ML20204J940
| ML20204J940 | |
| Person / Time | |
|---|---|
| Site: | Hatch, Vogtle, 05000000 |
| Issue date: | 12/31/1984 |
| From: | Addison E SOUTHERN CO. |
| To: | |
| Shared Package | |
| ML20204J925 | List: |
| References | |
| NUDOCS 8504250235 | |
| Download: ML20204J940 (60) | |
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Highlights Percent 1984 1983 Change Operating revenues (in thousands) S 6,123,985 5 5,418,043 13.0 Operating expenses (in thousands) S 5,076,512 S 4,399,432 15.4 Consolidated net income (in thousands) S 719,669 5 590,326 21.9 Return on average common equity (percent) 16.58 15.65 5.9 Earnings per share S 3.00 $ 2.70 11.1 Dividends paid per share 5 1.83 5 1.725 6.1 Book value per share (year-end) S 18.55 S 17.60 5.4 Market price (year-endclosing) S 18.875 S 16.375 15.3 Average shares outstanding 239,784,035 218,555,666 9.7 Year-end shares outstanding 250,651,627 229,589,500 8.9 Stockholders of record (year-end) 325,200 339,978 (4.3) Construction expenditures (in thousands) S 2,100,450 S 1,706,440 23.1 Total assets (year-end) (in thousands) S 15,003,960 S 13,475,388 11.3 Peak energy demand (in thousands of kilowatts) 19,772 20,518 (3.6) System capability - at peak demand (in thousands of kilowatts) 26,165* 25,877* 1.1 Energy sales (in thousands of kilowatthours): Within system service area 95,734,477 89,977,799 6.4 Off-system 18,750,335 12,029,933 55.9 Total 114,484,812 102,007,732 12.2 Total number of customers (year-end) 2,800,532 2,723,923 2.8
- Excludes 964,000 kilowat ts and 654,000 kilowatts of capability from specific generating units sold under long-term contracts to two nonaffiliated utilities in 1984 and 1983, respectively.
I l l Return on Average Dividends Paid I Earnings Per Share (dollars) Common Equity (percent) Per Share (dollars) 3.75 25 3.75 3.00 20 3.00
- E - immi 2.25 mm 15 2.25 E E m- _ - en ime M 1.50 10 1.50 0.75 5 0.75 80 81 82 83 84 0 80 81 82 83 84 0 80 81 82 83 84 0
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"The increised snergy salas thtt h51 ped produce 1984's finInciIl grina reflect tha econ::mic exptn-sion in our region. They also underscore a trend
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To Our Stockholders y almost any measure of corporate under the off-system contracts are expected to grow B achievement forTheS performance,1984 was a year of through 1985 and to remain a major source of revenues through the mid-1990s. Company. Earnings per share Overall, sales of electricity rose by 12.2 percent, were $3.00 - an incmase of 11.1 percent over the the largest gain in more than 15 years. 1983 figure. Although thelast months of 1984 saw Along with greater energy sales, more realistic earnings slip below the peak levels reached in earlier rates for electricity contributed to the upturn in earn-months, results for the calendar year were the ings for 1984. Rate matters for each system company highest ever recorded by our company, are reviewed on page 7 of this report. Return on common stockholder investment was Syst6m Prepares for Future Energy Needs higher as well - nsing to 16.6 percent for 1984 com- As I mentioned earlier, the increased energy sales pared with 15.6 percent for the previous year. The that helped produce 1984's financial gains reflect the Southern Company's common stock closed at 18% on economic expansion in our region. They also under-the final day of 1984 - the highest pnce m 11 years. score a trend much longer in duration - the continu-And the market-to-book value rat,o t of our stock at ing growth in the need for electricity. Even through year-end exceeded 100 percent for the first time the past 10 years - 10 years marked by the after-since 1977. math of the c>il embargo, recession, and double-digit Another m. dication of our improved financial inflation - peak energy demand on our system grew condition was the increase in the quarterly dividend . at an average rate of 2.4 percent a year. If that rate approved by the board of directors m October. The
, were to continue, demand on our system would dividend was raised three cents to 48 cents per share double by the year 2014.
- an increase of nearly seven percent. This was the Although the Southern electric system's building third corsecutive year in which the directors in- program is limited to power plant construction at creased your dividend payment. The board's action those sites where work is already under way, this
. reflects our efforts to reward your investment and program should ensure a reliable supply of electric maintam, as competitive a position as possible in the energy in our region for years tu come. We've set a fmancial markets. $7.1-billion construction budget for the three-year Healthy Economy Coosts Energy Sales period 1985 through 1987 alone. But it should be em-A major factor in the past year's results was the re- phasized that construction can be carried out only if surging economic growth across our service area - we're able to obtain the necessary funding through growth which brought increased requirements for the sale of securities in the financial markets.
electricity. Industry's need for electric energy grew by Cost Estimate Revised For Nuclear Facility l 9.7 percent, illustrating the recovery of our region's The largest project in our construction program is l traditional industrial base, as well as completion of a the %gtle Electric Generating Plant, a nuclear fa-number of new and expanded facilities. cility jointly owned by Georgia Power and coopera-l Sigmficantly more energy - an increase of tives and municipalities in the state. Unit 1 at Plant 6.7 percent - also was required to serve commercial %gtle is planned for completion in 1987, with unit 2 l customers. An upward trend in sales to these cus- expected to come on line the following year. tomers is expected to continue m light of the vigorous During 1984, Georgia Power conducted an ex-growth projected for the system's metropolitan areas. tensive review of its entire construction program, in-In the northern sections of Atlanta, for example, cluding the %gtle project. As a result, the company developers project that over the next decade more rai ed the cost estimate for completing Plant %gtle than 70 million square feet of office and retail space by 8.4 percent to $7.2 billion. Based on Georgia will be built - about one and a half times th Power's 45.7-percent ownership, the company's cost
?
amount of major commercial space in the entire is expected to be $3.1 billion. metropolitan area today. At the conclusion of its construction review, Power sales to neighboring utilities also con- Georgia Power established a $250-million contin-s tributed substantially to the company's 1984 per- gency reserve to cover any additional increases in the i formance. These "off-system" sales increased by cost of the major projects now under way. To date, 56 percent to 18.8 billion kilowatthours. Total sales productivity rates at Plant %gtle have not reached projected levels although substantial progress has been made. If constmetion productivity does not 3
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I continue to improve, however, a portion of the However, new legislation has been introduced in
$250-million reserve could be required to complete - the 99th Congmss which could lead to increases of 20 the plant. to 25 percent in electkic bills. An update on the acid '
Georgia Power's construction program also was rain issue and the knowledge being accumulated - examined in an eight-month review carried out by an through scientific inquiry is featured on page 24. ] independent consulting firm at the request of the - New Opportunities Pursued; Georgia Public Service Commission. In a report
- Prospects for1985 Outlined leased in libruary,1985, the consultants disagreed With our concerns about acid rain legislation and
. with some of the assumptions Georgia Power uses to other uncertainties facing this industry, we realize determine future energy demand and stated that the that the remainder of the 1980s will be a difficult Vogtle project may not be needed until the mid-1990s. period. But we're confident that this will be a time B+it the study concluded that the completion of Plant when a solid foundation for the future can be laid by
= Vogtle under the current schedule and budget is tending to our core business of providing electric '
- reasenable and economically justified. The complete service and at the same time developing a spirit of in-findmss of the study are expected to be a key factor novation and entrepreneurship. '
during hearings that the commission plans to hold on One way in which our system will explore new Georgia Power's financing needs for 1985. The com- opportunities is through a renewed commitment to pany has applied for approval to obtain up t marketing. Our marketing approach is designed to
. $650 milhon oflong-term financm, g and up to $1 bil- serve the interests of both our customers and stock-li n f tenn1 ans. holders. By making more productive use of our facili-In another important development, a bill was ties while responding to customer needs/ we can passed by the Georgia Senate m lbbruary,1985, re- spread our fixed costs over a broader base. We've set quiring the state public service commission to phase specific goals to inemase sales through 1990 - largely m to customer rates costs prudently incurred in the through the promotion of efficient uses of electricity.
construction of Plant Vogtle. The bill called for the We're also continuing to pursue diversification phase m to begin with the commercial operation of into unregulated lines of business. I'll be discussing each unit and continue for a period of three to six this subject with you in greater detail in future reports. years. The Georgia House of Representatives ad- We enter 1985 stronger for the financial results journed, however, before voting on the legislation. achieved 19 recent years. In addition, the south-The bill will be pending before the House m the 1986 eastern economy appears to be on a course of con-legislative session, but there is no guarantee that tinued growth and our sales of electricity to action will be taken on the proposal. ' neighboring utilities are projected to increase Coal Remains Systen(s Major Fuel throughout the year. Based on these factors, our
. Even with the addition of the nuclear units at Plant prospects for 1985 seem favorable although our Vogtle, coal will cont'nue to be our system's primary, results will be influenced greatly by rate regulation = i fuel. Thus, we view with great concern proposed n n- across our four-state service area. !
tional legislation to deal with acid rain by imposing Our prospects also rest on the capabilities of new, harsh restrictions on sulfur dioxide emissions . more than 31,000 skilled employees. Each of us is from coal-buming facilities. mindful that, as stockholders, you are the owners of
. In its last session, Congress did not pass an this business as well as our employers. Thus, if you emissions coritrol bill. The failure to enact what we have a question about our system, I hope you'll feel i
- believe was hasty legislation was due in part to an in- free to write or call me.
creasing awareness that acid rain is a complex - phenomene with many unanswered questions, that Sincerely, , < - the proposals would have burdened consumers with enormous costs, and that the effectiveness of the j ~ {i , 7 measures was highly questionable.- i f ^- l
- Edward L Addison President The Southern Company 4 March 8,1985
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Financi:1 Results of Georgia. (Plant Vogtle is a two-unit nuclear facili-TheSouthern Company post strong financial performancein 1984, with results for the year significantly above 1983 levels. ty under construction near Augusta. Georgia Power now owns 45.7 percent of the project.) Dividend Rate Increased Net income for 1984 rose to 5719.7 milhon - an m.- During 1984, dividend payments totaled 51.83 per crease of 22 percent over the prior year. share - an increase of 10% cents per share over Earnings per share - based on 239,784,035 dividends of $1.72% paid in 1983. For each of the average shares of common stock outstandmg m 1984 first three quarters of 1984, the dividend rate was
- were 53.00. In 1983, earnings were 52.70, based 45 cents per share. The fourth quarter payment was on 218,555,666 average shares outstanding.
raised to 48 cents per share, reflecting an increase A substantial gain also was achieved m another declared by the board of directors in October. The important measure of fmancial performance - re new quarterly dividend is equivalent to an annual turn on common stockholder investment (contoh- rate of $1.92 per share, an increase of nearly seven dated return on average common equity). Return on percent over the previous annual rate. stockholder investment reached 16.58 percent for The entire amount of dividends paid during 1984, compared to 15.65 percent in 1983.
. 1984 is taxable as dividend income. (Through the These improvements are due m part to a s.ignif*.-
1985 tax year, stockholders who participate in the cant increase in the amount of electricity used across company's dividend reinvestment plan may elect to the Southeast - particularly in the commercial and defer the payment of federal income taxes on a industrial sectors of the economy. Other important limited amount of reinvested dividends.) factors contribut,mg to the earnings upturn were At their January,1985, meeting, the directors of more realistic rates for electric service, extensive The Southern Company maintained the quarterly efforts to hold the line on costs, and a major in-. dividend rate at 48 cents per share. This dividend I crease in sales of electricity to neighboring utilities. was payable March 6 to stockholders of record The company's 1984 results also mclude nine . February 4. The Southern Company now has paid a I cents per share from Georgia Powers sale of an addi-dividend to its common stockholdeis for 149 con-tional five-percent interest in the Vogtle Electnc secutive quarters - dating back to 1948. Generating Plant to the Muniapal Electnc Authority Significant Increases Posted In Revenues, Total Assets Revenues were 13 percent higher in 1984 - advanc- , ing from $5.4 billion to $6.1 billion. l Total assets rose to SIS billion in 1984 from
$13.5 billion in 1983 - an increase of 11 percent. In terms of assets, the Southern electric system is one of the three largest investor-owned electric utility systems in the nation. l Operating Revenues Consolidated Net Income Total Assets i (billions of dollars) (millions of dollars) (billions of dollars) 7.5 750 15
_ M 6.0 600 12 i m E _ _ _ _ 4.5 450 9
- ~ ~ ~
1.5 150 3 6 80 81 82 83 84 0 80 81 82 83 84 0 80 81 82 83 84 0
The Southem Electric System / Rate Matters he Southern Company's orerating Gulf Power Granted Retail Rate Increase Tarea that spans much of Ala units provide electric service to an Georgia, the panhandle of Florida, During 1984, Gulf Power was the only Southern Company subsidiary to seek higher retail rates. In April, the company asked the Florida Public Service and southeast Mississippi. The following table pro- Commission to approve an annual increase of files the four operating units: $28.4 million. Culf Powerlater reduced that amount to $18.8 million, based on actual performance during Alabama Georgia Gulf Mississippi the first seven months of the year. The commission Nwer Nwer N wer Nwer granted the company a $4.7-million increase, effec-Total Assets (in thousands) tive in December,1984. This increase is 25 percent of
$5,496,197 57,880,072 5892,924 5660,530 Gulf Power's revised request.
Operating Revenues (in thousands) 52,105,406 53,132,880 5470,100 5424,195 Alabama Commission Extends Net Income After Dividends Innovative Ratemaking Concept On Preferred Stock (in thousands) The Alabama Public Service Commission voted in S 233,252 5 421,719 5 40,336 5 31,380 December,1984, to extend through June,1985, the Kilowatthour Sales (in thousands) rate stabilization and equalization plan adopted in 39,050,326 59,054,711 8,089,278 8,290,497 late 1982. The plan provides for small, periodic rate Customers (year-end) adjustments based on Alabama Power's rate of return 1,034,026 1,352,235 245,317 168,954 and the commercial operation of new generating facilities. The Southern Company's subsidiaries also in- Under the ratemaking concept, Alabama clude Southern Electric International, Inc., a con- Power's retail rates decreased by one percent effective sulting firm, and Southern Company Services, Inc., with April,1984, billings and an additional one-an organization which provides engineering and percent decrease was effective with July,1984, bill-technical services, at cost, to the other members of ings. Rates were stable for the remainder of the year, the Southern electric system. and no rate adjustments were necessary in the first The system operating companies are subject to quarter of 1985. the jurisdiction of their respective state public service The state public service commission will commissions which determine the price of electricity evaluate the operation of the rate stabilization plan for retail customen. These customers accounted for during the first six months of 1985. 74 percent of the system's total energy sales in 1984. 1 Retail Rate Increase Applications
- Annual Amount Public Service Retum on Common Return on Common Requested Date Filed Commission Decision Equity Requested" Equity Allowed *
- Alabama Power 5453.9 million 3/9/82 5306.0 million granted - 18.00 % Up to 15%
effective 12/1/82; additional adjustments covered under a rate stabilization plan Georgia Nwer
$319.5 million 3/7/83 $195.4 million granted - 16.50 % 15.50 %
S108.9 million effective 9/7/83 and 586.5 million effective 10/1/83 Gulf Nwer 518.8 million 4/27/84 54.7 million granted - 15.85 % 15.60 % effective 12/17/84 Mississippi Nwer 5 21.9 million 4/5/82 513.7 million granted - 18.28 % 16.00 % effective 5/5/82 ;
*This table summarizes each operating company's most recent rate filing.
" Figures for Alabama Power and Georgia Power are based on end-of-period common equity. For Gulf Power and Mississippi Power, returns are based on average common equity. 7
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e B3 ause coal is the systam's primsry fuzl, major
; enyhaels is pitced on echieving maximum produc-tivity at each coal-fired power plint. Th3 level of efficiency at these plants stands as a model for the industry. l
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Operations i i uring 1984, operation and maintenance expenses rose to
$3.8 billion - an increase of 18 percent over the $3.2 billion spent in 1983. For each kilowatthour sold, these costs were 3.33 cents in 1984, compared with 3.16 cents in 1983.
