during 1980, and the balance on December 31,1982. The such future sales will be consummated, or that any such $400,000,000 maturing in 1982 represents Georgia Power's ; future sale will take its currently anticipated form. At revolving credit with several non-territorial banks. The unused ; December 31,1979 Georgia Power's percent of ownership amount expiring on September 30,1980, is that portion of a : and investment in these plants were as follows: revolving credit agreement of Alabama Power in the amount i of $500,000,000. During the first quarter of 1980, applications . Wa %er were filed with the SEC requesting authority to issue short. I Constructon term unsecured indebtedness in the following amounts t Pi i through March 31,1981: The Southern Company, l Cap city ership ev P ess
$100,000,000; Georgia Power, $615,000,000, t-.alf Power, i (megawatts) On thousands) $104,000,000; and Musissippi Power, $65.000,000. Alabama Plant Hatch 1,630 50.1 % $469.316 $- Power has authority to September 30,1980, to issue (nuclear) unsecured debt of up to $455,000,000.
Ptnt Vogtle 2,320 50.7 - 294,363 6. Income Taxes: A detail of the federal and state income tax provisions is (nuclear) Ptnt Scherer 3.272 83.5 - 350,139 set forth below: (coal) 1979 1978 Ptnt War'sley 1,730 53.5 273.969 - (in thousands) Total provision for income taxes (coat) Federal-Currently payable $ 12,414 $ 13.135 Georgia Power provides for its own financing and its share $ f of direct expenses of the joindy owned plants is included in the corresponding operating expenses in the Consolidated ea@@ M
, Investment tax cred:ts 26,100 20.556 '
Statements of Income. Georgia Power is contractually 182'020 199'669 obligated to complete those plants under construction and acts as agent for each of the parties with respect to State-p yable , operating and maintaining the plants. In connection with ',r these sales, Georgia Power has entered into agreements Deferred in pnor years (credit) (1,875) (2,782)i whereby Georgia Power is required to purchase declining 22,326 21.362 fractions of OPC's and MEAG's capacity and energy of the 221,995 203.382 Total respective generating units dunng a penod of up to eigh. Less income taxes charged to y:ars following commencement of commercial operations- other income 13,732 12.226 such pr 1ases to be made whether or not any capacity or , Federal and state income taxes energy a available. The cost of such capacity and energy is charged to operations $208,263 $191.156 a function of each entity's carrying and operating costs and is included in purchased power in the Consolidated The provision for deferred income taxes results primarily Statements of Income. from the companies' tax deductions for accelerated methods
- 5. Short Term Borrowings: nf depreciation and other wnte offs of property costs, as pro-Interim financing in the form of notes payable to banks vided for by the income tax laws, being significantly greater and commercial paper is utilized to finance construction than the book depreciation of such costs. Income taxes apenditures. deferred in prior years are credited to income when the book Except for daily working funds and like items, substantially depreciation of those property costs exceeds the related tax -
all cash of the companies represents compensating deductions. balances, which are not legally restricted, maintained in The total provision for federal income tax as a percent of in-r:spect of short term bank borrowings, unused revolv,ng i come before fedeial income tax was 40.4 percent in 1979 and credit agreements, and lines of credit. 40.1 percent in 1978. The difference between these rates and The average interest rates and average and maximum out- the federal statutory rates of 46 percent in 1979 and 48 per-standing balances of short-term borrowings are as follows: cent in 1978 was due primarily to the exclusion from taxable 1979 1978 income of the allowance for equity funds used.during con-struct;on,6.8 percent in 1979 and 8.3 percent in 1978. Weghted average interest rates for notes payable to banks Investment tax credits utilized are deferred and amortized outstanding a; end of pened . 17.09 % 12.82 % over the average life of the property which gave rise to the M1ximum amount of borrowings credits. Such amortization is applied as a credit to reduce outstanding at any montt>end . $352,478,000 $219,253.000 depreciation in the Consolidated Statements of income and Average daily borrowings dunng amounted to $7,450,000 in 1979 and $7,678,000 in 1978. At penod 252,295,000 56.575.000 December 31,1979, investment tax credits totaling approx-Weghted average interest rates on imately $280,000,000, expiring at various times from 1984 to borrowings during period. 14.20 % 10.24 % 1986, have not been utilized and are available to reduce in-come taxes in future years. 34
p-p 7.Other Longterm Debt: Sinking fund requirements and/or serial maturities through Details of cther long-term Oebt are as follows: 1984 applicable to other long term debt are as follows:
$68.241,000 in 1980, $82,607,000 in 1981, $77.413,000 in ; December 31 1982, $22.131,000 in 1983, and $16,085,000 in 1984.
