ML20126G752
| ML20126G752 | |
| Person / Time | |
|---|---|
| Site: | Dresden, Quad Cities, Zion  |
| Issue date: | 03/27/1981 |
| From: | Nexon H COMMONWEALTH EDISON CO. |
| To: | Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML20126G750 | List: |
| References | |
| NUDOCS 8103310620 | |
| Download: ML20126G752 (6) | |
Text
_ _
Cm Commonwealth Edison One First National Plaza. Chicago, Illinois Address Reply to: Post Office Box 767 Chicago, Illinois 60690 March 27, 1981 Docket Nos. 50-295, 304, 254, 265, 10, 249 & 237 Nuclear Regulatory Commission Washington, D.C.
20555 Attention:
Antitrust and Indemnity Group Nuclear Reactor Regulation Gentlemen:
We are submitting the following information to comply with the provisions of 10 CFR Chapter I, Part 140, Section 140.21, and the letter from Jerome Saltzman, Chief, Antitrust and Indemnity Group, dated June 15, 1977:
(1) annual report of this Company for the calendar year 1980 which shows its income state-ment and balance sheet, duly certified by the Company's public accountants, and which includes a summary statement for the last quarter of the year at page 17; (2) a statement of internal cash flow projected for 1981 and actual for 1980; and (3) a narrative statement to which the cash flow projection is annexed, explaining the projection, dealing with capital expenditures which might be curtailed should that become necessary, and establishing the availability of adequate funds to meet the Company's obligation for the payment within three months of May 1, 1981 of the Company's maximum liability for retrospective premiums.
As noted in the narrative statement, the company has a three-quarter share in the ownership of Quad Cities Units 1 and 2; the remaining quarter share is owned by Iowa-Illinois Gas and Electric Company which is submitting a separate statement.
Very truly yours, COMMONWEALTH EDISON COMPANY
/
By b/
d'Yv?~
/
Hubert H. Nexon Senior Vice-President Enclosures 810331o $$g)
March 127, 19811 COMMONWEALTH EDISON COMPANY MEMORANDUM WITH RESPECT =TOLPROJECTED COMPANY CASH FLOW'
- STATEMENT FOR YEAR ENDING DECEMBER'31, 1981 a
The attached statement shows thatLinternal cash flow proj ected; for the year 1981 for Commonwealth Edison' Company is expected to total.about $287 million, and on an average quarterly.
b asis -to total about.$72 million.
The statement also shows'that the maximum total contingent liability for premium assessments.
against-the Company under Price-Anderson is $65 million_since, although'it. operates seven reactors, it is a tenant-in-common with only a 75% ownership interest in the two units at Quad Cities Station.
Iowa-Illinois Gas and Electric Company, the other tenant-in-common, is filing a separate statement Funds for the payment of the $65 million possible maximum premium-assessments could be diverted from the construction program and made available from internal cash generation or from other sources.
The Company increased its rates effective February 7, 1980, pursuant to an order of the Illinois Commerce Commission which authorized $389.6 million in additional revenues on an annual basis, inclusive of an i
appro <imately $45 million rate. increase collected subj ect to refund since October 15, 1979.
Rates were further increased by $282.6 million on an interim basis effective November 20, 1980.
This interim increase is subject to refund pending receipt of a final order expected by July 6, 1981 on an application for a $628 million annual increase.
The rate b
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The Company's credit ratings are sufficient to allow access to the capital markets -- both long-term and short-term --
adequate to fund the maximum $65 million. assessment.
The Company-
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has an A credit rating from both Moody's Investors Service, Inc.
j and Standard & Poor's. Corporation applicable to:its mortgage debt.
Its junior debt securities are rated A-and'A by Moody's and Standard & Poor's, respectively.
It also has high credit ratings -- PRIME-1 from Moody's and A-2 from Standard & Poor's --
applicable to its commercial paper.
In' addition, the Company.
has back-up lines of credit totaling ovet $330 million'(which, l
effective April 1, 1981, will increase'to $530 million)'at prime rates with major commercial banks and presently has outstanding borrowings totaling only $3.8 million under these lines. -The Company also has $117 million unused lines of credit with nine banks in connection with, but not limited to use for, a nuclear. fuel lease arrangement, subj ect to reductions equivalent to amounts provided for nuclear fuel under lease from time to time.
These credit ratings and credit arrange-f ments provide for the means to raise additional'eapital in.
the amounts which may be required.
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, 1 The attached internal cash flow statement projected for 1981 reflects the net effect of a requirement of over $350 million for cash dividends on capital stock.
Cash dividends on the Company's stock cannot be considered obligatory and becaur? they are subject to declaration from time.to time by the Company's Board of Directors, they could, if necessary, provide.'the means for making additional cash available for' other uses.
Without curtailing dividends or resorting to additional long-term or short-term financing, the Company could, if necessary, delay its construction program, thereby reducing its cash requirements for that program during the i
period of. delay and making cash available to meet assessments, although such action would increase the costs of plant construction.
As a part of its construction program, the Company j
has under construction two 1100 megawatt class nuclear units at each of three sites, LaSalle, Byron and Braidwood Stations.
Throughout the period 1982 through 1986, during which these f
units are scheduled to go into service, the Company's capacity
(
reserves are such that delays in Byron or Braidwood construction would not unduly impair the Company's reserve position..
It could, therefore, postpone construction pursuant to a variety of delay options which would make $65 million available in a six-month period without j eopardicing service, although a postponement would be costly.
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_4-Further, we have analyzed the effect for a three-month period beginning May 1, 1981, of halting construction of several combinations of the Byron or Braidwood units listed above.
Depending on the option chosen, the amount of cash made available in the shorter period would range from $34.6 million to $39.6 million.
Additional cash in amounts more than enough to provide $65 million in total would be available from the Company's cash and cash eauivalents on hand during that three-month period together with cash available on short-term notice through the use of the Company's bank lines or commercial paper resources.
The undersigned certifies that the foregoing memorandum with respect to Commonwealth Edison's projected cash flow for the year ending December 31, 1981, and the appended cash flow statement are true and correct to the best of his knowledge and belief.
4n/ /
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Hubert H. Nexon Senior Vice-President
1 1
COMMONWEALTH EDISON COMPANY
.AND SUBSIDIARY COMPANIES l
Internal CashLFlow l
1980 Actual and 1981 Projected (For Dresden, Quad Cities and Zion Nuclear' Power' Stations)
{
1980 1981.
Actual
' Projected 1
($000)
($000)-
'[
- Net Income Af ter Taxes and Dividends Paid S
41,292 S
50,000 Adjustments i
. Depreciation and Amortization
$ 361,515
$ 393,000 Deferred Income Taxes and i
Investment Tax credits 110,222
. 1 5 4, 0 0.0 Allowance for Funds Used During Cons truction (254,153)
(310,000)
Total Adjustments S 217,584
$ 237,000
- t
$ 258,876 S 287,000 i
Internal Cash Flow Average Quarterly Cash Flow 64,719 72,000 Percentage Ownership in all Operating Nuclear Units.