The major factor contributing to higher operat-ing costs was a 13-percent rise in fuel expenses primarily as a result of increased energy sales in all customer categories. Operation and maintenance ex-penses also were up because of purchases of power required under Georgia Power's contract al agree-ments with Oglethorpe Power Corporation and the Municipal Electric Authority of Georgia. These pur-chases totaled $403 million in 1984, compared with
$254 million in 1983.
Coal Dominates Fuel Mix For more than three decades, coal has been the pri-mary fuel of the Southern electric system. During 1984, this fuel was the source for more than 80 per-cent of the electricity produced by the system's power plants. Strong reliance on coal is expected to continue through at least the end of this century. Some 40 million tons of coal were burned at sys-tem generating facilities during 1984, making the Southern electric system one of the three largest users of the fuel in the United States. In 1983, the system's generating units consumed 35 million tons of coal. Mines in Alabama, Kentucky, Indiana, and Illinois provided some 95 percent of the coal delivered to the Southern electric system in 1984. The coal was delivered by rail, barge, truck, and con-veyer, with the majority of the fuel being transported by rail. Given the d,minant role that coal plays in the Southern electric system, considerable emphasis is placed on achieving maximum productivity at each of the system's 20 coal-fired facilities. An intensive program designed to reach and maintain optimum levels of performance was initiated systemwide in the mid-1070s. Today, the level of availability these plants have achieved is among the highest in the in-dustry and meets fully the goals management has Q
1 A centralized data cantar servas the data process-ing needs of the entire systam. This sophisticated computzr f acility - recognized as one of the most l advanced in the nation - handles a wide range of assignments at minimum cost.
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set. During the period 1978 to 1982, the National the 65.9-percent level achieved in 1983. Plant Electric Reliability Council (NERC) reported that Hatch's unit I was out of service from early October average operating availability of the nation's coal- through year-end for routine refueling and main-fired power plants was 81 percent. For that same tenance. The unit recorded an operating availability period, the Southern electric system logged an of 62.3 percent during the year, compared with average availability for its coal-fired plants of 71.3 percent in 1983. 85.5 percent. At the system's other operating nuclear facility In 1984, average operating availability for the - Alabama Power's Farley Nuclear Electric Gener-system's coal-fired generating units reached 89 per- ating Plant - availability for unit 1 increased slight-cent, sustaining the excellent record achieved in 1983. ly from 78 percent in 1983 to 78.8 percent in 1984. (Comparative figures for the industry were not Unit 2 continued to demonstrate exceptional per-available from NERC at the time of publication.) formance. The unit achieved an operating availa-During the year,48 of the system's coal-fired units at- bility of 94.3 percent for 1984, an increase of tained an availability level of 85 percent or higher, 6.4 percentage points from the level set in 1983. with a significant accomplishment recorded at one of Unit 2 of Plant Farley has set industrywide per-Alabama Power's facilities. For the month of August, formance records since it began commercial opera-all five units at the Barry Electric Generating Plant tion in 1981. Availability during its first year of operated at an availability level of 100 percent - service set a record among comparable units. In establishing a new performance record for the sys- October,1984, Plant Farley's unit 2 ranked first in the tem's coal-fired plants. United States and among the tcp 10 in the world on Nuclear Availability Declines widely recognized listing of nuclear plant perform-After two consecutive years of improved perform- nce. The listmg is prepared by Nuclear Startup Ser-ance, the overall availability of the system's nuclear vices, Inc., a firm which provides consulting services units decreased in 1984. The units' operating availa- t the nuclear mdustry. bility averaged 66.9 percent, a decrease of 8.9 per- Hydroelectric Generation Decreases centage points from the 75.8-percent availability Generation at the system's hydroelectric plants record posted in 1983. NERC statistics for 1982, the decreased in 1984 because of reduced amounts of latest year for which the data are available, indicate rainfall in Alabama and Georgia - where the that the average availability of the nation's nuclear system's hydroelectric facilities are located. Some power plants was 65 percent. seven billion kilowatthours were produced, a The decline in overall availability of the sys- 4.2-percent drop from the 7.3 billion kilowatthours tem's nuclear units was caused in part by extensive generated in 1983. work required to replace pipes which circulate cool-ing water through the reactor core of unit 2 at Georgia Power's Hatch Nuclear Electric Generating Plant. The unit was out of service for approximately eight months so that repairs could be completed. As a result, unit 2 recorded an operating availability of 32.2 percent for 1984 - a significant drop from Sources of System Iower Generation (percentJ 83 84 8bga, E CoalMJ% orless) 86 E Nuclear 05% orless) E Ilydro U% orless)
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Energy Usage 7 g gmmppgwpmyspamepq n 1984, the Southern electric e ~ 4 ue . y , . , 7 ~ ,j .
. system recorded a 12.2-percent in-
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; . 1 y gory. Sales totaled 114.5 billion kilowatthours - sur-
, ,. ', . sr? ?d passing all previous records for a calendar year.
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.J 9.7 percent. Some 38.5 billion kilowatthours were
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.h. $M i . .-m7" 7n-fi cent for the year to 20.1 billion kilowatthours. In the Prior year, sales to commercial customers totaled
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- 18.9 billion kilowatthours.
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, - , , Wholesale Sector Registers Gain
~ i Sales to wholesale customers across the four-state j area - municipalities and cooperatives with their
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own electric distribution systems - rose 3.4 percent N , , s j . e
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>- to 11.2 billion kilowatthours, compared with 10.8 bil-I', '
lion kilowatthours in 1983. This was the first increase
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l, 9 ever, total usage in the category remains below levels reached in the late 1970s reflecting the fact that many g wholesale customers - primarily in Georgia - now produce a portion of their energy requirements. Off-System Sales Increase The fastest growing segment of total energy sales is
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a 18.8 billion kilowatthours - or approximately e - l $(y . - ) , p, $; hg.g. g'y 16 percent of the system's energy sales for the year. y This compares with 12 billion kilowatthours -- or d c, . _- - Jy . y %, gif . ,Jr. 9g.g..V,X3,12 percentj.sof sales - in 1983. y
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The major reason for the gain in off-system Summer Peak Demand Drops; sales during 1984 was the initiation of energy deliver- New Winter Peak Recorded in 1985 ies to Gulf States Utilities Company of Beaumont, In addition to overall sales, the other important yard-Texas. In addition, sales continued to five other utili- stick of energy usage is peak demand - the highest ties which operate in Florida and Mississippi. The requirement for electricity measured over a one-hour Southern electric system's sales to other utilities fall period. into two categories - unit power sales and other On January 21,1985, demand for electricity long-term sales. reached an all-time high for the winter months as Unit power sales provide for the delivery of temperatures well below freezing blanketed the four-power from specific generating units which have state service area. The new record of 19,100,000 been dedicated to these sales. The system's other kilowatts surpassed by 16 percent the previous long-term sales call for the delivery of specific winter record of 16,447,600 kilowatts established amounts of power over a specified time period, if in 1982. that power is not needed in the four-state service Because of heavy air conditioning usage in the area. Southeast, however, the greatest peak energy de-The Southern electric system's contracts for unit mands on the Southern electric system occur during power sales are with Florida Power & Light Com- the summer months. The system's most recent record pany of Miami (FP&L), the Jacksonville Electric was set in August,1983, when electricity demand Authority (JEA), and Gulf States Utilities. Some reached 20,517,600 kilowatts. With the mild weather 970,000 kilowatts of capacity were purchased under experienced during the summer of 1984, the highest unit power contracts in 1984. Sales are expected to demand recorded for the year was 19,771,600 kilo-increase to about 2.5 million kilowatts in 1985 and watts - some four percent below the 1983 record 1986 and to 3.1 million kilowatts from 1987 through peak. The system's reserve margin at the time of the May,1992. Contract amounts then will decrease to 1984 peak was 32 percent. ; some two million kilowatts until mid-1993 and will Growth Rates Projected be substantially less through 1995 when the agree-long-term forecasts - which do not include the im-ments expire. pact of off-system contracts - indicate that sales of Other long-term sales totaled 1.7 milh.on kilo-electricity to retail customers across the four-state watts at year-end 1984, compared with 1.1 milhon region will increase at an average annual rate of kilowatts in 1983. These sales were made under con- two percent from 1985 through 1995. Total sales in tracts with the city of Tallahassee, FP&L, Florida the service area during this period are expected to - Power Corporation of St. Petersburg, Gulf States grow at a slightly lower rate - 1.9 percent annually I Utilities, JEA, and Mississippi Power & Light Com- - reflecting the fact that many of the system's l pany. Purchases are expected to remain at this level wholesale customers are producing an increasing l in 1985 and will decrease to some 1.6 milh,on kilo-portion of their electricity needs. Growth in peak de-watts in 1986, to 450,000 kilowatts in 1987, and t mand in the area served by the Southern electric sys- , some 400,000 kilowatts from 1988 through 1992, ' tem is expected to average 2.5 percent a year from 1985 through 1995. I l Residential Energy Sales Commercial Energy Sales Industrial Energy Sales (billions of Lilowatthours) (billions of Lilowatthours) (billions of kilouwsthours) 50 50 50 40 40 40
- ~ ~ ~
30 30 30 14 80 81 82 83 84 0 80 81 82 83 84 0 80 81 82 83 84 0
New Marketing Strategies Initiated In 1984, new marketing strategies were designed to Today's Efficient Heat Pump: How It Works increase retail energy sales by promoting the efficient ~ he companies of the Southern electric system must use of electricity. By 1990, these strategies are ex- have huge amounts of generating capacity in place to pected to result in 15.7 billion kilowatthours of meet peak demands created by air conditioning. If energy sales above the usage projected for the period, that capacity also is needed to produce electricity in The long-term goal is to maximize the productivt use the winter, the companies' generating units can be of existing generating facilities - thus benefiting cus- operated more efficiently and fixed costs can be iomers by spreading fixed costs over a broader base, spread over a larger number of kilowatthours. One An integral part of these marketing efforts is to of the best ways to maximize the use of the system's introduce customers to energy-efficient equipment generating capacity and offer customers greater value which demonstrates the value of electricity. Good for their energy dollar is to encourage homeowners Cent's Home certification programs lead the way in to install a year-round, one-unit heating and cooling the energy management programs offered by each of system: the energy-efficient heat pump. the four operating companies. Employees work with In the winter, heat pumps conc ntrate the solar architects, builders, manufacturers, and owners to warmth that exists in outside air - even on the cold-ensure that new homes and apartments are built to est days - and transfer that heat indoors. During the Good Cent's Home standards of energy efficiency. summer, the same unit pumps the heat from inside a The operating companies also are encouraging structure to the outside environment. residential customers to select appliances which make In winter, a heat pump typically works in the electricity use more economical. A major effort is following manner: Through pipes that run from a under way at each company to educate customers compressor outside a building to a heat exchanger in-about the benefits of the electric heat pump - an ap- side, freon or another refrigerant flows back and pliance which has become increasingly competitive forth between the compressor and the heat exchanger. with natural gas for both heating and cooling. (An As the freon moves into the compressor, it is a explanation of how the heat pump operates is fea- chilled liquid. Then, after absorbing heat from the tured on this page.) atmosphere, it evaporates into a gas. The hot gas - In addition, the four operating companies are above 100 degrees Fahrenheit - rushes back into the working to increase sales to commercial and in- heat exchanger which, in turn, warms the surround-dustrial customers and to attract new customers to ing air. the region. The emphasis is on listening to customer Fans push this hot air through ductwork to the needs and satisfying those needs as efficiently as inside of tlic building. Mean.vhile, the freon - hav-possible. For example, several of the operating com- ing given up its heat - flows outside to the conden- ! panies are working with industrial customers to ser as a chilled liquid to absorb more heat from the l develop supplemental energy rates to encourage the air and repeat the cycle. use of electricity at off-peak times. Under these rates, In the summer, this cycle is reversed. energy can be supplied at lower than normal prices l provided the customer does not require the energy during times of high demand. Off System Energy Sales Total Energy Sales Territorial Peak Demand (billions of kilowatthours) (billions of kilowatthours) (millions of kilowatts) 25 125 25 g 20 100 20 M_ _ _ _ _ _ _ _ _ 10 50 10 I__ 80 81 82 83 84 0 80 81 82 83 84 0 80 81 82 83 84 0 15
Since the early 19702, tha Southsrn electric syttsm hrs reduced tha amount of gsnsrating capacity under construction by natriy three-fourths. Today, construction is I!mited to some 5.8 million kilowatts. T* --N m
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tJ - p% New Generating Unit Completed b - 1.-
%p-(%{1/ . ,,[ In February,1984. unit 2 of the Scherer Electric gg..;?1 Generating Plant - a coal-fired facility in central
?f g ' .-r.O ~e d . - Georgia - began commercial operation. The unit y.- .
g.j% . was constructed by Georgia Power under joint own-i 5 '
.? ? ership agreements with Oglethorpe Power Corpora-( ,
p' QW3 tion, the Municipal Electric Authority of Georgia (MEAG), and the city of Dalton. Georgia Power has
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gieg retained an 8.4-percent interest in unit 2. The first t u . 3 81 ; .- unit at Plant Scherer began commercial operation in
^:_ - -
dkf 1982. Units 2 and 4 of the plant are scheduled to be a; c5's r% x
.$e . .. $g$ .f-I. brought into aservice Also in 1984, in 1987 new 500-kilovolt and 1989, respe transmission
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Daniel westward to louisiana - improves the relia-bility of service to customers of Mississippi Power P ,' f 'm . y $$ and provides a key interconnection for energy sales
'Y . . p p. . h to Gulf States Utilities Company of Beaumont, Texas.
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- j. ~ ~ ' ~-(.fg q'q.. f bwgf5Georgia .~ Power finalized negotiations with MEAG in t .a M,7 March.1984, to expand that organization's owner-
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- f. b d. M.4 W'7 ship in the Vogtle Electric Generating Plant. a nuclear
[, - . Q ,/, - 3 facility under construction near Augusta. The sale of
.A * * .- , %/h +$bD an additional five-per nt shaie of the facili'y in-creased MEAC's ownership of Plant Vogtle to g., t / .
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- . nn yj q, , j,~ In Alabama, negotiations required by a 1981 h"' ' I. . - '1. ., idhWhl.i $ order of the Nuclear Regulatory Commission (NRC)
~ ( 5 i "4 ,;' Th s' have been conducted between Alabama Power and 51c [ . . . MhPSf'. .} t - ' - g f Q h,.N Alabama Electric Cooperative, Inc. ( AEC) concern-ing the sale of approximately six percent of the Farley
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m f .. - - Nuclear Electric Generating Plant. However, in June.
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.-i,J 1984. AEC requested that the NRC impose sanctions against Alabama Power. AEC alleged that Alabama 7 .
, yp;M c (f; .p n,q. [;,M%gyf"6 j. 9.9 W. . '.' i J..b Power violated license conditions relating to the saie 4 f. 4 of Plant Farley. That request is still pending.
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System Construction Projects Total Total Total Approximate Plant Estimated Generating Capacity of Investment in Anticipated 1%rcentage (Type of Date of Capacity Facility at Facility at Cost of Completed at FuckPlant) Completion Per Unit Completion 12/3U84 Facility 12/31/84 (in kilowatts) (in kilowatts) (in thousands) (in thousands) Alabama Pbwer Miller 2,640,000 $ 934,088 52,329,127 (coal) Unit No. 2 1985 660,000 98 % Unit No. 3 1989 660,000 6% Unit No. 4 1991 660,0n0 4% Mitchell Dam 150,000 2 S 192,169' S 218,320' 88 % (hydro) Unit No. 5 1985 50,000 Unit No. 6 1985 50,000 Unit No. 7 1985 50,000 Georgia Ibwer Bartletts Ferry 108,000' S 63,560' S 93,864' 75 % (hydro) Unit No. 5 1985 54,000 Unit No. 6 1985 54,000 Coat Rock 106.000' S 895' S 295,197: * (hydro) Unit No. 7 1995' 53,000 Unit No. 8 19955 53,000 Rocky Mountain 847,800 5 133,271 5 894,769 15 % (pumped storage) Unit No. I 19918 282,600 Unit No. 2 19918 282,600 Unit No. 3 19918 282,600 Scherer 1,773,424*' S 619,002*' $1,922,269* ' (coal) Unit No. 3 1987 818,000' 60 % Unit No. 4 1989 818,000 6% Vogtle 1,060,240* $1,907,283* $3,085,500* (nuclear) Unit No.1 1987 530,120' 75 % Unit No. 2 1988 530.120' 45 %
- Fieldwork is scheduled to begin in 1985.