1979 1978 8. Cumulative Preferred Stock - Subject to Mandatory On thousands) Redemption: Obi gatons incurred in connecton Gulf Power's 10.40 percent, Mississippi Power's 10.20 per-with the sale by pubhc authontes cent, and Georgia Power's $2.75 Class A series of preferred
, of tax exempt polluton control stock, issued in 1975, and Alabama Power's 11.00 percent rmeue bonds- series, issued in 1976, are entitled to the benefit of a man-S 41,000 datory sinking fund requiring the respective companies to 5 e .. $ 41.000 redeem or purchase at par, five percent of the shares an-6% to 8% duo 2004 46,030 46.030 9% due 2005 . . .
30,000 30.000 nually commencing in the fifth year. The combined aggregate 6% to 72% due 2006 . . 86,800 85.600 amount of redemption requirements for these series through 5 8% to 6 4% due 2007 . . 43,100 43.100 1984 amounts to $5,250,000 in 1980 and $7,750.000 each 6.375% to 7.1 % due 2008 . 98,800 96.600 year thereafter. During 1979. Georgia Power reacquired Noncollateralized- 9,200 shares ($230,000) to be used to partially satisfy the 5.9% to 7.4% due senally November 1,1980, sinking fund requirement. The gain on the 1979 2003 . . ... 17,060 17.150 reacquisit:on is included with premium on preferred stock as 725% to 9125% due serially shown in the Statements of Capitalization.
- 9. Long Term Debt Due Within One Year:
65 / o me rate'due 1982'(B) . 500 A summary of sinking fund requirements and scheduled 8.5% We 1994 17,400 17,400 7.25% due 2003 5,800 5.600 maturities of long-term debt due within one year are as 9.5% due 2005 35,000 35.000 follows: 725% due 2006 10,000 10.600 40,000 1979 1978 72% due 2007 . 40.000 7.375% due 2008 48,000 48.000 On thousands) Bond sinking fund requirements (A) . $51,794 $ 50,183 542,180 547280 Less funds on deposit with trustees . 95,747 122.904 Less Capitalized lease obhgations (C) . 7', Re Notes payable-125,000 Cash sinking fund requirement 85 22.370 11.5% due 19801982 125.000 18,000 22,000 First mortgage bond matunties . 133.545 8.75% due 19811989 88,241 Other long-term debt (Note 7) 28.948 9.75% We 1979L2010 11,700 22l000 11 821
$86,326 11 % - 13.5 % .. -
5.072 Total $184.863 6% due 1980L1986 2,946 - 20,000 (A) The annual first mortgage bond sinking fund requirement 1 1 7 (D) is one percent of the aggregate amount of the bonds authen-Total $770,192 $706 242 ticated prior to January 1 of each year and may be satisfied by use of bonds specifically authenticated for such purpose (A) The subsidiary compar,ies have authenticated and against unfunded property additions equal to 166 2/3 percent delivered to trustees a like principal amount of first mortgage of such requirement it certain earrangs coverage requirements bonds as secunty for obligations under these installment are met. The 11%% series of first mortgage bonds due agreements. The principal and interest on the first mortgage August 1,2000,is subject to a mandatory sinking fund in the bonds will be payable only in the event of default under the annual amcunt of $5,000,000 commencing August 1,1981.
, installment purchase agreements, 10. Contingencies:
(B) Floating interest rate based on 65 percent of prime at Alabama Power and Georgia Power are members of Morgan Guaranty. At December 31,1979, the rate was Nuclear Mutual Umited, established to provide insurance 9.9125 percent, coverage against property damage to members' nuclear (C) All financing type leases as defined in Financial Account, generating facilities. In the event of a loss by a member ing Standards Board Statement No.13 have been capitalized. company, the companies could be assessed a retrospective d A. December 31,1979, such leases were comprised of premium adjustment up to a maximum of $22,176,000 and nuclear fuel ($84.656,000), coat railcars ($22,634,000), $14,000,000, respectively. buildings ($17,081,000), and transportation and other equip-ment ($17S82,000). Monthly principal payments are required pius interest based on average interest rates at December 31,1979, of approximately 17.18, 9.51, 7.94, and 16.25 percents, respectively. The principal payments on nuclear fuel leases are based on cost of fuel consumed.
. (D) Interest rate varies in accordance with terms of the j agreement. At December 31,1979, the rate was 151/8 percent.