Dresden 100.00%
Quad cities 75.00%
Zion 100.00%
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MAXIMUM TOTAL CONTINGENT LIABILITY
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Contents Transfer Agents Agcats and Registrars
. ( right )
The First National Bank of Chicago
- One First National Plaza
~
Letter to Stockholders.
1 Chicago, Illinois 60670 liighlights.
2 1980 in Review.,
2-5
.\\tanufacturers Hanmer Trust Company
- Summary of Selected Consolidated Financial Data.
6 k,P az Nianagement 3 Discussion and Analysis of Financial
, 'ork 10015 Condition and Results of Operations 67 The First National Bank of Boston Report of Independent Public Accountants.
8 100 Federal Street Financial Statements 8-20 B st n Niassachusetts 02110 Report of NIanagement
.Inside Back Cover
- also warrant agenn Directors.
.Inside Back Cover N!anagement
.Outside Back Cover Registrars Continental Illinois ' ational Bank N
and Trust Company of Chicago" 231 South LaSalle Street Chicago Illinois 60690 The First National Bank of Chicago *"
One First National Plaza Chicago Illinois 60670 Nforgan Guarant> Trust Company of New York 3
Commonwealth Edison Company "y,d" y.' k < w15
, or The Company is an investor-owr.ed utility engaged prin-cipally in the production, purchase. transmission, distn-State Street Bank and frust Company 225 Franklin Street bution and sale of electricity in an 11,525-square-mile serv-Boston, Alassachusetts 02110 ict.nea of northern Illinois (see map) Corporate address:
One First National Plaza, P.O. Box 767, Chicago, Illinois
...h'y"""jpM7,n<,,g,oniy 60690. Telephone: (312) 294 4321,
~~
Dividend Reinvestment Plan Agent i
M The First National Bank of Chicago Shareholder Seruces Department t
(
P. O. Box 1762 Chicago, Illinois 60690 W
Lake Cornrnonwealth Edison Senice Area Annual Sleeting
$t The annual meeting of stockholders will be held at 10:30 l
Q a.m. on Wednesday, April 15, 1981, in the Grand State l
Ballroom of the Palmer House State Street and Alonroe Chicar Street, Chicago, Illinois. Proxy materials will he mailed to J
stockholders about NIarch 9.
O
/
e Annual Report, Form 10-K and Financial Review This 1980 Annual Report has been approved by the Board of Directors. The 1980 annual report on Securities and Ex-Imois change Commission Form 10-K and the 1980 Financial Review (with comparatise statistics for the last 10 years) will be available in early April. Stockholders may obtain a copy of either or both without charge upon request to R. P.
Bachert, Secretary and Treasurer, Commonwealth Edison Company, P. O. Box 767. Chicago, Illinois 60690.
1 1
l l
~-
Dear Stockholder:
We begin 1981 at a time of political change, with new already made and increase the etTe(t of intiation on our leadership in the Wnite House and LA benate. The labor and equipment costs. After reviewing our con-effect this will hme on economic and energy policies struction plans, the Illinois Commerte Commission will become (learer in the months ahead as President (oncluded, in October 1960. that "it is in the economic Reagan and his administration deselop specific plans interest of ratepavers and shareholders alike that and present them to the new Congress. The thange is construction of the Braidwood and Byron nuclear gen.
l likely to have an important impact on the operation of crating plants be completed at the earliest possible j
electric utilities.
date."
l We have said before that the energy problem has We have tentative plans for some additional nuclear two parts. One is conservation; the other is supply. A and coal-tired units in the early to mid-1990s. Ilow-major shornoming of past U.S. energy policy, in our ever, with the extremely high cost of building new judgment. has been the failure to adequately address generating facilities, whether nuclear or coal-fired, i
the supply part of the problem. The President has deferring construction of these units would benefit our stated that he will take whateser action is necessary to customers and stm kholders, if it can be done without increase domestic energy supplies. We applaud that jeepardizing future electric service reliability.
statement.
Both in the Company and the U.S., we need to pur.
At Edison. we have long been active both in promot-sue those technologies which will expand and extend ing consersation and expanding energv supplies.
our domestic energy resources. Between now and the In 1%0 we increased and gase new direction to our end of the tentury, greater use must be made of Amer-(onservation actisities by creating a new position.
ica's coal and uranium supplies. A recently completed Alanager of Load Alanagement and Consersation.
study sponsored by the National Academy of Sciences Our conservation, load management and related re-supports this conclusion. It found that there is no way j
scart h and development activities are now coordinated that the U S. can meet its energy requirements during under one executive.
the next 20 years without substantially increased gen-These a< tiuties include, among ithers, work on off-eration from nuclear and coal-fired power plants. Un-peak ice storage systems for use with commercial and fortunately. today's electricity prices are based primar-induurial air conditioning. and experimentation with ily on the low facility costs whic h prevailed before the remote mntrol load-shedding equipment to help mn-current surge of inflation. Electricity must be priced at trol air wnditioning demands. They also include sea.
a lesel nearer its real economic costs, if we are to sonal and time of-day electric service rates that en-provide the necessary new generating capacity.
murage our customers to shift use from peak periods to times when our loads are :ow.
Sincerely.
Our goal is to defer the need for new generating i
capacht besond the six nuclear units currently under l
mnstruction at LaSalle County, Byron and Braidwood stations. We are going ahead with these partially com-I l
pleted units despite the fact that we must raise the James J. O'Connor l
required funds under unfamrable market mnditions.
Chairman and President l
All of the units were committed for construction well before the slmedown in load growth that began with i
the 173 oil embargo. Their early completion'is desir-l able because the savings in energy costs from these l
units will exc eed any savings associated with delaying j
them. Getting this modern capacity on line early will enable us to replace higher cost generation. mu(h of it oil-fired, with electricity produced at low nuclear fuel 5
l costs.
While postponement would reduce somewhat our
/U l
current need to raise new < apital. it would increase the d-g $a long-term costs of completing the units and, con-U# M
~
sequentl), our future capital requ.rements. Delavs also would add to the cost of carrying the expenditures 1
-. -..- _ -,-..~.-, -, -,,--.~ - - -.- --
Commonwealth Edison Company /1980 in Review Earnings Higher New Peak Load Earnings on common stock in 1980 were 52.97 per With the first normal summer temperatures in three share. This was 46e higher than 1979 earnings of years, a new peak load of 14.2 million kilowatts was 52.51 per share. The 1979 figure included about 12e established July 15, 1980. The new peak occurred due to the change that year from bi-monthly to month-during a hett wave which pushed temperatures into ly billing.
the upper 90s. It broke the previous record of 13.9 mil-The increase in 1980 earnings is due principally to lion kilowatts set in 1977.
higher rates, lower purchased power costs and larger construction related credits. However, these factors Rate Relief Granted were partly offset by the recession, increased operating Effective February 7,1980, the Illinois Commerce and maintenance expenses, higher interest and de-Commission granted the Company a rate increase of preciation charges, increased taxes and more common about 14.4 % based on 1979 sales. Unforunately, that shares outstanding. (See N!anagement's Discussion increase only temporarily halted the detenoration in and Analysis of Financial Condition and Results of ur financial condition. Accordingly, on August 8, Operation's beginning on page 6.)
