NRC-95-0036, Detroit Edison 1994 Annual Rept.
| ML20083A273 | |
| Person / Time | |
|---|---|
| Site: | Fermi  |
| Issue date: | 12/31/1994 |
| From: | Gipson D DETROIT EDISON CO. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| CON-NRC-95-0036, CON-NRC-95-36 NUDOCS 9505100134 | |
| Download: ML20083A273 (48) | |
Text
, . . .
, Dougics n.Gipson -, . 3 Senx>r Vce Presdent -
Nuclear Generauon ,
h Fermi 2 840oNonno,. s e.., !
j Newport, Mesan 48166 nm uw49 i
May 1,1995 NRC-95-0036 U. S. Nuclear Regulatory Commission Attention: Document Control Desk Washington D.C. 20555
References:
- 1) Fermi 2 NRC Docket No. 50-341 NRC License No. NPF-43
Subject:
Annual Financial Report Pursuant to 10 CRF 50.71(b), please find attached one copy of the 1994 Annual Financial Report for the Detroit Edison Company.
If you should have any questions regarding this report, please contact Elizabeth A. Hare, Compliance Engineer, at (313) 586-1427.
Sincerely, Enclosure
] cc: T. G. Colburn w/ enclosure J. B. Martin w/ enclosure M. P. Phillips w/ enclosure .
T. Vegel w/ enclosure Region 111 i
95051001'34 941231 PDR ADOCK 05000341 I PDR !
4 i
i
m;m-ng
.l '
.g
/J gg, , ,
E
^'
menn.unns .
.._ ;- . . . . g ._ .. . . _ _
, . , , g- y .v - .
? ,
..' _ . ;M_M ' *
~ *
^; _ . . _
.&gg- .
~ '
e,_. .
- . .a .
..'... _ '. a% ,. . w . g ,, g .
g,g,,ggg,, 3 o . .
7 ;. ; 4 .
Unital ..
. ,,,,, ,,,,,,,,,,g .1 . ; ;,g,,,,, ,,,,,,,g l Jim #mM#
- l#At skar-
' -amake W k- namenr.c-mans == nam e mauw , tenW-:imer.se MoDes.sa,mgesof : J'. : .ammyiprcommiham. ;.M .'em se ;.um;rsee: d ~
mme, .z..
. 8 ""'*********Pauw seusynes!ssraums pesiaU #a:s n-E
- : ..--Deringthope,tsenmal:
,ge..g. y , .1..ag"ig;;r,y,,,w,,,,,7 . ; .gzgn. f: ~ns :JMap"9R a1 - . _ .
si enynemW: . Mweitoss9sa.nsas :ime$t?]:.;.y:JJ..W:t
-C menssimissemi,sion=ast[: :3pamidhian==mie .
- . 1 #Juamp
- w,ser C # 4 g?as.Ct:.
j .W .. l(~ nemassesuam h,vamesse14s,ma :{: up@5.XWp*t#VD "
- +s
- ,.y., w ; a.paven. wame==swwwme m .c w ....
- .: w:y; yaman
'= gsvma i .=':- yy7
. n o g m e et ;.
ap sec,n,,, ,.,;e g r y m m : y p m:s -
j
~ sq'athmeWe: . . -
e1. on' ~ . - '.
- . : 7 1 g :. ;j
.. . - . .~J:J 1 " . . . .. . 7 . .
.:3 Ama a . . ~~ ~ .egenskenAnhir- - -
}.. age l{ :mehestanser ::.. t,~r .?qpqpie...;.
- namen.nmu :..c ;. . L..;menns;:'unnemaM W :J: .:: : Mn; >:
pg 1
g,; f: nemuswunemasan.]: j.:.aw Wimmesecayune
. . ,..e = 7 y1: :: w %,we, yn mai,. :
u;.. .. .
..- g y ..: .
- 7.x.. . 3:.g. 7 t wy ' 4
...l. _h A': I_'
^
- . .:- .;; . _l..l.
. : :- ' 'A' : ^AL*N '
y -
. ' h.; A- .
7 . [ ] .[i w ,,,,,,,,-
y .. .. . . .
'~ 1
?- '
. :MWw
=
.[
. .R :w' s
,,e,,,
rn p% . . .
-41 ze ~_
ggggggggg~pg: ; [ ;. ; , = :~ ~ y 1.
-. y eengengl,eprsees.3 ;... ;:: :.;;n:g.' .
. _,. ;' . sID
. i. ) .. g ;; .
.., . . . ~ . -..;
.y "
J .- ' .~,
... .-,. .,, i, 4
.i.. .. .
abus' ** 4,1 .
. *~(
v,
- e. '. _' ' .'
b
-' D
^
! *5' I
. , . - - . . . . .,9,.-
,.5,' ausent.edan m .; _
,' :[ '#,.,, ._ .
. ..c 4^ .
. . , - .' N. .',.
- t. ,
.k ,,
o V . ,.
': \ ' i'._
% .[.
(' ' i 4
- s '
~
-{
^la .Q ; . ;. l9. n.m ;; ". .;. .' . . /... m
~ . -.
.......,...;.,.v.,.; . .- < ......
( ,.
...~
'?
G .. , . : , ; ....'L._: . _. . . . _ . , 5_ .. . :
," .; 7:. } [ , . :: . M _" , ; ' ., ). }.[ ..O
- . .; 'f;/_.;J..:n.)'-l':.W 3. :.l:_ .. . .). [ :,, '.; , ' ,. .':.f.
c ., f i . ~, : ' . ).1y.h - .
._.n ._
3
. r. ~ . . .. ..~ , . . ,' .. .a : 7._ ,:. a _ q- . . . - r :. .. .
m .- . . . . .: ,
- 0 : , : 0, . ....' '- ' . ;- h::(. .fl_f;;:..'h ..N.- .. l %. ';. ' .. 'A .. . . . . . . . ' ;;' l T;.
. ; :;/ .' . . yr _': . ' ' 3'-' 'l ';l' a'.., '.'..:l Y' ' ll .. , ! ",:.:s-
.' ': ., Y ?g -l ' ? u l_}' _ l
r?<..'.'.'.s.,.' : : .l '
.: ' . r'. h.,o .. : .
- , .f
- ._*^
,l' ;..a. ~. . . . . , . . . .
,c. .
' '): ;7 : :: ; L + . ' -
', * ' ;y :*;'.: p.- 'A : ; . :.,2: ,. ,i :
. '. .~. . '
'..c)
. .T , . ;.:$:-6
,: <.j ..u.._ .e ':... -
Q.1.:** ~.4 .
- .l l
- f'- :. L- l! > ': *. . ' .y . ; ' V . . . .' ;' ;::.>; }..; 4 . . ~;_) ;. _. l , f;,.;:;l*.y y,[
i
- -- . --- ,, ._y '. ..;.;;
.. V -[ ::::.. ;- . . ;.~ . I ' ' .f.' ; , ' ,,'. *. ,.q },y l. 3: . ; .:. . _ ; .;; ;;[ a:'.. . . _
. _; ' '; , r., .; .; : , ;
- a. ;w..
,...'.9'.s:. ..
. t , ; .5 y . _. ,; . . - . .
_eq._.n....._ 7- .
, ) ; : - .S. q
.:. , ;. ... ;...p : .,. * . . . . , , ._...;,. . . . . , , , ,_ _ . ,,(- , ., ,y
.,::..,,q
. n . .
. . :: . . : .,. . : y. - .:..: ,;*':s *..- :.+.:.,,.
. .. . .. :..- .. ,, . :,. , :~..
. . ., m.
.'.,p.,.......;:
., '. ., , ',: ., . . .h . . ' ' . .-\ - '. " j '
.., ;. 'l h l, .
', [ .
'[; ,
Y': :. ; . ^ % . , l:
! , ', . ' .$ k. ' : l ... .
c, ' ' :,: - ::. fM
.l 3
- . . . . . s:
- '.M
?- .. , f:'. :.c t. 4;J .
- f. :.' ;,
.+..n .
- . ~ .:w. .s .. - r .,t.. . i :. ;
'l , .
. l, _
c
['. . , .: -
l,y . :. _
.. .. [ ; , , ,
- '. . ? L. " r ..,y, e . , . , . , . 3,.,.
". .,,} f. L '. ' .]. 3 l b'...'., ,
. .} j [ . .. . '. ' '. . .. i . y .. [. .. " . h ', i . . . } ,..- : . ,i i
.l.. . .4 N
'. . ' . l.
- - . .. b
'[
A ' ' I .',.'
- . . . l ..- .
e : . .
. , ., . . . . ,, ,. .,, . . . . . . , , ,.,,..,;,,g,,, ,, . . , . . . , . .
, ; , , , . . ; . u'+.. . .. . . . s . ; ;;., . '.; ,l _' . . : , . :l : s . .
l.
?. :
[.i j j . . . + , - .
.} , .
MQ*MyMQWMM#s&WM@@ . . l
. . ('., ':
': f: . . , ; ; ' . . . . . .- . :~
- ? .' l , : ,
- l . _f ' . .
]
,',,. . ,'. [ ' '
_ 3: {; } ;I' -
. '. :( . : :,if ' . .f ' , . . ..c
,. .j.,, .
., . :5 l . l, . ., . ,
[ ' _ ,
l !. ;
....'. .[
h '-,
Y .
sl . .
l
,., . . , , . . ..ca.. ..r.. + > . + . . , , . , . . . . . , , . . .. ..
..1.. . . , . . , . ,..;;.,r. .. .t . . . . . . .
- k. <
- . >_ ; o . . -
. . .'. ') . .
f h , .' . : k. i.
.s... 3
- f ' ; -
ll : y .) . .2. , ? '.. ;. ~;.
, 3
- ...?' ~ >~ - ~.:- , . 2:V ~, iL ,
, v: ~ ./ . ' .. .. .r i f,.
, . . . .,...,.y
':: - ? ?. .:l. i. . f
.,,.'m
. :.; ' ', ~; i j~.,O. , , . ,; c.L; . . '
- :.:' s:' t *N L y ' :: %. i:. :- t"
. : ,3l . . ' D :.~ ;' : ..: ; ,, ' . 1 ' n*;.. .. :? . J. m
? ; u ,, 4:;..' +
,* i ::'.m:.' Q,: _\ ..u ;;f., '~'".*.A'..:/% .y.]N r. <[.:
- 3. W,h
- i1... ..
- . ?[:'s; . : '; . . < -'
. . . [;;.\ [:gr [._. ..3.;y in ; . _' [* l::. o.; ).1-;' . O-: '.,l;;.j ;*:.l, y , ;;il.-h.C .~,r
_.' ,.l[f }
- l}.. l'.>,'
.; , ..., ,a I' .y.,:\l3 ,)' .Q[ i*..'y:! :S, ' :. ~ ..;..
- ;; 2 a.. . ,;v ,
i ^..- '_.'.'..,..:'...'.
L
_ ;;;. . _ \.,j;,.:..., .:;;- ,;.y . ' ....:.,, . :
' ' >.- -. ', :- .. .. .. u , : ' . .;x.v : _ .. . .;:_ v; ._
': y ;
,.,i:;. ::3;, h 7,....: ~; '3. . : ' >: . . . . i. ;;' '; . > . . ;. * ; . , '. . . . .. '. ..c ( ,, . L
's .. _ : : ;; : '. ,
3 ; .' . \
. ._ ,u ;..,
- l' :. i. ..;
.:, ..' : . ;;;c. ,. ' : v'- ; ....y, e,. : -
,- ' : . . . rt . ;.;'- v ,c '.
,- . , . . .g .l-g,y .- ; .
- c. .
.. . - ': ) , . . . . .
. w.: 'j ',
1 p,J c.5..^j / - 6 w' 1 "'
g.. $. . - N. ' :- ;. .4 3. . . ? 7 ' ~ ;. : f . .: ., j .. . .4 ~ d g ' ' '. a.1 . T . ' , ., . ;
- f^l ;
l, ? ; ...' .'. . f. ' : .. f. ^l h f..y. . ..
- '_: .j;;y_,I.;. .3[.'. ,; ,~ .i .'; 2. ..l L ]. L.),f ,
.l, }.:ll [ !.: l._ : ; [ _ . ; y ._ , ; ),. .Q;. :); ; j .( _ . _
. 4 '..D; .; f i j '. ), .j, , .,' ' :.
h; .
i
[. f. f.' .
o $).f L. .f E. M h. . . .$ .
h, . p.
. . n . .
. .. . .f.
[ .
, g .
'h, .. ,, ?; . .
N .? E .) .,
f f b 'l.).Y : . .
- ~
. ;'?.'? f h. Y. .: '?2Y '
l .~.'.: f f .i. .'.k 'f
-l.). \ ', :
'l f ; . ' . m ,' ..
~' ' '
. .j:'.ll. ; } . .. .- . . . - l .I . iG. l.f. , ^5.ll[.l . L. : n ' , . [ ,,,,,L,4,,: :
-'l,, };'$ O
, y. . - y,. . .,
[.
, .[ .[. .'i.k, k. , . . . - [b.$ " :[ . -
, ; 'D' . ' . ' . . . f.I
.' '. . 7:h ,1 ' [:, ['
l ,b ,
- l, f l.. '
- f ?? ;.e.
l5 f. [.N ..
v.. , . . ,
h ..}w; .- . . .
. : ". i ', . . . ' :[ :l'. , [ f": I.' _::., __nhku;w : [
. . : . .- n..;.y . . . .
3.. ,, p .
[ G._. :_},
?- -l'f. . :#.- *. .l. .l. ;.. - . . , . . . <
n .~. . ;........r.q:..- .. . ' . . .: ... ,; :. , . , . : ..: v . ,;
- a. . . .. :n : $ . ~, . . . . c .4 . m. . . > - .
- [. y. :
}*
.-:.... - ..w.. . . . - .. . , . . . .
...,;.n.
t; ' : '.. .'. ' m.g .. ::. '. : l_'.-. .._....c. ...
, yr.~~..
? _, , . . .; , . _ -? ,j. . . .. ~ . . . . . . .'
.. ,. ... . . .{,
. ,( \ ' . .'*.
w ., ;
.Y
, . , _@y W: *..- . .jQ . ...l....,._-.
. - r'
' . . . ' . . ;.... _{._..: .,.!._.,. * . . . ' . : '.
.: . ll ; . . :.' ' ....;
. . a ; . . . . J. \' . '..'::. . r . % . ..y. '..- . . .
. . '.'3... _
. . . 'Q:\'. J . . . . .
.W , (_'l; . , -l.;l ,,' ).
- - .. .l(.: ; ' .; .J { [ .,b * .. l ?;S;:l; '? ;_ '.
,, ,?.2 .' ::.'.i. ,.: J: . l.~ '],. . _- . ' . .J.',.(, l { f -} :l,
. qqa:.z.-<.
._i
^
< -: ......-,,..:v -
q.
w' ; , ' ', ' ' $.. ,". . . -, ,[ , '. f,i
- "' r gJ...7.- ..f.
. ._ vf . i,,m%' . , j.' ". ' ' '.
..'.J.'
.',.s ..,,.j..;;.,'..._'~.*.:
q ' . ';:,.c, . , . : .:
9,_.
. y , ,.
N
', . . : ,3- ,, .
~
4,,,...i j, - ; ,.
.,.,,. .,,7.,,,,,....;7
,, .. ,. ..:i_. ~ ,
, . - , . ' z*: : . .'^ . . . . _ ., ... -_ - _ F. ..'O
- .. c,
..n:..; . 3., . .
. .;;;. . . a.
. C.) '. ,- ; ,;':,
. . . ..!.'_.~,
- . . . .. p, w..,.
L
- &&.( 9...., . _~ ;' ,; e .?..'. . . .
j g: .:: :
'.s * .' . - . - .:
^
- " ' f.
- . % . ~, . e ' ;-: '.c
'.., );'. F':.C.,. :'.R
,L.
i .y ; - m.' -:. - . ...:*. - <
.. .,.,;- , ' ;. .- - . . .4.?_ . _,
<:: ..i_'.
......,s,;...., .. .. -. . . ,. .. .. .' . ,- .. l. - .. .,:. ' . p .; ; ~. .., ,.;. ..,.. ,..4 ..?..._ y, , _' .l.'r..;., : .< ....;.- ,',q .-
..?
'.<.'.....s..'
- ...v.. ._,..;.*
e ; ,-: _ -,,'....,.:....,'._'*c..
A .
v.
. . . .c, e 4 -
': , . .v: . .. ',;.- .,3.- ,. . 1,.
.. . ;',. m c _s..., *;n. - .':. - . . ' .* :
,. [
s., ,
g _ ,
- . ' .: .-- . -. . .. ; e, t .:.'.' '
y... .e
. . . ' ' . . . '..~'e Y ,, :- : _ .
+<r.' 3. ,
' ~
.,.9 .'Q,-..:... _ s .u - - *' .,'..',._.',<,:...::..*_:.,,,.,,4..'.. . ; . ,: ..;. ., ; .:
.~....[..",
2 {v,. : .
'..,r s
1..., s- g. .. .
. - f . ;.
_...s ,'.l,,.;.'+l..
e
- '. . . ' L ~ .
- * *: ' ..
s [. . .: ' . .'..:: * ' ~ ;
- .'.*X..:. ;e . . '.' '~
- A '
- .' . ' .,,...4.,Y]._.'k,..c.
, lt . ,.:.
. .':'., . ' A. , . ,, ~. h.,'.1..
.d.-.
..s...;,_,- , :
.) .ea._.,._r.._..t y 4;1.:.e y g. .
cc . ,; y;;.. .yr; ;. .
. . . , . s - -
,,-_,~'
n;.. ; ,. . : . . .,- '. :. .-.---.: 'g. ' .: - * ,..... .w p. . .. ' '.;::._
- y J.',..n ,n
- : y
- - c- ..-
- . ; . .. u ._,:1...; 9....- ,:..._i,,.:
- - - -. ::., ' :! ..~~.:: .-:
.c...- . _: , : , <..: . ' . -* -
..:. -. -n .-; ' ..b . r _ .' *x .. :
_s... .. . . : x.s; ., ;..'..rt s... . . .
. ' g. -: y ;.. - .'.i..V.l ;_ -
'._-,y b .s. y . ;-
..-; g. . . ..u .' .-;- , . . ,_;y . ..._.4,-.. 4 .- *i;,,:,.,.
. ~ ;
.c
'a .,c. . .' : - :. . -.. . ' .. .
.',,..v_3 r ., ; . c?; . . . . : a . . _. _l; ',.: ' . 6_ :.
- r. . '
~
W.9.,: . [) . . . - . *
. ,' .s _-.; :; ; ,:* - s.;
'-, . : V' ' . . . '7 : .(,, . . ' s. ;; ,' :;;, (_.o ' .. _ _ .:..' .., 9 . '..: ' , . 'S.' ..-
- { ' yl: , s * * , . f.. j,; , - .T- ' . ' . } j f ., . '; 2;. ,. . .%
T ' ;..
. :;, ; f.
- ,,, t..
7',
': -. . . N. ." .-: :%< . ': '-: ' ^ ^ '.. : ' */ ; W
);~ .:.' v " ab Q
. ~ . ; y 4. : =R. .' , ; ,:, : .
c.
3..".U,,;'....*...,.,.. .:.: , ... . . . . '. : ,
. s y;.
i z.
.' ^, ' .. _ . ,
'. . .,'.y. . . ' , ..~....:. .
. c r
.i. .
L * ; '. . . .l __ '; .'_ ' d , . ,
~
- j. :):~ ..,'.'.::._. ' _ _ ' _,L.,.._.. . . .,; -_f.....,......;.... , [ .l;. ' . . ' ,- [ '
',), .,-.\ ; y; I,.,
- s. . . _ . __ . . . . _ :. .
'.i
\
4 O.-
..,L.
y r_'
. . ' * - . ,. = .# , .-l .;-. - _. , '. _ c.._._'_'_'l~-
' ' .,: .: l l.
. s,
.=. _
o**. , ' + -
L:' f. . . ./ .j_'. . ., ,.. . [
.; a. . .. a ;, .,' ... .;-;..,..- ;c .i . _ . .. . ,,: .::. . . . -'
-7'* ' ; . e .._-* ,
...c- . ':. .- .r - - '_
' ~ . . . , , _
We will remember 1994 as a year of significant gains and disappointing setbacks; but, most of all, it was a year of choices and changes. Maybe that is how 1994 is best
. remembered . . . as a time ofpositioning Detroit Edison
. 1 o,,, for thefuture.
r Pimt sesen e - Servios Ptera; W pef @ie Avesi :* ..
pah lg duh. p f '
- "- s most of the electric utility tors sold utility stocks to buy other
?4 industry continued to debate securities and the Dow Jones electric the possibilities of deregulation, utility average fell 18 percent, a m a-your company completed its jor disappointment. It seems little first main rate case in five consolation that the .13-percent price years, ending a period of virtual de- decline in Detroit Edison common regulation under what is now viewed stock was smaller than those of most as a highly successful settlement other utilities.
agreement with the Michigan Public Despite the ups and downs of the Service Commission (MPSC). As we stock market, good earnings and a forecast in last year's annual report, solid cash flow, coupled with an earnings fell in 1994, largely because understanding of the importance of of the $78 million rate reduction dividend income, led our Board to effective Jan. 22,1994. The price cut, maintain dividends at $2.06 per share the second in as many years, was due - a rate we believe is sustainable in in part to the MPSC's decision to re- today's markets. Our tradition of un-duce Detroit Edison's allowed rate of interrupted dividends spans 85 years, return on common equity to 11 per- andin 1994 paid you 77 percent of cent, close to the industry average. earnings.
With insurance expected to cover While the interest-rate increases most of the 1994 expenses associated' negatively impacted our stock price, with the outage at our Fermi 2 operations profited from industrial nuclear power plant, the company customers' record demand for elec-earned $390.3 million compared with tricity. And we delivered, including
$491.1 million in 1993. Earnings per an all time peak demand June 16 of share were $2.67 in 1994, down from 9.68-million 'dlowatts and monthly
$3.34 in 1993. The return on com- peak recordr. in nine of 1994's mon equity of 11.6 percent in 1994 12 months. While our Fermi 2 plant was slightly above the allowed rate of remained out of semce during the return, and was better than expected year, our fossil fueled plants because it included a $31 million operated with exemplary efficienc/.
reserve for the additional Fermi 2 ex. Most of these facilities set or reached penses discussed later in this report. existing generating records delivering The economic growth experienced 44-billion kilowatthours of electricity, by both the nation and Southeastern a sales record in itself. The people Michigan in 1994 induced the Federal operating these plants deserve Reserve Bank to increase interest special recognition.
rates. With new choices, some inves-m amm onisa m men nron E l
Incidentally, when we say deliv- options in ourindustry and helps us company in 1995, primarily to provide ered, we mean it literally. Last year stabilize our future earnings by ensur- greater financial flexibility in an in-a record setting 58,000 lightning ing that we retain these major creasingly competitive environment -
strikes occurred during 16 storms in industrial customers for as long as and to protect our utility business and our service territory and tested the 10 years. customers from the risks involved >
value of our recent investments in These contracts also will help us with non-utility ventures. Although
- storm communications, system reli- further improve our relationships with these new, energy-related businesses ability and service restoration. the Big Three by stationing Detroit are small compared with the invest-These investments paid off for our Edison engineers in customer facili- ments and strength of our core customers as the company attained ties to assist in lowering energy costs business, we hope to add to your re-the second best record for service re. and improving quality and efficiency. turn the advantages of selling liability in the nation. Detroit Edison will therefore be a key energy-related products and services player in helping automakers sustain in Michigan and nationwide. (See their record setting sales performance more information on these ventures We announced our intention to of 1994. These "value creating part- on page 9 of this report.)
nerships also can lead to further Detroit Edison shareholders will form a new holding compan# business opportunities for our com- vote on the new holding company Pany. These long-term, multi purpose structure at their annual meeting in 1995, primarilt/ to provide' contracts typify a new, more-flexible April 24,1995. Proxy matenals fully grcatcrfinancialflexibility in describing the transaction will be Pricing and service dustrial customers structure that ultimately wi forsent in ,ll to all holders of common stock.
an increasint/ y compelillve sustain and grow shareholder value. The change also requires approval by
'l Even greater competition looms in the Federal Energy Regulatory Com-environment and to protect our the future. In 1994, the MPSC estab- mission and the Nuclear Regulatory lished the framework for a mandatory Commission (NRC). We hope to have utility business and customers retailwheeling program for Detroit the necessary approvals and put the Edison and Consumers Power, allow- organizational structure in place from the rishs int olved u'ilh ing our major industrial customers to before the end of 1995. When that buy up to 10 megawatts (MW) of elec- happens, Detroit Edison common non-utillly renturcs. tricity from alternate suppliers and stock will be exchanged share-for-requiring us to transmit the power on share for the common stock of the Customer satisfaction is a key our lines. As proposed, the experi- holding company.
element to the future value of your mental five year program -limited to We are proud of our employees' Envestment. Likeyou, customers 90 MW for Detroit Edison -would many accomplishments during 1994 -
wanted choices and again we delivered. begin only when we need additional especially their recognition by the in 1994 we offered alternatives to generating capacity. We oppose this National Safety Council as the safest the Big Three automakers, our largest order and on Aug. 26,1994 appealed utility work force in the country.
c ustomers, by negotiating long-term to the Federal District Court for the Significant safety milestones were energy contracts which await ap. Western District of Michigan because reached at our Fermi 2, River Rouge proval of the MPSC. Detroit Edison is the present MPSC proposal would and St. Clair power plants. Employ ,
the first utility in the country to se. shift costs from wheeling customers ees at our Greenwood Energy Center ,
cure contracts with an entire basic to other customers or to you, our and Design Engineering group have industry within a service area. These shareholders. not had a lost-time accident in the automotive contracts will lower elec. Choice and change go hand-in- past 11 years. People working on tricity prices for the Big Three by hand. Just as we provide flexible Power Supply's Unit Trains have gone between 10 percent and 15 percent. alternatives for customers, we also 18 years without a lost-time injury While this reduces our revenues, at have moved to reorganize the com- and employees in our Primary Ser-least in the short term, it reduces our Pany. Late in 1994, we announced vices and Engineering Relay groups exposure to the growing competitive our intention to form a new holding have worked safely for more than 25 years. We remain committed to O m an mse mm mwr
eliminates the need for expensive line con- cial contracts in 1995, the auto companies Changing Today struction. The company also reduced its will receive rate discounts of 10 percent to Jo M M Dino m nventory requirements by eliminating the 15 percent, while Detroit Edison will secure One of the largest electric utilities in the need to stock 10 different types of regula- the automakers' business - roughly 15 per- ,
Uhited States, Detroit Edison has the flex. tors. The standardized regulator offers cent of its system sales - until the end of l ibility needed to prosper in a changing additional features to help improve the the century. These contracts represent industry. The ability to respond to changes company's field operations and increase about $2 billion in revenues over 10 years in the energy marketplace will make Productivity. The new design permits and include interruptible features which Detroit Edison an even stronger company quicker restoration of service during emer- will reduce Detroit Edison's generation re-tomorrow. gencies and allows the company to switch Detroit Edison's strategy for future load between circuits without the voltage growth is clear. The company must remain problems associated with earlier designs. /
competitive in an industry becoming more The supplier, Cooper Power Systems of diversified, cost conscious and market. Waukesha, Wis., gave Detroit Edison an
" Industry Achievement Award" for its part
,.j 'p ' ;*
driven. This report provides an overview of .
g steps the company has taken to provide its in developing the new regulators. The l % ;_
shareholders with value in an increasingly regulators cost less to make and show how l 1. 'j dynamic electric utilityindustry. a utility can save money by rethinking how .