35 J
FINANCIAL REVIEW , In addition, under the Price-Anderson Act, Alabama Power Constant dollar amounts represent historical cost stated in and Georgia Power each maintain private insurance arv1 terms of dollars of equal purchasing power, as measured by agreements of indemnity with the Nuclear Regulatory Com- the Consumer Price Index for All Urban Consumers (CPI U). mission (NRC) to cover thirdparty liability arising if a nuclear Current cost amounts reflect the changes in specific prices incident were to occur at a company's nuclear power plant. of plant, from the date the plant was acquired to the present, The Act limits public liability claims that could arise from a and differ from constant dollar amounts to the extent that single nuclear incident to $560.000,000 for each licensed specific prices have increased more or less rapidly than the reactor, Each of the companies' reactors is insured against general rate of inflation. The current cost of utility plant, this liability to a maximum of $160,000,000 by private in- which includes land, land rights, intang ble plant, property surance (the maximum amount presently available), and the held for future use, and construction work in progress, was remainder is provided by indemnity agreements with the determined by indexing the surviving plant by the Handy-NRC, In the event of an incident, a company could be Whitman Index of Public Utility Construction Costs. Since the assessed $5,000,000 per incident for each reactor in service utility plant is not expected to be replaced precisely in kind, to a maximum of $10,000,000 per reactor in any year. On current cost does not necessanly represent the replacement the basis of Alabama Power's ownership of one reactor in cost of existing productive capacity. service and Georgia Power's ownership interest in two reac- Depreciation was determined by applying the current fors, the companies could be assessed a maximum of depreciation rates to the indexed plant amounts.
$5,000.000 and $5,010,000, respectively, for any such inci- Fuel inventories and the cost of fuel used in generation dent, but not more than $10,000,000 and $10,020,000, have not been restated from their historical cost. Regulation respectively, in any one year. limits the recovery of fuel costs through the operation of ad-
- 11. Quarterly Financial Data (Unsudited): justment clauses or adjustments in basic rate schedules to Summarized quarterly financial data for 1979 and 1978 are actual cost. For this reason fuel inventories are effectively as follows: monetary assets.
Since only historical costs are deductible for income tax
!'a 3 $ purposes, the income tax expense in the historical cost finary cial statements was not adjusted.
ouanerEnded operating operanno consondated Revenues income Net income NNr7 Outstanding Revenues and other operation and maintenance expenses onenousanos; already include the average effects of inflation during the
$693.564 $112.590 $45 687 $0 33 period in historical dollars and, therefore, no adjustments March 31.1978 Ane 30,1978 674 758 92.382 28 028 0 20 have been made to them.
Under the ratemaking orescribed by the regulatory com-NeNmoe3$iN: $ $ !09 missions to which the subsidiaries of The Southem Company YE'iE Scotember 30.1979
$N Nd 922 845 165 288 38 29Q 91.390 82y 0 63 are subject, only the historic cost of plant is recoverable in revenues as depreciation. Therefore, the excess of the cost December 31,1979 140.546 59,818 0 40 762.786 of plant stated in terms of Constant dollars or current cost
- 12. Supplementary Information to Disclose the Effects of that exceeds, the historic cost of plant is not presently recoverable in rates as depreciation and is reflected as a Changing Prices (Unaudited): reduction to net recoverable amount.
The following supp!cmentary information, made consistent Because only the historic cost of deprec,ation i is with Statement No. 33 of the Financial Accounting Standards recoverable in rates, present and future depreciation provi-Board (FASB), is intended to set forth the effect of both sions are inadequate for purposes of maintaining the pur-general inflation and changes in specific prices on the chasing power invested by the common stockholders, and Southem electric system. It should be viewed as an estimate the related cash flows are inadequate for replacing the prop-of the approximate effect of inflation, rather than as a precise erty. The impact of this ratemaking process on the common measure. As stated by the FASB, the measurement and use stockholders is mitigated to the extent that depreciable prop-of information on changir,g prices will require a substantial erty is financed with debt which can be repaid with dollars a-leaming process on the part of all concerned. The FASB less purchasing power. makes no pretense of having solved all of the implementation problems and intends to review the requirements of this statement on an ongoing basis.