19W, we applied for a 19.7% rme increase and, because of our urgent need to raise additional capital, Sales Down, Revenues Up asked that about half the increase be granted on an in.
Adjusted to eliminate the one-time effect of the change terim basis. The Commission authorized an interim to monthly billing in 1979, kilowatthour sales to ulti-rate increase of about 8.9%, effective November 20, mate consumers were down 1.6% in 1980.
1980, subject to refund with interest if not justified in Because of the recession, kilowatthour sales to large hearings on the full request. The interim increase is commercial and industrial customers decreased 7.6 %.
expected to raise revenues by about S283 million on an After adjustment for the 1979 billing change, sales to annual basis. However, because the higher rates were residential customers were up 4.1 %, due in part to a applicable for only six weeks of the year, their impact warmer summer in 1980, while sales to small commer-on 1980 results was modest.
cial and industrial customers were up 0.4 %.
So long as the interim rate order is effective, we are Despite the decrease in kilowatthour sales, higher required to cease capitalizing allowance for funds used charges produced a 22.2 % increase in revenues. A de-during construction on that portion of our LaSalle tailed breakdown of 1980 revenues and sales is shown County Unit I investment not already included in the in the table at the bottom of page 3.
Company's rate base under the Commission's Feb.
The number of customers served at year end was ruary 1980 rate order. (See Nianagement's Discussion 2,949,000, an increase of about 30,000 during the and Analysis of Financial Condition and Results of year.
Operations beginning on page 6.)
1980 Hi hli hts change Avera Since Annual Cge 8
8 ange 1980 1979 Since 1970 l
Net income on Common Stock S287.1 million up 33.5%
up 8.1 %
Earnings per Common and Common Equivalent Share S2.97 up 18.3 %
down 0.4 %
Cash Dividends Paid per Common Share
$2.60 up 1.7 %
Electric Operating Revenues
$3,324.0 million up 22.2%
up 13.8 %
Sales to Ultimate Consumers 61.2 billion kwh down 2.6%
up 3.1 %
3 Average Residential Revenue
- 6.23e per kwh up 21.9 %
up 8.6 %
I Average Residential Use 6,625 kwh down 0.7 %
up 1.7 %
Electric Customers at December 31 2.95 million up 1.0%
up 1.3 %
Peak Load 14.2 million kw up 2.9 %
up 3.2 %
- Excludes light bulb service.
2
51 ore Rate Relief Sought
$5.7 Billion Construction Budget llearim;s on our 19.7% rate increase application are Our five; year construction budget for electric plant now in progress. If our request is granted in full, and equipment during the 1981-85 period is 55.7 bil-annual revenues would rise by about S628 million, lion which includes approximately S290 million for including the interim rate increase, based on sales for environmental control facilities Year-by year estimat-the 12 months ended April 30,1980. By law, the Com-ed expenditures are 51,300 nwion each in 1981 and i
mission must make its final decision on our request 1982,51,200 million in 1983, and 5950 million each in by July 6,19';1.
1984 and 1985. Construction expenditures for 1980 While the interim increase is providing temporary nrc $1,180 million.
relief, its effect (and indeed the effect of any increase finally aHowed) will be eroded by the continuing high 1980 Financings rate of inflation.
During 1980 we completed major financings totaling S940 million. as indicated below.
Securities Ratings Lowered Citing in reased capital requirements together with (j';'['n"b inadequate carnings and internal cash generation, a major ra:
- ncy in June reduced our first mort-February Common Stock S139 gage bor.c
- to A from AA-and also lowered its February Loans (bank holding j
ratings on our unsecured debt and preferred and companies) 100 j
preference sto<ks.
.\\ larch 14%'b Debentures. Series 6, The ke3 to imprmed credit ratings is improved and 15M% Sinking Furd earnings. To achieve this, we are engaged in an inten-Debentures, Series 7 250-site cif6 t to teduce costs, with tight restrictions on June First Stortgage 11%% bonds, mertime. business trasel. hiring, outside contracting Series 40 60 and other expenses. Of even greater importarr e is
' June 94 % Pollution Control adequate and timely rate relief. Through such relief, Obligations 20 together with cost-control measures and improved September 512.75 Preference Stock 50 productivity. we hope that in time the higher credit September 10% % and 10%'L Pollution ratings the Company previously held will be restored.
Control Obligations 40 December Common Stock 141
(\\'arious)
Nuclear Fuel (sale / lease-back) 140 Total S940 1980 Revenues and Sales Electric operaung increase Kilowanhour increase Resenues Over Sales Over (thousands) 1979(1)
( millions) 1979(1)
Residential S t.118.478 22.5 %
17,861 kwh 0.6 %
Small commercial and industrial 1.105.637 23.5 %
18,918 0.2%
Larce commercial and industrial 785,018 21.5 "L 18.821 7.6 %
- i Publh authorities 238.825 22.8 %
5.283 4.2 %
- l Electric railroads 14.742 32.5 %
365 4.9 %
I Ultimate consumers 53.2627 00 22.7%
61.248 kwh 2.6 ";
- Sales for resale 38,899 9'3 Other resenues 22.444 l
Total 53,324.043 62.221 kwh peaene t) bit the Scar ended [W emtw 31. F9 the thanite in late Ntan h IC9 m ninnthh f rom bi-rrmnihlv billinnt prmupally allra ung residenual j
iummers ruuhed in aadenal elent.c operanns resenun of ata.ui 5B ' nuthon and addinonal kilowanhour u;es of atmut 025 nulhon.
3
Nuclear Units Delayed clear operations. The Director's responsibility is to as-Sinc.e our 1979 Annual Report, service dates of the six sure that questions concerning nuclear safety in the nuclear units under construction at LaSalle County, design. construction, operation and maintenance of our Byron and Braidwood stations were delayed for vary-nuclear stations are resolved.
ing periods of up to two years. This has resulted from The Company also is participating in several in.
problems in meeting design and construction sched-dustry committees that have studied the lessons ules, a slowdown in the Nuclear Regulatory Commis-learned at Three hiile Island. Establishment of the In-sion's licensing effort, and the need to keep annual stitute of Nuclear Power Operations (INPO) is one Snancing requirements within the Company's finan-outgrowth of the Three hiile Island incident. Func-cial capabilities. The deferrals have signincantly in-tioning much like an independent auditor, INPO is es-creased the estimated construction costs of these units.
tablishing bench marks of excellence for managing and Service dates for the six nuclear units under con-operating nuclear power plants. It also is conducting struction are shown below.
independent evaluations of individual nuclear stations.