Notes: (1) Excludes the capacity and investment in existing units at (3) To provide the company with additional flexibility in its these facilities - units which were placed into service more construction schedule, Georgia l'ower has petitioned the than 25 years ago. Federal Energy Regulatory Commission for a license exten. (2) At the time of completion of these units, existing Unit sion to 1995 at Coat Rock and 1991 at Rocky Mountain. Nos.1,2, and 3, with a combined capacity of $2,500 (4) Excludes the 91.6-percent interests in Unit Nos. I and 2 kilowatts, will be retired. Existing Unit No. 4 will remain in sold to cooperatives and municipalities in Georgia. service. As a result, the total capacity of the f acility will be (5) Includes the 25-percent interest in Unit No. 3 owned by 170,000 kilowatts. Gulf Power. (6) Excludes the 54.3-percent interests sold to cooperatives and municipalities in Georgia. 18
Construction Budget Outlined The remaining two-and-one-half million new Although there may be further adjustments to the shares were sold to the public, with proceeds totaling system's construction program, the operating com- 540 million. panies plan to complete the projects already under Bonds, Preferred Stock Sold way. Generatmg units are under construction at The operating companies raised additional capital seven sites, with the largest projects scheduled for for construction activities during 1984 through the completion by 1991. In total, these umts will add sale of $150 million of first mortgage bonds and 5.8 million kilowatts of generating capacity to the $50 million of preferred stock. Also, Alabama system. Power, Georgia Power, and Gulf Power were in-During 1985, the system expects to brm.g int volved in sales by public authorities of $732 million operation one coal-fired unit and five hydroelectnc of tax-exempt pollution control revenue bonds. units for an additional 865,500 kilowatts of capacity. At year-end, the Southern electric system had The construction budget for 1985 is 52.5 bilhon. drawn down $109 million of the $469 million in Construction expenditures are expected to be short-term pollution control notes outstanding with $2.5 bilhon m 1986 and $2.1 bilhon in 1987, bringing the total for the three-year period 1985 through 1987 commercial banks. The entire 5469 million is ex-pected to be refinanced in 1985 with long-term pollu-to $7.1 bilhon. tion control bonds. At the close of 1984, temporary Funds Raised to Finance Construction cash investments totaled 5822 million. External sources provided $855 million or 41 percent The company's capital structure at year-end was of the $2.1 billion required in 1984 for new construc- 53 percent debt, eight percent preferred stock, two tion. Approximately $1.2 billion - or 59 percent of percent preferred stock subject to mandatory re-the funds needed for construction - came from in- demption, and 37 percent common equity. ternal and other sources. One of The Southern Company's goals is to New Common Stock Issued raise the percentage of common equity in its capital During 1984, The Southern Company raised structure to 40 percent by 1988. Sigmficant progress $316 million in new common equity through the sale t w rd achievmg this goal has been made each year of more than 20 million additional shares of com- since 1979 when common equity was 30.5 percent of mon stock. capitalization. Further strides m, reaching the com-Some $231 million - almost three-fourths of pan /s objective will depend on whether the operat-the equity raised during the year - came from the ing companies earn sufficient returns on the equity already invested in the business. sale of 15 million shares through the company's Divi-dend Reinvestment and Stock Purchase Plan. More 1985 Securities Sales Outlined than 155,000 - or 48 percent - of the company's Offerings by the operating companies totaling stockholders were participating in the plan at $760 million are being planned for 1985. And to pro-year-end, vide the operating companies with the equity funds Approximately three million shares of common required to continue their construction programs, stock were sold through the Employee Savings Plan The Southern Company expects to raise approxi-and the Employee Stock Ov tership Plan. ~ tese mately 5370 million from the sale of new shares of sales supplied nearly $45..iillion. common s+ock. Total Generating Capadty Under Constrmtion (millions oflilowatts) 25 20
~
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10 19 75 76 77 78 79 80 81 82 83 84 0
3 i Mtnigsmsnt is dedicited to ccmpir, ting Plint Vogtla with tha quility assurancs necamcry to glin regulatory approvals and to operate the plant safely, .g reliably, and efficiently. p
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Progress Report on Plant Vogtle he Southern electric system's third a rating far higher than required for equipment used Tnuclear power plant is being structed by Georgia Power - The S uthern Companys largest oper-in standard industrial construction. 1.icensing Process Outlined As construction enten the final stages, a major focal atm.g unit - some 40 miles southeast of Augusta. point of the Wgtle project will be a series of hearings The %gtle Electric Generating Plant will have tw before a three-member panel appointed by the units, each with a capacity of 1,160,000 kilowatts -
, Nuclear Regulatory Commission (NRC). The NRC is the largest capacity of any units in the system.
, . the federal agency that oversees the operation of Plant %gtle is bemg built under iomt ownership nuclear power plants in the United States. Public agreements with Oglethorpe Power Corporation, the hearings - expected to begin in late 1985 or early Municipal Electric Authority of Georgia, and the city 1986 - will be held by the NRC panel to assure that of Dalton. Georgia Power owns the largest share of Plant Wgtle meets strict government standards for the plant - 45.7 percent - and will operate the safety and reliability and, thus, can be licensed to facility when its completed.
operate. If the licensing process proceeds on sched-At year-end 1984, units 1 and 2 were approxi-ule, fuel loading at unit 1 is expected to take place in mately 75 percent and 45 percent complete, respec-September,1986. Georgia Power then would begin tively. Unit 1 is scheduled to begin commercial
, low-power testing and move to full-power operation operation in 1987 with unit 2 planned for service the and commercial start up as early as March,1987.
followmg year. To help avoid costly delays and to ensure the Scope of Project Reviewed prompt availability of allinformation that might be Plant %gtle is the largest construction project ever in needed during the licensing process, Georgia Power the state of Georgia. Because of the technical de- has begun an 18-month pilot program called mands and dimensions of the project, erecting Plant " Readiness Review." Believed to be a first in the Vogtle often has been compared to the task of build- nuclear power industry, Readiness Review calls for ing a small city. The following facts illustrate the engineers from Georgia Power, Southern Company mammoth proportions of the undertaking: Services, Inc. (SCS) - The Southern Company's
- More than 10,000 people work at the site. engineering and special se: cices subsidiary - and
- The completed facility will contain 650,000 cubic Bechtel Power Corporation to examine the quality of yards of concrete - enough to build a sidewalk from design and construction work in key areas and pro-Atlanta to los Angeles and then north to Canada. vide documentation to the NRC on an ongoing basis
- The structural and support steel inside the plant to ensum that necessary standards are being met.
will weigh 23,000 tons - enough to build 12 office On-Site Management Emphasized buildings, each 24 ston,es high. Intensive quality assurance efforts also are under way
- 1. aid end to end, the large pipe used in the plant at Plant Wgtle to identify potential problems and would reach 105 miles and the small pipe would ex-prevent them from occurring. To provide day-to-day support of the construction activities,30 members of Eacho nt Wgtle's cooling towers will stand the project's top management team moved m, early 550 feet, roughly equal to the height of the Wash-1984 from Georgia Power headquarters in Atlanta to ington Monument or a 55-story skyscraper.
the plant site. In addition, about 300 engineering At the end of 1984, much of the heavy construc-
, specialists from Bechtel, Westinghouse Electric Cor-tion at Plant Vogtle had been completed - concrete poration, Georgia Power, and SCS now work full-poured, steel supports welded, reactors lowered int time at Plant Wgtle.
position. Two domes, weighmg nearly 500 tons each, had been hoisted onto the umts, containment build- Top management maintains direct involvement in the construction through a project management ings by one of the world's largest mobile cranes. board which meets monthly on the grounds of the The majority of construction in 1985 will re-plant. This board - consisting of executives from volve around the installation and fittmg of pipes, Georgia Power, the co-owners, and other major sup-circuitry, ducts, and other mternal components. The pliers and participants in the project - reviews all entical components are of " nuclear" grade quality - major steps in the building process. The goal of these programs is to make Plant Vogtle an integral part of the energy supply network which serves the Southeast.
= ---- - _ _ _
The Southsrn r Isctric systsm has made a major commitment it, tasting new technologies for pro-tacting the environment. In 1984, research results proved the effectiveness of the baghouse in con-trolling power plant emissions.
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Research and Development uring 1984, the Southern electric developm>:nt of a fluidized bed combustion boiler, Da number of ongoing progr system initiated several research projects and continued to advance The 160/00-kilowatt boiler, to be built in Paducah, Kentuck f, will be the largest demonstration of this technology in the world. These research efforts reflect the system's commit- By injecting air and limestone particles into the ment to minimize the environmental impact of boiler ciuring the combustion of the fuel, the fluid-generating electricity and to develop efficient energy ized be.1 technology is expected to remove about technologies for the future. 90 percent of the sulfur in coal. Baghouse Project Expanded Pr! ary co-sponsors of the $220-million project Environmental research includes expanded testing of include the Electric Power Research Institute (EPRI) a technology for reducing flyash emissions at power - the research and development arm of the electnc plants that burn high-sulfur coal. utility industry - the Tennessee Valley Authority, Since 1982, researchers from Southern Com- the Department of Energy, Dub Power Company, pany Services, Inc. (SCS) - The Southern Com- and the state of Kentucky. pany's engineering and special services subsidiary - Thy development of technologies to reduce sul-have been experimenting with a baghouse, or fabric fur dioxide emissions is a major focus of the systems filter, at Gulf Power's Scholz Electric Generating rese rch efforts. Plant. The baghouse works much like a vacuum Fuel Cells Installed cleaner. As exhaust gases leave the power plant's In Alabama and Georgia boiler, they are filtered through 210 fiber glass bags. In September,1984, system researchers installed a Through this process, flyash is trapped in the fuel cell power plant at a student center on the baghouse and clean gases are released into the University of Alabama campus in Tuscaloosa. The atmosphere. experiment is part of a $58-million nationwide pro-The new technology has proven to be extremely gram sponsored by the Department of Energy and . effective, removing 99.99 percent of the flyash. That the Gas Research Institute. Work under this program level of performance is well above the standard set also includes Georgia Power's testing of a 40-kilowatt by the Environmental Protection Agency. fuel cell at a hospital in Gainesville, Georgia. Results During 1984, a second phase of testing was ini- from these projects will help determine whether fuel tiated that will continue throughout 1985. In this cells - already used to provide electric power in stage of the experiment, researchers willinvestigate spacecraft - are feasible for everyday applications. alternative fabrics and more effective cleaning Research Budget Reviewed l methods in an attempt to reduce the size and, Research expenditures totaled $28.3 million during d i ultimately, the cost of this particulate control 1984, including a $15.3-million contribution to EPf4 technology. In 1985, the system expects to spend $31.5 million or) System Plans to Co-Sponsor research. x Fluidized Bed Combustion Project In a related area of research, the Southern electric system has made a commitment - subject to the negotiation of a final contract - to participate in the Systemwide Resemh and Development Expenditures (milliom of dallaM 50 40 80 81 82 83 84 _l_lM 0 23
r Acid Raim An Update
- In studies of watersheds where fish kills and spinal A cid rain continues to b nation's most complex and in- deformities of fish have occurred, acid rain was not tensely debated environmental found to be the likely cause. Other factors, including issues. Because sulfur dioxide natural watershed processes, appear to present more emissions from coal-fired power plants are said to valid explanations.
contribute to the formation of acid rain, the issue is
- The acidity of rainfall in the eastern United States is of major concern to the Southern electric system. essentially unchanged over the past five years. In Through the Electric Power Researth Institute fact, at a majority of monitoring stations, the acidity (EPRI), the Southern electric system is participating of precipitation appears to have decreased slightly in in one of the most extensive research programs in the 1932 and 1983.
world on acid rain science and technology. EPRI's
- There's no conclusive evidence of widespread crop five-year budget for this work is nearly 5400 million. damage resulting from acid rain.
System contributions make up approximately five
- A decline in the growth rate of trees and a dieback percent of this figure. Studies being funded focus on of spruce and fir forests on a number of mountain-cloud chemistry; the long-range transport of emis- tops have been observed. However, acid rain has not sions: the effects of acid rain on lake waters, fisheries, been proven to be the cause. Air pollution in general and forests; and advanced technologies for generat- is thought to play a role in these problems. Nitrogen ing electricity from coal. oxides and hydrocarbons from metor vehicles react Complementing the efforts of the electric utility to form ozone which may be the primary factor.
industry is an accelerated research plan by the federal The Southern electric system cites these findings government. A timetable covering the period be- as evidence that additional research is needed to en-tween now and 1989 has been set for gathering spe- sure that proper, cost-effective solutions are found cific data needed to help guide the development of a and to demonstrate there is sufficient time to conduct cost-effective national policy on this issue, this research. Ahhough Congress did not enact any Although critical questions are yet to be of the acid rain control legislation proposed in 1984, answered, scientific knowledge about acid ra!n a law requiring emission reductions could be passed broadened during 1984. Ibliowing are key points within the next two years. None of the legislation be-which outline the current state of understanding: ing considered offers any assurance that the desired
- Some lakes in the northeastern United States and environmental benefits would be achieved, yet the eastern Canada are acidic and do not support desir- costs would be tremendous. For example, one widely able fish populations. However, a major study com- discussed proposal would result in an additional pleted in 1984 concluded that no single factor is $7.9 billion in capital costs for the Southern electric responsible for lake acidification. The interaction of system alone by 1993 - the first year of compliance.
the atmosphere, climate, geology, soil, and vegeta- The increase in electric bills at that time would tion - among other factors - must be considered at average 20 to 25 percent. each individuallake. As research continues and more information be-
- An evaluation of data collected since the 1930s on comes available, the system will take any additional lakes in the Northeast shows no discernible trend of steps that are justified to help ensure the quality of change in lake acidity. As many lakes have decreased the environment.
in acidity as have increased, with the majority of the lakes remaining unchanged over the past 50 years. Add Rain Resemh Espenditures* (millions of dollars) 125 100
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. . . . *Bsualon projections frorn the 50 Dectric lbwer Researth Instuture
. . that include lndustry expendi-25 tures plannelfor research on acid rain science and taknology.