~
t l ;
. it provides service. .
Cost Reduction Continues tower. cost electric utilities will be more Detroit Edison aims to give its customers attractive when customers begin shopping -e ,
lower electricity prices and its shareholders f r better deals in a competitive environ- y greater long-term value. Since 1987 the ment. Detroit Edison reduced its rates by g {
company has trimmed its work force by $169 million in 1993 and by $78 million in g 24 percent and successfully minimized in. 1994. This 7-percent reduction in the total ._ .
J,4 creases in its operating expenses. For price of electricity in the past two years helps explain why the company's 1994
, " ' A %_. . Q example, Detroit Edison has reduced its Detroit Edison's Craig L. Smith, engineering production costs at its coal fired plants to earnings decreased despite record sales.
technican, shows Wayne State Um,versity engi-the lowest levels ever, and contmues to use Much of the sales growth can be attributed neering student Patricia A. Kohlman a voltage environmentally preferred low-sulfur West. to Southeastern Michigan's improving 4
regulator designed by company employees and
- ern coal, with significant savings in fuel gconomy, with steel and other manufactur- p gg,, ,gg;,, g f
costs. In addition, union and management mg compames benefiting from a strong new standardized regulator improves service jointly have developed a strategy to reduce 1994 auto market. reliability and is less expensive to produce. I To retain these manufacturing custom-production costs further and minimize expetisive forced outages with a goal of ers, Detroit Edison offers them competitive best in class performance by 1997. Prices and additional products and ser-However, in today's competitive environ. v ces. For example, the company is helping ,
ment, it is not enough for utihties simply to U.S. auto manufacturers cut their costs to meet customers' needs and look for means become more competitive m the global ve-to cut costs. Besides traditional efficiency. hicle marketplace. In 1994, Detroit Edison steel customers - representing 5 percent of
, improvement actions, Detroit Edison has became the first utility m the country to ne- .
found ways to provide superior customer gotiate innovative sole-supph,er contracts talue at lower prices by implementing f r an entire basic mdustry within its ser- g
,, employee ideas. The company's new vice area. If the Michigan Public Servic About 85 percent of Detroit Edison's sales Innovations employee suggestion program Commission (MPSC) approves these spe-generated in its first year more than covered by either long-term contracts or i
$18 million in productivity improvements 1994 Sales Mix competitive pricing options. The stability of l and cost savings, with more than 1,400 Detroit Edison's large-customer base ben-employees contributing 3,300 ideas. efits smaller customers and shareholders As an example of employee idea power, RES ENTIAL COMME C1AL .
Detroit Edison expects to save about gyg .-
~~
fixed costs over a larger sales volume.
$1.5 million annually because of one recent Another 10-year energy contract with INDUSTRIAL .
suggestion. A new voltage regulator de-
"i.
29% ., Henry Ford Hospital helped stabilize both signed by company employees and a steam and electricity prices and provided supplier provides more reliable service and this customer with an economical solution QTERCONNECTION OTHE l m mmt mso-a mour E l
for its energy requirements. Detroit ~ "" " "" ~ ~ " C E " " 1 considered by the company. At the sugges.
Edison's steam sales rose 3.5 percent in tion of the panel of business customers, 1994, and are projected tu continue in- Detroit Edison changed the way it commu -
creasing as the company's Thermal Energy nicates with customers in preparation for Division finds better and more innovative c planned temporary senice interruptions tb ways to meet customer needs. N.
%! minimize any impact on customers'
- Customer ValueIncreases Y' n ,sr ,.
b"'i"'"
Because of continuing actions to expand Detroit Edison's strategy goes beyond sim. and improve customer service programs, ply reducing rates to reflect marketplace consumers now may select a variety of new conditions and minimizing the need for products and senices as well as options for future rate increases. The company's ap- paying their bills. The company also offers proach will deliver the types of senices a lower time-of-day rate to customers with that prompt current electricity customers -
electric heating and cooling systems, and to choose Detroit Edison for their non- Penelope Redd Myles discusses the Kids %t- provides promotions for new home builders energy purchases as well. ing-Michigan program with Detroit Edison and remodelers who install energy-efficient In one recent example, Wal-Mart Stores, Regional Manager Michael A. Palchesko as her wall and ceiling insulation, windows, light-daughter Asia Lauren Myles votes in a mock ing and major electrical appliances.
Inc. selected Detroit Edison to maintain and repair transformers and other high- 'I'.ction. About 12,000 Michigan students par-ticipated in the company-sponsored program , y _
voltage equipment at its 16 stores in Southeastern Michigan. This allowed Wal-become more involved in the electoral process. ..g Mart to focus on its core business and take advantage of Detroit Edison's lower primary voltage-supply rate, which led to a using ozone-depleting freon gas in the cool-10-year contract worth several million dol-lars annually m utility revenues.
ng process.
Detroit Edison pursues senice quality
[
Early in 1995 Detroit Edison announced as part of its approach to winning custom- i another 10 year sole-supplier electricity O '
ers. The company's recently completed contract with Blue Cross and Blue Shield of three-year, $229-million commitment to im-Michigan. The health care provider will re-place the 20-year-old cooling unit at its proved senice reliabilityincluded ~#^ $ ^
overhead line improvements and tree trim-downtown Detroit headquarters with new Detroit Edison mascot Louie the Lightning Bug
, ming to prevent storm-related power electric chillers instead of an alternate and cD nald s* Ronald McDnald teamed up interruptions and to protect the public from system using natural gas. Detroit Edison in 1994 to tell some 30,000 elementary school
' the potential danger of downed electrical students about electrical safety. The success-worked with the health care insurcr to de-
% - 'd ' -
ful program will be repeated in 1995, with velop a rate package making the electric lightning-protection devices in the past two joint advertising featuring Detroit Pistons chillers the preferred choice. As a side years, which allowed the company to captain Joe Dumars.
benefit, use of the electric chillers will
- ' ". record-setting 58,000 lightning eliminate the environmental concerns of strikes m its senice area in 1994.
These actions have had positive results. In addition, Detroit Edison has continued i Customer Satisfaction A recent survey of the 25 !argest U.S. elec- a pilot program for customers who turn in
- REUABIUTY CALL SATISF ACTION triC utilities found Detroit Edison in second older,less-efficient refrigerators and freez-ioos. place with the fewest number of customer ers. The program not only saves the outages. Customers polled said they are customers the expense of disposing of un- -
pleased with Detroit Edison's improved ser- needed equipment, but also ensures that the vice reliability, its prompt actions to correct refrigerator and freezer components con-senice interruptions and its improved tele- taining ozone depleting freon are disposed phone communications system. of in an emironmentally safe manner. Since II In addition to quarterly customer sur- older refrigerators do not include the in-veys,thecompanyusedconsumeradvisory creased safety features of newer models,
. panels during 1994 to gather information this program also helps eliminate the dan-from residential and business customers. ger of small children's getting trapped
- Euiployees listened to customers' concerns inside old refrigerators.
and problems, and obtained their view- Already a leader in recycling paper and si 92 s3 94 si s2 83 94 points on senices offered or being cardboard, the company also increased its D m orTumT r mis o iou Amit utroser
Shown at the Michigan Electric Power Coordi-nation Center in Ann Arbor, Mich., are from left, John E. Lobbia, chairman of the board and chief executive officer; Anthony F. Earley, Jr.,
president and chief operating officer; and Larry G. Garberding, executive vice president and chief financial officer. The center celebrated its 25th anniversary in 1994.
Because we are determined to pro-vide our shareholders with the best possible service, we are proud that Detroit Edison Shareholder Services was rated "best in class"in a recent study of the 11 top-performing U.S.
utilities conducted by the Utility Man-agement Service. We plan further improvements to our Dividend Rein-vestment Plan later this year that will offer you, our shareholders, greater convenience and value than ever.
As we reflect on 1994 and look ahead to the rest of 1995, we have shareholder value foremost in mind.
Yourinvestment is helping Detroit Edison to position itself to grow in the 21st century.
maintaining our high standards in the Fermi 2's largest low-pressure tur-vital safety area and to our many pro- bine blades have been removed and Sincerely, grams to protect the public as well as its maximum generating capacity will employees. be temporarily limited to between Other developments in 1994 in- 800 MW and 900 MW. We plan to in-volved our Fermi 2 power plant. First, stall new low-pressure turbines in MM '
the NRC gave the plant an overall 1996 to increase plant capacity to Larry GlGarberding about 1,160 MW. The prior top ca. Executive Vice President and
" good" performance rating in its Chief Fmancial Officer periodic Systematic Assessment of pacity was about 1,140 MW.
' Licensee Performance report. Sec- We expect that most of the repair ond, we began a restart and testing costs to return Fermi 2 to service will
, process after an extended outage. be covered by insurance. (For greater Fermi 2's turbine-generator under- detail on the Fermi 2 outage, please Anthony E Earley,Jr.
went a reconfiguration and overhaul see Note 2 of this report.) President and Nef Opera &g Omcer to repair damage from a December Our emphasis has been to get 1993 turbine generator failure. More Fermi 2 back in service and to take than 8,000 separate work projects, other steps to ensure that our cus-M g- g including reactor refueling, and nearly tomers and shareholders were not 200 engineering modifications were negatively affected by the outage at John E. Lobbia completed during the yearlong out- the plant. Chairman of the Board and Chief Executive Officer age. That work will help enhance plant performance. February 27,1995 m rmorr Emsa immn mort E
Shown at the Michigan Electric Power Coordi-nation Centerin Ann Arbor, Mich., are from left, John E. Lobbia, chairman of the board and chief executive officer; Anthony E Earley,Jn, president and chief operating officer; and Larry G. Garberding, executive vice president and chief financial officen The center celebrated its 25th anniversary in 1994.
Because we are determined to pro-vide our shareholders with the best _
possible service, we are proud that Detroit Edison Shareholder Services was rated "best in class"in a recent study of the 11 top-performing U.S.
utilities conducted by the Utility Man-agement Service. We plan further improvements to our Dividend Rein-vestment Plan later this year that will offer you, our shareholders, greater convenience and value than ever.
As we reflect on 1994 and look ahead to the rest of 1995, we have shareholder value foremostin mind.
Yourinvestment is helping Detroit Edison to position itself to grow in the 21st century.
maintaining our high standards in the Fermi 2's largest low-pressure tur.
vital safety area and to our marly pro- bine blades have been removed and Sincerely, grams to protect the public as well as its maximum generating capacity will employees. be temporarilylimited to between /
Other developments in 1994 in- 800 MW and 900 MW. We plan to in- Md ,
volved our Fermi 2 power plant. First, stall new low pressure turbines in the NRC gave the plant an overall 1996 to increase plant capacity to Larry 0 carberding
" good" performance rating in its about 1,160 MW. The prior top ca. geugejc rgsident, and f
periodic Systematic Assessment of pacity was about 1,140 MW.
l ' Licensee Performance report. Sec- We expect that most of the repair ond, we began a restart and testing costs to return Fermi 2 to service will l . process after an extended outage. be covered by insurance. (For greater Fenni 2's turbine-generator under- detail on the Fermi 2 outage, please Anthony E Earley, Jr.
went a reconfiguration and overhaul see Note 2 of this report.)
QSl gdent a 9g to repair damage from a December Our emphasis has been to get 1993 turbine generator failure. More Fermi 2 back in senice and to take than 8,000 separate work projects, other steps to ensure that our cus-including reactor refueling, and nearly tomers and shareholders were not M 4' 200 engineering modifications were negatively affected by the outage at John E. Lobbia completed during the year long out- the plant. Chairman of the Board and Chief Executive Officer age. That work will help enhance plant performance. February 27,1995 i
m mon r.msos 29u xxxtit utront B
- ,- n :-g ;.. . .. w . . .; .. ..f, : r: g .y. . ; . ._c
- ,p
y ...
7.
{I. :m . . .
.ff- -
y* 1 g, f,.),}. . ,,l
.m ,. - . . c Q.n, g_ (1, ; j "-
.w ; ,,e ; . . :a. : . ,
y, :.m .,'.:.4'.
~. . . ..
. . j3.
./* . , . _ : ;}. ._ ' Uj' '
.M' [~ '
S. { ;
- s.
[-} , . .
- ac . q
- . .
- .
- s.a.m emenn. _ .A. . . _
vg5.
.g4 ~ :2 ..7 A Ql_ l QA.'
,~
nIc'.-
i s.neseu.mns / ;(;
- .L. gass.mannssesinsenes
. . . . has asseer te. ess ash .. ;
2.....
...N.e..:
' y . :M t . . U .3:'. c. m
... . \: {.. ' m .) &~7
.: . ; 3 ..
- s. .
.; W GB EW W 450' .
, ~ - '1 .- k.-
.- - [j , . .:
' _ w ,,,, ,,,,,,,, g ~ ' . ' . . ' nMb.;! e',' '..'
g'
,- c . . Mf'#
.f w wiesentesigutcase :- '-. ../.. a , '-
.. J. ..71 ..
?
- ):.. .. 0 4 ,,.j. c hw. 3'
_ .,,p~ -rwarEspsy Maqqesthadeep f:o n
.s #g-
- ensinser :
. . .s-_# ...m. ,
g-.,. #
m .: . .;.
y a' . ...a.
.m. g,,
- m. ; ;
- . ~ A 9t*" .
- $ [,_,_ , . ... ..
- ,,g g, g n , -.
.- *,c.
v.
3 - . ..
y y;
.-4 . : s_ ~ -; < V_.
.:(
f f. .
. . ' .' y. Y _ . '
y3 ;;4 $w_ly; y; . .y. .;
sm.. yy. ..
A
. 3
- i q
- f -
. ys -
7;;c .g . g A;
i, ; ..
s.,x.. ...: .
[
- ., , f, /-~. E ,"7.I% 0 .. .,, ,,i.,.
l._ ; -l..
- v. . i .
.l.:N'; ;. : -
9"': ..L' ' i ,l $ lQ$
.[?_. l R;...
[. ' -:
M. gn ggW ygk;p Q4y 5 w @f yy Q %l
- .'. .
- .s ,
. x . ?C . ?. ; '* .m.
j . - ; '
^
r o
' ~ ~ ' '
. , ; . . [. _ . .. ._,...
i ; ;. ;
ramm;4 g
, m-m u m m. y
}/
prQf/p%*g myglql If f {i
~ ,
Q\.
/ ks a t
-yQQ k .n J=:W y v..s- w-
- .;w %m <=*;g.e ,. .
7 r a m. ,
y
+ ay
/
y 'l '* Q ' w ' 4
? ,
w I . 9
^
~z + l "IN '
m 3 i Ae __
- A sk.
? I t . ,U,,,]'
..J
~
v' a
-- ?
p %+-
, 24 y ~'
!$.\,
L. , ..
~
} . y- .
i w ;; b g, f' V .l' s
[f;~ y ;
~
)
"g ..Q ,. - ;,;
s g ;*:
IN; hk
_ . , ,p s , 4f!
ij
_;_,,N :'
' = ' '
- A '
s- - - -
J- .e
'g.
' _' + .
,_ ; :&. A ' ' ' ' ' : ,,._,,_ _ . , , . . _
. assampem .
p r.
- - g ,; ' - .- - }. ' r [ L ' ; * ' . , ., , .
. , , . . . . . .. :, , , . . , 1,( .: . .q;., f j ,3 g . 'j'y '- '. g. p ,. (
,..).. .- ^ - 6,* - .
.j .. ,.
}_(,,
[' '
Lamy e. eashesAss . - . ,- - -
_; ., c. . ,
m mes
'j,i-iQ- ... p ,- ? 14 4.Q.,. . f 3 ;.- . ..
. emeddyndh5.Ehese ' _ t e * .' ' . . . . . '- f' ,..
(..._ ,ri . '
. . .;l lg Y
- . .. q :l.:" . y '. ' ti '. _ . _
. i7
. ..' i:
[',;^ , '..] '_
i., .
49 . .y . .
. f \, . . . ' , '.
.h '. .#:%' ' h T. .< g.;, ., .
. , t. , . $;, . ' , . . -
.h 'J '
~
$.;.a q .. ;. );; ,
' ,i 3-
. .'. }} . ., . ,. m ,. , ..'[...' .
'..'~
i: ),
.. . 1 h,,',..-
I[,7?{. ' i,y' - - _ . ,I.{l ' J ,,
-l g,' . ' *
?. s 5%.'? . ? :* .. ,*q :u...l T. .}:.'. u. J .') &h ' : ,.'f. ,'$- $ . ?' ~ ' !l ' f:, ',$ *. N !, l!N! .
.T.f. ' ' . . . . .* . f. . .
_: '4 lO,Y ' '
k, . - .N ' '
.. :. $ ' OO M
,1 '
ap h.i,[ t:
. a -
^ gm ap.
y' a:: V ' -
. :: (in . . .
y_
=*
__ ,d; eft,3 .
9 .; .. . .
_ .,. Q w _.
y ,,g y
'~
- , 5 . Y: &' -
g p : 7-
--'~-_'.- .
'. ** - ' ./ f.T + 7 E ' ' - * ,j - ,' .
) _-
',_, '? $ ' ' ' '
h
[ _ ;;
3
- _ py. _Qy y ;
}; W
~
m w ansahne@ .
r .
{ . s
% m shest
.' _ 1peseentef 3stehe. -
X'.'.
&S
. gl . ' . ' . .;jg,;':. ' '
if . .
e esmosapst dessi-7 ~. - - q;
,. gg, w
p',..;_ ' '
t
'*: ;_. i;. . .
?_ l*f. . _
a ,
, : .t .
l f. -
l, . v, % < :
p
}';; _[_~- .
.,. .'^'_.' .,
k ~6 .. . , ' ,- -
f
[a I k.
c' )
p, >-. . . ._. ...
- s. ..
,:2. . ' _ _
[
- s. . , .
U fk(). . ' 1
].' . r ,\ . '.
,' '1 g
g" ~
' ' . , y_ _
..} h :
'3
% . . . ') * * . , . . Y s- - .. . s. tc C '
+ , 1
- ~ '
1
4 use of electronic mailin 1994 and thus phisticated system to continuously monitor addition, more than 5,000 adults supported decreased its use of paper. The Environ. their sulfur dioxide and nitrogen oxide the program by redeeming coupons in
, mental Protection Agency (EPA) has emissions. In addition, the company has a Detroit Edison's BRIGHTIDEAS customer
, recognized Detroit Edison as a charter $25 million project under way at its newsletter. This highly successful program i ' member of its WasteWi$e program for re. Monroe Power Plant to install new coal willbe continuedin 1995.
- ,ducing office solid waste. burners which will reduce nitrogen oxide Detroit Edison successfully piloted a l In addition, the company recycles its emissions by about 44 percent, new " Kids Voting-Michigan" program in used oil, tires, batteries, transformers, The company also helped form the Clean four school districts during 1994, and will electric cables and utility poles. Wood Air Coalition of Southeast Michigan, a take it to additional districts in the future.
- chips from the company's tree-trimming group of businesses, governments and or- The company sponsors this program to help program are donated to schools, nature ganizations supporting voluntary activities educate young people about the electoral preserves and park systems for use in land- to reduce smog during "0 zone Action!" process. The program also encourages scaping. Since 1991, the company has days when the weather is hot and muggy. parents to vote and to spend time with recycled more than 300,000 cubic yards of Detroit Edison advertising encouraged their children educating themselves on
- wood chips, the equivalent of a 10-foot. drivers to use car pools or public transpor candidates and issues.
wide nature trail from Detroit to New York tation whenever possible. As a result of City. voluntary actions, Southeastern Michigan eP y -
M Fly ash, a by product of the company's decreased its ozone emissions and now coal fired plants, is used to build roads as meets federal air quality standards; Detroit g well as make cement products. Recycling Edison and other companies thus will not .
this ash in 1994 saved hundreds of thou- have to adopt stricter and more expensive sands of dollars in disposal costs, plus controls. The EPA recently classified ...,,
landfill space the size of a football field Metro Detroit as an attainment area under ,<
l filled to a height of more than 110 feet. the Clean Air Act, enhancing the area's -
g l The company began recycling fly ash in viability as a place to do business.
l 1938 and since has recycled enough fly ash Detroit Edison reached out to the people ~
1 l to fill the Empire State Building nearly four it serves in a variety of other ways during -
times. 1994. The ccmpany and its Detroit Edison ;
The Investment Recovery group at the Foundation gave more than $3.7 million to , ~
company's Warren Service Center works help support educational, health and hu- caggsg ,
- i. ,-
.T with GoodwillIndustries of Greater Detroit man servic.es, civic, community and - . , , ,
to refurbish transformers and meters, and cultural organizations and institutions in Brian E Hawthorne, Md supply supervisor sells other used equipment and scrap met. 1994. The company and the Foundation s, l
- als. This operation not only benefits the promoted Michigan economic development ]snergy 3 g o-ener y p j environment and provides jobs for people nationally and internationally through while skiers enjoy the site's adjoining recre-j
- with disabilities, but also generates several sponsorship of the 1994 World Cup Soccer ational facility. Detroit Edison is a charter i i million dollars in revenue and avoids sig. matches in Southeastern Michigan which member of the U.S. Environmental Protection nificant disposal costs. were broadcast to television viewers world- Agency's Methane Outreach Program to reduce !'
l Detroit Edison also has a program to de. wide. Other communityinvolvement global warming emissions by turning landfill l gas into energy.
crease the amount of hazardous waste programs included the company's and ;
l Foundation's sponsorship of Sesame Street
- generated at its facilities. Its Waste Re-on public broadcasting and the company's j i
- duction Task Force has increased employee awareness of the need to consider disposal Eyes and Ears program which trains em. 8cm 3HSineSSCS Orom costs in purchasing decisions. The plyaen to provide safe havens for people The electric utilityindustry projects only l
- company's waste reduction activ% m. and to contact public safety authorities in modest opportunities for growth in its core i clude improved handling of cleaning the event of crimes, accidents and other business over the next few years. Conse-materials and using non-chlorinated sol- emergencies. Both sponsorships cel- quently, Detroit Edison has broadened its vents. Since 1989 the volume of waste ebrated their 10th anniversaries in 1994. business horizon in areas where it can capi-
, generated has decreased by more than Also during 1994, Detroit Edison talize on its ability to provide customers -
80 percent and by 1999 the company plans stepped up actions to deliver important with advanced energy services with ever-to reduce the remainder by another 50 per. safety messages to its customers. About greater efficiency. The Board of Directors cent. 30,000 elementary school students pledged announced plans in December to form a As part of the company's continuing ac. to " Play it Safe Around Electricity" as part new holding company in 1995 to provide an tions to satisfy the requirements of the of the company's electrical safety cam- organizational structure to facilitate opera- ,
federal Clean Air Act Amendments of 1990, paign, cosponsored by 228 Mcdonald's tion of new businesses in these areas.
Detroit Edison power plants now have a so. restaurants m Southeastern Michigan. In m omm w-mmt.ateoar D ;
I
.' f D An example oibow the companylever- PriorInvestmentsProvide Value ages its strengths is its iuvcstment in an 9 1 ?
i' exciting new technology to control electri- ,
- - ,df While the company adds new products and , ,
cal power use. A Detroit Edison subsidiary, 8 + sewices, it also maintam, s its prior invest- ,
ments m, facilities serving customers m .
EdVenture Capital Corporation, invested
$10 million in Echelon Corporation, which S utheastern Michigan. ,
has developed and commercialized Repairing the Fermi 2 nuclear power I
LonWoars' technology. This innovative Pl ant was a major challenge m 1994. The Pl ant represents about 11 percent of the
~
technology is bringing about the long. " 1 I
awaited " smart house or " smart building,,.
where machines, appliances and lighting
- g. company's generating capacity and 28 per-cent of its total assets. Keeping Fermi 2 i
are controlled automatically. No new wires .w -
perating efficiently and safely will pay off need to be installed. The s'ystem operates # f r Detroit Edison customers and share-by using LosWonts' microchips in power holders in both the short and long runs by outlets, switches, appliances and other holding down costs and helping to meet products. In 1995, Detroit Edison will use envimnmental regulations in die years Detroit Edisa's Luny L. Seres was one of sev- ahead. Fermi 2 in a typical year can con-the chips in a test program designed to en-eral employees who volunteered for a j,omt serve fossil fuels and reduce power plant 4
able customers to reduce their utility bills Detroit Edison and Michigan Department of through better management of their energy emissions by up to 9-million tons of carbon Natural Resources program to increase the . . . .
usage. The company also will test a new, di xide,44,000 tons of sulfur dioxide and pheasant population in Michigan. During the two-way communications link enabling it to past five years, Seres has helped raise more 34,000 tons of nitrogen oxide.
than 1,500 Sichuan ringneck pheasants on com. Major repairs were completed in late pany property near the Fermi 2 power plant. 1994 on the turbine generator and testing commenced in early 1995. Insurance is expected to cover most of the turbine re-
< For the past seven years, the company pair costs of more than $'70 million and the T. has been involved in a landfill gas genera- cost of purchasing replacement power dur-tion business in Riveniew, Mich., that ing the months Fermi 2 was out of service.
produces 6.6 megawatts (MW) of electric- In a recently approved settlement, the ity. The facility burns methane, thus company agreed that replacement power helping protect the environment by reduc- costs will not be passed on to customers .
ing the volume of greenhouse gases. and that additional power supply costs col- l Biomass Energy Systems, a company sub- lected in 1994 from some large industrial sidiary, started three similar projects in customers will be refunded. This agree-Michigan, California and North Carolina in ment will help stabilize electricity prices The company's Monroe Power Plant and its 1994, and has targeted 15 other possible over the next few years.
other coal-fired plants reduced production costs sites in eight states. Active in reducing Once testing is completed, Fermi 2 will
, to their lowest levels ever in 1994, enabling greenhouse gases, Detroit Edison is a mem- operate until its next refueling outage in pe s in a e of 1 m n ber of the U.S. Department of Energy's 1996 without its two largest rows of low-199 ,
1 Climate Challenge program to prevent glo- pressure turbme blades, decreasm, g its j bal warming. operating capacity from 1,140 MW to be-better tailor new products and services to Midwest Energy Resources Co., another tween 800 MW and 900 MW. After new .
customers' needs, company subsidiary, delivers lower-cost, low pressure turbines are installed during Another subsidiary, Edison Energy low sulfur coal mined in the western United the 1996 refueling outage, the plant's ca-Services, offers energy cost-reduction ser- States to Detroit Edison and other utility paciw will be increased to 1,160 MW. .
vices for large industrial and institutional and industrial customers. Midwest Genen! Electric will manufacture and in-customers on a nationwide basis. Edison Energy's Superior, Wis., facility transfers stall th ' new equipment for an estimated i
Energy Services also can provide on-site the low-sulfur Western coal from rail cars $30 million to $40 million, and will receive l energy management for these customers; to Great Lakes vessels that carry the coal incentives tied to operation of the new tur-procure, install, operate and maintain new to Michigan and other destinations in the bines and Fermi 2's capacity factor.
i energy systems; and supply customers United States and abroad. More than with steam. compressed air, heat, light and 13.5-million tons of coal were transshipped ;
chilled water. in 1994, when Midwest Energy set a record for the annual gross coal tonnage passing through the Duluth / Superior harbor.
h TM DETWorf EDNS IW4 AMA1. REPORT
..w..-.. ---m._ _ - . . .