In 1980, INPO chose our Dresden station for its first Scheduled Net Capability full-scale evaluation and concluded that Dresden "is Unit for Service (kilowatts) bemg safely operated by an experienced, capable and dedicated staff "
~
LaSalle County 1 1982 1,078,000 We remain convinced that nuclear power is the LaSalle County 2 1982 1,078,000 safest, cleanest and most economical method of gener-Byron i 1983
' t,120,000 ating electricity for our customers. Our response to Byron 2 1984 1,120,000 Three >!ile Island demonstrates the Company's con-f t nuing commitment to safe operations.
0 Savings with Nuclear Power The Company 1:as tentative plans for additional Our nuclear units in 1980 once again provided our coal fired cycling capeity in the early 1990s and also customers with electricity at the lowest cost while con-has contracted for some equipment for two nuclear serving less abundant fuels. During the year, we gen-units in the mid-1990s at a site in Carroll County, erated 26 billion kilowatthours with nuclear fuel,41 %
lilinois. However, work on the Carrcil County units, of the electricity we produced. Some 46 million barrels i
which are still in the planning stage, has been delayed.
of oil would have been consumed if these kilowatt-With lower expected load growth aided by intensified hours had been generated with residual oil rather than conservation efforts, we hope to defer the need for this uranium. In the process, our 1980 fuel bill would have capacity.
increased by about St.5 billion. Had we used Western low sulfur coal as fuel rather than uranium, our 1980 Nuclear Safety: A Continuing Commitment fuel costs would have been S460 million higher.
j in our 1979 Annual Report and at the 1980 annual
(
meeting, we reported on measures being taken at Edi-Dividend Reinvestment Plan son in response to the accident in Alarch 1979 at the Over 41,000 common stockholders are participating in Three Afile Island nuclear power plant in Pennsyl-the Company's Automatic Dividend Reinvestment i
vania. To assure safe operation of our nuclear plants, and Stock Purchase Plan.
we are making equipmen: changes. strengthening Under the plan, stockholders purchase additional emergency response plans, and providing additional common shares by reinvesting their quarterly common i
training for nuclear station personnel. For our three stock dividends at a 5 % discount from the market operating nuclear stations, such measures are expected price. They also may make optional cash payments of to cost S275 million through 1085, including S30 mil-from $25 to 53,000 per quarter to acquire additional l
lion in 1981.
shares at 100% of the market price. No brokerage The Company in August named a Director of Nu-commission is paid by stockholders for these pur-clear Safety, reporting to the Chairman and President.
chases.
The newly created post was established on the recom-Interested common stockholders may obtain an en-mendation of the Senior Advisory Panel, a group ofin-rollment form and a prospectus describing the plan dependent scientists and engineers formed by Edison from Commonwealth Edison Shareholder Services, after the Three Stile Island incident to review our nu.
P. O. Box 767, Chicago, Illinois 60690.
4
-._._...,.m
_~
I
=
1 i
i Tax Status of 1980 Dividends.
Board, N!anagement Checies
- Cash dividends, paid on common stock J.n 1980 were Elected to the Board of _Dt.cctors for the first time at
- 52.60 per share. Of this, the Company estimates that the 1980 annual meetin'g were liarvey Kapnic k; Fi-1 92 % was a return of capital (rather than ordinary nancial Consultant; Thomas L hlartin.Jr., President
]
disidend income) for federal income tax purposes. All of the Illinois Institute of Technology; and Edward A:
i 1980 dividend payments on the preferred and prefer-Alason. Vic e President, Research, of Standard Oil s
ence sto(ks were ordinary dividend income.
Company (Indiana).
- i The Compar.y reported this information on the subi
' During the year,. Thomas G. Ayers. retired as stitute Form 1099 statements mailed to stockholders in
':hairman and was elected Chairmat of the Executise I
late January 1981. A letter of explanation also was in-U.enminee. He was succeeded by James J. O'Connor.
duded. If you were a sto< kholder of record in 1980 and who became Chairman and President. Wallate B.
did not re<eise a substitute form 1099 statement and Behnke, Jr. was elected Vi(e Chairman and Byron
-)
letter of explanation, please contact Commonwealth Lee. Jr. and Hide L. Thomas were elected Executive Edison Shareholder Services P. O. Box 767, Chicago, Vice Presidents
)
111inois 60690.
Also during 4980, George P. Rifakes, former $lan.
[
The Company's estimate of return-of-capital divi-ager of Fuel.nd Budgets, and Preston B. Kasanagh, i
dends is subject to adjustment by the Internal Revenue former Alanager of Purchasing, were elected Vice Service.
Presidents. Thomas J. Alaiman was named Assistant Affirmative Action in the 1980s Vite President and J Patrick Sanders was appointed Nianager of Industrial Relations. Klaus 11. %... l, isio F.or nearly 60 3 ears the C..ompany has had a nond.is-foriner Dn...ision \\.. ice President of Chicago-Central crimination policy, apprmed by the Board of Direc-tors.. 'I,oday our arTirmative action plan reflects the Division, was named to the newly created position of -
i Company,s poh.cv of equal opportunity in hiring and Alanager of Load hianagement and Conservation.
l promoting regardless of race, color, religion, national Robert I. Alannine replaced hir %... l as Chicago-isio Centra Division Vice President. Frank A. Palmer l
origin. sex, handicap, age or other non job related became Division Vice President-Nuclear Stations and characteristics.
One goal of our attirmative action program is t Richard E. VanDerway was named Division Vice President-Fossil Stations.
equme the minority representation in Edaon s work force with that in the labor market across our northern Illinois service area. About 22 % of the people we serse 4
are members of minority groups. Currently. minority group members make up over l'% of our total work force. Consistent with the Company's affirmatise ac-tion plan, women continue to assume more responsible i
managerial and professional assignments.