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Management's Report Auditors' Report l The management of The Southern Company has To the Board of Directors and to the prepared - and is responsible for - the consoli- Stockholders of The Southern Company: dated financial statements and related information We have examined the consolidated balance sheets included in this report. These statements were and censolidated statements of capitalization of The prepared in accordance with generally accepted ac- Southern Company (a Delaware corporation) and counting principles appropriate in the circumstances subsidiary companies as of December 31,1984 and and necessarily include amounts that are based on 1983, and the related consolidated statements of in-the best estimates and judgments of management. come, earnings retained in the business, amount paid Financial information throughout this annual report in for common stock in excess of par value and is consistent with the financial statements. sources of funds for gross property additions for The company maintains a system of internal ac- each of the three years in the period ended Decem-counting control to provide reasonable assurance ber 31,1984. Our examinations were made in ac-that assets are safeguarded and that books and cordance with generally accepted auditing standards records reflect only authorized transactions of the and, accordingly, included such tests of the account-company. Limitations exist in any system of internal ing records and such other auditing procedures as we control, however, based on a recognition that the considered necessary in the circumstances. cost of the system should not exceed its benefits. The In our opinion, the financial statements (pages company believes its system of internal accounting 32-49) referred to above present fairly the financial control, together with its internal auditing function, position of The Southern Company and subsidiary maintains an appropriate cost / benefit relationship. companies as of December 31,1984 and 1983, and The independent public accountants provide an the results of their operations and the sources of objective assessment of how well management meets funds for gross property additions for the periods its responsibility for fair financial reporting. They stated, in conformity with generally accepted ac-regularly review the system of internal accounting counting principles, which, except for the change, control and perform such tests and other procedures with which we concur, in the method of recording they deem necessary to reach and express an opinion revenues by two of the subsidiaries as described in on the fairness of the financial statements. Note 1, were applied on a consistent basis. The audit committee of the board of directors, composed of four directors who are not employees, Arthur Andersen & Co. provides a broad overview of management's financial reporting and control functions. Periodically, this Atlanta, Georgia, committee meets with management, the internal March 6,1985. auditors, and the independent public accountants to ' ensure that these groups are fulfilling their obliga-tions and to discu ,s auditing, internal control, and financial reporting matters. The internal auditors and independent public accountants have actess to the members of the audit committee at any time. Management believes that its policies and pro-cedures provide reasonable assurance that the com-pany's operations are conducted with a high standard of business ethics. In management's opinion, the con-solidated financial statements present fairly the financial position, results of operations, and sources of funds for gross property additions of The Southern Company and its subsidiaries. 26
Management's Discussion and Analysis Of Results of Operations and Financial Condition I Results of Operations growth in energy sales was in sales to off-system The Southern Company's earnings showed marked utilities. The increases in this category during each of improvement in each of the past three years, primari- the past three years are because of enen;y sales under ly the result of rate increases, growth in energy sales, two types of long-tenn contracts, one of which repre-and a stringent cost-control program coupled with sents the sale of capacity and energy from specific the easing of inflationary pressures. fossil generating units (unit power sales). The other type (other long-term sales) represents capacity and Net Income energy from system fossil umts for sales which call Consolidated net income for 1984 totaled $720 mil-lion, an increase of 22 percent from 1983, which, in f r the delivery of specific amounts or power over a turn, was 25 percent higher than in 1982. Earnings specified time penod, if that power is not needed m the four-state service area. Revenues den,ved from per share of common stock also continued to climb, sales under these contracts for the past three years although the percentage increase was smaller in com-parison to net income due to the greater average are as follows: number of shares outstanding during each successive Unit other period. Earnings per share amounted to $3.00 in Year Ib.er Longterm Total 1984, $2.70 in 1983, and 52.38 in 1982. Increases
<in thousanu over the prior year were 11 percent,13 percent, and 1984 5366.736 5406,525 5775,261 31 percent, respectively. Earnings for each year were 1983 251,392 253,768 sos,160 affected by special factors. In 1984, earnings were in- 1982 - 275,552 275,552 creased by niae cents per share (some $21 million) from the sale of an additional five-percent interest in Unit power sales - some 970,000 kilowatts of Georgia Power's Plant Vogtle. Earnings in 1983 and capacity in 1984 - increase to approximately 1982 were increased by five cents pei share 2.5 million kilowatts in 1985 and 1986 and to
($11.8 million) and 12 cents per share ($23.5 mil- 3.1 million kilowatts from 1987 through May,1992. lion), respectively, as a result of a change in the Thereafter, the capacity sales decline to some method of recording revenues from a cycle billing 2.0 million kilowatts through mid-1993, with sub-basis to accrual of unbilled revenues by Mississippi stantial reductions for the last half of 1993 and for Power and Georgia Power. See Note 1 to the finan- 1994 and 1995. This capacity is being sold to Florida cial statements. In addition,1983 earnings were re- Power & Light Company, Jacksonville Electric duced by five cents per share ($11.1 million) because Authority, and - beginning in 1985 - to Gulf States of the refund of revenues billed subject to refund in Utilities Company. prior years by Mississippi Power. Revenues Operating revenues increased in each of the three years due to rate increases, higher energy sales, and recovery of increased fuel and purchased power costs through fuel and purchased power provisions con-tained in rate schedules. The economic recovery that began in 1983 accelerated into a period of economic expansion in 1984 - resulting in greater energy sales to retail customers, particularly in the commercial and industrial sectors. However, the most significant 27
The other long-term power sales - 1.7 million the buy backs from this unit contributed significantly kilowatts of capacity at year-end 1984 through 1985 to increased purchased power expenses in 1984. The '
- will reduce to some 1.6 million kilowatts in 1986, increases in other operation and maintenance ex-to 450,000 kilowatts in 1987, and to approximately penses are attributable to various factors, including 400,000 kilowatts from 1988 through mid-1992. This additional facilities and, to a lesser degree than in capacity is being sold under separate contracts to previous years, inflation.
Florida Power Corporation, Florida Power & l.ight Company, Jacksonville Electric Authority, Gulf Allowance for Funds
, , Used During Construction (AFUDC)
States Utilities Company, Mississippi Power & Light AFUDC represents the cost of capital charged to Company, and the city of Tallahassee, Florida. utility plant that is under construction and not in-The average revenue per kilowatthour for total cluded in rate base. The equity portion of this credit sales has contmued to climb, up from 5.04 cents in
, represents noncash income. However, the normaliza-1982, to 5.27 cents in 1983, and to 5.31 cents m 1984, tion of the income tax effect of the debt portion re-due to the effect of rate increases and the recovery of sults in a noncash charge. In addition, previously higher fuel and purchased power costs. capitalized amounts increase current cash flow Expenses significantly since revenues are higher because of the Operation expenses rose during each of the past increased rate base and additional depreciation ex-three years because of higher prices paid for fuel in pense. AFUDC (net of income taxes), as a percent of 1984 and 1982, greater fuel generation in 1984 and net income, was 43.9 in 1984, compared to 37.0 in 1983, increased levels of purchased power in each 1983 and 32.5 in 1982. This ratio has risen each year, and the escalating costs of other operation ex- period because of increases in construction work in penses. The cost of fuel per net kilowatthour gen- progress resulting from the lengthy construction crated dropped from 1.93 cents in 1982 to 1.90 cents ps riods and the large amounts of capital required to in 1983, but increased to 1.95 cents in 1984. Greater build new generating facilities, demand for energy in each of the past three years Effects ofInflation was met by an increase in total generation and add. -
, Although the rate of inflation declined in the past tional purchased power. Georgia Power is contrac- three years, the high levels of inflation encountered in tually obligated to buy back declmmg amounts of , prior years continue to have a significant impact on energy from its joint owners in certain generating the Southern electric system. Regulated utilities plants for a specified period following commercial typically have been affected more severely by infla-operation of the facilities. Plant Scherer Unit No. 2 tion than other industrics because regulatory com-began commercial operation in February,1984, and missions have not always allowed sufficient revenues i to keep pace with higher costs and provide adequate returns on the large investment - some 85 percent of Revenues irom Off System Energy Sales AFUDC Component of Net income (miliiom of dollars) (milliom of dollars) 800 750 640 600 480 450 320 300 E UnitIbwer E Net income 28 -I-80 81 82 83 84 geo 0
5 other tonsTerm , 80 81 82 83 84 150 0 N AFUDC
total assets - in utility plant. See Note 14 to the sale of utility property, retained earnings, and non-i financial statements for supplementary information cash charges to income such as depreciation, deferred about the estimated effects of inflation. investment tax credits, and deferred income taxes. The remaining funds (41 percent) were from the sale Future Earnings Potential Although the results of operations for each of the f c mm n nd preferred stock, first mortgage past three years have shown considerable improve- bonds, and proceeds from pollution control obliga-ment compared to prior periods, the improvements tions. See the Consolidated Statements of Sources of are not necessarily indicative of future earnings Funds for Gross Property Additions. potential. It is expected that higher operating costs CapitalStructure and carrying charges on the increased investment in As a result of the stronger financial performance dur-plant - if not offset by increases in revenues (by ing each of the past three years, the company con-cither periodic rate increases, growth in energy sales, tinued to progress toward its long-term goal of or a combination of both) - Will adversely affect increasing common equity as a percent of total capi-future earnings. Future increases in sales will be sub- talization. At year-end, this ratio reached 37.2 per-ject to a number of factors, including the volume of cent, compared to 31.5 percent at the end of 1981. energy sales to neighboring utilities, energy con- Correspondingly, the ratio of long-term debt fell servation practiced by customers, the elasticity of de- from 58.0 percent in 1981 to 53.2 percent in 1984. mand, weather, and the rate of economic growth in However, the cost of the 1984 sales of long-term debt the system service area, and preferred stock exceeded the historical embedded In addition, the level of future earnings is con- cost. During 1984, the operating subsidiaries sold tingent upon the successful completion of the $150 million of first mortgage bonds and, through Southern electric system's construction program, public authorities,5732 million of pollution control especially Georgia Power's Plant Vogtle, a jointly bonds, at a combined weighted interest rate of owned nuclear facility. See Note 3 to the financial 12.1 percent. This compares to a 9.43-perant com-statements for information regarding legislation con- posite interest rate on first mortgage and pollution cerning the " phase in" of Plant Vogtle into rate base. control bonds at the end of 1981. Other sales during Financial Condition the year were $50 million of adjustable rate preferred The principal changes in the company's financial st ck (11.2 percent at December 31,1984) by Georgia cond: tion in 1984 were additions of 52.1 billion to P wer and $316 milhon of common stock by The utility plant, the sale of an additional five-percent in- S uthern Company. terest in Plant Vogtle - with a net book value of
$181 million - and the receipt of $855 million in net funds provided from financings. Internal and other sources provided approximately 59 percent of funds for gross property additions, principally from the Market-to-Book Value Ratios Common Stock Sales (percent) (millions of dollan) 125 D0 400 75 300
-l25 E Employee Stock Plans
- ~li~100 l - - -
~ ~ - ~ ~ ~
E Divi &nd Reinvestment and Stock Purthase Plan 100 E Public 29 80 81 82 83 84 0 80 81 82 83 84 0 f
- u 4
s, At the close of 1984, the company's common The Southern Company and its subsidiaries stock had a market value of $18.875 per share, com- plan to obtain the funds required for construction pared to a book value of $18.55 per share. The from similar sources and in comparable amounts to ! market-to-book value ratio at year-end was 102 per- those used in the past. However, the type and timing x _ l ' cent, compamd to 93 percent at year-end 1983 and of financings will depend on market conditions, 1982, and significantly above the 73-percent ratio at maintenance of adequate earnings, and regulatory the end of 1981. Continued efforts will be made to approval. , improve operating efficiency as well as to aggressive- A substantial portion of the Southern electric ly pursue fair and adequate rate increases when system's construction program for the next four years - necessary to maintain a competitive position in will be dedicated to the completion of Georgia the marketplace. Power's Plant Vogtle. Plant Vogtle consists of two nuclear generating units with planned commercial CapitalRequirements The construction program of the Southern electric peration dates of March,1987, and September, 1988, for Unit Nos. I and 2, respectively. At system is estimated to require $7.1 billion for the December 31,1984, Unit No.1 was approximately three years 1985 through 1987. However, plans for , new facilities are subject to costly revision and delay 75 percent complete and Unit No. 2 was approxi-because of factors such as the granting of timely and mately 45 percent complete. Actual construction adequate rate increases, new cost estimates, revised expenditures through the end of 1984 (including load projections, design changes in nuclear plants to AFUDC) applicable to Georgia Power's 45.7-percent meet changing requirements, unforeseen nuclear wnership mterest were $1.6 bilhon for Unit No.1 plant licensing requirements, changes in environmen- and c mm n facilities and $313 milhon for Unit No. 2. Georgia Powers portion of the total estimated tal requirements, and the availability and cost of capital. (As a result of changing conditions during c nstruction costs of the plant at completion (m-the past several years, Georgia Power has sold un-cluding AFUDC) is estimated to be $2.3 billion for divided interests in certain power plants as well as Unit No.1 and common facilities and $823 milhon transmission facilities, and the system companies f r Unit No. 2. It will be necessary for Georgia Power ti finance have contracted to sell substantial amounts of capaci-ty and energy from coal-fired units as discussed part of its construction program through the issuance , fPreferred stock and long-term debt. Georgia . under " Revenues" above.) Power must receive approval of the Georgia Pubh,c I Service Commission and the Securities and Exchange l Commissien before issuing such securities. See
" Financing" in Note 3 to the financial statements for further information on Georgia Power's financing j applications.