.. . ,: _ : ;; L . . .' .,; [. .-_ . . . . .. L :- .. ..
.( ;; - :..
.;.. .. .. s..- .
_r ; ..
l
- ~: ' ' ' '
- -. .[ .
f:(
J i.l)O V " % /
.L & }.l ll-
+" *
,, f,., *'
w
.,.. , . jAesasdC.Fsen.. ; ..,.... j p.4 7. - f;;f ' 4 ;::'%,1;' N .
e .' p. .
. . Fermiis' 4mnimeand c.: r. .
1;.E.-
pp. _ ,.
y.
_ . mi.cerasumia gans -
S.. y.:
.~
/ - ' . Frank f.Wassipid. : -
h ' +.: '.+
4
.. ^
N. -.w
+
t: .
,.; .. ., .z.. " -
7...
. M2's esindised .
> sn * '
+.s .
~ '; . g . li : l l . ' . . . . . . low 1 measure tunimes. .' .
.)
p+ + , - ., -
4
[ k,; ' f. ':)- . .
',- i .l . .' .',
f,
' , i, .
~ -
- _ ;; .. - , ; y._.,.
.e.
3 u ..
- x. , , . . ..','..;.,.
e --
..f- . ,
h- '
..'. 9 '
.A bz.f : .
- m. . . .. . , .
.g ' [ - ',' ,y
,A.*. '. '.l. 'l.: .
, .+
.. _ c. . . : q. . .
4 i, - , ,- ,_ . . - . ;\ . ., . , . .
7y y 7 .j y-mm ; .
' af .d jp}
L. . ' ., .
- .f .
_. .. . , . . . _q . . - [ : :
. g. . *-
... .g
- . . . ,!'- , ' . ' .. . ' , ' , . \ . .', 'h
',_,,.,t-' >
i- -
't . e.
,. .,1 .
..e .a s. , - n~;
_ _4 , ._ .
- .v',
,j ' . ,, , , .,. ,
, g
.g -
- e. . > <:. g ..
'y*
.g . . 4 k;
g( . L
- i - / .
' A
,- .m. ..
4 - ,
cp . . ..
E
'. . ' f f, _
- .: g}g:. y ,., W t M yq ~
.L-
.? ./ 7 _
@w m. .f.y . .
s.
- c .f[
N.. l .. y j? hk '
m m.m emm; g..
~
),ia s ::. '
.f; l'l, L .~. 7 4
,,e .
. , f '...
m.. ' -
3 g g- ..' . .,
.f, .', .7..: '; 4 q., ly
.'a . - 7
. .j.' '
} ;.L. S
. -[ ' . , , h ra , .( . - 3-,
/. My '
t..'
M t."' f; s [ ~' '
j -- y
- -: . g : .s
' g 7. , . . , - .
y .
,;y 5. .. . .: = -
- . , .. . 7
- . . . c. n -
e.
.. 4 -
. j;. ,:a; 'J:_' [. . ' , _ , . . _ . . v._- % , ; _, ,
s.... . . . .- .c , ; . ,.
'a- :; .
^ ~
. ... 9. ..
. . . ;t. :q . + . . : . . ;. :.p.
3 .
. :. . ... :.. 4 : - -
' / ; . ..
a 'b.#* . , -
/ ,, . '
'g
. ,' . .- . . . , , ..Is .
- b
. , . , ,. hp .. '
o
, , . . - . g-
,', ~M .q ' *
.I -. . _
- c n,; - '
..[ . . -
- p. .
(.;n . , . .- - .
....y;.'
h.- ll _'. ' _ '-, . . , 'y ..'
T 3 p d
-- i-Apm ..._. 4te' " ~
[. a.' . ' .
z
.= ., .. .*.l. ,, :. .'.- l : . w e- y
.g,.....,.m g,M a . p .,r I
. . . f- . . 4 [ ;,; -
c, .
'..i.s r.
- .: 10' . e.,j : .c ' ' -
3 . ~
, a;o=:eb
. - _ - - - - - - - - - -.- _ -- - -- - - ~ . -
l.
The company and Consumers Power re- Two high-pressure boilers were up- through electronic funds transfer. A spe- ;
cently reached a tentative agreement with graded at the company's Trenton Channel cialtoll-free telephone number for !
- the Michigan attorney general, the Michi- Power Plant in 1994 to add 110 MW of shareholders (800-5515009) also makes it -
gan Department of Natural Resources and coal-fired capacity to help meet customers' easier for them to communicate with !
other interested parties ending a contro- peak demands. The undertaking con- Detroit Edison.
versy about fish mortality at the jointly cluded an environmental project designed The company's improved Customer Com - .
i owned Ludington Pumped Storage Power tolimit emissions from the plant. munications automated phone system is 4
Plant. The plant operates essentially as a Detroit Edison currently maintains another new tool at the company's disposal.
storage battery by pumping water from 685 MW of capacityin economy reserve The system eliminates busy signals and can l lake Micidgan to fill a 27 billion-gallon and does not expect to need additional gen- handle up to 40,000 calls per hour. The reservoir at night and other times of low erating capability for at least another five Customer 2000 System is being developed electrical demand. The water is released years. The MPSC is considering a manda- to provide additional services for customers tory wheeling program requiring Detroit as well as more information about their en- :
Edison to deliver up to 90 MW of electric- ergy usage.
ity generated by third parties to some of its in 1994 Detroit Edison reorganized its large customers, who may choose to Energy Marketing and Distribution organi-switch to other suppliers when the com- zation to better serve customers. For I
pany needs additional capacity. The example, the company strengthened its amount of electricity covered by this ex- Service Center Operations and dedicated perimental program equals about 1 percent case managers to handle customers' con-of the company's generating capacity. In cerns. The company's new centralized 1994, the MPSC issued an interim order customer service organization provides for establishing the framework for this five- more uniform credit policies and practices, year retail wheeling program, which also and also facilitates communications be- !
j' gY involves Consumers Power. Detroit tween office and field personnel so
-[ Edison appealed the order and the utility employees can better respond to custom-trade organaation, the Edison Electric In- ers' needs. The reorganized Power
^1 stitute, supported the company's suit Delivery Operations enables euployees to j asking the court to clarify the MPSC's ju- respond better and faster to storms and re-risdiction over retail wheeling. The MPSC storing customer service.
is expected to issue its final order in the The strategy for making Detroit Edison I Detroit Edison's Valerie L. Klobuchar uses an case early in 1995. a more performance-driven company in-upgraded computer system to assist sharehold- dudes a computerized Human Resources ers with their account transactions.
7g 7gpfgE gIE g[ggfjgggj Management system and new programs to Capability andEfficiencF help supervisors evaluate performance and More than $118 million will have been in- Provide more competitive, market- and per-to turn turbines and generate lower-cost ested by 1998 to improve Detroit Edison f rmance-driven compensation. The electricity during the day, when electricity strategy also includes a commitment to em-demand and cost are greater. The settle- computer-based information systems. New
. ployee development and building a more ment recommends that the barrier net improve efficiency companywide. flexible and higher skilled organization.
installed in 1989 to minimize fish losses be .
I Detroit Edison's actions to provide bet. Perhaps ille company's most significant considered a permanent solution. Both ,
ter Shareholder Services reflect some of achievement is the many positive steps it companies agreed to dewlop additional
's contbuous-improvement ac, took in 1994 to respond to change. The i fish proertion measures, to pwide annual Pl anned formation of a new holding com-v.) for unavoidable Sture fish ties. The company's Sharehdder ,
r4re. Pany in 1995 will provide Detroit Edison
" ## #" # " Services operation was ranked "best b ;
class" in a recent benchmarking study of with the increased financial flexibility to hanced fishinr,, parking and boat launch
)' oP-Performb& U.S. utilities. Computer meet industry deregulation. It provides a facilities. These costs may be recoverable hardware and software have been up. vehicle for developing and operating new-in rates after a roval b#the Federal En.
dedt ductivity, b fiti businesses, and offers a mechanism by harehold s y ways such as the which Detroit Edison can define and sepa-Co oe i on o low co rect deposit of dividends to their accounts rate is regu ated and mregulated 1,872-MW plant will save Michigan utility customers about $2J billion over its lifetime, f
E Tus rerkort FNn w mrAL REIMr
While in recent years the company has earned returns on equity substantially better than the utility industm averages, Detroit Edison's 1994 return on equity of11.6 percent was closer to
.' the industry average of11.7 percent (see chart below). During the rate moratorium that
- followed its landmark 1988 Settlement Agreement with the Michigan Public Service
- Commission (MPSC), Detroit Edison generated cost savings that increased cash flow and enabled the company to improve itsfinancialposition andpreparefor thefuture. In 1994, the MPSC authorized a rate of return of11 percent andfuture returns on common equity are expected to remain in line with industry averages.
System Sales Climb to Resenmvers e.xpectedcapacity ./ purchased power costs related to the F' nni 2 outasc Busincss intctruption in-a record 44-billion kWh factorperformance diSaRou>aruts surance covered $66 milhon of the costs The Southeastern Michigan economy im- Detroit Edison will have funds disallowed and the company made sure that customers proved in 1994, boosted in part by record under its 1988 settlement agreement with were not adversely impacted by the lost automotive industry sales. Detroit the MPSC which required that Fermi 2 op- Fermi 2 generation. Industrialcustomers Edison's electricity customers used a erate at the greater of either a capacity on the company's R-10 rate were automati-record 44-billion kilowatthours (kWh) and factor of 50 percent or the three-year roll cally billed for the excess costs, but Detroit i system sales hit a new high. Industrial ing average for the nation's top 50 percent Edison refunded those payments under an
. sales were up 5.9 percent, commercial of boiling water reactor (BWR) plants. agreement it sought with the MPSC, the sales 3.5 percent and residential sales Since Fermi 2 did not operate during 1994, Michigan attorney general and other inter-1.1 percent. and will operate at reduced power until ested parties. The agreement also requires Detroit Edison added nearly 17,000 cus. 1996, the company expects a capacity that insurance proceeds in excess of the tomers in 1994 and now serves a record factor performance disallowance. The company's outage-related costs be credited l
i 1.98-million electricity customers in South. company has reserved $31 million in 1994 to customers.
eastern Michigan. Company productivity earnings in anticipation of the expected continued toimprove; each employee disallowance if Fermi 2 does not exceed Revenues down Slightly served an average of 235 customers in the three year BWR averages in 1995, Detroit Edison's total 1994 revenues of 1994, compared with 220in 1993 and 1996 and 1997. $3.52 billion were down 1 percent from 165 in 1987. The MPSC's power supply cost-recovely 1993 revenues of $3.56 billion. Sales Provision makes it possible to recover ex- growth helped offset the drop in revenues, Insurance Covers moSt COSTS cess fuel and purchased power costs from which resulted largely because customers ermi g SgUtgown customers. Ilowever, Detroit Edison did paid 7 percent less in 1994 than in 1992.
The company's Fermi 2 power plant was not bill most customers for the higher fuel This resulted from a MPSC order to the oat of senice during 1994 following a December 1993 turbine-generator faihue. Earnings Per Share vs.
Retum on Average Common Equity The company estimates that $70 million to Dividends Paid Per Share v2uoNTHS EEEDSEPTEMBERm
. . st o e cos of ret rn the plant to senice is expected to be covered N under the company's $2.75 billion property damage insurance pohcies. The company received an mterim $25 milhon m 1994 under this coverage. 32 .
$3.79 )
The company also received $66 million
, 1994 from its excess and business inter-m m m ruption insurance. This coverage paid
$2.2 million per week beginning in May N N 1994- 21 weeks after the start of the Fermt 2 outage.
W s 19.1%] M E DETRofr EDISON EARNINoS PER SHARE /
E REGULATORY REsEARCH ASSOCIATES. INC- - D!vlDENDs PAID PER sRARE So COMPANY ELECTRIC UTILITY AVERAGE TH DETROIT EDISON 104 ANNCAL REPORT h j
company to reduce its rates by $78 million shareholders have received uninterrupted tions. Company employees retain some effective Jan. 22,1994, following a $169- dividends in all of the 85 years since the 5.1 million shares in the restructured million rate decrease in 1993. In addition, company was listed on the New York Stock Employee Savings Plan. .
1994 revenues were reduced by $31 million Exchange in 1909. Shareholder equity increGSes ,
to reflect one time charges related to the Cash Flow Coverage of Dividends Common shareholder's equity as a percent .
Fermi 2 outage and the corcpany's pro-murscortarni age of total capitalization was 44.2 percent jected capacity factor performance disallowances for 1995,1996 and 1997.
- N N D " " 8E8 N in 1994, up from 43.9 percent in 1993. The W c mpany retired $258 million in outstanding 3.36*
Earnings decline debt in 1994; it saved money by the early Earnings declined by 20.5 percent in 1994, redemption of bonds with high interest again due in part to the company's lower rates and the issuance of $250 million in rates. Total earnings for common stock 6 new securities with lower interest rates.
Interest expense on long term debt dropped dropped from $491.1 million in 1993 to
$390.3 million in 1994. Earnings per M 3M nearly 16 percent to $274 million in 1994, share fell from $3.34 in 1993 to $2.67 in from $325 million in 1993.
1994. The earnings decline also reflected Detroit Edison's bond ratings remain un-the higher depreciation and operating ex- changed with ratings as follows at year-end penses which, following the 1994 rate 1994:
M >
order, increased by $84 million annually. MNPh@dJn' '~M7~5Lj Lower accretion income and increased am- m lygch W Sw6QT ortization expenses - non-cash charges , Ma@Investes Seh AS against income related to the 1988 Fermi 2 phase-m plan - also contributed to the
, g ditadmMMM* d @V h M
drop in earnings.
' " * " ' " ' " - - Common Stock price Detroit Edison has no current plans for closes year at sz6.125 a general rate case proceeding. For a com. Average number of y,,1,,,,1,1, ,11111, ,1,,, ,,1,,, ,,11,,,1,,
plete analysis, see pages 25 and 34. Common Shares drops 1994 as the Federal Reserve Bank tried to Strong cashflow enables The average number of common shares out- control inflation and repeatedly raised the standing dropped from 147 million in 1993 discount rate it charged banks for short-company to Strengthen balance to 146.2 million in 1994. The number of term loans. Besides the substantial Sheet andSupport dividend increases in long-term interest rates, elec-shares decreased when Detroit Edison re-The increased cash flow which the com- purchased 2.2 million shares of common tric utility stock prices were hit hard by pany generated after its 1988 settlement stock from its Employee Savings Plan in security analysts' evaluations of risk in the agreement has enabled Detroit Edison to August 1994 after it restructured the plan electric utility industry in light of increased strengthen its balance sheet. Common to offer participants more investment op- discussion of deregulation for the produc-shareholders' equity increased by more than $1 billion, or 49 percent, between Capital Expenditures Capitalization 1988 and 1994. Long term debt decreased by $413 million, or nearly 10 percent, in 44, MiW@iR
~
the same period, and the average cost of 'g4 33g,4 .
debt dropped from 9.6 percent to 7.2 per- 50.8 % 5.0% 44.2 %
i cent, or 25 percent. In addition, interest 93 '~ 3984 i expense declined by $180 million, or -
.. .' -'. 13 ~ NF59tM ,
38 percent. 92 M 5.9z ' 51 % 5.1 % 43.9 %
Detroit Edison's common stock dividend increased from $1.68 per share in 1988 to '92 ,,,
.- - 9 NW' *- W" ' '%'
$2.06 per share in 1994. Supported by 53.5 % 4.5% 42%
earnings per share of $2.67, the company's ,, .gi g'ygg" 'g 1994 dividend-to earnings ratio - or payout 56.8 % 4.8% 38.4 %
ratio - of 77 percent compared favorably 7:fWyy
~
with the industry average of slightly more '90 than 80 percent. The company's cash-flow 62.4 % 4.8 % 32.8 %
coverage of dividends remained better than I
the industr3 average. Detroit Edison g gTER jTkErEREhCE gpE STOCK g COMMON sHARElI0LDER EQUITY U THE DETRori Edison IW4 AM AI. REPORT
Securities Issued During 1994 tion of electrical energy. While the Dow Gross Interest Jones electric utility average declined by j Month Amount Rate 18 percent during 1994, Detroit Edison's
- Type of Security Sold Sold ($ Millions) (Percent) common stock closed the year at $26.125 General & Refunding Nortgage Bonds Per share, or nearly 13 percent below its 1994 Series C August-September $200.000 6.708tu 1993 closing price of $30. Detroit Edison Pollution ControlBonds performed better than two thirds of the Series 1994 AA March 7.535 5.875 48 electric utilities in the index. The mar- l Series 1994 BB June 12.935 6.450 ket to-book ratio at year-end 1994 was l Series A 1994 December 23.700 6.350 114 percent, down from 134 percent a Series I 1994 December 6.300 6.350 year ago. l
- 54* Securing businessf0r thefuture Total Financing $250.470 Detroit Edison is committed to providing both customer value and shareholder value.
(1) Variable Rate at December 31,1994 The company negotiated 10-year sole-sup-Securities Redeemed During 1994 Plier contracts in 1994 with Chrysler Corp.,
Interest Ford Motor Co. and General Motors Corp. <
Principal Month Amount Rate Detroit Edison awaits MPSC approval of Redeemed ($ Millions) (Percent) these contracts under which the company Early Redemptions will rovide P lower rates and increased General & Refunding Mortgage Bonds service reliability for these important indus-1989 Series A July $168.285 9.875 trial customers in return for securing their 1992 Series D September 10.000 8.300 business for aslong as 10 years. For a !
1993 Series E September 10.000 7.770 detailed analysis of these contracts, see 1993 Series J September 30.000 7.740 page 38.
Holding companypT0p0 sed Pollution ControlBonds Series 1989 AA April $ 7.100 7.750 Detmit Edison plans to form a new holding Series 1989 BB August 2.850 7.000- company in 1995 to provide the flexibility ;
Series Y 1984 - October 2.400 10.625 the company needs to develop and operate i Senes Z 1984 October 7.750 10.750 its new energy-related businesses. See
$ 20.100 page 38. Common shareholders willvote on Total Early Redemptions $238.385 the new holding-company structure at their ,
Mandatory Redemptions 19.649 annual meeting April 24,1995. The change Total Redemptions $258.034 also requires approval by the Federal Energy Regulatory Commission and the -
Nuclear Regulatory Commission. When the Outstanding Long Term Debt High/ Low Market Price necessary approvals are obtained, Detroit tan.uoxs orpouARs1 (DouARs PER sRARE) Edison common stock will be exchanged share-for-share for the common stock of the In add tion i provements later this year ,.
M to Detroit Edison's Dividend Reinvestment g Plan will offer shareholders greater flexibil-ity and make it easier for them to buy and sell company stock. The revised plan will M M offer a partial reinvestment of-dividends op-nd tr sfert buy es. In ad on, it E will allow shareholders to increase the 6 maximum amount they contribute and to sell all or part of the shares they purchase g through the plan.
E TAIABLE !sSEEs HIGH MARKET PRICE M TAX EXEMPT!ssUEs M low MARKET PRICE m wraon r.mson m aum war E
REPORT OF AN
< tu amort msos commy un sensman courcas P
The consolidated financial statements of The Detroit Edison The Board of Directors, th-ough its Audit Committee consisting Company and subsidiary companies have been prepared by solely of outside directors, meets with Price Waterhouse LLP, management in conformity with generally accepted accounting representatives of management and the Company's internal principles, based upon currently available facts and circumstances auditors to review the activities of each and to discuss accounting, -
~
and management's best estimates and judgments of known auditing and financial matters and the caming out of conditions. It is the responsibility of management to assure the responsibilities and duties of each group. Price Waterhouse LLP integrity and objectivity of such financial statements and to assure has full and free access to meet with the Audit Committee to that these statements fairly report the Company's financial discuss its audit results and opinions, without management position and the results ofits operations. representatives present, to allow for complete independence.
To meet this responsibility, management maintains a high standard of record keeping and an effective system of internal controls, including an extensive program of internal audits, written administrative policies and procedures, and programs to assure the selection and training of qualified personnel.
These financial statements have been audited by the Company's , ,1 ident independent accountants, Price Waterhouse LLP, whose report and Chief Financial Officer appears on this page. Its audit was conducted in accordance with generally accepted auditing standards. Such standards include the evaluation of internal accounting controls to establish a basis M[ Mkt for developing the scope of the audit, as well as such other hn b.
procedures they deem necessary for expressing an opinion as to [haim oi e Board whether the financial statements are presented fairly. and Chief Executive Officer REPORT OF INDEPENDENT ACCOUNTANTS IHCefIfilel$lollSCLLP 200 RENAISSANCE CENTER DETROIT, MICHIGAN 48243 fo the Board of Directors and Shareholders of The Detroit Edison Company In our opinion, the consolidated financial statements appearing standards which require that we plan and perform the audit to on pages 17 through 33 of this report present fairly, in all material obtain reasonable assurance about whether the financial respects, the financial position of The Detroit Edison Company and statements are free of material misstatement. An audit includes its subsidiary companies at December 31,1994 and 1993, and the examining, on a test basis, evidence supporting the amounts and .
results of their operations and their cash flows for each of the disclosures in the financial statements, assessing the accounting three years in the period ended December 31,1994, in conformity principles used and significant estimates made by management, with generally accepted accounting principles. These financial and evaluating the overall financial statement presentation. We -
statements are the responsibility of the Company's management; believe that our audits provide a reasonable basis for the opinion our responsibility is to express an opinion on these financial expressed above.
statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing A tw 4 s LLP o m nm m1 ms - _ _ l
. THE DrrR017 EDISON COMPANY AND SUBSIDIARY COMPANIES l
Year Ended December 31 !
g 1994 1993 1992 l
L ,.OperatingRevenues .
Electric-System $3,448,351 $3,467,357 $3,472,583 '
' Electric-Interconnection 43,141 60,363 58,447 Steam 27,849 27,491 27,113 ,
Total Operating Revenues $3,519,341 $3,555,211 $3,558,143 Operating Expenses '
. Operation Fuel' $ 719,215 $ 750,127 $ 704,371 Purchased power 116,947 91,747 126.101
.. Other operation 621,066 604,882 548,520 ,
Maintenance 262,409 251,149 . 262,803 Depreciation and amortization 476,415 432,512 423,407 Deferred Fermi 2 depreciation and amortization (7,465) (8,959) (14,984)
Amortization of deferred Fermi 2 depreciation and return 84,828 30,888 - -
Taxes other than income 255,874 261,449 252,011 Income taxes 270,657- 297,469 302,758 Total Operating Expenses $2,799,946 $2,711,264 $2,604,987 Operating Income $ 719,395 $ 843,947 $ 953,156 ,
Other Income and Deductions Allowance for other funds used during construction $ 1,684 $ 2,055 $ 1,363 Deferred Fermi 2 return - - 13,785 Otherincome and deductions (24,973)' (24,961) (21,179)
Income taxes 8,111 8,594 7,108 Accretion income 13,644 44,130 45,695 Income taxes - disallowed plant costs and accretion income (4,252) (14.062) '(15,576) ,
Net OtherIncome and Deductions 8 (5,786)- $ - 15,756 $ 31,196 !
Ecome Before Interest Charges 8 713,609 $ 859,703 $ 984,352
' Interest Charges .
Long-term debt 8 273,763 $ 325,194 $ 388,580. t Amortization of debt discount, premium and expense 10,832 9,114 3,952 Other 11,170 4,928 5,169 Allowance for borrowed funds used during construction (credit) (2,065) (1,436) (1,396)
Net Interest Charges $ 293,700 $ 337,800 $ 396,305
- Net Income
. $ 419,909 $ 521,903 $ 588,047
. Preferred and Preference Stock Dividend Requirements 29,640 30,837 30,498
. Earnings for Common Stock 8 390,269 $ 491,066 $ 557,549
' Common Shares Outstanding- Average 146,151,505 147,031,446- 146,998,485
[
Earnings Per Share $2.67 $3.34 $3.79 (See accompanying Notes to Consolidated Financial Statements.)
m DEnortIDison m Amu ateorr 17
{
moIem:YelW end3DE-UWR181:5:1. 4a
, TK2 DETR0;T EDISON COMPANY &%D St:BSIDIARY COMPMIES December 31 l
l ASSETS 1994 1993 I- .
l
- Utility Properties .
Plant in service Electric $12,941,414 $12,557,267 I- Steam 69,813 70,948
$13,011,227 $12,628,215 Less: Accumulated depreciation and amortization (4,529,692) (4,137,881)
$ 8,481,535 $ 8,490,334 Construction work in progress 104,431 160,230 Net utility properties $ 8,585,966 $ 8,650,564 Property under capitalleases Dess accumulated amortization of $94,678 and $101,381, respectively) $ 134,542 $ 154,837 Nuclear fuel under capital lease (less accumulated amortization of $374,405) 193,411 184,083 Net property under capitalleases $ 327,953 $ 338,920 Total owned and leased properties $ 8,913,919 $ 8,989,484 Other Property and Investments Non-utility property $ 11,281 $ 10,053 Investments and special funds 18,722 15,914 Nuclear decommissioning trust funds 76,492 29,929
$ 106,495 $ 55,896 Current Assets Cash and temporary cash investments $ 8,122 $ 11,071 Customer accounts receivable and unbilled revenues Oess allowance for uncollectible accounts of $30,000 and $34,000, respectively) ~ 195,824 195,319 Other accounts receivable 34,212 26,619 Inventories (at average cost)
Fuel 136,331 129,024 Materials and supplies 155,921 165,187 Prepayments 10,516 10,914
$ 540,926 $ 538,134 Deferred Debits Unamortized debt expense $ 42,876 $ 45,396 .