(
Quarterly.\\larket Price Range and Dividend Payment-Common Stock hlarket Prhe Range' Divide.,.s ilich Lim Per Share 1%0 by Quarter 1st S21b 51 b 5.65 2nd 234 16 %
.65 3rd 22N 19 %
.65 4th 19 %
16%
.65 1
)
O lst 52-525 4 5.05 2nd 2 5',
22 %
65 3rd 25 22!-
.65 l
.* i h 231a 1n
.o 5
- b rep.r;co on,hr NT 's L.i ompmc a anw o.m, upc T he t '.ctp.ns. onam.n
- h a tradca un the New i"ik. Stulwee and PS Jn %k Luhangrt w ah :he w her omM 4 M L b lie.rmbr: i i.1"M
- erre e rre qpr.+mm.Nt.m h.>lacrs.4 re...ru m ~he L..mpara i o smmon
- k j
5 l
--,,,.-...-..-~.-~._._-.-_.....,-----._--_--__.._,__-,..-.,,-._,-.-.--....,m.
t Summary of Selected Consolidated Financial Data 1980 1979 1978 1977 1976
---Niillions of Dollars-Electric operating revenues.,
S 3,324 S2,721 S2,443 52,095 S1,908 Net income.
'S 382 S 297 5 321 S 247 5 242 Earnings per common and common equivalent share (in dollars)..
S 2.97
$ 2.51. S 3.30
$ 2.86 S 3.20 Total assets (at end of year)..
S10,177 59,173
$7,924 S6,830 55,910 Long-term debt, preference stock subject to mandatory redemption requirements and the capitalized nuclear fuel lease obligation (at end of year).
S 5,230 S4,867 S3,795 S3,255 S2,929 Cash dividends declared per common share (in dollars).
S 2.60 5 2.60 S 2.45 S 2.40
$ 2.40 Management's Discussion and Analysis of sonable terms. The necessity for extensive plant expansion Financial Condition and Results of Operations in an inflationary era, when the Company has been Liquidity and Capital Resources required A large amounts of new capital at high costs,-
The Company and its electric utility subsidiary, Common-c upled wi% additional costs imposed by regulatory delays -
wealth Edison Company of Indiana, Inc., (the "compa, in construction and environmental compliance require-nies") are engaged in a continuing construction program ments, has been a significant factor in the deterioration of which has been and will be modified as necessary for adap.
. earnings. The deterioration of earnings has caused declines tation to changing economic conditions and timeliness of in debt and preferred and preference stock coverages and rate relief, as well as other relevant factors. The construction several downgradings of the Company's securities ratings program (excluding nuclear fuel) for the five-year period and has adversely affected the prire and cost at which the 1981-85 calls for electric plant and equipment expenditures Company car. sell equity and debt secunues.
of approximately $5,700 million, including $1,300 million each in 1981 and 1982, $1,200 million in 1983 and $950 Results of Operations million each in 1984 and 1985. These estimated expend.
Earnings Per Common Share. The Company's earnings per tures include $4,470 million for production facilities, $1,135 e mmon and common equivalent share were $2.97 in 1980, million for transmission and distribution facilities and S95
$2.51 in 1979 and 53.30 in 1978. The decrease in earnings million for general plant, and assume that construction costs Per share reflects the effects of inflation on the Company's will escalate 9% annually. Purchase commitments, prin-Perating expenses, increases in provisions for dividends on cipally related to construction and nuclear fuel, approximat.
Preferred and preference stocks and increases in the average ed $1,868 million at December 31,1980. In addition, the number of common shares outstanding, as well as the factors companies have substantial commitments for the purchase discussed below, all without sufficient raq relief to offset ad-of coal nader long-term coal contracts.
verse cost trends.
Of the funds required for the 1981-85 construction pro-Electric Operating Peenues. The Company's kilowatt-gram,it is presently estimated that approximately 50% will hour sales to ultimat: consumers, with 1979 adjusted to be provided from outside financing. In addition, approx-eliminate the effects of the change from bi monthly to imately $761,964,000 will be needed to refinance first mort-monthly billing for certain customers, declined 1.6% and gage bonds and loans from bank holding companies matur-0.1% in 1980 and 1979, respectively and increased 4.4% in in;; by the end of 1985. The type of financing will depend on 1978. The decline in kilowatthour sales in 1980 was sig-market conditions and the results of rate increase requests nificantly affected by the economic recession.
during the five-year period. The Company expects a portion Rate increases granted by the Illinois Commerce Com-of its financing to be provided through the leasing of nuclear mission had a significant effect on electric operating reve-fuel. The type of financing, if possible, will reflect the Com-nues for the years 1980,1979 and 1978 and are summarized pany's goal to reduce the debt portion of its capitalization to as follows:
approximately 50% toward the end of the five-year period.
Reference is made to the Statements of Consolidated Interim or Annual Revenue Amount Changes in Financial Position for the construction expendi-EfTective Date Permanent increase (in millions) (a) tures and funds provided internally from current operations November 20,1980 Interim
$282.6( b) for the years 1980,1979 and 1978.
February 7,1980 Permanent
$389.6(c)
The Company's ability to finance the construction pro.
October 15.1979 Interim 5 45.2 December 14.1978 Permanent
$ 74.9
- gram is dependent upon electric rates which will provide a lesel of carnings sufficient to pay for that portion of the con-(a) Based on twelve-month test periods used in rate order.
struction program to be financed from internal sources and (b) Subject to refund with interest if nct made permanent.
to maintain debt and preferred and preference stock cover.
(c) Includes the interim increase effective October 15. 1979 ages and common stock equity earnings which will permit which with certain exceptions was made permanent by the Februarv 6.1980 order.
the issuance of additional securities of the Company on rea-6
. - ~ -
Ofrating resenues increased $603.121,000 in 1980. of The Company has six nuclear generating units with an whitt pproxinunely S358.836 000 resulted f rom rate in-aggregate capability of 6,636.000 kilowatts under construc.
creases elfecthe February 1 1980 (including the related tion with u heduled servi <e dates ranging from 1982 to 1986.
imerim im rease effectise October 15.1979) and Nmember With the addition of these nuclear generating units, the 20.1960. $283.689,000 from increased fuel adjustment Company anticipates that by the mid 19AO's mer 50% of tharges because of higher fossil fuel costs, ofTset by a the kdowatthour generation will be from nuclear generating
$39.404.000 net decrease in other items. resulting primarily um ts.
from the ellect of the change from bi-monthly to monthly The amounts of purchased and interthanged power ex-billing in 1979, penses during the years were primarily affected by the Operating resenues increased $2"8,134,000 in 1979, of asailability of generating units, weather and weather relat-which approximately 585,221,000 resulted from rate in-ed problems..\\ lost of the kilowatthour purchx.es were at creases effectise December 14.1978 and October 15,1979, prites lower than costs at which such kilowatihours could 5160.505,000 from increased fuel adjustment charges have been generated on the Company's system at the time of because of higher fossil fuel costs. 533,716,000 from the purchase. In 1979 the Company had prolonged generating I
change from bi monthly to monthly billing of residential unit outages and prolonged sesere weather w hich impaired and tertain commercial customers and 58,434.000 from the barge and rad deliuries of coal and oil to fossil-fueled gen-transfer of resenues from resale customers which had been erating stations and hampered coal handling operations. In recorded in other deferred credits pending a final federal 1978 the Company had an increase in energy supplied to regulatory decision on revised wholesale rate whedules, other utilities. much of it emergency energy during the offset by a 59.742,000 decrease in resenues from decreased prolonged coal strike and extreme cold weather early in kilowatthour sales (excluding the effect of the change from 19~8.
bi-monthly to monthly hilling) and other items.