l I Capital Structure Construction Expenditures (percent) (billions of dollars) l gg 100 M Debt 3.00 E.E $ Eat 75 E Preferred Stock 50 Subject to Mandatory Redemption
~ ~ ~ ~
2.25 1.50 E External 30 I- - 80 81 82 83 84 I 25 0 Pre ed Stock E Common Equity 80 81 82 83 84 85 86 87 0.75 E t rn 1 0 Souras l - rnwied -
k 0 In addition to the funds needed for the construc- In order to issue additional long-term debt and tion program, approximately $389 million will be re- preferred stock, the operating subsidiaries must com-quired by the end of 1987 for present sinking fund ply with certain earnings coverage requirements requirements and maturities of long-term debt. designated in their mortgage indentures and cor-The capital requirements of recent yean have porate charters. These coverages were, at the end of necessitated the sale of common stock at prices below the respective yean, as follows: book value. The market price has been advenely af-fected by the continuing need to raise additional Mortgage Charter capital to complete long-term construction projects, Coverage Coverage the lack of a current cash return on the investment in (2.00 Required) (1.50 Required) projects under construction, inflation, and regulatory 1984 1983 1984 1983 lag in granting rate increases. While the negative im- Alabama Power 3.30 3.33 1.77 1.77 pact of selling common stock below book value is Georgia Power 2.51 2.40 1.77 1.80 recognized, it is management's opinion that the con- cu!f Power 3.o1 2.90 1.80 1.78 sequences of the only alternative - delaying or Mississippi Power 3.97 3.72 2.18 2.04 canceling major construction projects - would be far more detrimental to existing stockholders and The ability to maintain these coverages and to ultimately to customen. The extent and effect of the generate sufficient amounts of internal funds for con-resulting dilution are not expected to affect the com- struction depends upon the receipt of timely rate in-pany's business, including future financing plans or creases that allow an adequate return for investors capabilities and pending construction projects of its and offset the rising costs caused by additions to operating affiliates. utility plant, inflation, and other facton. Should The The U. S. Treasury Department has proposed Southern Company and the subsidiary companies be tax legislation that would greatly curtail acceleiated unable to obtain sufficient funds from external depreciation and investment tax credits. Although sources which - together with internally generated the Treasury proposal is expected to be substantially funds - would be adequate to continue construc-altered during the legislative process, any decrease in tion, delays and possible cancellations mr.y prove the availability of these two items would require the necessary. Delays in construction projects could re-Southern electric system to obtain funds from other sult in significant additional costs. sources, primarily the capital markets. To meet short-term cash needs and contingen-l cies, the system companies had, at the beginning of 1985, approximately $878 million of cash and tem-porary cash investments and $2.2 billion of unused credit arrangements with banks. System Nameplate Capacity Territorial Peak Hour Demand (millions of kilowatts) (millions of kilowatts) 40 25 _ - amm 32 20 __ E 24 15 16 10 _l~~l_ _ 82 83 84 85 86 87 0 E UnitIber 82 83 64 85 86 87 0 31
-pm,aw - - rminini -
7 Ccnsolidated St:t:ments cf Incoms l For the Years Ended December 31,1984,1983 'and 1932 The Southern Company and Subsidiary Com vanies a . 2
- _=
1984 1983 1982 E (in thousands) Operating Revenues (Note 1) 56,123,985 55,418,043 54,927,183 g. Operating Expenses: iw Operation - Fuel 2,152,830 1, >00,084 - 1,810,947 ' 155,189 Purchased and interriianged power, net 351,450 164,548 Other 821,821 . 740,776 641,447 s Maintenance 483,126 418,148 391,404 Depreciation and amortization 429,404 407,072 391,185 Taxes other than income taxts 276,690 249,747 234,581 % Federal and state income taxei 561,191 519,057 416,440 g [ Total operating expenses 5,076,512 4,399,432 4,041,193 Eli Operating Income 1,047,473 1,018,611 885,990 N Other Income (Expense): - Allowance for equity funds used during construction 211,583 145,833 92,707 Interest income 59,634 60,150 69,191 5 Other, net (Note 4) 46,310 (7,633) 2,906 ' (41,847) (19,793) (28,814) k income taxes applicable to other income p Income Before Interest Charges . 1,323,153 1,197,168 1,021,980 = Interest Charges and Preferred Dividends: b Interest on long-term debt 660,996 624,283 576,807 Allowance for debt funds used during construction (198,937) (141,272) (118,277) E 1,261 6,221 Interest on notes payab!e 16,097 B; Amortization of debt discount, premium, and expense, net 2,4r.1 2,308 2,080 Other interest charges 14,826 11,732 9,951 Preferred dividends of subsidiary companies 108,041 104,189 95,876 603,484 602,501 572,658 = Net interest charges and preferred dividends Consolidated income betore refund of retail revenues billed E- subject to refund in prior years and cumulative effect of a change in method of recording revenues 719,669 594,667 449,322 Refund of retail revenues billed subject to refund in prior A years - less income taxes of $10,367,000 (Note 2) - (11,140) - 2 Cumulative effect as of January 1 of accruing unbilled - revenues - less income taxes of $6,326,000 in 1983 and "- 522,320,000 in 1982 (Note 1) - 6,799 23,009 i:- Consolidated Net Income - as reported S 719,669 5 590,326 5 472,331
- pro forma (Note 1) S 719,669 $ 583,527 5 449,401
{ t Average Number of Shares of Common Stock Outstanding (in thousands) 239,784 218,556 198,800 Earnings Per Share of Common Stock: Before cumulative effect of a change in method of K recording revenues 53.00 $2.67 $2.26
- Cumulative effect of accruing unbilled revenues - 0.03 0.12 E Total Earnings Per Share of Common Stock - as reported S3.00 52.70 52.38 L- - pro forma (Note 1) 53.00 $2.67 52.26 Cash Dividends Paid Per Share of Common Stock S1.83 S1.72% $1.66 f
L The accompanying notes are an integral part of these statements. -=
- 32
Consolidated Statements of Soumes Of Funds for Gross Property Additions For the Years Ended December 31,1984,1983, and 1982 The Southern Company and Subsidiary Companies 1984 1983 1982 (in thousands) Funds from Operations: Consolidated net income S 719,669 $ 590,326 5 472,331 Add (deduct) principal noncash items - Depreciation and amortization 567,034 510,240 500,441 Deferred income taxes, net 237,371 288,501 210,170 Deferred investment tax credits 242,989 195,057 205,591 Allowance for equity funds used during construction (211,583) (145,833) (92,707) 1,555,480 1,438,291 1,295,826 less dividends on common stock 436,007 374,371 327,723 Net funds provided from operations 1,119,473 1,063,920 968,103 Funds from Financings: Common stock - Public offerings 40,303 78,893 43,974 Dividend reinvestment and stock purchase plan 231,288 198,170 152,736 Employee savings plan 35,258 23,907 19,957 Employee stock ownership plan 9,213 22,320 22,517 316,062 323,290 239,184 First mortgage bonds 150,000 125,000 275,000 Bonds retired, reacquired, or refunded at maturity (60,658) (41,146) (56,388) Preferred stock 50,000 50,000 75,000 Preferred stock reacquired (5,329) (10,186) (3,089) Proceeds from pollution control obligations, net 364,535 57,005 131,023 Pollution control bond anticipation notes payable 109,356 - - Increase (decrease) in other long-term debt (68,479) 89,478 (48,224) Net funds provided from financings 855,487 593,441 612,506 Funds from Other Sources: Decrease (increase) in temporary cash investments (283,173) 95,211 (124,759) Decrease (increase) in other net current assets (excluding notes payable and long-term debt and preferred stock due within one year) 167,103 (69,491) 22,826 Sales of property, net book value 181,330 - 19,562 Other, net (including allowance for equity funds used during construction) 60,230 23,359 (7,709) Net funds provided from other sources 125,490 49,079 (90,080) Gross Property Additions (including allowance for funds used during construction in the amounts of $317,935,000 f in 1984, $219,643,000 in 1983, and $154,255,000 in 1982) 52,100,450 $1,706,440 $1,490,529 The accompanying notes are an integral part of these statements. 33
Consolidated Balance Sheets At December 31,1984 and 1983 The Southern Company and Subsidiary Companies l Assets 1984 1983 (in thousands) Utility Plant: Plant in service, at original cost 513,927,029 513,164,920 less accumulated provision for depreciation 3,950,212 3,576,884 9,976,817 9,588,036 Nuclear fuel, at amortized cost 455,274 421,955 Construction work in progress 3,820,286 2,903,314 Total 14,252,377 12,913,305 less property-related accumulated deferred income taxes (Note 1) 1,759,016 1,558,271 Total 12,493,361 11,355,034 Other Property and Investments (Principally nonutility property, net) 31,499 11,473 Current Assets: Cash 55,872 46,403 Temporary cash investments, at ccst which approximates market 821,966 538,793 Receivables, less accumulated provisions for uncollectible accounts of
$7,700,000 in 1984 and $4,395,000 in 1983 599,309 551,992 Accrued utility revenues 75,649 96,093 Fossil fuel stock, at average cost 629,303 601,137 Materials and supplies, at average cost 162,681 128,978 Prepayments 17,511 34,119 Vacation pay deferred 49,626 47,710 Total 2,411,917 2,045,225 Deferred Charges:
Deferred cost of canceled plant - 855 Debt expense, oeing amortized 22,478 20,377 Miscellaneous 44,705 42,424 Total 67,183 63,656 Total Assets $15,003,960 $13,475,388 The accompanying notes are an integral part of these balance sheets. 34
Capitalization and Liabilities 1984 1983 (in thousands) Capitalization (See accompanying statements): Common stock equity 5 4,639,227 5 4,041,577 Preferred stock 1,001,820 951,620 Preferred stock subject to mandatory redemption 194,224 201,784 long-term debt 6,638,085 6,293,732 Total 12,473,356 11,488,913 Current Liabilities: Preferred stock sinking fund requirement 5,229 2,998 long-term debt due within one year 153,153 126,633 Pollution control bond anticipation notes payable 109,356 - Revenues to be refunded - 13,175 Accounts payable 579,461 439,331 Nuclear fuel disposal fee 61,502 3,544 Customer deposits 80,200 73,320 Taxes accrued - Federal and state income 112,078 104,168 Other 86,910 83,863 Interest accrued 202,589 175,372 Vacation pay accrued 56,692 54,232 Miscellaneous 88,271 70,076 Total 1,535,441 1,146,712 Deferred Credits and Other Liabilities: Accumulated deferred investment tax credits 947,977 748,150 Nuclear fuel disposal fee - 54,984 Miscellaneous 47,186 36,629 Total 995,163 839,763 Commitments and Contingent Matters (Notes 3,4,9, and 10) Total Capitalization and Liabilities $15,003,960 $13,475,388 The accompanying notes are an integral part of these balance sheets. I 35
Consolidated Statements of Capitalization At December 31,1984 and 1983
. The Southern Company and Subsidiary Companies 1984 1983 1984 1983 (in thousands) (percent of total)
Common Stock Equity: Common stock, par value $5 per share-Authorized - 375,000,000 shares: Outstanding - 1984: 250,051,627 shares; 1983: 229,589,500 shares (a) S 1,250,258 $ 1,147,948 Amount paid in for common stock in excess of par value 1,978,458 1,764,706 Premium or preferred stock 5,755 5,509 Earnings retained in the business (Note 11) 1,4(M,756 1,123,414 Total common stock equity 4,639,227 4,041,577 37.2% 35.2 % Cumulative Prefermd Stock of Subsidiaries:
$100 par or stated value -
4.20% to 5.96% 199,356 199,356 6.48% to 7.88% 147,000 147,000 8.04% to 9.52% 340,464 340,464
$25 stated value, Class A -
$2.52 to $2.56 100,000 100,000
$3.44 75,000 75,000 15.68 % 40,000 40,000 Adjustable rate (11.20% at 12/31/84) 50,000 -
Adjustable rate (11.84% at 12/31/84) 50,000 50,000 Total (annual dividend requirement - $87,882,000) 1,001,820 951,820 8.0 8.3 Cumulative Preferred Stock of Subsidiaries Subject to Mandatory Redemptiom
$100 par value -
10.20% to 11.36% 68,203 71,152
$25 s!ated value, Class A -
$2.75 56,250 58,630
$3.76 75,000 75,000 Total (annual dividend requirement - $24,844,000) 199,453 204,782 Less amount due within one year (Note 6) 5,229 2,998 Total excluding amount due within one year 194,224 201,784 1.6 1.7 I.
( 1984 1983 1984 1983 (in thousands) (percent of total) Long-Term Debt: First mortgage bonds of subsidiaries - Maturity Interest Rates 1984 3%% to 3%% - 37,915 1985 3%% 11,988 11,988 1985 3%% 15,000 15,000 1986 3%% to 3%% 29,725 29,725 1987 4%% to 8%% 104,179 101,179 1988 3%% to 4%% 55,000 55,000 1989 18%% 98,000 99,000 1989 4%% to 5%% 30,823 30,823 1990 through 1994 4%% to 17%% 450,284 455,193 1995 through 1999 4%% to 8%% 458,526 458,526 2000 through 2004 7%% to 11%% 1,669,205 1,679,289 2005 through 2009 8%% to 11%% 1,300,968 1,300,968 2010 through 2014 12%% to 17%% 1,187,000 1,043,750 Total first mortgage bonds 5,410,698 5,321,356 Other long-term debt (Note 7) 1,442,901 1,146,848 Unamortized debt premium (discount), net (62,364) (47,839) Total long-teun debt (annual interest requirement - $741,863,000) 6,791,238 6,420,365 Less amount due within one year (Note 8) 153,153 126,633 Long-term debt excluding amount due within one year 6,638,085 6,293,732 53.2 54.8 Total Capitalization 512,473,356 511,488,913 100.0 % 100.0 % (a) At December 31,1984, a total of 13,491,385 shares was reserved for issuance pursuant to the Dividend Reinvestment and Stock Purchase Plan and the Employee Savings Plan. The acenmpanying notes re an integral part of these statements. l l 37
Consolidated Statements Of Earnings Retained in the Business For the Years Ended Deamber 31,1984,1983, and 1982 The Southern Company and Subsidiary Companies 1984 1983 1982 (in thousands) Balance at beginning of period $1,123,414 5 909,189 5 767,938 Consolidated net income 719,669 590,326 472,331 1,843,083 1,499,515 1,240,269 Cash dividends on con. mon stock ($1.83 per share in 1984,51.72% per share in 1983, and $1.66 per dare in 19C2) 436,007 374,371 327,723 Capital stock issuance expense 2,320 1,730 3,357 Balance at end of period (Note 11) 51,4 % 756 51,123,414 5 909,189 Consolidated Statements of Amount Paid in For Common Stock in Excess of Par Value For the Years Ended December 31,1984,1983, and 1982 The Southern Company and Subsidiary Companies 1984 1983 1982 (in thousands) Balance at beginning of period 51,764,706 $1,545,245 51,395,395 Proceeds from sales of common stock over the par value thereof - 20,462,127 shares in 1984, 20,765,675 shares in 1983, and 17,866,902 shares in 1982 213,752 219,461 149,850 Balance at end of period 51,978,458 51,764,706 51,545,245 The accompanying notes are an integral part of these statements. 38
- _______________________ ______________ ___ _ .____ ___~
. . . . .. . . . . . ~ . _ . . . . _ .. . ~ . . . . . - . . . . . ._ . - . . . . . . , . . -
Nstes ts Fin nci:1 Stat:ments December 31,1984,1983, and 1982 The Southern Company and Subsidiary Companies i
- 1. Summary of Significant Accounting Pelicies: changes and pro forma effect on prior periods, ;
General assuming the changes had been applied retroactively, The Southern Company is the parent company of are shown in the Consolidated Statements of Income. four operating companies, a system service company, Fuel Costs and Southern Electric International, Inc. (SEI). The
, Fuel costs are expensed as the fuel is used. The oper-operating compames provide electnc service m four ating companies' electric rates include provisions to southeastern states. Contracts among the companies adjust billings for fluctuations in fuel and purchased
-- deahng with jointly owned generating facilities, power costs. Revenues are adjusted for differences ..
interconnecting transm,ssion i lines, and the exchange between recoverable fuel costs and amounts actually of electric power - are regulated by the Federal recovered in current rates. Energ'j Regulatory Commission (FERC) or the Fuel expense includes the amortization of the Securities and Exchange Commission (SEC). The cost of nuclear fuel and a charge, based on nuclear system service company provides, at cost, techmcal generation, for the permanent disposal of spent and other specialized services to The Southern Com- nuclear fuel by the United States Department of pany and to each of the subsidiary companies. SE1 Energy (DOE). The total charges for nuclear fuel in-markets to utilittes and industrial concerns the cluded in fuel expense amounted to $113,492,000 in technical expertise of the Southern electnc system in 1984, S79,707,000 in 1983, and 577,675,000 in 1982. planning and operating electric power facilities. Alabama Power and Georgia Power have signed con-The Southern Company is registered as a hold- tracts with DOE that provide for the permanent ing company under the Public Utility Holding disposal of spent nuclear fuel which is scheduled to Company Act of 1935. Both the company and its begin in 1998. Pending permanent disposition of the subsidiaries are subject to the regulatory provisions spent fuel, sufficient storage capacity currently is of the Act. The operating companies also are subject available through the year 2001 at Plant Hatch and to regulation by the FERC and their respective state into 2007 and 2010 at Plant Farley Unit Nos. I and 2, regulatory commissions. The companies follow gen- respectively. Storage capacity for spent fuel will be erally accepted accounting pnnciples and comply available at Plant Vogtle through the year 2003. with the accounting policies and practices prescribed by their respective commissions. Utility Plant All material intercompany items have been Utility plant is stated at original cost. This cost in- , eliminated in consolidation. Consolidated retained cludes appropriate administrative and general costs; ! earnings at December 31,1984, include payroll-related costs such as taxes, pensions, and
$1,130,714,000 of undistributed retained earnings of other benefits; and the estimated cost of funds used subsidiaries. during construction. The cost of maintenance, re-pairs, and replacement of minor items of property is Rewnues charged to maintenance expense. The cost of replace-Alabama Power recognizes revenues concurrent with ments of property (exclusive of minor items of prop-billings to customens on a cycle billing basis. Gulf erty)is charged to utility plant.
Power, in 1975, Georgia Power, in 1982, and Missis-sippi Power, in 1983, began accruing for service Allowance for Funds Used During Construction rendered but unbilled at the end of each fiscal period (AFUDQ to match more closely revenues and expenses. The ef- This allowance represents the estimated debt and fect of this change in the method of recording equity costs of capital funds which are necessary to revenues by Mississippi Power and Georgia Power finance the construction of new facilities. The com-was to increase 1983 and 1982 income by $4,987,000 posite rates used by the companies to calculate and $498,000, respectively, before the cumulative ef-fect for prior periods. The cumulative effect of these 39
r _ 3 a
.s AFUDC during the years 1982 through 1984 ranged Pension and Other Post-Retirement Benefits
- from a groa rate of 9.69 pen.ent to 11.72 percent for The companies have defined benefit, trusteed, and Gulf Power and Mississippi Power and from a net-of- noncontributory pension plans which cover substan- s tially all regular employees. The policy of the com- .*
income-tax rate of 8.40 percent to 9.55 percent for . Alabama Power and Georgia Power. AFUDC, net of panies is to fund each year's accrued pension cost as f-income tax, as a percent of consolidated net income determined using the " entry age normal method with was 43.9 in 1984, 37.0 in 1983, and 32.5 in 1982. frozen initialliability" actuarial cost method. Certain "
/
ctuarial assumptions used in determining the an-Depreciation and Amortization nual plan costs and contributions were changed m , Depreciation of the original cost of depreciable utili. 1984. The most significant changes were an increase ! ty plant in service is provided using composite n the assumed rate of return on plan assets (from straight-line rates which approximated 3.7 perant in f1Ve percent to seven percent) and an mcrease m the 1984 and 1983 and 3.6 percent in 1982. Depreciation assumed annual rate of salary increases (from four includes a factor to provide for the expected costs of percent to six percent). These changes resulted m a .. decommissioning nuclear facilities. This factor is net decrease of $224,582,000 in the accrued unfunded : based on an estimated decommissioning cost of ap- L proximately $32 million per unit for Georgia Power's {iability for the plans and a reduction of $31,817,000 in the 1984 contributions to the plans. Accrued pen-ownership interest in Plant Hatch and some $45 mil- sion costs amounted to $71,569,000 in 1984, lion per unit for Alabama Power's Plant Farley Unit $95,326,000 in 1983, and $84,504,000 in 1982. Of 1 Nos. I and 2. These estimates will be adjusted , these amounts, 540,496,000 in 1984, 558,501,000 in periodically to reflect changmg price levels and 1983, and $55,146,000 in 1982 were charged to oper-technology. When property subject to depreciation is ting expenses, and the balance was charged to con-retired or otherwise disposed of in the normal course struction and other accounts. Also, Mississippi of business, its cost - together with the cost of Power, m 1983, and Georgia Power, m 1984, m-removal, less salvage - is charged to the accumu- , curred additional costs of $5,927,000 and -- lated provision for depreciation. The deferred costs b13,006,000, respectively, to pay retirees under a one-of two canceled plants were amortized over five-year . time early retirement program. Accumulated pension periods. This amortization amounted to $855,000 in benefit information as of the valuation dates 1984, $1,446,000 in 1983, and $7,750,000 in 1982. Gamiary 1 of each year) follows: Both canceled plants were fully amortized at the end of 1984. 3934 3933 ' Income Taxes (in thousands) The companies provide deferred income taxes for all Actuarial present value of
*" ulated pla benefits-income tax timing differences. Investment tax credits d '
are deferred and amortized over the average lives of Nonvested 7,932 10.229 the related property. Provisions for property-related Total 5 591,987 5529,938 - : deferred income taxes reflect consumption of part of Weighted average rates o. . turn the value of the plant and equipment to which they assumed in determining i relate. Consequently, the related accumulated de- actuarial present value of accumulated Plan benefits 8% 8% - ferred income taxes are a valuation reserve which is $1,017,498 5820,725 Net assets available for benefits J deducted from the plant investment in the Consoli-dated Balance Sheets. Other deferred income taxes are included in taxes accrued. See Note 5 for further information regarding income taxes.