Unamortized loss on reacquired debt 123,996 124,567
~
Recoverable income taxes 663,101 771,277 Other postretirement benefits 36,562 48,568 Fermi 2 phase-in plan 390,764 475,592 Fermi 2 deferred amortization 52,259 44,794 Other 122,080 41,171
$ 1,431,638 $ 1,551,365 Total $10,992,978 $11,134,879 (See accompanying Notes to Consolidated Financial Statements.)
u in orm.cr ro' sos m4 usix nron 1
THE DETBolf Epis05 COMPAAT AND $UBSIDIARY COMPANIES -
December 31
- LIABILITIES 1994' 1993 !
y
'i apitalization C
- Commo'n stock - $10 par value, 400,000,000 shares authorized:
144,863,447 and 147,047,918 shares outstanding, respectively H (311,804 and 334,002 shares, respectively, reserved for conversion-
$ 1,448,635 - $ 1,470,479 cipreferred stock)
Premium on common stock 545,825 553,966 Common stock expense (47,461) (48,175)
Retained earnings used in the business 1,379,081 1,319,685 Total common shareholders' equity $ 3,326,080 $ 3,295,955 Cumulative preferred stock - $100 par value,6,747,484 shares authorized; -
3,905,470 and 3,909,419 shares outstanding, respectively .
p (1,539,827 shares unissued) i Redeemable solely at the option of the Company 380,283 380,683 Long term debt 3,825,296 3,830,596 Total Capitalization $ 7,531,659 $ 7,507,234 Other Non Current Liabilities Obligations under capitalleases 8 126,076 $ 141,043 Other postretirement benefits 37,143 48,567 Other 48,707 15,130-
$ 211,926 $ 204,740 Current Liabilities Short-term borrowings $ 39,489 $ 138,204 Amounts due within one year Long-term debt 19,214 19,649 Obligations under capitalleases 201,877- 197,877-
' Accounts payable 147,020 159,870 Property and general taxes 31,608 38,592 income taxes -5,304 16,839
. Accumulated deferred income taxes 32,625 63,046 Interest 60,214 66,388 Dividends payable 82,012 83,143 Payrolls 71,958 67,778 Fermi 2 refueling outage 1,267. 20,774 Other 97,215 103,193 789,803
- $ $ 975,353 -
Deferred Credits Accumulated deferred income taxes 5 2,014,821 $ 1,986,463 3 Accumulated deferred investment tax credits 346,379 359,205 ,
Other - 98,390 101.884 i e $ 2,459,590 $ 2,447,552 Commitments and Contingencies (Notes 2,3,4,9,12 and 13) ,
Total $10,992,978 $11,134,879 i .. :
(See accompanying Notes to Consolidated Financial Statements.)
nis nETROIT ED1 SON 3094 ANNUAL REP
1 fME DETROIT EDISON COMPW AND SUBSIDLAM c0MPANIES
.i Year Ended December 31
-1994 :1993' :1992 Operating Activities - .
l Net Income $ 419,909 . . $ . 521,903 _ $ 588,047 -
Adjustments to reconcile net income to net cash from .
l operating activities:- j
" Accretion income '
Depreciation and amortization (13,644)
-476,415-(44,130).
. 432,512
.(45,695) 423,407 -
]
' Deferred Fermi 2 depreciation, amortization and return net 77,363 21,929 (28,769)
' Deferred income taxes and investment tax credit - net 93,287- ~ 85,574 - 132,179 l
Fermi 2 refuelingoutage net (19,507) 17,856
' (6,084)
Other (31,091) 32,367, . 6,714 Changes in current assets and liabilities:
Customer accounts receivable and ur. billed revenues (505) 10,733 9,068 Other accounts receivable (7,593) (2,247) 17,815-
- Inventories , (1,774) 33,839 5,239 -
Accounts payable (13,858) 21,364 (24,930)
' Taxes payable (18,031) (6,499) (8,109). i Interest payable (6,174) .(19,769) (15,199) .
Other (2,189) 35,350- '9,807 '!
Net cash from operating activities' $ 952,608 $ 1,140,782 $1,063,490 Investing Activities Plant and equipment expenditures $(366,392) l S (396,407) $ (415,937)
Purchase ofleased equipment- .
(11,500) (2,402) - t Nuclear decommissioning trust funds (46,563) (5,346) . (4,482) - -
Non-utilityinvestments (12,843) 182 ' (614)
Changes in current assets and liabilities 5,042. 10,225: (7,897)
Other (11,537) (19,988)' 2,047 Net cash used for investing activities $(443,793) $ (413,736) $ (426,883)
Financing Activities Sale of cumulative preferred stock $ - $ 200,000' $ - -i Sale of general and refunding mortgage bonds 200,000 1,510,000- 350,000 Funds received from Trustees: Installment sales contracts and loan agreements 50,470 .76,510 348,960 Increase (decrease) in short term borrowings (98,715) 109.210 (9,000)
Redemption oflong term debt (258,034) (2,024,289) (957,859) ;
Redemption of preferred and preference stock - (164,158) (22,005) .
Premiums on reacquired long term debt and preferred and preference stock (11,563) (81,453) (16,556)' i Purchase of common stcck (59,855) - -
{
Dividends on common, preferred and preference stock (331,445) (330,792) (318,349) .
Other (2,622) -(20,417) . (9,225) :,
Net cash used for financing activities $(511,764) $ (725,389) L $ (634,034)
Net Increase (Decrease) in Cash and Temporary Cash Investments 8 ' (2,949) -$ 1,657 $ 2,573
~ Cash and Temporary Cash Investments at Beginning of the Period 11,071 9,414 - 6,841 i Cash and Temporary Cash Investments at End of the Period $ 8,122 $ 11,071 $ 9,414 Supplementary Cash Flow Information j Interest paid (excluding interest capitalized) $ 289,375 $ 346,542 $ 406,571 Income taxes paid 183,172 233,542 178,786 New capitallease obligations '
9,328 36,606 39,320 For purposes of the consolidated financial statements, the Company considers investments purchased with a maturity of three months or less to be temporary cash investments.
(See accompanying Notes to Consolidated Financial Statements.) t
. [] na Dmorr smson m mm urort
7tur pmoir roiEcoAPAAdo sessEMRY CoMPANN.S ,
, . j
..- Premium Retained:
Common Stock on Common Earnings .l F'*- ^
$10 Par Common : Stock- Usedin the -! *
'. Shares ' Value' ~ Stock Expense . Business-~
Balance at December 31,1991 146,983,123 $1,469,831 $553,463 $(48,150) . $ ' 872,428 !
Issuance of common stock on conversion of i
' convertible cumulative preferred stock, .
l j
5%% series 33,568 336 -261- ' (13)
Expense associated with preferred and preference stock redeemed (847)
Netincome ~
588,047 -
Cash dividends declared -l Common stock - $1,98 per share .(291,066). .;
Cumulative preferred and preference stock * (30,403):
l Balance at December 31,1992 147,016,691 $1,470,167 $553,724 $(48,163) $1,138,159 .;
. Issuance of common stock on conversion'of .;
convertible cumulative preferred stock, .
. 5%% series 31,227 312 242 (12) ;
I Expense associated with preferred and
- preference stock redeemed (6,634) ,
Net income 521,903 ,
Cash dividends declared . .
Common stock - $2,06 per share .
-(302,894).
Cumulative preferred and preference stock' (30,849) .}
Balance at December 31,1993 .
147,047,918 $1,470,479 $553,966 $(48,175) . $1,319,685 :
Issuance of common stock on conversion of *
. convertible cumulative preferred stock,
- 5%% series - 22,164 222 173 (9)
' Common stock reacquired from Detroit Edison Savings & Investment Plans, August 4,1994 (2,206,635) (22,066) (8,314) 723 (30,198)' i Net income 419,909 .!
Cash dividends declared l Common stock - $2.06 per share (300,676) l Cumulative preferred stock * (29,639)
]
Balance at December 31,1994 144,863,447 $1,448,635 $545,825 $(47,461) $1,379,081
- At established rate for each series.
3 t
i' i
(See accompanying Notes to Consolidated Financial Statements.)
THE DETRMT EMSON WH ANNUAL REPORT 21 a
c THE DETR017 MSC3 Com%n AND BCBSIDIAW COMr%NIES . ;
NOTE 1L DEFERRED FERMI 2 DEPRECIATION AND RETURN- ..
An MPSC authorized phase-in plan for Fermi 2, effective in Significant Accounting Policies January 198s, provided for gradual raducreases in the early years of plant operation rather than a one time substantial. .
' INDUSTRY SEGMENT- The Detroit Edison Company. rate increase which conventional ratemaking would provide. ,
(' Company") is a regulated public utility engaged in the SFAS No. 92, " Regulated Enterprises Accounting for Phase- -
gen: ration, purchase, transmission, distribution and sale of in Plans," permits the capitalization of costs deferred for electric energy. future recovery under a phase-in plan. Accordingly, the i REGULATION - The Company is subject to regulation by the Company recorded non-cash income of deferred depreciation .
Michigan Public Service Commission ("MPSC") and the and deferred return totaling $506.5 million through 1992. In ,
. Federal Energy Regulatory Commission ("FERC") with 1992, deferred depreciation was $4.5 million and deferred
. respect to accounting matters and maintains its accounts in return was' $13.8 million. Beginning in 1993 and continuing cccordance with Uniform Systems of Accounts prescribed by through 1998, these deferred amounts will be amortized to t
- these agencies. As a regulated entity, taking into account the operating expense as the cash recovery is realized through cost recovery restrictions contained in the December 1988 revenues. Amortization of these deferred amounts totaled end January 21,1994 MPSC rate orders and the provisions of $84.8 million in 1994 and $30.9 million in 1993.
the Energy Policy Act of 1992 (" Energy Act"), the Company DEFERRED FERMI 2 AMORTIZATION- The December
- m ets the criteria of Statement of Financiai Accounting 1988 MPSC rate order prwides for the Company's February '
Standards ("SFAS") No. 71, " Accounting for the Effects of 1990 purchase of Wolverine Power Supply Cooperative, Inc.'s i Certain Types of Regulation." This accounting standard ( Cooperative") ownership interest in Fermi 2 for $513 million ,
recognizes the ratemaking process which results in differ- to be treated as a regulatory asset with a 19-year principal :
ences in the application of generally accepted accounting amortization and associated interest of 8%, which is the principles between regulated and non regulated businesses. composite average of the Cooperative debt assumed by the Such differences concern mainly the time at which various Company at the time of the purchase. Since the straight line items enter into the determination of net income in order to amortization of the regulatory asset exceeds the revenues follow the principle of matching costs and revenues- provided for such amortization during the first 10 years of the PRINCIPLES APPLIED IN CONSOLIDATION- The recovery period, the Company is recording deferred amortiza-Consolidated Financial Statements include the accounts of all tion, a non cash item of income, totaling $67.2 million subsidiary companies, all of which are wholly-owned. through 1999. For 1994,1993 and 1992, the amounts :
deferred were $7.5 million, $9 million and $10.5 million, REVENUES - The Company records unbilled revenues for l resPectively. The deferred amounts will be amortized to electric and steam heating services provided after cycle billings through month-end. peratmg expense as the cash recovery is realized through revenues during the years 2000 through 2008.
PROPERTY, RETIREMENT AND MAINTENANCE, !
DEPRECIATION AND AMORTIZATION- Utility properties PROPERTY TAXES - The Company accrues property taxes t are recorded at original cost less regulatory disallowances. m nthly during the fiscal period of the applicable taxing authority. j In general, the cost of properties retired in the normal course of business is charged to accumulated depreciation. Expendi. INCOME TAXES- Deferred income taxes are provided for i tures for maintenance and repairs are charged to expense, temporary differences between book and taxable income to and the cost of new property installed, which replaces the extent authorized by the MPSC. For federalincome tax property retired, is charged to property accounts. The annual Purposes, the Company computes depreciation using acceler-provision for depreciation is calculated on the straight line ated methods and shorter depreciable lives. Investment tax remaining life method by applying annual rates approved by credits utilized which relate to utility property were deferred
. l the MPSC to the average of year-beginning and year-ending and are amortized over the estimated composite service life of l balances of depreciable property by primary plant accounts. the related property. See Note 6. ;
Provision for depreciation of Fermi 2, excluding decommis- ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION sioning expense, was 3.26% of average depreciable property ("AFUDC")- AFUDC, a non-operating non-cash item, is for 1994 and 2.63% for 1993 ans 7992, except for $300 defined in the FERC Uniform System of Accounts to include I million being amortized over 10 years commencing in 1989 "the net cost for the period of construction of borrowed fimds !
and $513 million being amortized over 19 years commencing used for construction purposes and a reasonable rate on other in 1990. See Note 3 and Deferred Fermi 2 Amortization funds when so used." AFUDC involves an accounting proce-below. Provision for depreciation of all other utility plant, as dure whereby the approximate interest expense and the cost ,
a percent of average depreciable property, was 3.2% for 1994, of other (common, preferred and preference shareholders' 3.4% for 1993 and 3.3% for 1992. equity) funds applicable to the cost of construction are transferred from the income statement to construction work in progress in the balance sheet. The cash recovery of
- AFUDC, as well as other costs of construction, occurs as Q wta m wa m mawar l
completed projects are placed in service and related depr: cia- LICENSING AND OPERATIIN- The Nucl:ar R:gulatory tion ia ruthorized to be recovered through customer rates. Commission ('NRC") maintairs jurisdiction over the licensing The Company capitalized AFUDC at 7.66% in 1994 and 9.65% and operation of Fermi 2.
in 1993 and 1992. Fermi 2 was out of service in 1994. On December 25,
[ ACCRETION INCOME- In 1988, the Company adopted 1993, the reactor automatically shut down following a SFAS No. 90, " Regulated Enterprises - Accounting for turbine-generator failure. Safety systems responded within
. Abandonments and Disallowances of Plant Costs," and design and regulatory specifications. The turbine suffered recorded indirect losses for Greenwood Unit No.1, for the mechanical damage, the exciter and generator incurred abandoned Greenwood Unit Nos. 2 and 3 and for a portion of mechanical and fire damage, and the condenser had some Fermi 2 as a discount (reduction) of the Company's invest- internal damage. The fire was contained in the turbine m:nt in these units. These net after tax losses, due to building, and there was no release of radioactive contami-discounting, originally totaled $198 million, which amounts aants during the event. The nuclear part of the plant was cre being restored to net income over the period 19881998 not damaged.
as the Company records a non cash return (accretion income) Major repairs have been completed and tests are continuing on its investment in these units. The Company recorded to balance and synchronize the unit. The Company expects
$8.9 million, $29.5 million and $30.2 million of net after tax that most repair costs related to returning the Fermi 2 accretion income in 1994,1993 and 1992, respectively, turbine-generator to service will be covered by insurance.
CAPITALIZATION- DISCOUNT, PREMIUM AND These costs are estimated to be in the $70 million to $80 EXPENSE - The discount, premium and expense related to million range. The Company has received partialinsurance the issuance of long-term debt are amortized over the life of payments of $25 million for property damage. In addition, the each issue. In accordance with MPSC regulations, the Company has received insurance payments of $66 million for discount, premium and expense, when related to debt re- replacement power costs. As a result of an investigation as deemed without refunding, are written off to other income and to the cause of the December 1993 mechanical failure, the deductions, and when related to debt redeemed with refund- Company will replace major Fermi 2 turbine components, ing, are amortized over the life of the replacement issue. Installation of new low pressure turbine sections is expected Capital stock premium and expense related to redeemed to add about 20 MW of generating capacity to the plant, preferred and preference stock are written off against re- which would expand the plant's capability by about 2%
tained earnings used in the business. In the interim period the Company will operate Fermi 2 FERMI 2 REFUELING OUTAGES - The Company recog- without the large seventh and eighth stage turbine blades nizes the cost of Fermi 2 refueling outages over periods in until the next refueling, which will reduce the Fermi 2 power which related revenues are recognized. Under this procedure, output to a range of about 800 MW to 900 MW. During the the Company records a provision for incremental costs lower output period, new turbine shafts and blades will be enticipated to be incurred during the next scheduled Fermi 2 manufactured for the plant's three low pressure turbines.
refueling outage. See Note 2. These major components will be installed during the next LEASES- See Note 9. refueling outage in 1996.
EMPLOYEES' RETIREMENT PLAN AND OTHER Replacing the major turbine components in 1996 is ex-POSTRETIREMENT BENEFITS- See Note 13. Pected to cost between $30 million and $40 million. These costs will not be covered by insurance. These costs will be capitalized and are expected to be recovered in rates because NOTE 2 such costs are less than the cumulative amount available under the cap on Fermi 2 capital expenditures, a provision of Fermi 2 the MPSC's December 1988 order. See Note 3.
INSURANCE - The Company insures Fermi 2 with property GENERAL - Fermi 2, a nuclear generating unit, began damage insurance provided by Nuclear Mutual Limited commercial operation in January 1988. Fermi 2 has a design and Nu&ar Ekch Insurana um&d ( E,L C
electrical rating (net) of 1,139 megawatts ("MW"). However, The NML and NEIL insurance pohcies provide $500 million of due to certain equipment limitations, Fermi 2 is rated at composite primary coverage (with a $1 million deductible) and 1,116 MW until modifications can be made to achieve the
$2.25 billion of excess coverage, respectively, for stabiliza-design rating. This unit represents approximately 28% of tion, decontammation and debris removal costs and repair total assets,11% of total operation and maintenance ex-and r replaument of propety. Acordingh, de combed penses and 11% of summer net rated capability.
limits provide total property damage insurance of $2.75 MPSC rate orders issued in April 1986, January 1987, billion.
December 1988 and January 1994 contain provisions with I respect to the recovery of Fermi 2 costs. See Note 3 for a discussion of Fermi 2 rate matters and the MPSC's treatment of Fermi 2 project costs of $4.858 billion.
THE DETROIT ENSON 1904 MUA1. REPORT
TM DETROIT EDis0N COMPMY DD SUBSIDIARY COMMIES The Company maintains an insurance policy with NEIL amortization in the Consolidated Balance Sheet; Earnings on providing for extra expenses, including certain replacement the external decommissioning trust fund assets during 1994, power costs necessitated by Fermi 2's unavailability due to 1993 and 1992 were $1.3 million, $1.2 million and $1.0 cn insured event. This policy, which has a 21 week waiting million. respectively. Earnings on the external low level period, provides for three years of coverage, radioactive waste disposal trust fund assets were $0.2 million * '
. Under the NML and NEIL policies, the Company could be in 1994. Trust fund earnings are recorded as an investment :j liable for maximum retrospective assessments of up to with a corresponding credit to accumulated depreciation and ,
cpproximately $28 million per loss if any one loss should amortization. Trust fund assets are assumed to earn an after- j exceed the accumulated funds available to NML or NEIL. tax rate of return of 7%, compounded annually. j As required by federal law, the Company maintains $200 The external trust fund for low level radioactive waste !
million of public liability insurance for a nuclear incident. disposal costs was initially established by charges to other i Further, under the Price-Anderson Amendments Act of 1988, operation expense in the Consolidated Statement of Income of l' deferred premium charges of $75.5 million could be levied $1.4 milli n in 1993 and $5.9 million in 1992.
against each licensed nuclear facility, but not more than $10 At December 31,1994, the Company had a reserve of $51.5 -
million per year per facility. On December 31,1994, there million for the future decommissioning of Fermi 2 and $10.8 7 were 110 licensed nuclear facilities in the United States. million for low level radioactive waste disposal costs. These Thus, deferred premium charges in the aggregate amount of reserves are included in accumulated depreciation and approximately $8.3 billion could be levied against all owners amortization in the Consolidated Balance Sheet with a like of licensed nuclear facilities in the event of a nuclear incident. amount deposited in external trust funds.
Accordingly, public liability for a single nuclear incident is The Company also had a reserve of $14.2 million at currently limited to approximately $8.5 billion. December 31,1994 for the future decommissioning of Fermi 1 DECOMMISSIONING - The NRC ha= jurisdiction over the an experimental nuclear unit on the Fermi 2 site that has decommissioning of miclear power plants. An NRC rule been shut down since 1972. This reserve is included in other requires decommissioning funding based upon a site specific deferred credits in the Consolidated Balance Sheet with a like estimate or a predetermined NRC formula. Using the NRC's amount deposited in an external trust fund. The Company formula, the Company estimates that the cost of decommis- estimates that the cost of decommissioning Fermi 1 in the sioning Fermi 2 when its license expires in the year 2025 is year 2025 is $19 million in current 1994 dollars and $114
$489 million in current 1994 dollars and $3 billion in future mi]Iion in future 2025 dollars.
2025 dollars. The assumed annualinflation rate used t The staff of the Securities and Exchange Commission has increase the cost to decommission is 6%, compounded questioned certain of the current accounting practices of the annually. electric utility industry regarding the recognition, measure-The MPSC and FERC regulate the recovery of costs of ment and classification of decommissioning costs for nuclear decommissioning nuclear power plants. A January 1994 generating units in the financial statements of electric MPSC order authorized a $500 million external trust fund in utilities. In response to these questions, the Financial 1994 dollars to finance the decommissioning of Fermi 2. The Accounting Standards Board has agreed to review the MPSC's January 21,1994 rate order includes an increase in accounting for removal costs, including decommissioning. If rates for the decommissioning of Fermi 2, which the Company current electric utility industry accounting practices for such believes will be adequate to fund the estimated cost of decommissioning are changed: (1) annual provisions for decommissioning using the NRC formula. See Note 3. The decommissioning could increase, (2) the estimated cost for order approves a decommissioning surcharge on customer decommissioning could be recorded as a liability rather than bills under which the Company is currently collecting approxi- as accumulated depreciation, and (3) trust fund income from mately $31.4 million annually, including $3.5 million for the the external decommissioning trusts could be reported as recovery of low level radioactive waste disposal. The FERC investment income rather than as a reduction to decommis- .
has approved the recovery of decommissioning expense in sioning expense.
~
base rates, most recently in its June 1993 order. The Energy Act provided for a fund to be established for The Company has established external trust funds to hold the decommissioning and decontamination of existing United decommissioning and low level radioactive waste disposal States Department of Energy (* DOE") uranium enrichment ,
funds collected from customers. During 1994,1993 and facilities. Utilities with nuclear units are required to pay for a 1992, the Company collected $26.9 million, $3.7 million and portion of the cost by making annual payments into the fund
$3.4 million, respectively, from customers for decommission- over a 15 year period. The law directs state regulators to ing Fermi 2. Also, in 1994, the Company collected $3.3 treat these payments as a necessary and reasonable cost of million from customers for low level radioactive waste fuel and, accordingly, the Company has recorded a regulatory disposal. Such amounts were recorded as components of asset and liability in the Consolidated Balance Sheet to reflect depreciation and amortization expense in the Consolidated these costs.
Statement of Income and accumulated depreciation and C m nmm msom uwam
c NUCLEAR FUEL DISPOSAL COSTS - The Company has a three largest customers (Chrysler Corporation, For' d Motor _
contract with the DOE for the future storage and disposal of Company and General Motors Corporation) without impacting '
spent nuclear fuel from Fermi 2. Under the terms of the the intes or service of other customers. Annual revenue
, contractithe Company makes quarterly payments to the DOE reductions will range in amounts from about $30 million in i I
based upon a fee of 1 mill per kilowatthour applied to the 1995 to $50 million for 1999 through 2004. The Company 1 - Fermi 2 electricity generated and sold. The spent nuclear - expects to offset these reductions by further reducing operat .
, fuel disposal cost is included as a component of the ing expenses. ,
Company's nuclear fuel expense. The DOE has stated that it In August 1994, the Company filed an application with the '!
will be unable to store spent nuclear fuel at a permanent 'J MPSC seeking approval of the special manufacturing con-
- repository until after 2010. However, the DOE and utilities tracts. The Commission scheduled expedited hearings in this with nuclear umts are pursuing other mterim storage options. case, which were completed in December 1994. An order The Company estimates that existing temporary storage approving these long-term contracts is expected to be issued '
capacity at Fermi 2 will be sufficient until the year 2000, or in March 1995, i until 2015 with the expansion of such storage capacity. ;
FERMI 2 - The December 1988 MPSC order established, for the period January 1989 through December 2003, (1) a cap on .
NOTE 3 Fermi 2 capital additions of $25 million per year, in 1988 dollars adjusted by the Consumers Price Index (" CPI"),
Rate Matters cumulative, (2) a cap on Fermi 2 non fuel operation and maintenance expenses adjusted by the CPI and (3) a capacity 1 The Company is subject to the primary regulatory jurisdiction factor performance standard based on a three-year rolling i of the MPSC, which, from time to time. issues its orders average commencing in 1991. For a capitalinvestment of !
pertaining to the Company's conditions of service, rates and $200 million or more (in 1988 dollars adjusted by the CPI), !
recovery of certain costs including the costs of generating the Company must obtain prior MPSC approval to be included i facilities. MPSC orders issued in Deceraber 1988 and on in rate base. See Note 1 - Regulation. ,
January 21,1994 are currently in effect with respect to the Under the cap on Fermi 2 capital expenditures, the cumula-Company's rates and certain other revenue and operatm, g- '
tive amount available totals $50 million (in 1994 dollars) at related matters. December 31,1994. Under the cap on non-fuel operation and i On January 21,1994, the MPSC issued an order reducing maintenance expenses, the cumulative amount available totals the Company's rates in the amount of $78 million annually. $31 million (in 1994 dollars) at December 31,1994.
The rate reduction was determined by using a 1994 test year I Under the capacity factor performance standard, a disallow-and an overall rate of return of 7.66%, mcorporatmg an 11% !
ance of net incremental replacement power cost will be return on common equity and a capital structure comprised of !
imposed for the amount by which the Fermi 2 three-year 40% common equity,55.01% long term debt and 4.99% rolling average capacity factor is less than the greater of preferred stock. The MPSC order meludes the recovery of either the average of the top 50% of U.S. boiling water I (1) mereased Fermi 2 decommissioning costs of $28.1 million reactors or 50% For purposes of the capacity factor perfor-annually, which includes the recovery of low-level radioactive mance standard, the capacity for Fermi 2 for the period i waste disposal costs, (2) full recovery of 1994 other post- 1989-1993 shall be 1,093 MW, and 1,139 MW for each year retirement benefit costs plus recovery and amortization of the thereafter until December 31, 2003.
1993 deferred cost (see Note 13), (3) costs associated with As discussed in Note 2, Fermi 2 was out of service in 1994 the return to rate base of Greenwood Unit No.1 (4) Fermi 2 phase-in plan revenue requirements of $70.8 million in 1994 and will operate at a reduced power output until the installa- t tion of major turbine components during the next refueling '
. and (5) costs associated with a three-year $41.5 million
. ($7.6 million in 1994, $14.9 million in 1995 and $19 million outage in 1996. As a result, the three-year rolling average in 1996) demand-side management program. In keeping with capacity factor will be unfavorably affected in 1994-1997.