For a discussion of taxes, except income taxes, reference is Operating revenues increased $347,'71.000 in 1978, of made to Note 13 of Notes to Financial Statements.
which approximately S141,611,000 resulted from rate in.
Interest on long-term debt and notes payable increased creases effectise October 14.1977 and December 14,1978.
because of greater amounts of debt outstanding and higher 5150.366.000 from increased fuel adjustment charges interest rates. During 1960,1979 and 1978, average long.
because of higher fossil fuel costs and $55,794,000 from in.
term debt oustanding was 54,635,445,000, $3,895,445,000 creased kdowatthour sales and other items.
and $3306.410.000, respecthcly, and the aserage interest Reference is made to Notes 14 and 15 of Notes to Finan.
rates thereon were B.50%,7.66% and 7.29%, respecthcly; tial Statemems.
awrage notes payable outstanding were $445,525.000 Butnc Operatmg Fxpemes and het Fuel expense
$325.719.000 and $206,563,000, respectisely, and the aver-has increased mer the years primarily as a result of in-age interest rates thereon were 12.82 %, 11.18 % and creases in the price of fuel consumed. Although there was a
'.83 %, respecthelv.
deevase in net generation of electric energy in 1979, there The amounts of allowance for funds used during con-w ere significant increases in prior yeart The change in the struction (".\\FUDC") reflect increases in the levels of in-mix of the sources of electric energy generation reflects vestment in construction work in progress and changes in the primarilt the avadability of the various types of generating annual rates as discussed in Noie 1 of Notes to Financial units during the respecthe 3 ears. The cost of fuel consumed.
Statements..\\FL DC does not contribute to the current cash generation of electric energy and fuel sources of Ilow of the Company For the year 1980 the equity com-net kilowatthour generation ere as follows:
ponent mnstituted 43"L of net income and the debt compo.
nent representing interest costs expended, was equivalent to 1940 19'9 19N 23% of net income. In connection with the rate order etlec.
Con of f uel consumed tne February 7.1980, the Company has been allowed to in.
< per muhon htu r clude 5343.5 millio, ot construction work in progress relat-61 199 22e 16 M c 130. l le ed to Lasalle Countt Unit ; :n the rate base and ceased to
.N udear 313'c 2tidie 24 Ine capitalize.\\FUDC on such anstructmn work in progress.
ni 534 ene 35 m e ro be in connection with the interim rate order efTc'cthe N"lember 20. yk the Company was required to cease Ir il fuels.
~
9 Nei generaaon of electrk energv taPitalizing,\\FL DC on the remainder of its in estment in i mdhons of Ldowatthours :-
62.310 62.133 66.c9 LaSalle County Unit 1, which amounted to $630 million at Fuel <ources of iolowanhour December 31,1980.
encranon Reference is made to Note 21 of Notes to Financial State-
< al et 4B an ments regarding the effects of inflation on selected sup-Nudear 4I ao 45 plementar3 data including cash dhidends declared per com-ul 11 12 10 mon share. the marke: prict per common share and inmme N eural m t
3 2
from mntinuing operations. on an inflation adjusted basis.
100";,
100";,
t wrt 1==
a
Commonwealth Edison Company and Subsidiary Companies Statements of Consolidated Income
'" _ThousanEs7r ooriar,--
ELECTRIC OPERATING REVENUES (Notes 14 and 15).
$3,324,043
$2,720.922
$2,442,788 ELECTRIC OPERATING ENPENSES AND TANES:
fuel (Notes 1 and 21) '..
$ 1,167,232 5 962,742 5 753,800, Purchased and interchanged power-net I15,392 163,205 50.845 Operation.
461,873 406,179 354,249 Slain:enance.
206,787 179,124' 164,491 Depreciation (Notes 1 and 21) 269,937 250,122 '
228,871 Taxes (except income) (Note 13) 390,244 305,705 320.876 i
Income taxes (Notes 1 and 12)-
j Current -Federal.,..
103,241 61,813 70,050
-S tate 14.601 8,711 9,439 j
Deferred-Federal-net.
93,460 46,119 76,145
-State-net.
17,073 6,093 6,691 Insestment tax credits deferred-net (Notes I and 12).
( 8.310).
(3,981) 32.537
$2,831,530
$2.385.832
$2.067,994 '
ELECTRIC OPERATING INCOh!E....
5 492,513
- 5. 335,090
$ 374,794 OTHER INCOhiE AND DEDUCTIONS:
Interest on long-term debt S (394,189) ' $ (298,354) $ (240,936) i Interest on notes payable (57,133)
(36,422)
(16,171)
Allowance for funds used during construction (Note 1)-
)
Borrowed funds, net of income taxes.
88,778 68,859 44,597 Equity funds.
165,375 153,269 114,679 Current income tax credits applicable to nonoperating activities (Notes 1 51,332 s
and 12) 106,731 77,305' Niiscellaneous-net.
(20.072)
(3,069)
- (7,337 )
$ (110.510) $ C8,412) $ (53.836)
NET INCOh!E.,
$ 382,003 - $ 296,678 5 320,958 PROVISION FOR DIVIDENDS ON PREFERRED AND PREFERENCE STOCKS.....
94,910 81.722 66,905 NET INCOh!E ON COhihlON STOCK'.
5 287,093
$ 214,956
$ 254,053 AVERAGE NUh!BER OF COhlh!ON AND COhlhiON EQUIVALENT SHARES OUTSTANDING (in thousands) 96,569 85,759 76,939 EARNINGS PER COh!NION AND COhlh!ON EQUIVALENTSHARE (Note 1) 52.97
$2.51
$ 3.30 CASH DIVIDENDS DECLARED PER COhihf0N SHARE
$2.60 52.60
$2.45
( ) Indicates deduction.
l The accompanying Notes to Financial Statements are an integral part of the abose statements.
l Report of Independent Public Accountants To the Stockholders of Commonwealth Edison Company:
We hase examinea the consolidated balance sheets and counting records and such other auditing procedures as we statements of consolidated capitalization of Commonwealth considered necessary in the circumstances.
t Edison Company (an Illinois corporation) and subsidiary In our opinion, the financial statements referred to above companies as of December 31,1980, and 1979, and the present fairly the financial position of Commonwealth related statements of consolidated income, retained earn-Edison Company and subsidiary companies as of December ings, premium on common stock and other paid-in capital.