.m.
40 .
3
=.
The actuarial present value of acrumulated plan Effective in December,1984, the Florida Public - benefits was determined on the basis of accrued Service Commission granted Gulf Power $4.7 million 1 benefits as of January 1 of the respective years, annually of its $18.8-million rate request. whereas the plans are funded based on the premise In August,1983, on remand from the Supreme that the plans will continue in existence, which re- Court of Mississippi, the Mississippi Public Service quires that future events be considered. Commission granted Mississippi Power an annual in-The system companies also provide certain crease in retail revenues of approximately $18.6 mil-health-care and life insurance benefits for retired lion of the S39.3 million requested in 1980. In employees. Substantially all employees may become November,1983, Mississippi Power made refunds to eligible for these benefits when they reach normal its customers of amounts which had been collected retirement age while still working for a system com- subject to refund, resulting in a charge of $11.1 mil-pany. The costs of such benefits are recognized as the lion (net of taxes) to consolidated earnings for 1983. . payments are made during the post-retirement In April,1984, Georgia Power filed a request period. During 1984, the cost of providing such with the Georgia Public Service Commission (GPSC) s benefits was 55,270,000, of which 54,424,000 was to cover estimated increases in fuel costs and unre-charged to operations and the remainder to construc- covered fuel costs from prior periods. The allowance s tion and other accounts. granted by the GPSC was deficient in covering the C mpany's prior period fuel costs by approximately Wcation Pay
$22.3 million. Geory,ia Power filed a petition regard-The operating companies' employees earn vacation ,
ing this matter with the Superior Court of Fulton in one year and take it in the subsequent year. How-ever, for ratemaking purposes, vacation pay is recog- g unty on July 6,1984, and a motion for recon- , sideration and reheanng with the GPSC on July 13, ; nized as an allowable expense only when paid. Consistent with this ratemaking treatment, the com- 1984. He m ti n f r reconsideration and reheanng was derued by the GPSC on August 7,1984. The panies actrue a current liability for earned vacation petition filed with the Superior Court of Fulton pay and record a current asset representing the future County was taken under advisement at a hearing recoverability of this cost. Such amounts were n November 16,1984, and a decision is still pend-
~ $49,626,000 and $47,710,000 at December 31,1984, and 1983, respectively, in 1985, an estimated 64 per-mg. In management,s opmion, the settlement of this cent of the cost of vacation pay will be expensed, and sse will not have a material financial impact on Georgia Power.
the balance will be charged to construction and other accounts. .
- 2. Rate Matters:
In November,1982, the Alabama Public Service Commission (APSC) adopted retail rates which pro-vide for periodic adjustments based upon Alabama Power's earned return on common equity. The rates also provide for adjustments to recognize the placing of new generating facilities in service. Both increases and decreases have been placed into effect since the adoption of these rates. On December 20,1984, the APSC extended these rates through June 30,1985, and provided for proceedmgs to evaluate this rate- ~ making concept. 41
1
- 3. Construction Program, Financing, Plant Vogtle And FuelCommitments: The above construction estimates include Georgia Construction Power's 45.7-percent ownership in Plant Vogtle -
The subsidiary companies are engaged in continuous Nuclear Unit Nos. I and 2 which are planned for _ construction programs, currently estimated to total commercial operation in 1987 and 1988, respectively. -- some $2.5 billion per year in 1985 and 1986 and At December 31,1984, Unit No. I was approximate-52.1 billion in 1987. These estimates include the ly 75 percent complete and Unit No. 2 was approxi-allowance for funds used during construction and mately 45 percent complete. Georgia Power's reflect the present ownership percentage in all gener- investment at De mber 31,1984 - based on its _ ating facilities under construction. The construction 45.7-percent ownership - was $1.595 billion for programs are subject to periodic review and revision, Unit No. I and common facilities and $313 million , and actual construction costs incurred may vary for Unii No. 2. The total projected costs of Georgia from the above estimates because of numerous fac- Power's percentage ownership of each unit are tors, such as granting of timely and adequate rate in- 52.263 billion and 5823 million, respectively. In creases, new estimates of increased costs, revised load August,1984, as a result of an extensive review of estimates, design changes in nuclear plants to meet the construction program, estimated total plant addi-changing requirements, unforeseen nuclear plant li- tions at completion for Plant Vogtle were increased censing requirements, the availability and cost of from 56.6 billion to 57.2 billion. This represents an capital, and changing environmental requirements. increase of $240 million (8.4 percent) for Georgia At December 31,1984, substantial purchase commit- Power's 45.7-percent ownership interest. This in-ments were outstanding in connection with the con- crease reflected, among other things, then current struction program. estimates of engineering costs, staffing levels, and The U. S. Environmental Protection Agency has wage and materials costs, as well as a downward proposed new air quality control regulations relating revision of certain productivity rates. As previously to the stack height requirements of the Clean Air Act reported, the projected productivity rates were higher which could require installation of costly flue-gas than those then being experienced at the plant. Since desulfurization equipment or use of more expensive the conclusion of such review, productivity rates low-sulfur fuel at affected coal-fired generating have improved, although not as much as was fore-facilities. The regulations, as proposed, would have a cast. If Georgia Power's continuing efforts to improve __ significant effect on certain facilities. However, the productivity rates further are not successful, a ultimate impact cannot be accurately determined un- portion of the $250-million financial and contin-til final regulations are promulgated and the state en- gency reserve that is provided for in Georgia Power's vironmental agencies determine what actions must total construction estimate could be required for be taken by the system companies to comply with the Plant Vogtle. ' - regulations. The application of the regulations to any Before operation of a nuclear unit, an operating Southern electric system plants currently in service license must be obtained from the Nuclear or under construction is uncertain. In addition, in the Regulatory Commission (NRC). Procedures for ob-past few years several bills have been before Congress taining operating licenses afford an opportunity for . concerning acid rain which would make additional interested parties to request a public hearing on pollution control equipment mandatory for coal- health and safety, environmental, and antitrust fired electric power plants. The enactment of legisla- issues. Issuance of operating licenses by the NRC tion or regulations mandating reductions in sulfur may be conditional upon requiring substantial dioxide emissions in the service area ,f the system changes in the proposed operation or upon installing companies would substantially increase capital re- additional equipment to meet upgraded safety or en- - quirements and/or operating costs. vironmental requirements, with consequent delay and added cost. Georgia Power applied for operating licenses for Plant Vogtle in September,1983. The NRC's Atomic Safety and Licensing Board (ASLB) held a Prehearing Conference on May 30,1984, to define issues to be addressed in the Plant Vogtle li-censing hearings. On September 5,1984, the ASLB
m yy 3 s s gw ::. 3 ,. m o , /. g - .. a w granted intervenor status to two organizations and possibly costlier, means of financing, or it could docketed certain contentions for consideration during become necessary to cancel or delay certain construc-l the future licensing hearings. If the licensing process tion projects. Delays in construction projects could i proceeds on schedule, fuel loading at Unit No.1 is result in significant additional costs. expected to take place in September,1986. Georgia Georgia Power must receive approval of the .. .. Power then would begin low-power testing and move GPSC and the SEC before issuing securities. In 1984, to full-power operation and commercial start up as the GPSC approved the issuance and sale by Georgia early as March,1987. Power of specific amounts of preferred stock and At the conclusion of the 1985 legislative session long-term debt. The GPSC's orders provide that no in March, there was pending before the Georgia portion of the approved securities "or any monies House of Representatives a bill that would require associated with these securities be allowed for the GPSC to phase Georgia Power's prudently in- ratemaking purposes until such time as there has curred construction costs for each unit of Plant been a thorough study of Georgia Power's construc-Vogtle inta its retail rate base in equal annual in- tion programs which have been used to justify the stallments over a period of not less than three nor need for these securities." The orders further state that before the GPSC acts on any other financing ap-more than six years from the date of commercial operation of such unit. Similar legislation previously plication filed by Georgia Power, the GPSC "will had been passed by the Georgia Senate. Under the consider up front or before the fact construction pro-House bill, the rate base and cost recovery would be grams in relation to its regulatory functions. ." limited to Georgia Power's proportionate share of Pursuant to such orders and in connection with
$7.2 billion, costs directly attributable to new NRC Georgia Power's pending financing application, the requirements, costs due to delay in operation caused GPSC commissioned a prospective study of the by judicial or regulatory action not resulting from economic feasibility of Georgia Power's construction ,
Georgia Power's failure to comply with governing program. This study, which does not address past regulations, carrying costs (AFUDC) attributable to decisions relating to construction expenditures, was the deferral of cost recovery, and other costs completed in February,1985. The study concludes necessary to avoid confiscatory rates as a result of the that, under the current budget, completion of Plant bill. Costs found by the GPSC to have been im- Vogtle and Plant Scherer Units No. 3 and No. 4 is prudently incurred would not be included in the rate reasonable, economically justifiable, and in the in-base or nuclear purchased power expense. The bill terests of Georgia Power's retail customers. The study also would permit the GPSC to equalize nuclear pur- also finds that the cost of Plant Vogtle Unit No. 2 ap-chased power expenses over the period such expenses pears uncertain. It further concludes, based upon are to be incurred, giving effect to the carrying costs assumptions made by the consultant, that the Rocky associated with the deferral of cost recovery. The Mountain pumped storage project is uneconomic House bill will remain pending at the commencement and that cancellation of the project should be of the next legislative session expected in January, considered. At December 31,1984, Georgia Power 1986. What, if any, action on phase-in legislation had 5133 million invested in the Rocky Mountain may be taken in the future by the Georgia General project. Georgia Power is currently continuing its Assembly cannot now be determined. planned construction activities relating to Rocky Mountain. Georgia Power believes that the Rocky Mountain project is economic over its entire he ent possible, the subsidiary companies, life, which extends almost 50 years beyond the construction programs are expected to be financed from the issuance of additionallong-term debt and 25-yyar time horizon on which the consultant s con-clusmn is based. preferred stock, from the receipt of additional paid-in capital provided by The Southern Company from the sales of common stock, and from intemal sources. Should The Southern Company and sub-sidiary companies be unable to obtain funds from these sources, the companies would have to use short-term indebtedness or other alternative, and 43
1 At the beginning of 1985, unused credit ar- On June 29,1984, AEC filed with the NRC a request rangements with banks totaled $2.2 billion, of which that the NRC institute a proceeding which could lead approximately $502 million expires at various times to imposition of sanctions against Alabama Power ^ z 1 during 1985 through 1987,5200 million on April 30, for alleged violations of such license conditions. On d 1988, and the balance on December 31,1990. July 3,1984, Alabama Power filed with the NRC a -H The unused amount expiring on April 30,1988, petition for a declaratory order seeking clarification L is under Alabama Power's revolving credit agree- of the license conditions relating to Plant Farley. ; ments. These agreements require the payment of a Alabama Power's petition was denied on commitment fee based upon the unused portion of September 7,1984. AEC's petition is pending before the commitments which, in the case of eight of the the NRC. agreements and at the option of Alabama Power, Fuel Commitments 4' may be offset in whole or in part by the maintenance To supply a portion of the fuel requirements of the : of balances with the respective banks. system's generating plants, the subsidiary companies The amounts expiring in 1990 represent revolv- have entered into various long-term commitments for ing credit arrangements of Georgia Power. During the procurement of fossil and nuclear fuel. In most - the term of these agreements, Georgia Power may cases, these contracts contain provisions for price convert short-term borrowings into term loans, escalations, minimum production levels, and other payable m 12 equal quarterly installments during the financial commitments. Additional commitments for years 1991 through 1993, or at an earlier date at coal and nuclear fuel will be required in the future to Georgia Powers option. These term loans would be
, supply the subsidiary companies' fuel needs.