- the MPSC's recognition of the need for industrial customers The plant's capacity factor was 0%,86.5% and 76.6% during }
- to be competitive, the January 1994 rate reduction was 1994,1993 and 1992, respectively, or a three-year rolling allocated among the various classes of customers approxi. average of 54.4% in 1994. The average capacity factor for mately as follows: Industrial-$43 million, Commercial-$24 the top 50% of U.S. boiling water reactors for the 36-month million, Residential-$10 million and Governmental-$1 million. Period ending September 1994, was 79.2%. The Company (
The order was effective for service rendered on and after has accrued for the Fermi 2 capacity factor performance January 22,1994 and is the subject of various appeals before standard disallowances that will be imposed during the period ;
the Michigan Court of Appeals. 1994 1997-
- INDUSTRIAL RATES-In August 1994, the Company In accordance with April 1986 and December 1988 MPSC entered into 10-year special manufacturing contracts which, if rate orders, ratemaking treatment of the Company's Fermi 2 l approved by the MPSC, will lower costs for the Company's project costs of $4.858 billion is as follows: (1) $3.018 billion THE DETROIT EDISON 1994 ANNUAL REPORT 2!
THE DE7korr EDISON coMPA2T AND stT4slDIARY COMPANIES in r;te hae with recovery and return, (2) $300 million plant's operation and maintenance expenses and capital c.mortized over 10 years with no return, (3) $513 million improvements. The Company is obligated to provide MPPA [
canortized over 19 years with associated interest of 8% and with backup power when either unit is out of service.
f4) $1.027 billion disallowed and written off by the Company The Company was required to purchase MPPA's capacity -
m 1988. and energy entitlement through 1994. Such purchases were .
~
At December 31,1994, the Company's net plant investment 80% for 1992,20% for 1993 and 10% for 1994. The cost for >
in Fermi 2 was $3.1 billion ($3.9 billion less accumulated the buyback of power was based on MPPA's plant-related -
depreciation and amortization of $0.8 billion). investment, interest costs incurred by MPPA on their original Under the December 1988 MPSC order,if nuclear opera. Project financing plus 2.5%, and certain other costs such as tions at Fermi 2 permanently cease, amortization in rates of depreciation and operation and maintenance expenses.
the $300 million and $513 million investments in Fermi 2 Buyback payments to MPPA were $50.9 million, $12.5 million would continue and the remaining net rate base investment and $6.0 million for 1992,1993 and 1994, respectively.
amount shall be removed from rate base and amortized in LUDINGTON PUMPED STORAGE- Operation,6ntenance
- rates, without return, over 10 years with such amortization and other expenses of the Ludington Pumped Stoage Plant not to exceed $290 million per year. In this event, ("Ludington") are shared by the Company and Consumers unamortized amounts of deferred depreciation and deferred Power Company (" Consumers") in proportion to their respec-return, recorded in the Consolidated Balance Sheet under the tive interests in the plant. See Note 12 for a discussion of phase-in plan prior to the removal of Fermi 2 from rate base, litigation related to Ludington.
will continue to be amortized, with a full return on such unamortized balances, so that all amounts deferred are recovered during the period ending no later than December NOTE 5 ,
31,1998. The December 1988 and Januaiy 21,1994 rate ,
orders do not address the costs of decommissioning if opera. Sale OfAceOunts Recew.able and Unbilled tions at Fermi 2 prematurely cease. Revenues The Company has and believes it will continue to operate The Company has an agreement providing for the sale and under the terms of all applicable MPSC orders with n assignment, from time to time, of an undivided ownership significant adverse effects as a result of any cost recovery interest in $200 million of the Company's customer accounts restrictions contained therem, .
receivable and unbilled revenues.
At December 31,1994 and 1993, customer accounts NOTE 4 receivable and unbilled revenues in the Consolidated Balance Sheet have been reduced by $200 million reflecting the sale. '
Jointly-Owned Utility Plant All expenses associated with the program are being charged ,
to other income and deductions in the Consolidated Statement The Company's portion of jointly owned utility plant is as of Income, follows:
Ludington Pumped NOTE 6 Belle River Storage In service date 1984 1985 1973 Undivided ownership interest
- 49%
Investment / millions) $1,026.6 $174.3 Total income tax expense as a percent of income before tax Accumulated depreciation (millions) $ 297.8 $ 67.1 varies from the statutory federal income tax rate for the
- The Company's undivided ownership interest is 62.78% in Unit following r:asons: i No.1, 81.39% of the portion of the facilities applicable to Belle Percent ofIncome Before Tax .
River used jointly by the Belle River and St. Clair Power Plants, 49.59% in certain transmission lines and, at December 31,1994. 1994 1993 1992 75% in facilities used in common with Unit No. 2. Statutory income tax rate 35.0 % 35.0% 34.0%
Deferred Fermi 2 depreciation BELLE RIVER- The Michigan Public Power Agency and return 3.5 1.1 (0.6)
(*MPPA") has an undivided ownership interest in Belle River he'p*reIiatN Unit No, I and certain other related facilities MPPA is Other - net (3.2) (1.6) (0.2) entitled to 18.61% of the capacity and energy of the entire Effective income tax rate 38.9% 36.7% 34.6% I plant and is responsible for the same percentage of the M THE MrR0rr EN5ON IW4 ANKAL. kEPORr
Components of income taxes were applicable to the following: In Janua2y 1993, the Comp;.ny adopted SFAS No.109, I 1994 1993 1992
" Accounting for income Taxes." SFAS No.109 requires an I asset and liability approach for financial accounting and
" reporting for income taxes. At January 1,1993, the Company
- Oper tingexpenses
+ Current $195,848 $243,480 $204,346 recorded an increase in accumulated deferred income tax liabilities of $740 million representing (a) the tax effect of Deferred - net Borrowed funds component temporary differences not previously recognized and (b) the of AFUDC (1,081) (1,081) (1,081) recomputing of its tax liability at the current tax rate. The Depreciation and amortization 52,873 74,567 70,864 liability increase was offset by a regulatory asset of equal Property taxes (23,640) (9,590) 3,952 value, titled " Recoverable Income Taxes" in the Consolidated
' 4 '5 Balance Sheet. This regulatory asset represents the future e ap and expenses (1,998) (1,592) (1,692) revenue recovery from customers for these taxes as they ,
Nuclear fuel 14,645 (1,543) 6,313 become payable, with no effect on net income. In August Fermi 2 performance reserve (10,850) - -
1993, the Omnibus Budget Reconciliation Act of 1993 Reacquired debt losses 43,162 - -
increased the federal corporate income tax rate from 34% to Indirect construction costs (1,268) (1,268) (1,268) 1,380 (3,060) 35% retroactive to January 1,1993. As a result, the Com-Uncollectible accounts (700) .
Contributions in aid of Pany recorded (1) an increase of $88.1 milh.on m accumulated construction (6.898) (3,756) (4,877) deferred income tax liabilities, offset by a corresponding Fermi 2 refueling outage 6,798 (6,136) 2,068 increase in " Recoverable Income Taxes," and (2) an increase Shareholder value of $10.4 million in income tax expense.
improvement plan 2,244 559 (2,256)
Coal contract buyouts (401) (1,411) (1,918) At December 31,1994, " Recoverable Income Taxes" totaled Injuries and damages (1,071) (5,855) -
$663.1 million (deferrals of $828.1 million in 1993 less Steam purchase reserve -
(3.850) -
amortization of $108.2 million in 1994 and $56.8 million in Employee reorganization 4,200 (4,200) 1993)-
expenses -
Pensions and benefits 10,130 4,925 3,708 Deferred income tax assets (liabilities) are comprised of the Other (590) 1.073 (6,110) following at December 31:
87,635 68.216 115.180 1994 1993 Investment tax credit - net Utilized 2,612 250 (417) (Thousands)
Amortized (15,438) (14.477) (16,351) Property $(2,070,943) $(2,023,328)
(12,826) (14,227) (16,768) Fermi 2 deferred depreciation and return (170.668) (207,724)
Total 270,657 297,469 302.758 (52,913) (76,553)
Property taxes Other income and deductions Investment tax credit 187,000 195,000 Current (8.083) (7,712) (5,464) Reacquired debt losses (43,162) -
Deferred - net (28) (882) (1,644) Other 103.240 63,096 Total (8.111) (8.594) (7,108) $(2,047,446) $(2,049,509)
Disallowed plant costs and Deferred income tax liabilities $(2,566,578) $(2,590,064)
Cu e (18,384) (18,405) (19,835) 519,132 540,555 Deferred mcome tax assets Deferred - net 17,863 17,863 19,874 $(2.047,446) $(2,049,509)
Disallowed plant costs Accretion income 4,773 14.604 15,537
- Total 4.252 14.062 15,576
$266,798 $302,937 $311,226 in 1993, the MPSC issued an order, in a generic proceed-Totalincome taxes ing, authorizing accounting procedures consistent with SFAS
- No.109 and providing assurance that the effects of previously The Fermi 2 phase-in plan required the Company to record flowed through tax benefits will continue to be allowed rate additional deferred income tax expense related to deferred recovery.
depreciation totaling $33.5 million, with this amount amor~ The federalincome tax returns of the Company are settled tized to income over the six-year period ending December 31, through the year 1988. The Company believes that adequate 1998. provisions for federalincome taxes have been made through December 31,1994.
rn amorr smse mm mort E
THE DETR0!T EDI501 COMPANY MD srb 5fDIAW COMPANIES NOTE 7 On August 4,1994, the Company purchased 2,206,635 ,
' shares of its $10 par value Common Stock at a price of
" Common Stock and Cumulative Preferred $27.125 per share, totaling $59.9 million, from the trustee of
- DidPreference Stock the Detroit Edison Savings & Investment Plans. These ,
shares were canceled and reverted to the status of authorized .
At December 31, the outstanding Cumulative Preferred Stock '
but ur. issued shares.
redeemable solely at the option of the Company was: .
Date of Issuance 1994 1993 NOTE 8 '
- """ Short-Term Credit Arrangements and -
cumulative ereferred Stocu 5%% Convertible Series, Rorrolvings 55,470 and 59,419 shares respectively Oct.1967 $ 5,547 $ 5,942 As described below, at December 31,1994, the Corniny had 7.68% Series,500,000 shares Mar.1971 50,000 50,000 7.45% Series,600,000 shares Nov.1971 60,000 total short term credit arrangements of approximately $405 ,
60.000 .
7.36% Series,750,000 shares Dec.1972 75,000 75,000 nullion. At December 31,1994 and December 31,1993, 7.75% Series,1,500,000 shares Feb.1993 150,000 150,000 $39.5 million and $138.2 million of short-term borrowings ~
7.74% Series,500,000 shares Apr.1993 50,000 50,000 were outstanding with weighted average interest rates of Preferred stock expense (10.264) (10.259) 6.2% and 3.4%, respectively.
Tetal Cumulative Preferred Stock $380,283 $380,683 The Company had bank lines of cmdit of $200 million, all of which had commitment fees in lieu of compensating The Convertible Cumulative Preferred Stock,5%% Series, balances. Commitment fees incurred in 1994 for bank. lines of is convertible by the holder into Common Stock. The conver- credit were approximately $0.3 million. The Company uses ,
sion price was $17.79 per share at December 31,1994. The bank lines of credit to support the is,suance of commercial number of shares converted during 1994,1993 and 1992 was Paper and bank loans. All borrowings are at prevailing money ,
3,949,5,563 and 5,978, respectively. The number of shares market rates which are below the banks' prime lending rates.
of Common Stock reserved for issuance upon conversion and in May 1993, FERC issued its order authorizing the the conversion price are subject to fmther adjustment in continuation of the Company's $1 billion of short term certain events. This Series may be redeemed at any time in borrowing authority. This an:.hority will be in effect through whole or in part at the option of the Company at $100 per May 31,1995.
share, plus accrued dividends. The Company has a nuclear fuel financing arrangement -
The Company's 7.68% Series,7.45% Series and 7.36% [ heat purchase contract) with Renaissance Energy Company Series Cumulative Preferred Stock are redeemable solely at (" Renaissance"), an unaffiliated company. Renaissance may the option of the Company at a per share redemption price of issue commercial paper or borrow from participating banks on
$101, plus accrued dividends, the basis of promissory notes. To the extent the maximum The Company's 7.75% Series and 7.74% Series Cumulative am unt of funds available to Renaissance (cmTently $400 Preferred Stock are redeemable solely at the option of the milli n) is not needed by Renaissance to purchase nuclear Company at a per share redemption price of $100 (equivalent fuel, such funds may be loaned to the Corapany for general to $25 per Depositary Share), plus accrued dividends, on and corporate purposes pursuant to a separate Loan Agreement.
after April 15,1998 and July 15,1998, respectively.
M em 31,1994, approximately $205 million was available to the Company under such Loan Agreement. See Apart from MPSC approval and the requirement that Note 9 for a discussion of the Company's heat purchase -
common, preferred and preference stock be sold for at least par value, there are no legal restrictions on the issuance of contract with Renaissance. ;
additional authorized shares of such stock. Renaissance entered into five-year m. terest rate swap ,
agreements, guaranteed by the Company, in December 1990, At December 31,1994, there was no outstanding Cumula- with five banks for a nominal amount of $125 taillion. These tive Preferred Stock subject to mandatory redemption. agreements are used to reduce the potentialimpact of '
At December 31,1994, the Company had Cumulative increases in interest rates on the variable rate debt by Preference Stock of $1 par value,30,000.000 shares autho. exchanging the receipt of variable rate amounts for fixed rized with 30,000,000 shares unissued. interest payments at rates ranging from 8.12% to 8.145%
over the life of the agreements. The differential to be paid or '
received is recognized as an adjustment to the interest component included as part of nuclear fuel expense.
THE DEThotT ENSON luH ANEAL REPORT
NOTE 9 '- _
Long term debt outstanding at December 31 was:
g g' . Interest Rate 1994 1993
. Future minimum lease payments under long term non. (Thousands) ,
General and Refunding cancellable leases, consisting of nuclear fuel ($221 millica compated on a projected uDits of production basis), lake e R, e 2/1/96 6 % $ 100,000 $ 100,000 '
- vessels ($48 million), locomotives and coal cars ($149 trillion), Series S, due 10/1/98 6.4 150,000' 150.000
, office space ($28 million) and computers, vehicles and other - 1989 Series A, due 7/1/19 9% - 168,285 1990 Series A, due 3/31/20 7.904 .163,254 169,533 ;
equipment ($6 million) at December 31,1994 are as follows:
1990 Series B, due 3/31/16 7.904 209,352 218,868 i (M/Illons) (Mlllions) 1990 Series C, due 3/31/14 8.357 68,380 71,799 l "4 ,
1992 Series D, due 8/1/02 ,
3 Igg $103 1998 $ 41 290,000 300,000 and 8/1/22 7.605*
'1996' 99 1999 23 50,000 50,000 1992 Series E, due 12/15/99 6.83
/1997 61- Remaining years 125 1993 Senes B, due I?/15/99 6.83 50,000 50,000 4 Total $_45_2, 1993 Series C, due 1/15/03 ,
and 1/13/23 7.939' 225,000 225,000 .
1993 Series D, due 4/1/99 6.45 100,000 100,000 :
1993 Series E, due 3/15/00, The Cempany has a heat purchase contract with Renais.
1Do3 y . since whr.h provides for the purchase by Renaissance for the 3f93 geri 0 due 51/97 '
l Company ot up to $400 million of nuclear fuel, subject to the and 5/1/01 5.921* 225,000 225,000 continued avellability of funds to Renaissance to purchase 1993 Series J, due 6/1/18 7.74 270,000 300,000 such fuel Title to the nuclear fuel is held by Renaissance. Less:
Unamortized net discount (182) (1,906)
- The Company makes quarterly payments under the heat Amount due within one year (19,214) (19.214) purchase contract based on the consumption of nuclear fuel l
$2,271,590 $2.507.365 for the generation tef electricity. Renaissance's investment in Remarketed Notes nucle 2r fuel was $1V3 million and $184 million at December r
31,1994 and 1993, i espct tively. The increase in 1994 from ,unt of G e d 1993 of $9 milhon m:ludet purchases of $3 million and Refunding Mortgage Bonds capitalized interest cl $6 nu' lion. 1193 Series II, due 7/15/28 5.839 " $ 50,000 $ 50,000 i 103 Series K, due 8/15/33 - 160,000 160,000 Under SFAS No. 71, amor *.ization of leased assets is 4%"_ l 6.708 200,000 -
modified so that the wtal of interest on the obligation and l994hnes C, due 8/15/34 amortization of the leated at set is equal to the rental expense I Unamortized net discount (177) (181) allowed for ratemaking p:trposes. For ratemaking purposes, s 409,823 $ 209.819 the MPSC has treated all laa ses as operating leases. Net Tax Exempt Revenue Bond income is not affected by capitalization of bases. Obligations Secured by corresponding Rental expenses for both capital and operating leases were
$49 million (including $8 millic 1 for nuclear fuel), $126 [fu n Mo gage nds million (including $89 million fo; nuclear fuel) and $108 Installment Sales Contracts, million (including $70 million for luclear fuel) for 1994,1993 due 9/1/05 - 9/1/24 7.32' $ 302,155 $ 306,440 Le55:
and 1992, respectively.
Unamortized net discount (279) (293) -i Funds on deposit with Trustee (1601 Amount due within one year -
(435) 5 $ 301.876 s 305.552 ,
fgg. Term Debt Loa" Asreeme"t5-due 7/15/08 8/1/24 6.73' S 487,495 5 467,025 The Company's 1924 Mortgage and Deed of Trust (" Mort- k'(ortized pn net discount (73) -
gage'), the lien of which covers substantially all of the $ 487,422 3 467,025 Company's properties, provides for the issuance of additional bonds. At December 31,1994, approximately $3.1 billion U"5eNent 1,s Sales contracts, principal amount of Mortgage Bonds could have been issued due 12/15/15 - 12/1/19 8.95' s 314.060 $ 290.360 on the basis of property additions, combined with an earnings Loan Agreements, due 4/15/10 10/1/24 5.02' S 40.525 $ 50,475 test provision, assuming an interest rate of 8.9% on any such additional Mortgage Bonds. An additional $1.2 billion $1.143.883 $1,113.412 principal amount of Mortgage Bonds could have been issued Total Long Term Debt $3.825.296 $3.830.596 on the basis of bond retirements. , Weighted average interest rate at December 31,1994.
" Variable rate at December 31,1994.
m omorrEmsos m AMEWORr G .
4
P
^
ru omort torson connan wnman comuits 1 i
- In 1995,1996,1997,1998 and 1999,long4erm debt 1994 1993 maturities consist of $19 million, $119 million, $144 million, Carrymg Fair Carrying Fair ,
$169 million and $219 million, respectively. Amount Value Amount Value in June 1992, the Company entered into a three-year (musands) interest rate swap agreement matched to a $31 million cash and temporary .
- t'ariable rate tax exempt revenue bond. This agreement is cash investments s 8,122 s 8,122 s 11,071 s 11,071 '!
used to reduce the potential impact of increases in interest Other investments 15,168 15,168 2,809 2,809 . '
Nuc d rates on the variable rate debt by exchanging the receipt of 76,492 29,929 31,290 sio gt sf ds 76.492 variable rate amounts for fixed interest payments at a rate of Sale of accounts t 4.32% over the life of the agreement. The differential to be receivable and I p0id or received is recognized as an adjustment to interest unbilled revenues 200,000 200,000 200,000 200,000 expense related to the debt, Cumulative preferred stock 390,547 336,249 390,942 396,154 . :
Long term debt 3,844,510 3,511,459 3,850,405 4,106,216 i Short-term borrowings 39,489 39,489 138,204 138,204 !
NOTE 11 Customer surety .
Fsir Value OfFinancialInstruments The following methods and assumptions were used to esti- ,
mate the fair value of each class of financialinstruments for NOTE 12 i
which it is practicable to estimate that value:
Cash and temporary cash investments /Short-term Commitments GNd COnlingcNCitS Tl ng amount approximates fair value because of the COMMITMENTS - The Company has entered into purchase short maturity of those instruments. commitments of approximately $638 million at December 31, ,
1994, which m, eludes, among other things, the costs of major Other investments turbine components to be replaced at Fermi 2 and line The fair value of the Company's other investments was not construction and clearance costs. The Company also has estimated since they are not material and because some are entered into substantial long term fuel supply and transporta-already recorded at fair value, tion commitments.
Nuclear decommissioning trust funds The Company has an Energy Purchase Agreement (" Agree-The fair value of the Company's nuclear decommissioning ment") for the purchase of steam and electricity from the tmst funds is estimated based on quoted market prices for Detroit Resource Recovery Facility. Under the Agreement, securities and carrying amount for the cash equivalents. the Company will purchace steam through the year 2008 and Sale of accounts receivable and unbilled revenues electricity through June 30, 2024. Purchases of steam and The carrying amount approximates fair value because of the electricity were $21.3 million, $23.6 million and $24.5 million short maturity of accounts receivable and unbilled revenues for 1992,1993 and 1994, respectively, and annual purchase pledged for sale, commitments are approximately $30.0 million, $33.2 million,
$35.8 million, $37.0 million and $38.3 million for 1995,1996 Cumulative preferred stock The fair value of the Company's preferred stock outstanding 1997,1998 and 1999, respectively.
is estimated based on the quoted market prices for the same CONTINGENCIES-In 1986, the Michigan Attorney General or similar issues. and the Michigan Natural Resources Commission filed a state ,
Long tenu debt lawsuit against the Company and Consumers as co-owners of , , ,
The fair value of the Company's long term debt is estimated Ludington for claimed aquatic losses. The Company is a 49% -
based on the quoted market prices for the same or similar co-owner of Ludington. The suit, which alleges violations of ,
issues or on the current rates offered to the Company for debt the Michigan Environmental Protection Act and the common i of the same remaining maturities. law for claimed aquatic losses, seeks past damages (including ,
interest) of approximately $148 million and future damages l Customer surety deposits (from the time of the filing of the lawsuit) in the amount of ,
Surety deposits, including interest as specified by MPSC approximately $89,500 per day (of which 49% would be !
regulation, are returned to customers. The carrying amount applicable to the Company). :
approximates fair value. 1 In 1986, two emironmental organizations requested FERC '
The estimated fair values of the Company's financial to withdraw the Ludington license or provide some mitigation anstruments at December 31, all of which are held or issued for fish mortality. In April 1989, Consumers and the Com-for purposes other than trading, are as follows: pany were ordered by the FERC to install a temporary barrier net around the plant to protect fish on an interim basis until THE DETH0!T EDiW loot ANAL MPORT 1
permanent measures could be developed. A net has been in program of Detroit River sediment sampling and analysis oper'. tion for six seasons and the companies have proposed requested by the MDNR. At this time, it is impossible to that it be utilized as part of the permanent solution. predict what impact, if any, this matter will have upon the C On October 5,1994, the Company and all other parties to Company.
, the state action and the FERC proceeding, except certain The Energy Act became effective in October 1992. While Indian tribes, reached a tentative settlement. The settlement the Company is unable to predict the ultimate impact of this j
- agreement is subject to FERC and MPSC approval. (The legislation on its operations, the Company expects that, over '
Michigan Supreme Court is holding this matter in abeyance time, non-utility generation resources will be developed which pending approval of a settlement.) The settlement provides will result in greater competition for power sales.
for damages and use of the net as a permanent solution. The In addition to the matters reported herein, the Company is
< net present value of the Company's portion of the damages is involved in litigation and environmental matters dealing with i estimated to be approximately $30 million which will be paid the numerous aspects of its business operations. The Com- }
over a 24 year period, including $10 million to enhance pany believes that such litigation and the matters discussed recreational opportunities on Company-owned and donated above will not have a material effect on its financial position property. At December 31,1994, the Company has recorded a or results of operations.
regulatory asset and liability of $7 million for past damages, See Notes 2 and 3 for a discussion of contingencies related t
. pending approval by the FERC and MPSC.
to Fermi 2.
In January 1989, the Environmental Protection Agency
(" EPA") issued an administrative order under the Comprehen-sive Environmental Response, Compensation and Liability Act NOTE 13 ordering the Company and 23 other potentially responsible parties ("PRPs") to begin removal activities at the Carter Employees' Retirement Plan and Other -
Industrials superfund site. In June 1993, a Consent Decree P0stretirementsenefits was entered by the U.S. District Court for the Eastern District of Michigan. It included a provision for the payment of past EMPLOYEES' RETIREMENT PLAN- The Company has a costs incurred by the EPA of which the Company's share was trusteed and non-contributory defined benefit retirement plan approximately $1.3 million, paid in June 1993. The Company (" Plan") covering all eligible employees who have completed has recorded a liability of $8.4 million, which amount was six months of service. The Plan provides retirement benefits charged to other operation expense in the Consolidated based on the employee's years of benefit service, average final Statement of Income in 19891992, as its anticipated cost of compensation and age at retirement, The Company's policy is the clean up in 1995 1997. On July 7,1994, the PRPs in this to fund pension cost calculated under the projected unit credit matter petitioned the EPA to consider amending the clean up actuarial cost method, provided that this amount is at least plan to permit landfill disposal of certain contaminated soil equal to the minimum fitnding requirement of the Employee and on December 12,1994, the EPA issued a public notice of Retirement income Security Act of 1974, as amended, and is its intent to amend the Consent Decree to incorporate the not greater than the maximum amount deductible for federal ,
proposed change in the clean up plan. Should the procedure income tax purposes. Contributions were made to the Plan be approved, the Company's portion of the clean up costs will totaling $23.7 million in 1992, $29.4 million in 1993 and be reduced by approximately $3 million. There is, however, $45.8 million in 1994. e the possibility that EPA may, through subsequent proceed-Net pension cost included the following components:
ings, reqmre a clean-up of the sewer and sewer outfall -
1994 1993 1992 emptying into the Detroit River.
In August 1993, the Company, along with approximately 28 Service cost benefits other parties, received a " Notice of Demand" from the Michi- earned during the period 5 25,146 S 22,945 $ 21,644 gan Department of Natural Resources ("MDNR"), acting Interest cost on projected ,
benefit obligation 75,922 74.490 70,511 pursuant to a Michigan statute, for all past ($142,000) and Actual return on Plan assets (3,272) (119,037) (56,208) future costs incurred by the state in performing response activities related to the Carter Industrials site. In addition,
- d"
,f7, 33,f nft ga n s the notice indicated the need to conduct a PCB-sediment during current period (90,069) 33,435 (23,528) sampling program at the sewer outfall emptying into the Amortization of unrecog-nized prior service cost 3,613 3,297 2,776 Detroit River. In response to the " Notice of Demand," the Amortization of unrecog-Carter Industrials Site Group (the group, including the t ass res
! Company, of PRPs formed to jointly remediate the Carter
(*,dyt ,} , j ng (4.507) (4.507) (4.507)
Industrials site) paid $126,600 of past costs incurred by the 5 6.833 $ 10.623 5 10.688 Net pension cost MDNR, of which approximately 45% ($57,000) was paid by the Company. The group declined to commit to pay future costs which the MDNR may incur and declined to conduct the THE DETR0!T EDISON IM4 ANNUAL REPORT 31
Tne omort smsc: courm AND Ms Mm coMPAMEs l
l Assumptions used in determining net pension cost are as OTHER POSTRETIREMENT BENEFITS- The Company ;
I;llows: provides certain postr;tirem:nt health care and life insurance j 1994 1993 1992 benefits for retired employees. Substantially all of the '
Company's employees will become eligible for such benefits if ,
Discount rate 7.5% 8.0% 8.0% they reach retirement age while working for the Company. i Annual increase in future These benefits are provided principally through insurance compensation levels 4.5 5.0 5.0 companies and other organizations. .