31,1980, and 1979, and the results of their operations and and changes in financial position for each of the three years changes in their financial poe.idan for each of the three years in the period ended December 31,1980. Our examinations in the period ended December 31,1980, all in conformity 1
were made in acccedance with generally accepted auditing with generally accepted accounting principles applied on a
[
standards and, accordingly, included such tests of the ac.
consistent basis.
Ja ar 3,19 1.
W f 9, 8
. _.. -. _ _. -... -. -... -... _ -... - -.. ~ - -. -. _, _ _ -
Detember 31.
1%0 IC9 Consolidated Balance Sheets
_ nmu,anan,mers_
ASSETS UTILITY PL.\\.NT (Notes 1,8,17 and 21):
Plant and equipment, at original <ost (includes construction work in progress of S4.148 million and 53.296 million. respectisely) 511,965,860
$10,810,932 Less-Accumulated prmision for depreciation 2,334.809 2,096.394 S 9,031,051 S 8,714.538 Nutlear fuel, at' amortized cost ( Note 16).
231,127 359.767 S 9,862,178
$ 9,074,305 Less-Accumulated deferred income taxes ( Note 2) 957,732 839.199 S 8,904,446 5 8.235,106 POLLUTION CONTROL FUNDS LIELD BY TRUSTEE S
203 5
647 INVESTNIENTS:
Subsidiartet not consolidated (Note I)
S 194.186 S 178,619 Other imestments, at cost.
92,931 81,586 S 287,117 S 260,205 CURRENT ASSETS:
Cash ( Note 9).
S 12,328 5
14,804 Temperary cash imestments, at cost which approximates market,
8,002 120 special deposits 26,405 12.643 Ret eivables-Customers 293,590 236.858 Other 16.548 14,415 l
Prousion for uncollectible actounts (l.500)
(1,500)
Coal and fuel oil, at aserage cost 486,179 299,800 Staterials and supplies, at aserage cost 86,408 65,415 P epayments 17,468 5.040 S 945.428 5 647,595 DEFERRED CII \\RGES.
S 39,948 5
29,062 S10,177,142 5 9,172,615 r
LIABILITIES CAPITALIZATION (see accompanying statements):
Common stock equity S 2,912,994 S 2,534,043 Preferred and prefererae stocks without mandatory redemption requirements,
483,940 490,300 Preference stot k subject to mandatory redemption requirements.
628,081 585,567 Long-term debt 4,601.844 4.281,927 5 8.026.859
$ 7.891,837 CURRENT LIABILITIES-Notes pavable i Note 9)-
Commercial paper.
S 488.674 S 356,740 Bank loans.
3,800 3.800 Current maturtties of long-term debt.
139,342 49,080 Atcounts payable.
202,184 260,807 Accrued interest.
116.042 85,531 Accrued taxes.
130.218 123.378 Daidends payable.
49.211 80.098 Customer deposits.
22,156 18.244 Other 31,171 30,431 5 1.283.398 S 1.008.109 DEFERRED CREDITS-Accumulated deferred imestment tax credits i Note ! )
S 233.0 "
241,38' Other 33.608 31,282 5 260.585 S
2'2.069 CONI.\\llTN!ENTS AND CONTINGENT LIABILITIES t Note 181 510,l",142 S 9,1 2.015 t > Indicates deduction.
The mo.mpantmg N.,tes to f:nanual Matements are an niegral part i4 the aine ua:cmems, 9
Statements of Consolidated Capitalization
_fa*ousanas er oo'i! rs COhlh!ON STOCK EQUITY (Notes 3,6 and 7):
Common stock, $12.50 par value per share-Outstanding-108,300,369 shares and 87,883,250 shares, respectively..
$1,353,756
$ 1,098,541 Premium on common stock and other paid-in capital..
911,360 818,929 Treasury stock, at cost (10)
(6)-
Capital stock and warrant expense (14.286)
(13,417)
Retained earnings.
662,174 629,996
$2,912,994
$2,534,043 -
5' PREFERRED AND PREFERENCE STOCKS WITHOUT h!ANDATORY REDEhlPTION REQUIREhlENTS (Notes 3 and 4):
Preference stock, cumulative, without par value-outstanding-10,499,549 shares.
$ 432,320
$ _432,320
$ 1.425 convertible preferred stock, cumulative, without par value-Outstanding-1,623,295 shares and 1,823,280 shares, respectively.
51,620 57,980 Prior preferred stock, cumulative, $100 par value per share-no shares outstanding.
$ 483.940
$ 490,300 PREFERENCE STOCK SUBJECT TO h!ANDATORY REDENIPTION REQUIREh!ENTS (Notes 3 and 5):
Preference stock, cumulative, without par value-Outstanding-10,406,200 shares and 10,200,000 shares, respectively.
$ 628,081 5 585.567 f
LONG TERh! DEBT (Notes 8 and 20):
First mortgage bonds:
hiaturing 1980 through 1985-8%% due July 1,1980.
$ 49,009 8M% due April 1,1981.
39,269 39,269 3H% due January 1,1982..
4,000 4,000 3%% due July 1,1982.
40,000.
40.000 8% due October 1,1982.
99,695 99,695 9% due August 1,1983 125,000 125.000 3% due hiay 1,1984 50,000 50,000 4
9%% due June 15,1984 200,000 200,000 -
3% due April 1,1985.
100,000 100,000 3%% due June 1,1985.
4,000 4,000 hiaturing 1986 through 1995-3M% to 5.80%
'190,000.'
190,000 hiaturing 1996 through 2005-5%% to 9%%
1,075,000 1,075,000 hiaturing 2006 through 2010-8% % to 11%%
790,000 730,000
$2,716,964
$2,705,973
[
Debentures, due 1986 and 1987-124% and 14%%
375,000 250,000 Sinking fund debentures, due 1996 through 2004-2M% to 15%%
1,186.336 1,064,619 Sinking fund debentures, due 2008 through 2011-3%% to 4M%.
49,468 53,838 Pollution control obligations, due 2000 through 2010.-5%% to 10M%..
335,000 275,000 Other long-term debt 102,127 2.198 l
Current maturities of long-term debt included in current liabilities (139,342)
(49,080)
Unamortized net debt discount and premium (Note 1)..
(23,709)
(20.621) t
$4,601.844
$4,281.927
$8,626.859
$7.891,837
( ) Indicates deduction.
l The accompanang Notes to Financial Statements are an integral part of the above statements.
10
'. ~,,. _.. - - - -..-
._.... _...~ _.-._,. -... _ _ _.._. _ _
I
' Statements of Consolidated
.mn ir9 irs.
- t Changes in Financial Position
-Thous.mds of Dou.in-i FL'NDS PROVIDED IE i
Current operations-
, S 296,678 5 320,958' Net income S 382.003 :
Depreciation and amortization.
361,515' 329,421 309.331
' Deferred mcome taxes and investment tax credits-net.