Statement of income From Continuing Operations Adjusted for Changing Prices For the Year Ended December 31,1979 (in thousands) Conventional Constant Dollar Current Cost Historical Average Average Cost 1979 Dollars 1979 Dollars Operating revenues $3,128,169 $3,128.169 $3,126,169 Operation and mainternnce , 1,908,448 1,908,448 1,908,448 Depreciation and amo<tization . 304,188 561,160 638,519 Taxes other than income taxes . , 171,174 171,174 171,174 Federal and state income taxes 208,263 208,263 208,263 Other income and deductions , et (122,673) (122,673) (122,673) Interest charges and preferred dividends . 439,642 439,642 439,642 2,909,042 3,166,614 3,243,373 Income (loss) from continuing operations exclusive of reduction to net recoverable amount . $ 219,127 $ (38,445) $ (115,204) Income (loss) per average common share . $1.51 $(0.27) $(0.79) i Return on average common equity 8.90 % (1.56)% (4.C8)% increase in specific prices (a) . $1,387,460 I Reduction to net recoverable amount $ (773,306) (74,232) increase in general price level (2,009,775) l Excess of increase in general price level over increase M specific j prices after reduction to net recoverable amount . (696,547) i Reduction of purchasing power loss through debt and preferred stock financing 736,354 736,354 Net , $ (36,952) $ 39,807 (;) At December 31,1979, current cost of utility plant, net of accumulated depreciation, was $17.8 billion while historical cost or net amount recoverable through depreciation was $9.3 billion. FiveYear Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices l (Restated to Average 1979 Dollars) 1979 1978 1977 1976 1975 l ~ 53,128,169 $3.226,406 $3,182,502 $2,815,400 $2,698,531 { Operating revnues (thousands of dollars). Cash common dividends declared per common share . . $1.54 $1.71 $1.78 $1.81 $1.89 Market price per common share at December 31 , .... $11.50 $14.85 $21.30 $20.96 $19.91
. Net assets at year end at net recoverable amount (thousands of dollars) . .
$2.374,451 $2,591,735 $2,753,343 $2,580,215 $2,439,244 Average consumer price index (base year 1967 = 100) 217.4 195.4 181.5 170.5 161 2 37 i
AUDITORS' REPORT . To the Board of Directors and to the Stockholders of The Southern Company: We have examined the consolidated balance sheets and consolidated statements of capitalization of The Southem Company (a Delaware corporation) and subsidiary companies as of December 31,1979 and 1978, and the related state-ments of income, earnings retained in the business, amount paid in for common stock in excess of par value and sources of funds for gross property ~ additions for the years then ended. Our examinations were made in accordance with generally accepted auditirig standards and, accordingly, in-cluded such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our report dated February 16,1979, our opinion on the 1978 financial statements was qualified as being subject to the effect, if any, of the final outcome of a subGidiary com-pany's request for approval of appropriate regulatory authorities to recover the costs incurred in connection with the planning and cesign of a cancelled nuclear generating plant. In 1979, such approval was obtained and, accordingly, our present opinion on the 1978 financial statements, as presented herein, is different from that expressed in our previous report. As discussed more fully in Notes 2 and 3 to the financial statements, one subsidiary company has billed increased revenues subject to possible refund and one subsidiary com-pany cancelled the construction of a generating plant. The appropriate regulatory authorities have approved the amor-tization of the costs associated with the cancelled plant to operating expense over a five-year period, but have reserved the right to review the accounting treatment in the context of a rate request. The final outcome of the proceedings under which the revenues subject to refund have been billed and the ultir te recovery of the costs associated with the cancelled plant cannot presently be determined. In our opinion, subject to the effect, if any, on the 1979 financial statements of the final outcome of the matters discussed in the preceding paragraph, the financial state-ments referred to above present fairly the financial position of The Southern Compan e and subsidiary companies as of December 31,1979 and 19/8, and the results of their opera-tions and the sources of funds for gross property additions for the years then ended, in conformity with generally ac-cepted accounting principles applied on a consistent basis. Arthur Andersen & Co. Atlanta, Georgia, February 15,1980.
~.
Southem Company A , Perimeter Center East P.O. Box 720071 Atlanta, Georgia 30346 i ee 4 s
THE SOUTHERN ELECTRlC SYSTEM : l 1 The Southem electric system system Companies: operates 223 generating units Alabama Power Company Southem Company with a total capacity of 600 N.18th Street Services, Inc. 1 22.904.435 kilowatts. An add.i- Birmingham, A!abama 35291 P.O. Box 720071 i tional 7,636,682 kilowatts of (205) 323-5341 Atlanta, Georgia 30346 capacity are under construction. (404) 39m50 Georgia Power Company These facilities are intercon- 270 Peachtree Street, NW P.O. Box 2625 1 nected by some 27,000 miles of Atlanta, Georgia 30303 Birmingham, Alabama 35202 transmission lines across a ser- (404) 522 6060 (205) 870-6011 vice area which spans part of Gulf Power Company One Wall Street four states: Alabama, Georgia' New York, New York 10005 75 N. Pace Boulevard I the panhandle of Flon.da, and Pensacola, Fluida 32505 (212)269-8842 i southeastern Mississippi. In addi- (904)434 8111 l tion to a varied agricultural economy, this region has a grow. Mississippi Power Company
. . 2992 West Beach Ing industrial base which . includes Gulfport, Mississippi 39501 the manufacturing of textile prod- (601) 864 1211 ucts, primary metals, chemicals, and paper. Approximately nine million people live in the Southern electric system's service area.
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