Expected long-term rate of return on Plan assets 9.5 9.5 9.5 Effective January 1,1993, the Company adopted the provisions of SFAS No.106, " Employers' Accounting for Postretirement Benefits Other Than Pensions." The standard The following reconciles the funded status of the Plan t required the Company to change its accounting for the amount recorded in the Company's Consolidated Balance postretirement benefits from the pay-as-you-go (cash) basis to Sh:et:
the accrual of such benefits during the active service periods December 31 of employees to the date they attain full eligibility for ben-1994 1993 efits. The transition obligation at the time of adoption is being amortized over 20 years. The Company's incremental fThousands) cost upon adoption of the standard was $49 million for 1993 I Plan assets at fair value, primarily which is being deferred in accordance with the January 21, equity and debt securities $1,054.048 $1.059.775 1994 MPSC rate order. See Note 3. This amount is being Less actuarial present value of amortized and recovered in rates over the estimated fouryear benefit obligation:
period 1994 1997.
Accumulated benefit obligation, including vested benefits of $852,374 Net other postretirement benefits cost included the follow-and $872,138, respectively 872,530 892,761 ing components:
Increase in future compensation levels 138,411 152.279 Projected benefit obligation 1,045,040 1 4 1 3 1.010.941 Plan assets in excess of projected benefit (Thousands) obligation 43,107 14,735 Service cost - benefits earned Unrecognized net asset resulting from during the period $16,267 $15,312 initial application (33,288) (37,795) Interest cost on accumulated Unrecognized net loss (gain) 3,856 (7,315) postretirement benefit obligation 33,459 33,787 Unrecognized prior service cost 40,391 45,518 Actual return on assets (208) (18)
Asset recorded as Other Deferred Debits Deferral of net loss during in the Consolidated Balance Sheet S 54,066 $ 15,143 current period (833) -
Amonization of unrecognized transition obligation 20.633 21,685 Net other postretirement benefits cost $69,318 $70,766 Assumptions used in determining the projected benefit obligation are as follows:
December 31 Assumptions used in determining net other postretirement 1994 1993 benefits cost are as follows:
Discount rate 8.0% 7.5% 1994 1993 Annual increase in future compensation levels 4.5 4.5 Discount rate 7.5% 8.0%
Annual increase in future compensation levels 4.5 5.0 ,
The unrecognized net asset at date of initial application is Expected long-term rate of return on assets 9.5 9.5 being amortized over approximately 15.4 years, which was -
the average remaining service period c' mployees at January .
1,1987, in addition to the Plan, the Compq N s several supple-mental non qualified, non contributory, .t ied retirement benefit plans for certain management empt T.
i l
l n THE DETROIT ENSON IW4 AMil:AL REPONT
The f.110 wing reconciles the funded status to the amount NOTE 14 ,
I recorded in the Company's Consolidated Balance Sheet:
Supplementary Quarterly Financial ;
1994 1993 Infonnation (Unaudited) l (Thousands) 1994 Quarter Ended
. Actuarial present value of benefit obligation:
Mar. 31 June 30 Sept.30 Dec. 31 i Retirees $(256,370) $(242,787) ;
Fully eligible active participants (67,581) (65,933) (Thousands, except per share amounts)
Other active participants (140,710) (129,075) Operating Revenues $899,589 $872,690 $944,389 $802,673 '
- Accumulated postretirement Operating 1ncome 189,319 161,832 200,298 167,946 benefit obligation (464,661) (437,7951 Net Income 112,870 87,283 124,381 95,375 ,
Less assets at fair value, primarily Earnings for Common equity and debt securities 58.080 599 Stock 105,458 79,872 116,972 87,% 7 Benefit obligation in excess of assets (406,581) (437,196) Earnings Per Share 0.72 0.54 0.80 0.61 Unrecognized transition obligation 369,459 392,026 Unrscognized net gain (21) (3,397) 1993 Quarter Ended Liability recorded as Other Non Current Liabilities in the Mar. 31 - June 30 Sept. 30 Dec.31 Consolidated Balance Sheet $ (37,143) $ (48,567) (Thousands, exceptper share amounts)
Operating Revenues $874,847 $835,171 $976,248 $868,945 Operating income 221,732 186,498 228,436 207,281 Assumptions used in determining the accumulated benefit Net Income 135,203 102,664 153,365 130,671 obligation are as follows: Earnings for Common Stock 127,060 94,799 145,950 123,257 .
December 31 Earnings Per Share 0.86 0.64 0.99 0.84 [
1994 1993 Discount rate 8.0% 7.5% The fourth quarter of 1994 includes a decrease in operating i Annual increase in future compensation levels 4.5 4.5 revenues of $59 million, a decrease in operation expense of
$65 million and a decrease in maintenance expense of $1 Benefit costs were calculated assuming health care cost million related to a settlement agreement, with the parties !
trend rates beginning at 12.6% for 1994 and decreasing to intervening in the 1994 PSCR reconciliation case with the 6.0% in 2008 and thereafter for persons under age 65 and MPSC, for business interruption insurance proceeds associated decreasing from 7,4% to 6.0% for persons age 65 and over. with the December 25,1993 outage at Fermi 2. See Note 2.
A one-percentage-point increase in health care cost trend Earnings per share amounts for each quarter are required to -
rates would increase the aggregate of the service cost and be computed independently and, therefore, may not equal the interest cost components of benefit costs by $6 million for amount computed for the totalyear.
1994 and increase the accumulated benefit obligation by '
$47 million at December 31,1994.
i r
THE DETR0lT EMSON 1904 ANNUA!.krPORT 33
{ .
us renorr msos commy ano sunsmar couans
.l
- This discussion and analysis should be read in conjunction . Rate Changes
' with the Consolidated Financial Statem:nts and cccompanying The Jumary 21,1994 MPSC rate order reduced the Company's r Notes thereto, contained herein. rates by $78 million annually In keeping with the MPSC's ;
recognition of the need for industrial customers to be competi- , ;
RESULTS OF OPERATIONS tive, the January 1994 rate reduction was allocated among the '
' ' In 1994, the Company's earnings for common stock were various classes of customers approximately as follows:
$390.3 million, or $2.67 per share, a decrease of 20.5% from Industrial-843 million, Commercial-$24 million, Residential . .
the $491.1 million, or $3.34 per share earned in 1993. The $10 million and Governmental-$1 million. ;
. earnings decrease was due in part to a January 21,1994 order A December 1988 MPSC rate order provided for a morato- !
by the Michigan Public Service Commission ("MPSC"), which rium on base rate changes for the five-year period 1989 - 1993, I reduced rates by $78 million annually and increased deprecia-an expense stabilization procedure (" ESP") surcharge, which i tion and operation expenses by $84 million annually. In '
' provided annual revenues of $63 million in 1992 for the effects -
- addition, accretion income decreased and amortization of the
, ofinflation, and a suspension of the Power Supply Cost .
F:rmi 2 nuclear power plant phase-m, plan increased sigmfi-Recovery ("PSCR*) Clause for the four year period 1989 - 1992. [
cantly m 1994. Also, the Companyincurred additional one-The ESP surcharge expired for service rendered on or after !
time charges at the Ferms 2 nuclear power plant, which was !
January 1,1993, and the PSCR Clause was reinstated in 1993.
out of service in 1994 due to equipment failure, for maintel As a result of these two items,1993 operating revenues were nance expenses and the establishment of a reserve for esti-reduced by approximately $169 million.
mited Fermi 2 performance in 1995-1997. The earnings i decrease was limited by higher system sales and lower interest Kilowatthour Sales expense due to the early redemption and refinancing of higher Kilowatthour sales increased (decreased) as follows: ,
cost debt and the redemption of maturing debt.
1994 3993 At December 31,1994, the book value of the Company's Residential 1.1% 6.4%
common stock was $22.89 per share, an increase of 2.5% sm.ce Commercial 3.5 4.0 Icember 31,1993. Return on average total common share- Industrial 5.9 6.6 .;
holdn' equity was 11.6% in 1994,15.2% in 1993 and 18.6% Other (includes primarily sales for resale) (14.1) 6.7 >
in 1992, Total System 2.8 5.6 ;
Interconnection (45.2) 12.7 The ratio of earnings to fixed charges for 1994,1993 and Total (1.0) 6.1 1992 was 3.13,3.25 and 3.09, respectively. The ratio of e rnings to 11xed charges and preferred and preference stock 1994 dividend requirements for 1994,1993 and 1992 was 2.73,2.88 Residential sales increased due to substantially warmer i and 2.79, respectively. weather in the second qualter resulting in increased air OPERATING REVENUES conditioning and cooling-related loads, partially offset by lower -
Total operating revenues increased (decreased) due to the cooling-related loads in the third quarter. The increased (
following factors: heating-related loads in the first quarter were offset by decreased heating related loads in the fourth quarter. Commer-1994 1993 cial sales increased due primarily to improved economic 1 ggg conditions and increased cooling related loads. Industrial Rate Changes sales increased as a result of higher sales to automotive, steel MPSC rate reduction 3(81) $ - and other manufacturing customers reflecting the improvement Expense stabilization procedure -
(63) in the economy. The decreased sales to other customers i Power Supply Cost Recovery Clause (5) (106) reflect lower sales to wholesale for resale customers. -
(86) (169) 1993 'i System sales volume and mix 103 158 Residential and commercial sales increased due primarily to Interconnection sales (17) 2 ~
- " substantially warmer summer weather resulting in increased t se e (31) . air conditioning and cooling-related loads, partially offset by Other - net (5) 6 warmer winter weather reducing heating related sales. l Industrial sales increased due to higher automotive and steel Total s(36) $ (3) production and improved economic conditions. The increased sales to other customers reflect increased load requirements of wholesale for resale customers. .
i l
1 M THE DETRort ED1SoM 1994 ANNUAL REPORT
- f Interconnection Sales .
Other Operation ,
. Interconnection sales represent sales between utilities to meet 1994 ;
en:rgy needs as a result of demand and/or generating unit' Other operation expense increased due primarily to other
- t.vailability- postretirement health care and life insurance benefits expense, i c service quality claims expense and higher nuclear plant,
.* 1994 .
transmission and distribution and demand-side management
. Int;rc:nnection sales decreased due to the reduced availability ,
- cf energy for sale as a result of the Fermi 2 outage and lower expenses. These increases were partially offset by lower i sal:s to Consumers Power Company, incentive award expenses related to a shareholder value improvement plan, expenses recorded in the year-earlier period 1993
' r the write-off of obsolete and excess stock material and a Int rconnection sales increased due primarily to increased i reserve f r steam purchases under the agreement with the sales to Consumers Power Company, partially offset by a Greater Detroit Resource Recovery Authority, lower '
decrease in sales to Ontario Hydro. .
uncollectible and employee reorganization expenses and lower !
OPERATING EXPENSES injuries and damages expense.
Fuel and Purchased Power 1993 Fuel and purchased power expenses increased (decreased) due Other operation expense increased due primarily to the write- e to the following factors: off of obsolete and excess stock material, higher injuries and !
damages expenses, a provision for employee reorganization i 1994 1993 expenses, a reserve for steam purchases under the agreement (Millions) with the Greater Detroit Resource Recovery Authority,incen-tive award expenses related to a shareholder value improve- l refge uniIcost 5 () ment plan and expenses related to the new collective bargain- .
Fermi 2 business interruption insurance proceeds (65) - ing agreement with employees represented by the Utility ,
other 6 5 Workers Union of America - Local 223. These increases were ,
Partially offset by lower uncollectible expenses and a 1992 l Total $ (6) $ 11 accrual for low-level nuclear waste disposal.
Maintenance '
Net system output and average unit costs were as follows: 1994 1994 1993 1992 Maintenance expense increased due primarily to higher <
nuclear plant and storm expenses, partially offset by lower (Thousands o/NegawatthoursJ fossil plant and line clearance expenses. Since Fermi 2 was . ,
38,882 36,689 down for repair in 1994, the Company elected to upgrade ossil 42,410 Nuclear - 8,274 7,338 various plant facilities which resulted in higher nuclear plant Purchased power 6,599 2,211 2,705 maintenance expense.
. Net system output 49,009 49,367 46,732 1993 ..
Maintenance expense decreased due primarily to lower line Average imit cost ($/Megawatthour) $16.94 $15.73 $16.49 clearance and storm expenses, partially offset by expenses related to the new collective largaining agreement with employees represented by the Utility Workers Union of 1994 America-Local 223.
?
The increase in average unit cost resulted from replacm.g ,
- lower-cost nuclear generation with higher cost fossil genera. Depreciation and Amortization l
. tion and purchased power due to the Fermi 2 outage in 1994 as 1994 and 1993 i a result of a turbine-generator failure on December 25,1993. Depreciation and amortization expense increased due to ;
- This increase was offset by the receipt of Fermi 2 business increases in plant in service and, for 1994, to increased Fermi 2 l interruption insurance proceeds. decommissioning costs authorized by the January 21,1994 MPSC rate order.
1993 ,
The decrease in average unit cost was due to declining fuel Deferred Fermi 2 Depreciation and Amortization
, prices resulting from greater use of lower-cost Western low- 1994 and 1993 sulfur coal, increases in lower cost nuclear generation and Deferred Fermi 2 depreciation, a non-cash item of income, was decreases in the buyback of Belle River Power Plant capacity recorded beginning with the implementation of the Fermi 2 .
and energy from the Michigan Public Power Agency. rate phase-in plan in January 1988. The anmtal amount deferred decreased each year through 1992. Beginningin !
1993 and continuing through 1998, these deferred amounts are amortized to operating expense as the cash recovery is realized THE DETROIT EMSON 1994 ANNUAL REPORT 35
dsenorr smsoicoumr up seastmar cmmes -
l thrsugh revenues. - Deferred Fermi 2 amortization, also a non- Accretion Iccome ;
cash item of income, was recorded beginning with the - 1994 and 1993 )
Company's purchase of the Wolverine Power Supply Coopera- : Accretion income, a non-cash item of income, was recorded ' -l tive, Inc *s ownership interest in Fermi 2 in February 1990. . beginning in January 1988 to restore to income, over the period , l The annual amount deferred decreases each year through 1999. 1988-1998, losses recorded due to discounting indirect !
Amortization of Deferred Fermi 2 Depreciation and Return disallowances of plant costs. The annual amount of accretion -
income recorded decreases each year through 1998. Also, .
1994 and'1993 Beginning in 1993, the Company began amortizing to operating effective in January 1994, accretion income decreased due to expense deferred Fermi 2 depreciation and return as discussed the return to rate base of Greenwood Unit No.1.
- herein. Long Term Debt Interest Charges - ,
Tames Other Than Income Taxes 1994 and 1993 I 1994- L ng-term debt interest charges decreased due to the early Taxes other than income taxes decreased due primarily to redemption and refinancing of securities when economic and i lower property taxes, partially offset by higher Michigan Single the redemption of maturing secunties.
- Business Tax ("MSBT"). OtherInterest Charges 1993~ 1994 !
Taxes other than income taxes increased due primarily to Other interest charges increased due to higher levels of short- i higher MSBT expense and higher property taxes. term borrowings, accruals for prior years' MSBT audits and l the settlement of 1987 and 1988 IRS audits. ,
- Iccome Taxes
~
Prefmed and Prefmace StocWvidend Requirements 1994 {
Income taxes decreased due primarily to lower pretax income, 1994 .
partially offset by higher prior years' federal income tax Preferred and preference stock dividend requiremerts de- ;
creased slightly due to the optional and mandatory redemption i accrual. In March 1994, the Company and the Internal Revenue Service (" IRS") reached a settlement of the- of outstanding shares in 1993.
Company's income tax returns for the years 1987 and 1988. 1993 :
1993 Preferred and preference stock dividend requirements in- l Income taxes decreased due primarily to lower pretax income creased slightly due to issuance of cumulative preferred stock, and prior years' federal income tax accrual, partially offset by Partially offset by optional and mandatory redemption of an increase in the federal corporate income tax rate from 34% outstanding shares.
to 35% retroactive to January 1,1993 and higher taxes due to l the reduction of deferred Fermi 2 depreciation, amortization LIQUIDITY AND CAPITAL RESOURCES and return. Tim Company's liquidity has improved since the 1988 commer-cial operation of Fermi 2, a nuclear generating unit comprising .
Deferred Fermi 2 Return 28% of the Company's total assets and 11% of the Company's !
1993 summer net rated capability, and lower levels of capital !
Deferred Fermi 2 return, a non-cash item of income, was expenditures.
recorded beginning with the implementation of the Fermi 2 ]
rate phase-in plan in January 1988. The annual amount Fmu. 2 deferred decreased each year through 1992. Beginning in The commercial operation of Fernu,2 completed the Company's ,
1993 and continuing through 1998, these deferred amounts are Power plant constructirm program. The Company has no amortized to operating expense as the cash recovely is realized current plans for additional generating plants. Ownership of- v through revenues' an Perating nuclear generating unit such as Fermi 2 subjects the Company to significant additional risks. Nuclear plants are :-
Other Income and Deductions highly regulated by a number of governmental agencies 1994 concerned with public health and safety as well as the environ-Other deductions increased slightly due primarily to the write- ment, and consequently, are subject to greater risks and off of premiums and expenses related to the $50 million scrutiny than conventional fossil-fueled plants.
portion of 1989 Series A Mortgage Bonds not refinanced and Fermi 2 was out of service in 1994. On December 25,1993, an accrual for a contribution to the Detroit Edison Foundation.
the reactor automatically shut down following a turbine- ,
1993 generator failure. Safety systems responded within design and !
Other deductions increased due primarily to an increase in the regulatory specifications. The turbine suffered mechanical accrual for decommissioning expenses for Fermi 1, an experi- damage, the exciter and generator incurred mechanical and mental nuclear unit that has been shut down since 1972.
r
+
4 I
i M THE DETR0!T ENSON IW4 AWAL REPORT
_ _ _ __I
fire damage, and the condenser had some internal damage. Fermi 2 phase in plan and depreciation and amortir.ation. Net The fire w s contained in the turbine building, and there was cash from operating activities increased in 1993 due to lower no release of radioactive contaminants during the event. The non-cash items of income for the Fermi 2 phase in plan, higher
, nuclear part of the plant was not damaged. depreciation and amortization, and changes in current assets ,
, Major repairs have been completed and tests are continuing and liabilities, partially offset by lower net income and deferred j
- to balance and synchronize the unit. The Company expects mcome taxes.
- that most repair costs related to returning the Fermi 2 turbine- Net cash used for investing activities increased in 1994 due generator to service will be covered by insurance. These costs primarily to increased funding of nuclear decommissioning are estimated to be in the $70 million to $80 million range. trust funds, the purchase of leased equipment and non-utility The Company has received partialinsurance payments of $25 investments, partially offset by lower plant and equipment million for property damage. In addition, the Company has expenditures. Net cash used for investing activities decreased rec:ived insurance payments of $66 million for replacement in 1993 due primarily to lower plant and equipment expendi-power costs. As a result of an investigation as to the cause of tures.
the December 1993 mechanical failure, the Company will During the period 1992-1994, the Company has engaged in replace major Fermi 2 turbine components. Installation of new an extensive debt refinancing program. Assuming favorable low pressure turbine sections is expected to add about 20 economic conditions, the Company expects that it will continue megawatts (*MW") of generating capacity to the plant, which to refinance existing higher cost debt and equity securities.
would expand the plant's capability by about 2%. Also, in 1994, as a result of a plan change, the Company In the interim period the Company will operate Fermi 2 entered into the one-time purchase of common stock from the without the large seventh and eighth stage turbine blades until trustee of the Detroit Edison Savings & Investment Plans.
the next refueling, which will reduce the Fermi 2 power output . .
to a range of about 800 MW to 900 MW. During the lower ^ddm.onaUnformation , ,
An MPSC order permits the Company to issue approximately output period, new turbine shafts and blades will be manufac-
$3.5 billion of securities for the purpose of refinancing debt tured for the plant's three low-pressure turbines. These major and preferred and/or preference stock ' issued p:ior to 1993) components will be installed during the next refueling outage Prior to maturity (when economic) and at maturity, and to in 1996' replace funds used for those purposes. The Company also has Replacing the major turbine components in 1996 is expected MPSC authority to refinance substantially all non taxable debt to cost between $30 million and $40 million. These costs will obligations.
not be covered by insurance. These costs will be capitalized Cash requirements for scheduled long term debt redemptions and are expected to be recovered in rates because such costs are expected to be $19 million, $119 milhon, $144 million, are less than the cumulative amount available under the cap on
$169 million and $219 million for 1995,1996,1997,1998 and Fermi 2 capital expenditures, a provision of the MPSC's 1999, respectively.
December 1988 order.
At December 31,1994, Fermi 2 was insured for property . Cash requirements for capital expenditures were $363 milhon in 1994 and are expected to be approximately $1.9 damage in the amotmt of $2.75 billion and the Company had billion for the period 1995 through 1999. In 1995, cash available approximately $8.5 billion in public liability insur.
requirements for capital expenditures are estimated at $394 ance. To the extent that insurable claims for replacement ,
milli n. Environmental expenditures are expected to approxi-power, property damage, decontamination, repair and replace-mate $79 million for the period 1995 through 1999, meluding ment and other costs arising from a nuclear incident at Fermi 2 expenditures for Clean Air Act compliance requirements. See exceed the policy limits of insurance, or to the extent that such
" Environmental Matters" herein.
insurance becomes unavailable in the future, the Company will retain the risk of loss. The Company's internal cash generation is expected to be I Cash Generation and Cash Requirements sufficient to meet cash requirements for capital expenditures as well as scheduled long term debt redemption requirements.
Consolidated Statement of Cash Flows The Company generates substantial cash flows from operating In May 1993, the Federal Energy Regulatory Commission activities as shown in the Consolidated Statement of Cash ("FERC") issued its order authorizing the continuation of the Flows. Net cash from operating activities, which is the Company's $1 billion of short-term borrowing authority. This Company's primary source of liquidity, was $1,063 million in authority will be in effect through May 31,1995.
1992, $1,141 million in 1993 and $953 million in 1994. Net The Company had total short term credit arrangements of cash from operating activities decreased in 1994 due to lower approximately $405 million at December 31,1994, under i net income and changes in current assets and liabilities, which $39.5 million of borrowings were outstanding.
partially offset by higher non-cash charges to income for the THE DETRor! EDISON 19W ANNUAL REPORT U
[- rEE DErA0l? EDI$c]roMPANY AND SUB5IDIARY CDWMES
- j. Capitalization U.S. District Court for the Western District of Michigan
- Th9 Company's capital structure ra+ios (excluding amounts of claiming that the MPSC does not have the authori2y to order
' long term debt and preferred and preference stock due within the Company to participate in retail wheeling, and that the one year) were as follows: jurisdiction over transmission rates for wheeling resides with ,
the FERC. The MPSC is expected to issue a final order by the December 31 end of April 1995. :
1994 1993 1992 In response to the changing market for electricity, the -
Common Shareholders' Equity 44.2 % 43.9% 42.0 % Company has developed a number of programs designed to Preferred and Preference Stock 5.0 5.1 4.5 increase its efficiency and competitive status and address Long Term Debt 50.8 51.0 53.5 customer needs. An aggressive demand-side management 100.0% 100.0% 100.0% Program has been developed, an integral part of which is an interruptible rate for large industrial customers. This rate, commonly referred to as R 10 and approved by the MPSC, Competition permits its customers to achieve economic benefits while An electric public utility must compete with other energy enabling the Company to reduce its peak demand require- r suppliers to meet its customers' energy needs. Serious issues ments. The January 21,1994 MPSC rate order increased the facing the entire electric utility industry include deregulation, 400 MW available under the R-10 rate to 525 MW in 1994 and municipalization, cogeneration, independent power production, 650 MW in 1995, with the Company absorbing revenue losses open access to transmission lines and a more competitive bulk associated with the additional 250 MW made available under power supply market. Utility customers have the option of this rate.
self-generation or cogeneration and, depending on the extent As part of a continuing response to the challenge of competi-of future deregulation, may be able to enter into contracts with tion, the Company has executed 10 year special manufacturing other power suppliers. In the future, electric utilities may be contracts with Chrysler Corporation, Ford Motor Company and required to unbundle their products and services to accommo- General Motors Corporation, covering 54 of the Big Three date emerging competitive alternatives brought about by automakers' largest manufacturing locations in Southeastern possible industry restructuring due to deregulation. Michigan. On August 3,1994, the Company filed the executed On December 5,1994, the Company's Board of Directors special manufacturing contracts with the MPSC. The MPSC approved the formation of a holding company. The Company's must approve these contracts before they can become effective.
shareholders will be asked to approve this organizational An order approving these long-term contracts is expected to be structure at the Company's April 24,1995 Annual Meeting of issued in March 1995.
Common Shareholders. This organizational structure will be The special manufacturing contracts are available to custom-subject to receipt of a number of regulatory approvals. ers with a total connected load of 100 MW or more for specific A holding company structure will provide greater financial locations of 5 MW and over. Service under the special manu-flexibility to develop and operate new non utility businesses. facturing contracts will include both firm and interruptible It also will offer a mechanism for better defining and separat. service, which is priced to provide customers with competi-ing the Company's regulated and unregulated businesses, and tively based electric rates.
for protecting the Company's utility business and customers A major feature of the special manufacturing contracts will from any risks that may be involved in non-utility ventures- be the establishment of a long-term,10 year relationships with When all approvals are in place, the Company's common these customers during which the Company will be the custom-stock will be exchanged share-for-share for the common stock ers' sole supplier of electricity through the year 2000. The of the holding company. The holding-company structure could customers may reduce their purchases by 20% annually during ,
be in place before the end of 1995, the last four years of the contracts. The special manufacturing contracts provide that the customers' existing self-generation !