subject to authonzation from the GPSC and the SEC. In connection with these credit agreements, 4. Facility Sales and Joint Ownenhip Agreements: Georgia Power has agreed to pay certain fees and/or Geogia Power has sold undivided interests in Plants maintain compensating balances with the banks. Hatch, Wansley, Scherer, and Vogtle in varying In connection with all other lines of credit, the amounts, together with transmission facilities, to companies maintain compensating balances which Oglethorpe Power Corporation (OPC); the Munici-are substantially all the cash of the companies except pal Electric Authority of Georgia (MEAG): and the for daily working funds and like items. These city of Dalton, Geogia. These sales resulted in gains, balances are not legally restricted from withdrawal. after income taxes, of $21,250,000 in 1984 and The amounts of long-term debt, preferred stock, 53,873,000 in 1982. There were no sales of such and common stock which can be issued in the future facilities in 1983. The after-tax gain in 1984 resulted will be contingent on market conditions, the main- from the sale of a five-percent additional undivided tenance of adequate earnings levels, regulatory interest in Plant Vogtle to MEAG. At December 31, authority, and other facton. At December 31,1984, 1984, Georgia Power's percentage ownenhip and in-each of the operating companies had sufficient vestment in jointly owned facilities with the above coverages to permit the sale of additional bonds and entities were as follows: preferred stock. Georgia Ibwer Plant Farley construction An order of an Appeal Board of the NRC in an an. Total Percent Plant in Work in Capacity Ownership Service Progress titrust review resulted in conditions being imposed on the NRC licenses for Alabama Power's Plant Plant Hatch Farley which require Alabama Power to sell an (nuclear) 1,630 50.1 % 5645,177 5 38,879 ownenhip interest of approximately six percent in Plant Wansley _. (f ssil) 1,779 53.5 289,857 746 Plant Farley to Alabama Electric Cooperative, Inc. (AEC) and to provide transmission servi s to AEC "I'",'[' (to 3 = and municipal electric distributors. Alabama Power Unit Nos.1 & 2 1,636 s.4 82,311 31 has engaged in negotiations with AEC for such sale. common facilities - 23.5 68,247 6,637 Plant Vogtle (nuclear) 2,320 45.7 15,733 1,891,550 44
- a
;5 Each participant provides its own construction 5. Income Taxes:
financing. Georgia Power's proportionate share of A detail of the federal and state income tax provi-plant operating expenses is included in the cor- sions is shown below: = responding operating expenses in the Consolidated 1984 1983 1982 Statements of Income. Georgia Power has contracted un thousands) ;; to complete those jointly owned units still under con- Total provision for income taxes: struction and to operate and maintain the units as Federal-Currently payable 5 76,823 5 22,993 5 25,417 .=m agent for the joint owners. Deferred-current year 341,126 348,875 268,476 In connection with these sales, Georgia Power -reversal of - has entered into agreements whereby it is required to prior years (123,310) (86,772) (81,739) .s ' purchase declining fractions of OPC's and MEAG's Deferred investment , tax endits 242,989 m.os7 20s,591 ; capacity and energy of the respective generating units 537,62s 480,153 417,m during a period of up to 10 years following commer-cial operation (and, in the case of a portion of the $rrently payable 45,855 28,258 26,396 .- five-percent interest in Plant Vogtle owned by Deferred-current year 30,351 37,941 31,809
^
MEAG, during periods commencing on the earlier of -reversal of either the actual or currently scheduled commercial prior years (10,796) (11,543) (8,376) 2(; 65,41 54,656 49,829 operation dates of the Plant Wgtle units until the lat-ter of the retirement of such units or the latest stated s,*Iincome taxes charged c maturity date of MEAG's bonds issued to finance (credited) to: ~i ~ such ownership interest) with the payments for such Other income 41,847 19,793 28,814 capacity to be made whether or not any capacity is cumulative effect as of available. The energy cost of these purchases is a I*""'
- r
,nbi ed reven$es"i"* -
m u - 'I function of each entity's variable operating costs. The Refund of retail revenues - r cost of such capacity and energy is included in pur- billed in prior years - (10,367) - chased and interchanged power in the Contolidated Federal and state income taxes charged to operations $s61,191 5519,057 5416,440 Statements of Income. The capacity payments to. taled $211,352,000, $115,737,000, and $115,374,000 # for 1984,1983, and 1982, respectively. The current Defermd income taxes result primarily from the projected capacity payments for the next five years companies' use of accelerated depreciation methods : are as follows: $180,509,000 in 1985; S150,918,000 in and other write-offs of property costs, as provided 1986: $372,354,000 in 1987: $421,336,000 in 1988; for by the income tax laws, being greater than the ; and $480,466,000 in 1989. The increase in estimated book depreciation of such costs. Other deferred in- -- capacity payments in 1987,1988, and 1989 reflects come taxes are provided for certain costs or revenues the additional buy backs from the scheduled com. that are recognized for income tax purposes m 7 mercial operation of Plant %gtle Unit Nos.1 and 2. periods different from those used for book purposes. i Income taxes deferred in prior years am reversed m (credited) to income when the book depreciation of property costs exceeds the related tax deductions or when other timing differences reverse. Deferred in- =f - vestment tax credits are amortized over the life of the related property with such amortization applied as a _ credit to reduce depreciation in the Consolidated . t y
- 1. -
zu m 45
T s E k e k. k I L Statements of Income. These credits amounted to 7. Other Long-Term Debt: J $23,356,000 in 1984, $19,514,000 in 1983, and Details of other long-term debt are as follows:
; $13,463,000 in 1982. At December 31,1984, all in-December 31, vestment tax credits available to reduce federal in. 8#
come taxes payable had been utilized. thousan l-The income taxes currently payable include pro- obligations incurred in connection visions for the reversal of prior years' timing differ- with the sale by public authorities ences not previously recognized. At December 31, of tax-exempt pollution control [ '- 1984, the remaining balance of such amounts was c2aEeralIze"dI-5 approximately $287 million. The total provision for 5.8% to 13.75% due 2002 I federal income tax as a percent of income before fed- to 2013 S 565,530 $ 565,530 eral income tax amounted to 39.4 percent, 40.9 per. Noncollateralized-5.9 % % due serially cent, and 42.4 percent for 1984,1983, and 1982, 1 , i respectively. The difference between the rates and the s.0% to 9.125% due serially federal statutory rate of 46 percent was due primarily 1984-2004 18,700 22,200 i 7.2 to 12.25% due 1994 } to the exclusion from taxable income of the allow. ance for equity funds used during construction Adjustable interest rate . 5 (7.2 percent in 1984,5.7 percent in 1983, and 4.3 per- due 1985 (6.45% at 12/31/84) 50,000 - Less funds on deposit with trustees 422,461 58,596 cent in 1982). i 6. Cumulative Preferred Stock Subject t capitalized lease obligations-r Mandatory Redemptioru Nuclear fuel 75,059 134,369 The requirements for preferred stock subject to man- coal rail cars 13,607 15,779 7 Buildings 113,690 111.315 datory redemption through 1989 total 58,250,000 for other s.972 13.402 1985 and $12,000,000 per year for 1986 through 211,32s 274.865
- 1989. At December 31,1984, preferred stock had
) been reacquired which will be used to meet "N'due'1984-1989 s 12,200 14,650
$3,021,000 of the 1985 sinking fund requirement and 9.75% due 1984-2010 11,349 11,448
$1,276,000 of future sinking fund requirements. 6.0% to 16.0% due 1984-1986 1,558 2,251 12.375% due 1990 30,000 30,000 11.5% due 1991 20,000 20,000 4 Adjustable interest rates due 1984-1987 (8.56% to 10.50% at 12/31/84) 19,200 20,900 E 94,307 99,249
.- Total $1,442,904 51,146,848 Lj I"
i
. 46
The subsidiary companies have authenticated The annual first mortgage bond sinking fund re-and delivered to trusters a like principal amount of quirement (one percent of the sum of bonds authen-first mortgage bonds as security for obligations ticated prior to January 1 of each year) may be under collateralized installment sale or loan agree- satisfied by depositing cash, reacquiring bonds, or ments. The principal and interest on the first mort- pledging additional property equal to 166% percent gage bonds will be payable only in the event of of such requirement. default under the agreements. 9. Pollution ControlBond Assets acquired under capital leases are record- Anticipation Notes Payable: ed as utility plant in service, and the related obliga- At December 31,1984, Georgia Power had tion is classified as other long-term debt. The net S469,000,000 of pollution control bond anticipation book value of capitalized leases included m utility notes payable outstanding, of which $109,356,000 plant in service was $190,529,000 and $256,488,000 had been drawn down, with the balance on deposit at December 31,1984, and 1983, respectively. At with depositories. These notes are due in 1985 and December 31,1984, the composite interest rates for bear interest at 59 to 63 percent of the prime rate of nuclear fuel, coal rail cars, buildings, and other were interest. Georgia Power intends to refund the notes 11.37, 9.55, 8.30, and 14.41 percent, respectively. during 1985 with proceeds from the sale by public Sinking fund requirements and/or serial maturities authorities of additionallong-term pollution control through 1989 applicable to other long-term debt are bonds; however, the issuance of long-term securities as follows: 592,844,000 in 1985; S36,260,000 in 1986; requires the approval of the GPSC and the SEC. 520,682,000 in 1987; S13,652,000 in 1988; and
$10,348,000 in 1989. 10. Nuclear Insurance:
Under the Price-Anderson Act, Alabama Power and
- 8. Longterm Debt Due Within One Yean Georgia Power maintain agreements of indemnity A summary of the smking fund requirements and with the NRC which, together with private insur-scheduled maturities of long-term debt due within ance, cover third-party liability arising from any one year is as follows: nuclear incident occurring at the companies' nuclear 1984 1983 power plants. The Act limits to $620 million public un thusands) liability claims that could arise from a single nuclear Bond sinking fund requirement 5 68,526 5 72,896 ncident. Each reactor at the companies' nuclear orhon to be satisfied by bonding plants is insured against this liability to a maximum property additions 26,634 54,919 of $160 million by private insuran (the maximum Reacquired bonds 8,571 3,676 amount currently available), with the remaining cov-Cash sinking fund requirement 33,321 14,301 erage provided by a mandatory program of deferred i ' **88 37'915 premiums which would be assessed, after a nuclear
$' ", ','8'y be ddb**$ id' ties (Note 7) 92,844 74.417 -
Total 5153,153 5126.633 47 I . ..
I i incident, against all owners of nuclear reactors. A 11. Common Stock Dividend Restrictions: company could be assessed up to SS million per inci- 'Ihe income of The Southern Company is derived dent for each licensed reactor it operates, but not mainly from equity in earnmgs of its operating sub-more than $10 million to be paid in a calendar year. sidiaries. At December 31,1984, 5411,413,000 of On the basis of Alabama Power's ownership of two consolidated earnings retained in the business was reactors in service and Georgia Power's current own- restricted against the payment by the operating com-ership interest in two reactors in service, the com- panies of cash dividends on common stock under panies could be assessed a maximum of S10 million terms of bond indentures or charters. and $5 million, respectively, for any such incident, 12. Assets Subject to Lien: > but not more than 520 million and $10 milhon, The operating companies' mortgages, as amended - respectively, to be pa,di in any one year. and supplemented, which secure the first mortgage ; Alabama Power and Georgia Power are mem- '
, . bonds issued by the companies, constitute a direct
' bers of Nuclear Mutual Limited (NML), a mutual in-first lien on substantially all of the companies' fixed surer established to provide property damage property and franchises.
insurance in an amount up to $500 milhon for mem-bers' nuclear generating facilities. The members are 13. Quarterly Financial Data (Unaudited): .. subject to a retrospective premium adjustment in the Summarized quarterly financial data for 1984 and event that losses with respect to each policy year ex- 1983 are as follows: ceed accumulated funds. Alabama Power's and
d Georgia Power's maximum assessments are limited to $,",*,, $,,"d, [, r $",$r
$32 million and $19 million, respectively, under (a,nounts in thousands except for per-share data >
current policies. 1984
. Operating revenues $1,433,531 $1,484,335 $1.752,113 51,454,006 Additionally, both companies have poh. .aes operating income 235,785 237,836 337,670 236,182 which currently provide coverage up to $560 million consolidated net -
for losses in excess of the $500-million NML cover-i p,,"c **,m ,,,,3 ,,, N" MS "" M* age. This excess insurance is provided by Nuclear Earnings 0.n 0.61 1.06 0.62 Electric Insurance Limited (NEIL), a mutual insur. Dividends paid 0.45 0.45 0.45 0.48 ance company, and American Nuclear Insurers / 1,33 Mutual Atomic Enen;y Liability Underwriters. These operatins revenues 51,238,s25 51,223.487 s1,628,802 s1,326,929 me 212,354 215,540 334,243 256,474 policies cover both decontamination and debris re- D "u,i"fo 8 moval, as well as ex ss property damage. NEIL also income-
^5 reported 109,943 90,729 227,642 162,012 covers the extra costs which would be incurred in ob- Pro forma 103,144 na na na tam. .mg replacement power during a prolonged acci- Per common share dental outage at a member's nuclear plant. Members Earnings-are insured against increased costs of replacement power in an amount up to $2.8 million per week
^"[,P i','d Dividends paid 0.42%
s 0.424 l 'n' 0.42%
'n",
0.45 (starting 26 weeks after the outage) for one year and up to S1.4 million per week for the second year. The pro forma amounts shown in the first Under each of the NEIL policies, members are sub- quarter of 1983 assume the change in the method of ject to assessments if losses with respect to each recording revenues by Mississippi Power (see Note 1) policy year exceed the accumulated funds available to had been applied retroactively, the insurer under that policy. The present maximum The company's business is influenced by sea-assessmems under current policies for Alabama sonal weather conditions and the timing of rate Power and Georgia Power for property damage i. creases. would be 59.9 million and 55 million, respectively, and $15.1 million and $11 million, respectively, under the rephcement power policy. - L 48
- 14. Supplementary Information on Reporting The Southern electric system is subject to rate The Effects of Inflation (Unaudited): regulation and income tax laws that are based on the The following information is an estimate of the recovery of historical cost only. Therefore, inflation economic impact inflation had on The Southern creates an economic loss because the company is re-Company and the common stockholders' investment covering its cost of investments in dollan that have during 1984. The information is presented in accor- less purchasing power. Conventional accounting for dance with the general concepts set forth in Financial historical cost does not recognize this economic loss Accounting Standards Board Statement No. 33 as or the partially offsetting gain that arises through amended and should be viewed as an estimate of the financing facilities with fixed money obligations, -
approximate effects of inflation, rather than as a such as long-term debt and preferred stock. precise measure. The current cost information is ex-pressed in average 1984 dollars as measured by the i Consumer Price Index for All Urban Consumers. Current (in millions of dollars) Cost Net utility plant at year-end (historical cost or net cost recoverable through depreciation was $13,797.1) 525,931.1(a) Erosion of common stockholders' equity due to inflation: Additional depreciation S 517.1 Adjustment of utility plant to net recoverable cost (205.9) Economic gain from holding fixed money obligations (312.8) Excess of general level of prices (5950.1) in the current year over increase in specific price changes ($780.9) 169.2 Net erosion of common stockholders' equity due to inflation S 167.6 Annual Percentage Increase (Decrease) Average 1984 Dollars From (in millions of dollars except per-share amounts) 1984 1983 1982 1981 1980 1980 to 1984 Operating revenues 56,124.0 5,634.8 5,321.5 4,863.4 4,745.7 29.0 % Earnings on common stock (b) S 552.0 449.8 346.0 106.5 69.1 698.8 Economic gain from holding fixed money obligations S 312.8 311.0 302.2 604.8 897.9 (65.2) Excess of the generallevel of prices over increase in specific price changes 5 169.2 127.2 13.8 50.3 398.8 (57.6) Common stockholders' investment (net assets) at year-end S4,592.8 4,162.8 3,721.3 3,499.4 3,431.4 33.8 Return on average common equity (b) 12.61 11.41 9.58 3.07 2.02 524.3 Eamings per common share (b) S 2.30 2.06 1.74 0.59 0.45 411.1 Cash dividends per common share 5 1.83 1.79 1.79 1.85 1.97 (7.1) Market price per common share at year-end S 18.69 16.87 16.57 13.32 14.70 27.1 Average consumer price index 311.1 298.4 289.1 272.4 246.8 26.1 (a) Current cost of utility plant was determined primarily by applying the Handy 4Vhitman Index of Public Utility Con-struction Costs to the applicable historical costs. (b) Adjusted to reflect the net erosion of common stockholders
- equity as shown above. If only the additional depreciation were deducted from the reported amount of such earnings, adjusted earnings would be 5202.6,577.3, (552.9), (5152.7),
and (547.5), respectively. 19
Selected Consolid;ted Fin 2nci:1 Data . The Southern Company and Subsidiary Companies 1984 1983 1982 -; Condensed Statements of Income (in thousands): Operating Revenues 56,123,985 55,418,043 54,927,183
~
Operating Expenses - . Operation and maintenance 3,809,227 3,223,556 2,998,987 .p Depreciation and amortization 429,404 407,072 391,185 =p Taxes other than income taxes 276,690 249,747 234,581 & . Federal and state income taxes 561,191 519,057 416,440 Total Operating Expenses 5,076,512 4,399,432 4,041,193 Operating Income 1,m7,473 1,018,611 885,990 - Other Income, Net 275,680 178,557 135,990 Income Before Interest Charges 1,323,153 1,197,168 1,021,980 1 Net Interest Charges 495,443 498,312 476,782 Preferred Dividends of Subsidiary Companies 108,041 IM,189 95,876 Consolidated income before refund of retail revenues billed subject to refund in - prior years and cumulative effect of a change in method of remrding revenues 719,669 594,667 449,322 - Refund of retail revenues billed subject to refund in prior 6 years - less income taxes of $10,367,000 - (11,140) - { Cumulative effett as of January 1 of aaruing unbilled revenues - O less income taxes of 56,326,000 in 1983 and 522,320,000 in 1982 (Note 1) - 6,799 23,009 b Consolidated Net Income - as reported S 719,669 5 500,326 5 472,331 ' s-
- pro forma (Note 1) S 719,669 5 583,527 5 449,401 E Earnings Per Share of Common Stock:
Before cumulative effect of a change in method of recording revenues 53.00 52.67 S2.26 ; Cumulative effect of aaruing unbilled revenues - 0.03 0.12 e. Total Earnings Per Share of Common Stock - as reported 53.00 $2.70 52.38 ' 'E
- pro forma (Note 1) 53.00 S2.67 52.26 :
Cash Dividends Paid Per Share of Common Stock S1.83 S1.72% S1.66 i Retum on Average Common Equity (percent) 16.58 15.65 14.26 Total Assets (in thousands) 515,003,960 $13,475,388 S12,301,201 -E I.ong. Term Debt (in thousands) 56,638,085 56,293,732 56,104,179 .- Preferred Stock Subject to Mandatory Redemption (in thousands) S194,224 S201,784 5211,234 Gross Property Additions (in thousands) 52,100,450 $1,706,440 51,490,529 i Common Stock Data :A Book value per share (year-end) 518.55 517.60 $16.78 y Market price: High 18% 17% 15% low 14% 14% 11 _ Close 18% 16% 15% Shares outstanding (in thousands): 218,556 198,800 k Average 239,784 - Year-end 250,052 229,590 208,824 -_ Stockholders of record (year-end) 325,200 339,978 346,595 4 50 E _ _a- .