As a result of the Energy Policy Act of 1992, the Company expects that, over time, non-utility generation resources will wtB pe used for emergency back-up. It is anticipated that ,
this will result m, additional sales and revenue for the Com-be developed which will result in greater competition for power Pany. The contracts also provide for a corporate minimum sales. In addition, in April 1994, the MPSC issued an interim tabor-pay provision for 1995 through 1999 with specified order setting forth a framework for a retail wheeling experi-Price reductions for 1995 through 2000. Through these ment. The 90 MW experiment would last five years commenc.
agreements, the customers will be assured of both a more ing with the need for additional capacity, which is expected to competitive and predictable price for electric energy. Detroit be approximately the year 2000, and would be implemented Edison will be assured that the customers will purchase their concurrently with the Company's next Request for Proposal electric requirements from the Company.
case under the MPSC's capacity solicitation process. The Company has appealed the MPSC's interim order with the D in omorr toison im aucai, urour
v.-.
f
+
~ Pursuant to the terms of the special manufacturing con- July lo92. The Co .appy will submit a new pl:n to thi MPSC
~ tracts, the cust=ers will be able to designate a percentage of detAmg its proposed method of meeting energy demands on theirload at each facility as interruptible, The customers will or beface my 1.199E 4 also have the ability to designate interruptions on a corporate ggg g g hsis with the flexibility to clift interruptible load among InrlatiM a mm m d tic p.trehasing power of the dollar. In
- separate facilities. In total, approximately 160 MW of inter- 19% the Niun rate, as definet by the Consumer Price
- ruptible capaci@ expected. Index, was 2.7%. A%agh the curreat inflation rate is
' In order to fort,e an energy partnership with these custom- relatively iott, .'ts compoud effec; through time can be
- ers, the Company will provide service delivery quality guaran- signi5 cant, primar.ly in its effect on the Company's ability to tees sind on site engineering expertise to implement better replace its investment in utility plant.
service, identify energy conservation efficiency improvement Thnegulatory process limits tia amount of depreciation opportunities and achieve valuable energy savings for each expense reoverable through revenues to the historical cost of customer. The goal of these provisions of the special manufac- the Company's investment in utility plant, Such amount turing contracts is to combine the customers' energy conserva- produces cash flows which are inadequate to replace such tion efforts with the knowledge and skills provided by the property in future years. IIowever, the Qmpany believes that
. . Company. The Company also may invest in energy saving it will be able to recover the increased cost of replacement
. proj: cts with these customers. facilities when, and if, replacement occurs.
, ~ The Company will serve the special manufacturing contract Regulation and Rates customers at rates above its marginal cost. Further, at this The Company has no plans to seek increased rates for electric time the Company is not requesting a change in electnc rates service from the MPSC in the near future, charged to other customers. A= a result, annual revenue reductions will range in amwnts from about $30 million in Environmental Matters Protecting the environment from damage, as well as correcting 1995 to $50 million for 1999 through 2004. The Company Past environmental damage, continues to be the focus of state expects to offset these reiluctions by further reducing operat.
and federal regulators. Committees at both the state and ing expenses.
federal level are studying the effects of a wide array of chemi-In 1994, the Company completed its accelerated reliability cals and electromagnetic fields as well as global warming (as improvement program which upgraded its transmission and potentially affected by carbon dioxide emissions). Iegislation distribution system. This program has helped reduce interrup- and/or rulemaking resulting from these and any future studies tions and the duration of outages thus increasing customer could further impact the electric utility industry including the satisitction. Company.
The Company is reviewing potential energy services as a The Environmental Protection Agency (" EPA") and the method of remaining competitive while diversifying within the Michigan Department of Natural Resources have aggressive
, scope ofits core busmess. programs regarding the cleanup of contaminated property. The Meeting Energy Demands Company anticipates that it will be periodically included in Since 1980, the compound annual sales growth was 1.8% and these types of environmental proceedings. Further, additional peak demand growth was 2.4% (after adjusting for the effects environmental expenditures, although difficult to quantify, will of unusual weather). System sales and de: land are expected be necessary as the Company prepares to comply with the to grow at a compound annual rate of about 1.5% per year for phase-in of the 1990 Amendments to the federal Clean Air Act.
the next 15 years. The Company currently meets the first phase of sulfur dioxide emissions and nitrogen oxides emissions requirements. The Sales to the non-manufacturing segment, whi:h include second phase begins in the year 2000. The Company currently
- customers such as agribusiness, grocery stores, restaurants
. r.nd government, are projected to grow at a strong pace in the burns low-sulfur coal (less than 1% sulfur) at all its coal-fired units and believes it can meet the second phase sulfur dioxide next 15 years, a compound annual increase of 1.9% per year.
emission requirements thrcagh additional blending of coals.
- This projected increase indicates the Company's customer base Current projections indicate that annual fuel costs may is becoming more diverse and less dependent on the manufac.
increase by $13-20 million in the period 2000-2009 in order to turing segment.
comply with new sulfur dioxide emissions requirements. In The Company expects to meet its near term demand for addition, approximately $59 million in capital expenditures energy by the return to service, subject to environmental may be necessary for nitrogen oxides emissions requirements.
regul:.tions, of power plant units currently in economy reserve The Company expects that substantially all of the costs of status when energy demand and consumption requirements environmental compliance will be recovered through the provide economicjustification. The return to service of these ratemaking process.
units is conditioned upon the outcome of a competitive bidding process which was established by an MPSC order issued in THE DETROIT EDis0N 1994 ADUAL REPORT M
. THE DETR0!T EDISc*! COMPANY AND SUBSIDIARY COMPANIES 1994 1993 1992 1991' I
. Operating Resdential 8 1,136,169 $ 1,125,624 $ 1,098,027 $ 1,154,440 i Revennes Commercial 1,473,309 1,428,321 1,438,258 1,410,708 .i
. (Thou. ands) Industrial 736,339 720,002 749,240 723,984 )
Other 130,383 220,901 214,171 197,006 :(
Tota' System 8 3,476,200 $ 3,494,848 $ 3,499,696 $ 3,486,138 . !
Inter <,onnection 43,141 60,363 58,447 105,399 t Total 8 3,519,341 $ 3,555.211 $ 3,558,143 : $ 3,591,537 I Sales Residential 12,170 12,033 11,309 12,222 a (Afillions of AWh) Commercial 17,042 15,996 15,384 15,571 Industrial . 13,356 12,618 11,827 11,564 Other 1,586 2,318 2,177 ~ 1,692 Total System 44,154 42, % 5 40,697 41,049 Interconnection 1,978 3,611 3,204 - 5,534 Total 46,132 46,576 43,901 46,583 Electric Residential 1,805,141 1,790,197 1,7U.914 1,770,859 Customers Commercial 172,221 170,453 169,380 168,255 (YearEnd) Industrial 889- 850 8d 814 Other 1,974 2,041 1,992 1,968 '
Total ,
1,980,225 1,963,541 1,949,799 1,941,896 Average Annual Use Per Residential Customer (kWh) 6,773 6.747 6,375 6,929 Average Annual Bill Per Residential Customer $632.34 $631.21 $618.93 $654.54 Average Revenue Residential 9.34c 9.35c 9.71c 9.45c Per kWh Commercial 8.65 8.93 9.35 9.06 Industrial 5.51 ' "I 6.33 6.26 Capitalization Long-Term Debt $ 3,825,296 $ 3/ $ 3,973,485 $ 4,218,264 (Thousands) Preferred / Preference Stock 380,283 , 333,994 353,237 Common Shareholders' Equity 3,326,080 3.2u,a5 3,113,887 2.847,572-Total $ 7,531,659 $ 7,507,234 $ 7,421,366 8 7,419,073 Capitalization long Term Debt 50.8 51.0 53.5 56.8 (Percent) Prefened/ Preference Stock 5.0 5.1 4.5 4.8 Common Shareholders' Equity 44.2 43.9 42.0 38.4 Total 100.0 100.0 100.0 100.0 Common Stock Earmngs (Loss) Per Share $2.67 $3.34 $3.79 $3.64 Data Dividend Paid Per Share $2.06 $2.04 $1.955 $1.855 Payout 77% 61% 52% 51%
Dividend Declared Per Sharc $2.06 $2.06 $1.98 $1.88 Shares Outstanding- Average 146,151,505 147,031,446 146,998,485 146,945,932 Return on Average Common Equity 11.64% 15.23 % 18.56% 19.55 % '
Book Value Per Share $22.89 $22.34 $21.13 $19.32 Market Price: High $30% $37% $35% $35%
Low $24% $29% $30% $27%
Miscellaneous . Interest Rate Long Term Debt 7.2% 7.4% 8.6% 9.1% ,
Financial Data . Dividend Rate Preferred / Preference Stock 7.8% 7.8% 8.5% 8.6%
N Income (Loss) (Thousands) $ 419,909 '$ 521,903 $ 588,047 $ 568,037 .
Earnings (Loss) for Common Stock (Thousands) $ 390,269 $ 491,066 $ 557,549 $ 535,205 Long-Term Debt and Redeemable Preferred /
Preference Stock (Thousands) $ 3,979,763 $ 4,007,622 $ 4,525,504 $ 4,900,020 Total Assets (Thousands) $10,992,978 $11,134,879 $10,209,061 $10,463,624 Gross Utility Plant (Thousands) $13,115,658 $12,788,445 $12,402,581 $11,997,862 Net Utility Plant (Thousands) $ 8,585,966 8 8,650,564 $ 8,617,738 8 8,558,227 Capital Expenditures (Thousands) $ 366,392 $ 396,407 $ 415,937 $ 272.121 l Miscellaneous System Ca bility at Year End-MW 10,476 10,274 10,410 10,267 -
Operating Data System Ca ability at Time of Peak-MW 10,282 10,103 10,262 10,121 System Pe Demand -MW 9,684 9,362 8,704 8,980 Reserve Margin at Time of Peak 6.2% 7.9% 17.9% 12.7% !
_ ystem Load Factor S 55.4 % 55.8% 56.9% 55.9%
Heat Rate - Btu per kWh 9,980 10,080 9,990 9,980 Fuel Cost - e Per Million Btu 157.lc 148.2c 150.5c 153.3e ,
Number of Employees at Year End 8,494 8,919 9,183 9.357 l C ras Datuorr smson :wurnu ntPort
1990 1989 1988 1987 1986 1985 1984
$ 1,045,081 $ 1,013,677 $ 984,689 $ 905,208 $ 880,205 $ 827,210 $ 758,124 1,328,170 1,259,513 1,160,024 1,068,072 1,057,749 984,340 857,587 740,401 739,982 739,794 690,109 698,873 701,593 631,985
- 193,087 189,859 217,665 193,342 232,457 275,014 250,509
$ 3,306,739 $ 3.203 931 $ 3,102,172 $ 2,856,731 $ 2,869,284 $ 2,788,157 $2,498,205 269,542 202,574 133,518 128,473 78,041 77,916 76,856 5 3,576,281 $ 3,405,605 $ 3.235,690 $ 2,985,204 $ 2,947,325 $ 2.S66,073 $2,575,061 11,513 11,524 11,723 11,134 10,492 10,077 10,150 15,145 14,816 14,345 13.574 12,859 12,033 11,553 12,250 12,498 13,045 12,524 11,882 11,710 11,621 1,596 1,846 2,031 2,260 2,807 2,875 2.563 40,504 40,684 41,144 39,492 38,040 36,695 35,887 11,887 9,301 6,671 6,665 3,252 2,870 2,797 52,391 49,985 47,815 46,157 41,292 39,565 38,684 ;
1,757,878 1,738,494 1,718,835 1,697,326 1,664,226 1,642,981 1,629,668 l 166,850 164,138 160,680 156,986 150,670 146,608 144,012 808 788 762 73e <01 648 629 1,939 1,934 1,926 1,928 1,905 1,892 1,894 1,927,475 1,905,354 1,882,203 1,856,977 1,817,502 1,792,129 1,776,203 6,583 6,668 6,866 6,635 6,350 6,165 6,253
$597.51 $586.50 $576.70 $539.44 $532.74 $506.06 $467,03 9.08e 8.80c 8.40e 8.13e 8.39c 8.21e 7.47c l 8.77 8.50 8.09 7.87 8.23 8.18 7.42 6.04 5.92 5.67 5.51 5.88 5.99 5.44 5 4,923,999 $ 4,561,005 $ 4,238,536 $ 4,693,687 $ 3,656,569 $ 3,770,863 $3,845,272 376,183 399,188 416,212 521,894 742,273 879,497 894,168 2,588,452 2,370,060 2,226,949 2,919,985 2,716,403 2,588,025 2,379.998
$ 7,888,634 $ 7,330,253 $ 6,881,697 8 8,135.566 $ 7,115.245 $ 7,238,385 $7,119,438 62.4 62.2 61.6 57.7 51.4 52.1 54.0 4.8 5.5 6.0 6.4 10.4 12.1 12.6 32.8 32.3 32.4 35.9 38.2 35.8 33.4 100.0 100.0 100.0 100.0 100.0 100.0 100.0
$3.26 $2.65 $(2.92) $3.25 $2.58 $2.33 $2.20
$1.755 $1.68 $ 1.68 $1.68 $1.68 $1.68 $1.68 54% 63 % -% 52 % 65 % 72 % 76 %
$1.78 $1.68 $ 1.68 $1.68 $1.68 $1.68 $1.68 146,888,809 146,816,363 146,761,458 146,729,292 146,643,377 143,183,133 135,230,827 19.11 % 16.75 % (15.91)% 16.69% 14.09 % 13.31% 12.87%
$17.56 $16.07 $15.10 $19.75 $18.34 $17.47 $16.91
$30% $25% $17% $19 $19% $17% $16%
$23% $17% $12 $12% $15% $14 $11%
, 9.2% 9.5% 9.6% 9.5% 9.2% 9.9% 9.9%
8.7% 8.8% 8.9% 10.7 % 11.5 % 11.6% 11.6%
~
$ 514,459 $ 425,951 $ (378,826) $ 554,974 $ 477,095 $ 437,515 $ 401,937
$ 479,280 $ 388,933 $ (428,583) $ 476,734 5 378,292 $ 334,251 $ 297,778
$ 5,300,962 $ 5,028,961 $ 5,148,498 $ 5.232,662 $ 4,774,495 $ 4,731,589 $4,460,381
$10,573,325 $ 9,949,599 $10,060,293 $11,158,214 $10,377,125 $ 9,863,760 $9,276,614
$11,749,142 $11.024,368 $10,766,755 $11,893,418 $11,062,449 $10,466,039 $9,752,346
$ 8,624,923 $ 8,236,553 $ 8,303,644 $ 9,682.875 $ 9,034,716 $ 8,612,890 $8,076,168 5 230,201 $ 242,973 $ 235,127 $ 709.084 $ 645,196 $ 710,699 $ 938,004 10,130 10,081 10,004 9,164 9,070 9,296 8,898 9,953 9,942 10,038 9,020 9,199 9,367 9,271 9,032 8,704 9,133 8,427 8,050 7,172 7,350 10.2 % 14.2 % 9.9% 7.0% 14.3% 30.6% 26.1%
54.9% 57.3% 55.2 % 57.4% 57.9% 63.3 % 60.2 %
9,940 9,940 9,990 10.060 10,090 9,990 9,990 155.8e 169.2e 173.Sc 172.9c 189.2e 202.0c 190.6e 9,669 10,254 10,614 11.221 10.967 11,086 11,136 THE DETkOIT ED15051094 ANNL'AL REPORT i . _ - _ _ _ _ _ _ ---
THE r4TRorf EDisop coMPAirY 4
I Detroit Edison has assembled a strong man- Larry G. Garberding,56, # YMCA Camping Servica board and is a member of l agement team composed of executives with executive vice president and the visiting committee of the engineering college of g4 diverse backgrounds and extensive experi- chief financial officer since y the University of Michigan-Deartorn.
ence both inside and outside the 1990. He has extensive Douglas R. Gipson,47' This team encourages employee novationm, company.
financial knowledge and ex' :
senior vice presiJent, .- -
that will enable Detroit Edison to mcrease penence m a broad range of Nuclear Generation, since g~
- shareholder value by changing the company business activities. He pre-1993. M mon tha
~
today to prosper tomorrow. viously was a partner at 25 years' experience in the Arthur Andersen & Co. and 1 nuclear power industry, Mr.
dealt primarily with energy-related companies. He Gipson is responsible for
}
John E. Iobbia,53- also held leadership roles with several gas compa-chairman of the board and y nies as deregulation came to that industry He has cmPap nuh
" '# * [
chief execuuve officer since A a bachelor of science degree in industrial adminis-
.e 1990. He knows every as- tration from lowa State University Among his en an R e Peahon ne knni 2 Power plant. Besides associate's degrees from pect of Detroit Edison after commumty involvement activities, Mt Garberding is E. as c mPl ekd training at 26 years' experience in a director of the Detroit Symphony Orchestra Hall diverse areas such as wa e e s ns reactor aM as and the Michigan Nature Conservancy He is a customer service, finance- *" # *#" "#" "
member of the board and chairman of the finance engineenng, power supply nuclear plant and Gulf States Utilities. River Bend committee of Harper Hospital.
Pl ant. He has been certified as a senior reactor op-and corporate strategic planning. In the 1980s he Frank E. Agosti,58, senior erator (SRO) by General Electric and licensed by 4 managed the company's cogeneration activities and Vice President. Power Sup- : the Nuclear Regulatory Commission as a SRO. Be-I dealt directly with large electricity users who were g
examining the increasing range of energy options. ply, since 1990. He has fore joining Detroit Edison, he headed the River i
Bend plant's operations, planning and scheduling This experience helped shape his philosophy, that in more than 35 years' experi- ,
' and quahty services areas. Mr Gipson is a mem-an increasingly competiuve business emironment, ence in power generation ,-
the orJy way for a company to increase shareholder and fuel delivery at Detroit ber of the Edison Electric Institute Nuclear Edison and was responsible - Operations Committee and was a member of the i value is to provide superior customer value. He holds a bachelor of science degree in electrical for the startup of the g .
advisory board for the University of Michigan's engineering from the University of Detroit Mercy Monme and Fermi 2 power W Public Utility Executive Program. In addition, he Acuve in the community, Mt lobbia was chosen by plants. He holds a bachelor of science degree in serves on the board of directors for the United Way 42 CE0s from Southeastern Michigan companies to mechanical engineering from Michigan Technological of Monroe County, the River Raisin Centre for the manage the Detroit Investment Fund, a $60 million University. His organization designs, operates and Arts and the Monroe County Emergency Medical capital fund designed to attract investors to the city maintains fossil fueled power plants and fuel-deliv. Authonty by targetag real estate projects and high growth ery systems, and seils process steam, coal, fly ash Gerard M. Anderson,36, businesses. He also has chaired the Greater and techmcal services. Mt Agosti serves on the
- vice president for Non-Util-
- Detroit Chamber of Commerce, the Detroit Eco-nomic Growth Corporation and the United Way for boards of the East Central Area Reliability Council, Michigan Energy Resources Research Association, ity Business Ventures since g 1993. Prior tojoining Southeastern Michigan. Michigan Manufacturers Association and Goodwill Industries of Greater Detroit. He serves on the Detroit Edison, he worked d4 - '
Anthony F. Earley, Jt, 45- '# ' ' "'
board of trustees for Lawrence Technological Univer-
- president and chief operat #" ^ '* '
sity and on the industry advisoty boards of Michigan .
ing officer smce 1994. Mr. "#" '#"'*
' ,. Technological Umversity and the American Society manufactunng fields, includ-Earley brings a broad of Mechanical Engineers.
knowledge base from experi. $4 ing automotive companies and government agencies.
i ence outside the company Robert J. Buckler,45, As chairman of Biomass Energy Systems, Inc. and and heads Detroit Edison's senior vice president. -
its five operating subsidiaries, Mr Anderson is re-
- ' sponsible for expandmg the company's landfill-gas internal culture change mi. Energy Marketing and Dis-tiative. He holds degrees in tribution, since 1902. Mt ~ powergeneration business. He also is chief execu-i ', -
I physics, engineermg and law from the University of Buckler has 20 years' of #ve officer of Edison Energy Senices, Inc., a
! Notre Dame and served as an officer in the U.S. wide rangmg experience '~. subsidiary focused on working with large industrial ,
Navy's nuclear power program. A former partner in with Detroit Edison,includ. f. and insttutional customers on energy projects. He ,
) a law firm speciahnng in energy and environmental ing engmeenng, fuel supply, h91ds a bachelor of science degree in engineering issues, Mr. Earley worked with nuclear heensing. power plant construction fro n the University of Notre Dame and master's de , )
l safety issues and regulatory matters. As former and operation, marketing, customer senice and cor- grees in business administration and public policy president of the Long Ishnd lighting CA he has an porate strategic planning. He has rhampioned from the University of Michigan. l l
extensive hdcround in utility customer reladons. actions to increase customer satisfaction by finding Michael E Champley,46, reguladon uJ auclear energy Active in mdustry ways to better serve customers, mcludmg best in' vice president, Marketing associauors, he sened on the execunve comuuttees class improvements m telephone commumcations, and Sales, since 1992. '
of the New Etk Power Pool and the New York Gas senice reliabihty and outage restoration. He holds bachelor's and master s degrees in mechamcal engi With 20 years' experience W "
Group, as well as on the board of the Empire State with Detroit Edison, Mt neermg from the 1:mversdy of Michigan. His l Electne Energy Research Coiporation. He also Champley has broad N.
serves on the advisory board of the Umted Way for orgamzanon is responsible for all aspects of the expertise in strategic and l
Southeastern M higan and the Engmeermg Advi sory (encil ior Notre Dame.
companys transmission and distribution system.
customer senice and retail customer marketmg and financial plannmg, pricing h- '
j and regulatory affairs and '
sales. Mr Buckler is a member of the boards of the developing strategic supplier and customer busi-
! Engmeering Society of Detroit. Rackhani Foundation ness relatonships. He is responsible for retail l
! and DICA of Metropohtan Detrmt. He chairs the l Tus urkoiT tmsos iw4 rwri. kErwr
marketmg and sales activities, includmg market Leslie L. Loomans,51, Federal Affairs, he has primary responsibihty for planning, product development, pricing, economic vice president and treasurer Public Relations, Corporate Contributions, Environ-development, sales force management and the since 1989. Mr. loomans .
mental Initiatives and Detroit Edison's Employees' hru nearly 30 years' experi- +- Pulitical Action Committee. Mr. Taylor co-chaired g company's steam business. Mr. Champley spear- .
, headed the company's innovauve special ence with the company's the successful campaign of Detroit Mayor Dennis
- manufacturing contract negotiations with its largest marketing and financial Archer and chaired the Archer transition team. In
% customers. He earned a bachelor of science degree groups, including the 1994. Michigan Gov. John Engler re-appointed him from the University of Dayton and a master of busi- responsibihty of planning >f '
to the Miclugan Strategic Fund Board of Directors.
l ness administration degree from Indiana University andissuing more than $10 i He serves on many other boards and commissions, Early in his career he taught
- Principles of Public billion of bonds and stocks. He holds a bachelor of including the Michigan State Chamber of Commerce, Utihties' at Indiana University and provided inde. science degree in electrical engineering and a mas- the Michigan Cancer Foundation, the Children's pendent consultmg senices to municipal electric ter of business administration degree from the Hospital of Michigan and the Detroit Zoological and wastewater utihties. Mr. Champley has held U'liversity of Michigan. His organization is respon- Commission. In addition, he chairs Kids Voting-elected and appointed municipal government sible for finance and investor relations, banking and Michigan, Detroit Urban Ingue and Local positions and serves on the executive and advisory cash management, trust fund management, corpo- Initiatives Support Corporation.
committees of the Insutute of Public Utihties at rate insurance and the administration of employee Susan M. Beale,46, Michigan State University and retiree benefits and payrolls. Also, he chairs c rporate secretary since the Greater Detroit Area Health Council and serves Haven E Cockerham,47, on the board of NSF Intemational, Nuclear Mutual 1989. Ms. Beale pu,ied vice president Human Detroit Edison m 1982 after 4 Limited and Energy Insurance Mutual, chairing the Resources, since 1994. He w rking as a lawyer for latter's audit committee. He is a member of the In. ,
brings entrepreneurial and '
vestment Committee cf the Community Foundation Consumers Poar and bmad based corporate exte S uthem Califorma Edison.
of Southeastern Michigan and the Edison Electric rience to Detmit Edison. She holds a bachelor of Institute's Finance Committee.
Prior to joining the com- science degree m, home .
pany. Mr. Cockerham had Christopher C. Nern,50, ,
economics from Michigan State University and a more than 20 years' experi- vice president and general jtuis doctor degree from the University cf Michigan.
ence in personnel management and human relations with General Motors Corp. He owned and operated counsel since 1993. With more than 20 years'
{d
- 4' She has handled Detmit Edison corporate contracts, fuel purchasing and environmental matters. She an automobile dealership and headed a management experience with Detroit , also has participated in corporate strategic planning consultmg firro that specialized in human resources, E& son, he has responsibihty on employee issues. She championed the company's marketmg support and strategic planning with major for the company's legal employee peer review system and its Innovations clients in banking, constimer products, utihties and affairs and the corporate ? employee-suggestion program and streamlined s government He holds a bachelor of science degree secretary's function. Mr. i its policies and practices. Her responsibilities
',I in economics from North Carolina A&T State Univer- Nern develaped the company's long-time program of include Shareholder Senices and numerous Board sity and a master of business administration degree performing legal matters internally; he also has of Directors matters for both the company and its I from Michigan State University His organization been instrumental in the use of internal resources subsidiaries. Ms. Beale chairs the Detroit Seemi- l works in cooperation with company business units for all htigation and regulatory support. He has a ties bw Section of the American Corporate Counsel to increase orgamzational capabihty improve em. bachelor of arts degree from Michigan State Association and is on the National Education ployee skills and foster a motivating work University and a juris doctor degree from the Committee for the American Society of Corporate emironment. He is responsible for employee selec. Wayne State University hw School. Before joming Secretaries. In addition, she serves on the advisory
, tions, training and development, compensation, Detroit E6 son he was assistant attorney general board of the Detroit Women's Economic Club.
health care, union / management relations, organiza- for the State of Michigan Consumer Protection Divi-Frederick S. Karwacki,46, tion development and internal commtmications. sion. Mr. Nern is a member of the Michigan general auitor since 1989.