1981 1980 1979 1978 1977 1976 1975 1974 S4,256,237 53,763,483 $3,128,169 52,906.672 52,652,085 52,199,531 51,998,912 $1,488,995 2,691,360 2,243,644 1,908,448 1,816,508 1,629,709 1,337,845 1,130,955 927,267 359,514 331,222 304,188 269,012 216,060 190,178 170,791 153,361 207,582 179,543 171,174 157,127 129,956 120,718 104,198 88,949 _ 293,311 326,176 208,263 191,156 246,624 164,115 195,278 46,560 3,551,767 3,080,585 2,592,073 2,433,803 2,222,349 1,812,856 1,601,222 1,216,137 704,470 682,898 536,096 472,869 429,736 386,675 397,690 272,858 138,828 843,298 125,193 808,091 122,673 658,769 110,018 582,887 131,839 561,575 169,574 556,249 154,395 552,085 121,086 393,944 h 429,932 386,407 363,821 310,436 253,117 303,487 273,316 233,406 87,387 77,289 75,821 70,883 63,391 58,189 40,600 37,672 325,979 344,395 219,127 201,568 245,067 194,573 238,169 122,866 _ _ _ _ _ _ _ _ ==- S 325,979 5 344,395 5 219,127 5 201,568 5 245,067 5 194,573 5 238,169 5 122,866 J S 330,951 5 345,829 5 215.554 5 202,253 5 250,998 5 196,357 5 242,380 S 123,674 t
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$1.81 S2.23 51.51 51.45 51.95 51.62 52.26 St.41 m
$1.81 S2.23 51.51 51.45 51.95 51.62 52.26 S1.41 7 51.84 52.24 S1.49 S1.46 S1.99 $1.64 52.30 $1.42
{~ S1.62 51.56 $1.54 51.54 $1.48 51.41% $1.40 $1.39% _m_ 10.94 12.91 8.90 8.44 11.10 9.91 13.62 7.89 4
$11,198,120 $10,378,699 $9,568,610 59,011,366 58,332,620 $7,473,500 $6,735,120 56,183,815 W 55,754,200 $5,226,851 $4,769,066 54,522,888 S1,221,694 $3,744,495 53,408,210 52,939,388 M
$217,963 S152,000 5149,750 S155,000 $155,000 $155,000 $105,000 -
$1,288,022 $1,229,932 $1,164,956 S1,082,431 $1,218,404 $994,839 5992,087 $1,212,125 _b ii -
516.35 516.80 $16.80 $17.05 517.21 516.81 516.89 516.58 =_ 2 12% 14% 14% 17% 18% 16% 15% 17% 10% 10% 11 13 15% 13% 5% 7% j 12 12% 11% 13% 17% 16% 14% 8% s 180,139 154,392 145,038 139,005 125,846 120,072 105,264 87,083 190,957 168,697 148,745 142,102 136,772 122,807 110,246 98,750 g 347,119 345,335 341,401 342,482 328,135 292,759 264,652 229,791 y _? 4 MM 5
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S:lected Censolidated Fin:ncial Data The Southem Company and Subsidiary Companies 1984 1983 1982 Capitalization Ratios: long-term debt 53.2 54.8 56.9 Prefened stock 8.0 8.3 8.4 Preferred stock subject to mandatory redemption 1.6 1.7 2.0 Common equity 37.2 35.2 32.7 Total 100.0 100.0 100.0 Kilowatthour Sales (in thousands): - Residential 25,279,049 24,580,329 24,095,512 Commercial 20,147,559 18,881,778 18,409,993 Industrial 38,536,696 35,121,845 33,369,042 Sales for resale 11,192,583 10,828,900 11,109,091 Sales to utilities outside territory 18,750,335 12,029,933 9,254,302 Other 578,585 564,947 548,803 Total 114,484,812 102,007,732 96,786,743 Operating Revenues (in thousands): Residential 51,685,706 $1,577,742 $1,469,107 Commercial 1,359,343 1,236,007 1,173,323 Industrial 1,763,202 1,573,116 1,480,187 Sales for resale 455,842 439,038 446,199 Sales to utilities outside territory 776,889 507,909 278,234 , Other 41,(M1 37,004 34,206
- Total revenue., from sales of electricity 6,082,023 5,370,816 4,881,256 Other revenues 41,962 47,227 45,927 Total 56,123,985 $5,418,043 $4,927,183 -
l ! Customers (year-end) 2,800,532 2,723,923 2,659,494 . Employees (year-end) 31,121 30,875 29,882
- Maximum Peak-hour Demand (kilowatts) 19,771,600 20,517,600 17,840,100 System Capability * (kilowatts) 26,165,200 25,877,400 26,435,300
- Plant Availability (perwnt):
Ibssil-steam 90.9 90.8 89.8
- Nuclear 66.9 75.8 67.9 l Annualload Factor (percent) 58.9 53.9 59.8 Average Revenue Per Kilowatthour (cents):
Total sales 5.31 5.27 5.04 Residential sales 6.67 6.42 6.10 Average Cost of Fuel Per Net Kilowatthour Generated (wnts) 1.95 1.00 1.93 E
- Excludes 964,000 ar.d 654,000 kilowatts of capability from specific generating units sold under long-term contracts to two nonaffiliated utilities for years 1984 and 1983, respectively.
F 1 52
m I I ~ h 1981 1980 1979 1978 1977 1976 1975 1974
=
l 58.0 58.1 58.1 57.8 56.6 56.9 57.4 57.2
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8.3 8.7 9.6 9.3 9.7 9.3 9.5 11.0 2.2 1.7 1.8 2.0 2.1 2.4 1.7 - 3 31.5 31.5 30.5 30.9 31.6 31.4 31.4 31.8 i 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 E 24,239,470 24,651,737 22,645,723 23,606,119 22,829,156 20,985,791 20,275,134 19,4M,815
- 17,714,872 17,282,986 16,433,689 16,586,919 17,763,462 16,741,455 15,556,668 14,797,312 35,451,363 34,833,664 34,912,745 33,524,232 30,067,083 28,334,488 25,955,374 26,719,209 11,138,306 11,154,735 11,503,407 12,486,242 13,338,339 12,745,214 12,429,959 11,774,960 v 5,145,292 4,023,960 64,102 392,240 934,978 1,138,673 931,397 799,691
- 527,828 512,159 461,008 439,235 420,487 410,239 392,189 376,217 94,217,131 92,459,241 86,020,674 87,034,987 85,353,505 80,355,860 75,540,721 73,872,204 l $1,286,103 $1,186,206 $ 952,085 5 914,625 5 828,200 S 673,653 5 632,765 5 479,096 I 985,106 879,291 742,865 689,349 689,945 589,680 531,256 399,267 1,367,715 1,199,204 1,056,675 922,288 773,447 619,640 558,704 416,653 m2 397,585 336,984 326,309 324,351 298,834 265,957 233,603 160,606 161,581 110,243 2,955 12,460 19,846 19,050 12,844 8,518 29,385 26,216 22,050 20,252 18,760 16,516 15,141 13,077 I 4,227,475 3,738,144 3,102,939 2,883,325 2,629,032 2,184,496 1,984,313 1,477,217 23,347 15,035 14,599 11,778
~
28,762 25,339 25,230 23,053 _$4,256,237 $3,763,483 53,128,169 $2,906,672 52,652,085 $2,199,531 $1,998,912 51,488,995 I 2,619,673 2,565,461 2,522,284 2,472,646 2,415,939 2,363,877 2,305,216 2,279,334 1 28,944 27,940 26,540 26,465 24,632 22,385 20,684 21,115 19,412,500 19,553,100 18,015,300 18,172,900 16,973,700 16,683,500 16,185,500 15,759,100 25,834,000 23,694,600 23,986,500 23,356,400 21,988,100 21,002,900 20,324,400 18,678,800 C 87.3 86.5 84.9 83.9 78.7 75.4 83.4 85.6 ( 66.4 83.2 61.9 69.6 47.5 79.6 - - 2 56.5 55.6 58.3 58.1 60.6 58.2 56.7 57.4 y 4.49 4.04 3.61 3.31 3.08 2.72 2.63 2.00
;- 5.31 4.81 4.20 3.87 3.63 3.21 3.12 2.47 1.81 1.61 1.52 1.36 1.27 1.13 1.11 0.87 g
F u li h f P c r t s 53
The Southem Company Officers Directors Edward L Addison Edward L Addison John W. Langdale President President Vice Chairman Age 54; 30 years of service The Southern Company The Langdale Company Atlanta, Georgia (Forest products Age 54; electeo 1978 manufacturing) George B. Cam bell Valdosta, Georgia Financial Vice Prkident Age 67; elected 1977 Age 62: 44 years of service Alan R. Barton Pmsident Mississippi Power Company Douglas L McCrary Tommy Chisholm Gulfport, Mississippi President Secretary and Assistant Gulf Power Company Age 59; elected 1982 Treasurer Pensacola, Florida Age 43; 20 years of service Age 55; slected 1983 William J. Cabaniss, Jr President Therrell Murphy, Jr. Precision Grinding, Inc. William S. Morris, III Treasurer Chairman and (Metal machining) Age 42; 15 years of service Birmingham, Alabama Chief ExecutiveOfficer Age 46; elected 1985 Morris Communications Judy M. Anderson Corporation Assistant Secretary (Newspaper publishers, Age 36; 4 years of service Charles Chairmanof H. the Chabman, rd Jr* printing, computer services) Augusta, Georgia Chapman Corporation (Construction, real estate) Age 50; elected 1971 Dothan, Alabama Age 64; elected 1984 William A. Parker,Jr. Chairman of the Board A.W. Dahlberg GemMnvestment Company, Inc. Pmsident , Southern Company (Private investments) Atlanta, Georgia Se I Age 57; elected 1973 Birm n m labama Age 44; elected 1985 H.G. Pattillo P d nt and A.F. Dantzler*. Pattillo Construction ler Boat & Barge Company, Inc. C *]" "Yh... - Decatur, Age Geo)ia 58; electe 1972 3 6 eldt $b$ ppi Robert H. Radcliff, Jr. IPres; 5'P,hentM. Farley Chairman of the Board Midstream Fuel Service, Inc. I Alabama Power Company (General marine services) Birmmgham, Alabama Age 57; elected 1970 Mobile' Age 67; electAlab[1966
- Elected to fillthe vacancy created by the resignation of Fmnk P Samford, fr., effective March 5,1985.
* *A.E Dantiler will retire on May 9,1985. and be replaced by Earl D. Mclxan. Jr., Partner, TC. Griffith Insurance Agency, inc., Columbia. Mississippi.
54
ma r- i r- i -m>q i iim mi m i'n ,r ai-i Advisory Directors System Companies Crawford Rainwater V.J. Daniel, Jr. Alabama Power General Partner Former Chairman of the Board 600 North 18th Street Durnford Enterprises, Ltd. Mississippi Power Company Birmmgham, Alabama 35291 _ (Real estate) Gulfport, Mississippi (205) 250-1000 Pensacola, Florida Age 68: elected 1973 Age 68; elected 1975 Named AdvisoryDirector,1982 Georgia Pbwer = 333 Piedmont Avenue, N.E. M: William J. Rushton,III Alvin W. Vogtle, Jr. Atlanta, Georgia 30308 _: Chairman and Chief Former Chairman of the Board (404)526-6526 . . Executive Officer The Southern Company ; ration Atlanta, Georgia Gulf Pbwer a (Life and heal Co[ insurance) Protective Age 66: elected 1962 75 North Pace Boulevard g Birnungham, Alabama Named Advisory Director,1983 Pensacola, Florida 32505 Age 55; elected 1971 (904) 434-8111 y 1985 Committees Of the Board i er Robert W. Scherer SSgPPB Chairman of the Board Gulfport, Mississippi 39501 m, and Chief Executive Officer Audit Committee (601) 864-1211 -:- Georgia Power Company William A. Parker, Jr., Atlanta, Georgia Chairman Southern Company Services, Inc. A Age 59: elected 1977 John W. Langdale 64 Perimeter Center East 9-Crawford Rainwater Atlanta, Georgia 30346 Gloria M. Shatto Dr. Gloria M. Shatto (4o4) 393_0650 President - Berry College Compensation Committee 800 Shades Creek Parkway Rome, Georgia William S. Morris,111, Birmingham, Alabama 35209 - Age 53; clected 1984 Chairman (205) 870-6011 A.E Dantzler Herbert Stockham Robert H. Radcliff, Jr. Street b Chairman of the Board and New York, New York 10005 President Executive Comnu.ttee Edward L. Addison, (212) 269-8842 ? Stockham Valves
& Fittings, Inc. Chai, nan William A. Parker, Jr. 110117th Street' N.W' Birmingham, Alabama Suite 405 Age 56: elected 1978 H.G. Pattill Washington, D.C. 20036 2 Crawford Rainwater '
William J. Rushton, III (202) 775-0944 Southern Electric International, Inc. ' Nominating Committee 3500 Piedmont Road, N.E. Herbert Stockham, Suite 500 Chairman Atlanta, Georgia 30305 John W. Langdale (4(M) 261-4700 William J. Rushton,111 The Southem Electric System Y 8 8,
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Stockhold2rInform: tion I g 3 i Common StockIisting 5 The Southern Company's1984 The common stock of The Southern Company is ? nual report contains considerably more data than required bylaw, listed and traded on the New York Stock Exchange. _ j In addition, the stock is traded on regional stock ex-reflecting the company's commit- " ment to keeping its stockholden fully informed changes actoss the United States. (The ticker symbol about their investment. Listed below are a number of for Southern Company common stock is SO. The ~ other materials that may be helpful to investors. symbol SouthCo is used in newspaper stock listings.) Form 10 K Common Stock Share Data A copy of Form 10-K as filed with the Securities and Dividends Price Range Exchange Commission will be provided without Per Share High Low U, charge to stockholders upon request to the office of 1934 the Corporate Secretary. A copy of the company's S .45 Fint Quarter 17% 14% Financial and Statistical Review also is available on Second Quarter .45 16 14% request. Third Quarter .45 17% 14% Fourth Quarter .48 18% 17 Cassette Recordings Total 51.83 Cassette recordings of the 1984 annual report are available without charge as a service to the visually 1933 E impaired. Requests should be directed to the Cor- - First Quarter S.42% 16% 15% porate Information ofhce. Second Quarter .42% 16% 15% $ Mailing List for Publications Third Quarter .42% 16% 14% 'i The Southern Company maintains a direct mailing IburthQu rter .45 17% 16 Total 51.72% , list for stockholders whose shares are not held in their own names and for other interested parties to ' ensure that stockholder publications are distributed Dividend Reinvestment Plan , on a timely basis. Requests to be added to this list The Dividend Reinvestment and Stock Purchase Plan , provides a convenient method for stockholden to ac- - should be sent to the Corporate Information office. quire new shares through the investment of quarterly StockholderInquiries dividends and through optional cash payments. The _ Questions regarding ownership of Southern Com- price of shares purchased with reinvested dividends is pany stock or inquiries about the company's opera- discounted five percent from an average market _ tions may be directed to the office of the Corporate price. The price of stock purchased with optional Secretary (404 393-4498). cash payments is equal to 100 percent of an average market price. Optional cash payments can be made , monthly from a minimum of $25 to a maximum of
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56,000 per account for each calendar quarter. The company charges no service fee or commission for __ the purchase of stock, and all stockholders of record -T are eligible to participate. A prospectus describing the plan and the method for calculating the average market price may be obtained from the office of the - Corporate Secretary. .
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Through the 1985 tax year, the tax code allows individuals who participate in The Southern Com-pany's dividend reinvestment plan to defer the pay-ment of federalincome taxes on reinvested dividends. A maximum of $750 annually may be deferred on an individual return; up to $1,500 annually may be deferred on a joint return.
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