General Counsels Association and the Edison Elec-lg Ronald W. Gresens,61, ' He has a bachelor of sci-tric Institute Legal Committee. In adition, he is a vice president and controller past president of the Michigan chapter of the ence degree m accounting g since 1987. He has more -
American Corporate Counsel Association, a trustee imm Kan Technologi- d' than 26 years experience f of the Detroit Bar Association Foundation, and a cal Umversity Reporting V
- sith Detroit Edison's directly to the chairman of -
member of the Cablecastmg Board for the city of
, an& ting and financial the board, Mr. Karwach is
. groups His organization is
' $ Binningham.
responsible for assessing responsible for accountmg, i S, Martin Taylor,54, vice the company's management, operating and financial
~ budgeting and tax functions -
president, Corporate and g controls as well as the administrative and opera-throughout the company He has a bachelor of arts Public Affairs, smee 1994. N- tional effectiveness of organizational units. A degree in accotmting from Michigan State Univer He joined Detroit Edison in certified public accountant (CPA) and certified inter-sity Prior to joining Detmit Edison in 1968, he was 1989 with an extensive . . g {j nal auitor, he belongs to the Michigan Association an auit manager for Pnce Waterhouse LLP. A cer. pohtical background at the - of CPAs, the American Institute of CPAs and the tified public accotmtant (CPA), Mr. Gresens is a federal, state and local lev- -
Institute ofInternal Auditors.
member of the Michigan Association of CPAs, els. He earned a bachelor of Amencan Insttute of CPAs and Financial Execu science degree in pohtical ; Officer Retirements tives Institute. In adition, he is a member of the science and economics from Western Michigan Uni- Malcolm G. Dade, Jr, vice president, Human Chief Accounting Officers Association of the Edison versity and a juris doctor degree from the Detroit pe30, aces, retired July 1,1994, after 12 years of senice.
Electnc Institute. Mr. Gresens formerly sened on College of Law Early in his career he worked as a Saul J. Waldman, vice president, Corporate Comma-the Evaluauan and Allocatens Subcommittee of the corporate attorney in Chicago and later served on nications, retired July 2,1994, after 19 years of Capital Fund Ihvision of the Uruted Way the cabinets of two Michigan governors Besides ,en,ic,~
responsibihty for Regional Relations and State and I THE rTTRo!T ENSoX 1094 AUl'AL REPORT
Market for the Company's Common Equity Ansual Meeting af Shareh:1ders and Related Shareholder Matters The 1995 Annual Meeting of Shareholders will be held at The company's common' stock is listed on the New York Stock 10 a.m. Detroit time Monday, April 24, at The Detroit Edison Exchange and the Chicago Stock Exchange (symbol DTE). Company General Offices,2000 2nd Ave., Detroit. I The following table indicates the reported high and low sales Shareholders will be asked to (1) elect members of the Board ;
prices of the company's common stock on the composite tape of Directors, (2) adopt a plan of share exchange, (3) approve as of the New York Stock Exchange and dividends paid per share long-term incentive plan and (4) ratify the appointment of for each quarterly period during the past two yeare: independent accountants.
Dividends At the 1994 Annual Meeting of Shareholders, five directors, Price Range Paid all of whom were incumbents, were elected, and the appoint-Calendar Quarter High Low Per Share ment of independent accountants was ratified.
1993 First 37% 32 $0.495 Corporate Address Second 36% 33 % 0.515 The Detroit Edison Company Third 36 33 % 0.515 2000 2nd Ave., Detroit, MI 48226-1279 Fourth 34% 29% 0.515 Telephone: (313) 237-8000 1994 First 30% . 26 $0.515 Independent Accountants ;
Second 27% 24% 0.515 Price Waterhouse LLP i
200 Renaissance Center, Detroit, Michigan 48243 Third 27% 24 % 0.515 Fourth 27% 24% 0.515 Fonn 10-K Copies of Form 10 K, Securities and Exchange At Dec. 31,1994,144,863,447 shares of the company's Commission Annual Report, are available.
common stock were outstanding. These shares were held by a total of 151,077 shareholders.
equests shonM k &ed & ;
Susan M. Beale The amount of future dividends will depend upon the Corporate Secretary company's earnings, financial condition and other factors. The Detroit Edison Company Distribution of Ownership of Detroit Edison Common Stock 2000 2nd Ave., Detroit, MI 482261279 (December 31,19941 Transfer Agents 1ype of Owner: The Detroit Edison Company i Owners Shares 2000 2nd Ave., Detroit, Michigan 48226-1279 Individuals 72,483 17,560,606 Susan M. Beale Cathy M. Lewis '
Joint Accounts 65,752 22,597,426 Ronald J. Gdowski Janet A. Scullen !
Thist Accounts 11,748 6,974,685 Elaine M. Godfrey Jack L. Somers l Nominees 54 84,270,535 Sophie J. Koziatek Gloria A. Williams Institutions and Foundations 217 140,372
, Brokers and Security Dealers 11 10,912 Shareholder Services: (800) 551-5009 Others 812 13.308,911 Registrar of Stock l Total 151,077 144,863,447 The Detroit Edison Company State and Country: 2000 2nd Ave., Detroit, MI 48226-1279 Owners Shares (Preferred and Common Stock)
Michigan 72,004 36,186,475 Other Shareholder Information S; Florida 11,268 4,553,688 I Shareholders who hold stock in street form may request N $r 8 8' 4 quarterly reports by writing to the address below. Sharehold ., ;
lilinois 6,549 4,142,283 ers of record automatically receive quarterly reports.
Ohio 5,082 1,456,004 As a service to shareholders of record, Detroit Edison offers 44 Other States 39,892 12.060,605 direct deposit of dividend payments. Payments can be elec-Foreign Countries 572 182,694 tronically transferred directly to the bank or savings and loan Total 151,077 144.863.447 account of choice on the payment date. Please write to the address below to receive an authorization form to request direct deposit of dividend payments.
The Detroit Edison Company c/o Shareholder Services, Room 434 W.C.B.
2000 2nd Ave., Detroit, MI 482261279 l " THE DETROIT EDISON 1904 AMWAL REPORf l
- l' , ' ' j
., - - . ,I.. l . . ',
, , . . ' . . . . ., ,' . , , ~ , , .. -r I ., .-
' ..,s.,
~
I Y... * , :. *
- I.
E, ' . .~,
.u s ;b , l :. .';: , .1,.n i; '
'..E'3
. . . ... _ g.
.,.- en.g
. . . ... . .: .. . . .s. c..... .
. 7 ';. . .
. . . , . . .c.
',,'1-.. .;. /...,',.,~".l.. n) . . .
';, , - I ;
,.p*
. # E ". w.
,':.;_',',,.'.-. . :p
,.;." .~,,.!-',U'. - :; k .'
- .....g
- .. ', J J .. ' . ;; : . . . _ .' . . a 'i . ;_;,..,
- ,
- ",( /-7 . _ q'; ,.i '.l_,
.f*. . .' .:y .
!,..x- e ,.,~ ..
. p" v . r ;. . -. ' ;. : ,' ' ',i . ;. . '. <, ;t ,
,: . ? ; .. .
' ' - ' * - , ;..,3. . ' , ;;; . : 9,...
/r ,.
. ' _ - g r..' -' '*s,. . .:. - .
- 't.
' -' - .- .~, , , .
. . ~ .
. : i . i, . . . . , ,. j ' .',, ;
,t.
? . ;, ~ .;f, '. l. .**' - . ,. . _
_ . _ . .;.. . ,~.
l.'}. *l. ;'I'.
.,j*:,,,_*~.- l .'I.* . ' ,'._ % [ g. ' ; ' 'f " , '
-s._
.. ,r_; -
.}
- s. .
.'...' . N ' $ I:l ' .
l ,' y N* [. ,
. . 'j l , . . ,
~
.. .... .~ {'...'
- '['..
~
- ^
- . . '
., ~s +
- r, ,,1 -
.l -
I .' ' ' .
. . . I . . :. . . ,
... ....l Y '
W: A ..? " .. .b '. ?.
' j. -
l -N l: . .
- ' ~~ '
,.f,
.,- .. . , l [.j
^
"' i ,f 4 . ,, , . . . .*I..
~
[' ' , .
, ' , , b , , , .
J .. Jy N '.C N~b ".JQ C 1suhMi.h' N .'7.M @desrtancime W 9.+.n. - ^
41 3 '. f '-
. -l' s . ,,
I. , .. .
- t.} ~* ~'
.I ,; ^ ,
6
'g. ., + j.* .'.. .
^,.I .
,I
'y
- ^[ .f',, ! . f . .
.)k.
_ . , .~ .,
'.', ' : .h
- ;; Il .
~
. . . . :. I.. . *- ' .h ,. . . ~. :. . , ,
- f. '
,l ll
^
[.' _., !. f, ;s . a,.
- ; , g; j .
MarJ. . .._ A_ . 7. f. .. g , 7 ggggh, .
. gagsp8 hauk . ~ 1_ .
. . . .t . ..
s' ': - ..!- .
_e
. . ' , ' . . ' ;, . ., :l ,_. .
,, ',* ; .. ; . .. ',:.? -
[, ,
n ;ges
'~' neb.O.1.
Un . .i ..e. 6 ' PMPWpuimista, n; T
'? . } i. . 7 7 '.;c;..L fM thton'. 3j~ J % '.' [ ' MWMM j . . . . (.;'c cp ,. ~;' n. '
MrJtelbrentM1b'. :
.n. VL . , . (-.
- 3. . '
. - .. - . :, .:. ' _ . . . . M N p~- Mig y:
44pe M. a g es E. ,g . . ,
.. ? . ~ .
- . , A ., .
.?
% .Y -
l.' l f , . : l * ., ': _ ;.?' '; .
f *l ^ '. . . . j* ;
.; ;( : L .O l . : . ' [. { : '* ,: _
. .-, .. l - . . ~ . ~' ' ,{. ' . ; ,. ,, ..
~ . .
fME& $5& $ & 9% -
- ~~~ ~' '
- ,j ' . ' q .
- . '; .. _lb
' .I : ,
E
' l_ _
y-., ., . ,. ,, , .. ty j[ #
, 1 .- ',,' -
-} . ',
^ * ' .','..
I : * ~; * '
.. ,. . . _ - .x -, . . . . . , , 1 :- . ,L .
. . _ , ,.,.l w .
bf
,z..; . [: , ( ,l , q. ~ , . ' \f -~ , '. '. ', .'.1 f. '
3 - ,- ),'... [ , .;. (
~
~'..' ,',
k :
. ., g, :.- . . ; . . . . . . , . ; I. .
j[3 . . . . . 4 t M W ...'.L .'[.-[.1'ff [ I!E/ .
l
'.. $ % M 4 400E R M' _ 7 ?
.' k ' M .
' . :; l I ;,l. l 'I- 'V
. ,.':', . ~ l _ l l )_ : l l '.' \ ' . . ' -
^l _
g;
[;},k f(Q, . ; , . '..g
' ~ - ' *
. .; i:[. gy__ ./ . ; ;/;: :; +
_. ;y }.[; _- . ; .
(. Q
- I. ; . - '
J
- > , .i , . N . 'v
. . '.T
~
. . , . . . . . .. ; ',[ i a.. ,,' . , G . ' g .1 4, " ( . ' q ,.: y' -. , ' ~' '
,e .E .' -
.i*' ' . '. ~ '
1' 1 5 M ,. f .7 M j 9.f..~. U.,D9i:f ':i M::,M . 9 J.,; .i . [ j h .j.5 M . % M 3%' BS. 04 A E @ l ( ._ [ i . h 1/. [,, L' I. .
. , ' f. : _: N ' '.
' , ' ' l ; f., : +. ' ' * '. f .: ' : .. * '
^
'I. '
,. _a, N : _ . ,, [ , _,_ .l ,
4 O lJ L ", l" l re./R.(jf f T.3 rs.:c:S7,7 7 : : w u"bg.757 gygggtpetsSNP..g@l{gedir E _ x .
~.J..g,..';
.f. * :._ '* ?. '
- k'? '
.;. .a_,~ ll . h, -
lY ',. ~ ; 1. ' . ' . ,
' _ . , y..+ ; F ./..
. a p. . ; .. av ..w
. , j' .;-
.. ; u .e . z. .
., : s . . 3 .- . .~
.., . * : . . * * ^. . .
.: * ,. , }< y Jf,-A n. w ,; .;. . .~ . > ;} ... ; . 7. 9.. . Y
., , ; _ _ _, e
,:.... ..4 3_-
. , C ,;,, , , __
.__-7 ....,;
..f. , ,.
. . . . - ,.. ..f . , . . . . .,a ..3
,T.', ( - Q ':. . . . ' .,, . ' ; . .._ ;'
- ,*.? . -. n.>
'_s- , ;. .'. ' , -l ~ \ '
- ;*' <*. *'
- ' 4-
. L
~ .',;.f',.y s .. . . . ' . . i,, _. . ,. , c [ R ' . , . T. , . , I.. , ;' ' :
_ .;\ ' f ' , ks.,T, .;,
9 .l. .gi.:.;' +
.,-~_.'".-_~.,A,
~- . . . .- , - . .
,2, .
'j ,f f j ' ~ T f*. '.*',,*r 'i * \ :~" ll h. K . - ~~~"' ~ '
.I "
- ?'f' .$ f_ . h., 'ff ; ' . [' , _ b ' ?). ' ' . ? .. ,
. .,:hp J ', _. , ;fl. ;.l .; .) ' . ' [ - <.: ';,.. j : ,"- ; .i ' ' : .: ., { ' '.:l._^:' . l , ~~. L . :v.
, ; _ , , u. ll :': .. ;.:_ _,.,;_,. ' '? _. - l ; L. . }. ,v';f f,..tl :.. . : _
- .; ' ;; ['.[ -,. .f .]
- . .h .. . ?,'x :~. ' h.
- l ' '.,'.l
.!;. : ' / %:q aQ Jh ( n 3 ki%,4 '~..,%.l...",' - }& a _ ' O. L .: .y,. Y.
. } l. . '.. . ' . ' %l ' '_.,.r:l.'.,*.l-l..*
- ' c. .. ..,.,.. ;., >._.; :.. ._' ._' .. ..w:g *v Q ' .; * : l . '. ] ; y ,' ' . . . . . . . . , ,
. ._.: .a..*. :.'.:.:'J.a.},. n- .:. _ _
- . * ; ,. u: .- .; ,: ' .. : ..' .; . :;. ,. T.
.y . + '.: . . _ _ ': * .L
.n
/ . V. , , . ;
- ..,8
- ._z, ; l. '. . .
., . h : . ;'
....L;,4..,..',',.:..'4,i
,, , y . . .: : '
' .a.r...:"
+
. ' ,'W.n,. 9;, '.~ ;_ < , . ...a . . - ' : . :' :
c.9 . . ~ ~ ; . . O n :.:) :*
O
.O . _ ..;: ... ..- . ; ;',_.'l,..'..:'..**.7,, .. A. ::,j..,yk . .-- . ',,, _. -st
- * ,;.
- ; . :', ':'. .,3 l* , , _
- -_ l. :.. :'.
^ ' ' *
- : / *'l,:-
. _ .*:- ; . ='.e- ;, .. '
':* z ,C b: . ; . ', p'.y :'. ' *;., . . . ; : : :. ; n .
ry' :- p 4;.. .;.. e. : % ;" . : ..'s ' a.:' * '.; .:.f.:.... :... . :~ . . ';,. . ~
{ l '. ' %, e d'y ' .'. ._m. .}:.. : :_4 . . .s.* .. : - .;.s..- '
...'...;: . ,; '.. ;:.: . *:. g.
';, **.v....,,;.;... .-..y.-
,~ L* ; , a .:. . 9 . f ' . : .l, ; !. ' ' '
.: . ; b ,, . . ?;. : .: [ "Y . :: ,W.,. . .<! ' .: ; :) .
... ?? . .: T..; . 4 o :f: ' :;_ '
V y ':' :
^
- .I _* , . -
.t. .
I, I- ; -
- E. - . . . *. '_'
- . ,.:5.fh hk .hk . .(Ndth . . IS 'l.Al ' ./ . (-[., ,'l ;{ . '; .f ,. 3 .' ! . . h. [ . ; .,
I.h .l4
- '.(.l"I.
- , .
4'l . , Y$ - ' f
. . * I- ['" 9 ' ,'- '.;' h. .!, [ ,
k . '.. .
Y..W&ff , ' .' N:. -l .
,_bl f.f .l.1 " ; . z f !h d.k: f ' l'f. . : .'
.,[:- "5 ': ls's .Q_
y' * ' ' ; D_. .; . . ' Mu '*,.;.<
- 0 . l ' . ,
- i * 'Y 4
.l'.'.E',,.
' " !. .i l.
' ;;._ . ; . : II. .kIQ11kt ' ', ' ; Ch. fM ' *.*.?
- O ' -:
v, 7. J ;j . %CWf$%' . . '. _. * [., .' i .i. .. _:. ._. -:. '._y;# . . ,*D}y)h'Q )*C f f' O 'fif;(:,_L' ...?.A . : ?.Ih G'. * ' .'.: :.. :.i . ' ., V.:I.D .
[)
. * ..__....'l..'I
..* - ' . _,,.-[.
.'. O :. ,;,r i
' .. r . '
I .
- h: . . . : y .A .
.'l' ' fl. I : L' .- .T : Y
.t : L : ' . - : :
1A'
?. ' . . ? ." , '. > -h,~... . W. 'h. l '..; %;.;
- ? ~ - '- ' Qhf, Tkth$1 hhlh.)&$hiQIb1 -' .?' ' L h
. $ f:?N-k :-l T'h0 a. 'f 561Y
- f. l ., \;'
.] [. :.$def %gEittd.0f.kcr; h4n4y'.,Chpu'k
- l I. 5':$'93W. Y :3 . l; ' ' .
.. ' Q l, Q. :.C ..
._ . D , .?. ?'w.:.: i :. Y I .L f R_ ,~:l.?_($ j;-l. .
k !.;'- .N , '/ .'. ' .( h
,;.... Nh.;f.kNNNk,f.,M,hTb l'.b., 3 Ih j. . , [. s . . q '[,
- .5 ', \N*- l; . .' 7 - '1 .- D. ' [ ? [; : , l .. ;
f ' f,l l_. f , 0: .&h K$h(
.!; ' . . hh .h $ Of .l ; . _ .t' ~ f... ._ ; } ll,i ;. _ _, ,: {,\T. ' f. , l l . :rl ' . j. _ _ _, 'f _ l. .:. l :
'. .'.,-[
- l. $l.. { ,? -((:i, ., :f ;# '
h .$',I hg . , . . : ..[; . .j', ' . -[ .l
, . ~ ' -[, N; ( .] ' l' .
- . ' . , '. ; f
- 7,. . *i l , '.f.
.f. [ f? h :.')'l _; ~ [. . . _
- .l. ,'?.! : g (h f :: _ .' * . f_ ;. . 'l ~ . - *l* ._
, ( .; - l .) I: , _ ...,,.,; i.
- b f bke.f Kreg ige .OfficK;.'D)(yfigg. Ajgsje{ ,4,? ' TS.i i . VQ. L.M. a9(arMtiNet S.i i O ^' . $" [YMJ " 'Y C il^ M
,,'" ^ .
W . "'. " ' ' ' ' ' " Y J: " I$[-
M' E' EIMikUif'V #-
. , 4 y
.l , ' h . k' . . ,. 'ki' D(.K[hdbChlh !.
. . } }' ,
.c -'f: . ;D4} J. l ' .,' ).] ^ .
[ .' }-' ., .[ ' {; .
7, a l '. '. ' : . . . ' . - . ; ' i .,,.
. . . , .[. .( ?'
U . .. . * -
I N '. . '
((:;j._...f.
l.. k
-l Y ' .} : .lh~ ' ' . ; ", bN . l'::.N . . h0Mk%NL . . '_;..-) . ; .. ..; ,)~*;[ , . Q
,, , .- j. :.} ;[ ; ,'. . .
hl ($T'.
1
-] .
2..
l N1 . 01[ M h l [hN[. . f. .I . $. ' I .I ' I L [ ' I,.h >- l: ::.lI.h.h. . ..' AkNh.i 'I N;kh ,
1.' : N~
. _ ' '_ .il . . . , . . . . l fl. * ~ , . f
' f* .
ll? {' ; ; .
. . NCN.N iCdrC5 th8NdW IfbNdMkUCN.\. ~ Nl T .'l .5 . ]leggite(ITTC$
EMrktt p@0$dtef.:j.y:fQ : . lj f.'.
.. ;f.E(h.WManda9pnced 1.0 f.F. c: Mead $Uere i p. .$'W L. D.sessiaffaedAcaomicyWeloths,e4Rf .
ll-lL :.7.%@tadt FAh46.0cmpanyy.f ; fl
- . Thsudore 6.leiprsidti, , .f i ?.? 7. .i ? 4Cinld. gas %Mmme$nydL (;
[. : . . , .( . IIkC. .
' :- - $ ...t I: .
. I'
[
, ; .. . : . Y '. - - W'- '. 'fi .;. - l, . '. I'.
ffRhlkNf $1b [ bl,y,f,'
., lY ll f R&Q._ O ;. . . ' f {; ' , : } l. .: .
l-
- h. 'L: N,f- l'. .
'l . . .
- l. , .
..&l .: ; ,.
- . ll .
. l ' :; y,, . . ,? ,l? [
_ tlK' '; j'l'. -' ^' { 'l '
1 .l'f; f .
- l. f [
. .l ' _ . . ;. . ._. l : :
l.I.M .:. f . ,-ll- . l.;.; , -l'. lg Q: . ,* : : .]:}: . ,(l, \ ll ' f[ lW'
. ;. . l:.}_l ';hl._:, ),
f ; .iff,lk'
. I'. l9lQ.i.f ? ., k ' %. k.: ,:
- '
- . lY ?.k
, f: f * . ' . , N: .W. 'f' ,
. :. 1 ,,
l ] i . ' l:;. .. '!::f - { -
- h. h .] ', '. ,; :
(. .
l, 'jl':,, , U. l.l lY [.N'?d">'3'
4
,% h . {..,.
\ ? 'l ' Y DQhhhh hNhW $$iYt1hth. ..[ ", [ E: !$& 4 ' ( [ W; .l. ..I.'-QN .f . l ?. . .;:: L .h., ' ' . ; L::l? . , .. 3lNl:f .
! . l -
f.'
^
. ; '-l-l:h_'h $ 0' 'l
^ ^
. , ) f' .: i J L ' - ;'I ^'; f; i. 'q:i l J.
h' . ' l: .
- } .. .
l' !:{, .l . :.; ; _h y. h '.'ff bj _f^.A
.!..Y. ,' .'$ ' '-l '-' : : "
- ) . C. _e , *; fy::{ ,
10@b h RT l l '.I . -
[ -
. . .. b, . : . k k 2
-l}
'I.
.. . I . ',; '.; '~
~
- ~, .' f'.,'
- . f
'Y..... *
.Y ?, ' . $. ,h ! - -'
I. :. .:
N> Yl' . .
l
^
_Y , Y 0.'
^ ' '
. .l. . ; .
ll. : r
, f._ *
\ .:' . .; .[
i $ ue ;d I $O $ blOO ' ', h l,[-.
[^ . h . N -
. ;3 . . . ' . . . - i . . ,
. . . If .. J.. '(.; ',: '
l , . I.,
, , ' . ( [ I" . . ' , ' . ,' f ,
NO . ,1
[. .' . ,f.[ [,
i[ ' l , . !.I.: .l * . ? *, ' ;} l y'v.[ .if . ' ' ,;.l.-l'&Qg &k&QQ- {p ft
' h
(: .l l.~3'^~;^ .l . '; : . l; .l
. .Q.lll.l l '.
, .]
.".k:kI & , .'.. .) i ,. . k ..
. f '., '; , l ,
2
- h. Nk' . [ u, '4 NI..
~
h
. h; h. ,
?
d 7 .;.. : S;d, . . , f1 l k9t"81M . :
- l. h .. . , .
f ..,'.',I *: .. , .. '
f .? ^
- l.:I ?.N . j ,r.; ;
f& ; ' ' : ' l .f. ,..
. _ . ._. .f 4'; ' *: - . . ,' ~; . .~ ' ..I; '
.. - n ' ?. . - ,':' Y. ? ; .. I; . :' '?^
h '
- Y. :.
l 2 .? _ ' l; . ' ~
- l.
- l
- . . , . .; . : { y:. ' . . .
of .i l;;l:I, ?.. f. . " . .;!% ', ' ' I..T f. . .i *. . l . .. Y" 'I; Y f*>:.h._'; G .. #_, ' '.' N ' ,
~ E. ?$ f. Y . l , l.. , * . .bll;l lf .I h T.;f f,, ' ? 'l, ': -
/[ : ) .' '.
....:.', ., . . [ l.
, . . . , . .. . . . , . , ' . . ' , ;:, . . .... , .. .R;. .> ..
.- .- ; ..,r.. . , . . .
- . a 1 .....,;.:..* .in
- E' ; " y;','b . .,.s
- . . .' ' ;3 .. .:: .,..~i
.,.-:'..',l;. ....:... :,... ., .a.,,': y.
, ._ ;. ,% . .' -[,,l ' . - i '.......J.*.W'._;...
. **. e.
_. . ; .;_ .....l.: .._j.; . . ; '. :{ ,p ) . . '. ; - ' . . ,.,..4..,:-:9 9, .[. : ; - .._..
l, .
~
- ' -: ;.: ;;;; . .y ' ; ' . l . ' - _,X3 . f ,f. .; , ;, i .':, ._. .}. .., 7;; 3 . :: 3 ;. *V' - .
,Q.'.;. ?;; ; y ., . ; ; f [:;; ,, _} .'.y' . L'.". , , ' y . , ) :. . .J.. ~.:g .,i; 3 ;n. .; '. . __.
+- . :. f .;. _. ..
f' ' _: ' " * + ' * .',
.*_',. j.. ;,... g _..., . f _,': . !:, . , . ' . _ . " , . . ;. .f..^. ' .; ." v '_ . '.. , .,3 l **. :l 9's
- q;.'). ;... . ' N. _.,_ .. ,
- , ,..~ g , :l;. _.,.:.
_ f.y} '.
. , .. . c . . ;; . f * . '._ .*;
o[. ;, c.; F ' ..l i.?.,
.,.._.s. ' %, y. y;.;. ; .._. ..;.. )_;_ . . ' .. _ 4
,. 'i., : ,4 .; , ,, .
.3.._... * ,
- .. . . ' . , Y. _ 'J.
.',' y 3,! 3 ; N
<..*;._.,...g..".._ef:,' . : ; ;- an
,' ., 'n.
W: .',.,,s._.;,
L.:
.V.: ;. ..'._; .:.
"" m ; ..: . -. ; .}.....-
- m .
, ;_. .: .f
_ .,:. . :{ ; . .
! . ': 1 %,;_....'.,.,.'];,..
,: s.. 1::;,
,,...[j;.
.]
4 ; . ..; ': ; ::. _ , . : ;_ _ . ; c ,. '.. -
a '.
. 4 T;.;:. '.; :.y..
- ', 2 * ; .
- 1 .-. .L 4
l
.ll lll tlll lllll!l
, '[L, .
m u
m.
A g
w$=g o
o d
y Y m p a
r t
e N. .
d y 4 J'
u 4 nb==_
- r l
i
= k m .
(
D2
- a. w 3 E0
"=-
1 3 T0 u ) R0
_ a.
- 2 3
O2 IN 7- ,TD 8
0 MA 0 IV 4
0 8 ,E 2
m 2 6-1 i 2
7 2
9 N,
~
~
,i! l'll !1l l1 1!\ 'lI\l lll!li1j1. !l