110,222 54,445 118,083 Equity component of allowance for funds used durir.g construction (165,375)
-(153,269)
(114,679)
Otner non-cash items-oct.
3.341 (5,384)
(5.010)
Funds prosided internally S 691,706 S 521,891 S: 628,683 1ssuance of securities-Long term debt.
465,774 916,223 545,375 Capital simk.
390,018 454,032 348,423
. Sale of nuclear fuel.
139,925 increase in short term burrowings.
131,934 34.995 98,210
$1.819,357 51,927.141.
S1,620.691 FUNDS APPLIED TO:
9 Construction expenditures
$ 1.179,684 - $ 1,292,176 51,317,207 Nuclear fuel expenditures 123,793 139,620 160,110 -
Equit) component of allowance for funds used during construction (165,375)-
(153.269)
(114.679) 51.138,102 51,278,527 51,362,638 Cash dividends declared on capital stock.
349,825 309,105' 257,529 Retirement of first mortgage bonds for cash
- 49,009 139,504 83,321 Redeemed or reacquired preference stock.
7,091 7,230 Imestment in subsidiaries not consolidated,
t,033 19,920 41,915 Decrease in pollution control funds held by trustee (444)
(4,503)
(36,509)'
increase ( Decrease) in working capital (other than short term borrow:ngs and current maturities of long-term debt).
244,740 152,990
'(95,217)
Other items-net.
10.001 24,368 7,014
'S1.819,357 51,927,141 51,620,691
.( ) Indicates deduction.
Statements of Consolidated -
i9so iro ir8 Retained Earnings
-Thouunds or notiars-BALANCE AT BEGINNING OF YEAR.
S 629,996 S 642.717 5 579,288 NET INCOME 382,003 296.678 320,958 51.011,999 5 939.395 5 900,246 Cash disidends declared un-Common sto< k.
5 254.440 5 225,567 5 189,546 Preferred and preference stocks.
95,385 83,538 67,983 Premium and expense on preference stock redeemed.
2n4 S 349.825 5 309.399 5 257,529 BALANCE AT i;ND OF YEAR.
S 662.174 5 629.996 S 642,717 Statements of Consolidated Premium on i9so ir, ir8 Common Stock and Other Paid-in Capital
-Thousands of Dollars-BALANCE AT BEGINNING OF YEAR.
S 818,929 5 687.100
$ 574.033 ADD-Premium on issuance of common stock and gain on reacquired preference >tm s.
92.io7 132.175 113,480 5 911.636 5 819.275 5 687.513 DEDUCT--Transfer to common stock account upon exercise of warrants.
276 346 413 BALANCE AT END OF YEAR S 911 360 S 818.929 5 087,100 The auompanung Note, to Finan(ial 5:atemenis are an integral part of the abmc statements.
11 i
Notes to Financial Statements (1) Summary of Significant Accounting Policies tax accounting as discussed in Note 12. Income taxes Pr riciples of Consohdation. The consolidated financial deferred in prior years are charged or credited to income as I
statemen's include the accounts of all subsidiaries engaged the timing differences reverse.
in the electric utility business. All significant intercompany Investment tax credits utilized are deferred and amortized transactions have been eliminated.
through credits to income over the lives of related property.
Individual financial statements of the Company have Provisions for deferrals of construction-related income been omitted because it is primarily an operating company tax benefits (e.g. nberalized depreciation) reflect consump-and all subsidiaries included in the consolidated financial tion of the plant and equipment to which they relate. Con-statements are totally-held subsidiaries. Financial state-sequently, they are simil>r to depreciation prosisions, and ments of the Company's nonconsolidated subsidiaries have the related accumulated deferred income taxes is a valuation been omitted because, considered in the aggregate, they reserve like the accumulated pro.ision for depreciation.
I would not constitute a significant subsidiarv.
Income tax credits resulting from interest charges ap.
Investments m Subsidiaries not Con 3olidated. The Com-plicable to nonoperating activities, principally construction, pany accounts for investments in its subsidiaries not con-are cbssified as other income.
I solidated in accordance with the equity method. At dllowance for Funds Used D; ung Construction December 31,1980,1979 and 1978, retained earnings in-
/JFUDC). In accordance with uniform systems of accounts i
clude 518,354,000, $23,389,000 and $19,076,000, respec.
prescribed by regulatory authorities, the Company capi-I tively, of undistributed earnings of subsidiaries not talizes AFUDC which represents the estimated net cost of l
consolidated. The equity in earnings of subsidiaries not con-funds used to finance the construction program. Annual j
solidated, which is included in miscellaneous income, for the rates of 7.65%,7.26% and 7.0% (net ofincome tax rates),
l years 1980.1079 and 1978 was $965,000,54,362,000 and compounded semiannually, were used in 1980,1979 and
$1,645,0'J, re occtively. The Company's imestment in its 1978, respectively, to determine the amounts of AFUDC.
uran;u subsifary at December 31,1980 includes about These rates were calcula:ed in accordance with the formula
$6,205,000 wh0h represents the unamortized portion of the prescribed by the Federal Energy Regulatory Commission.
purchase cost sttributable to uranium ore reserves after tak-Reference is made to the next to the last paragraph in Man-ing account rf the estimated net value of the subsidiary's agement's Discussion and Analysis of Financial Condition other assets at the date of acquisition. This amount is being and Results of Operations.
amortized on the basis of uranium concentrate produced Unamortized Debt Discount, Premium and Expense.
from the reserves.
Debt discount, premium and expense on outstanding long-Depreciation. Depreciation is provided on the straight-term debt are being amortized over the lises of the respective line basis by amortizing the cost of depreciable utility plant issues.
and equipment over estimated composite service lives. Dur-Cam on Reacquired Debentures. Gains resulting from ing the years 1980,1979 and 1978, provisions for deprecia-reacquisition by the Company of its debentures to satisfy tion approximated 3.72%,3.68% and 3.63%, respectively, sinking fund requirements are recognized currently in other i
of average depreciable utility plant and equipment. While incomi net of related income tax effect. This method is con-I the eventual cost of retiring a nuclear generating unit is un-sistent with the treatment applied for ratemaking purposes.
certain at the present time, these composite depreciation The gain on reacquired debentures, net of income taxes, for rates include significant allowances for both interim the years 1980,1979 and 1978 was $2,207,000, $1,437,000 chemical cleaning and end-of-life decontamination and re-and $2,298,000, respeuively.
.irement.
Earnmys Per Common and Common Equivalent Share.
Amorts:ation of Nuclear Fuel. The cost of nuclear fuel is Earnings per share were computed using the weighted aver-amortized to fuel expense based on the quantity of heat age nuinber of shares of common stock and conimon stock produced for the generation of electric energy. Since October equivalents outstanding. Addi ional shares of common stock 1976, a provision for costs associated with disposal of spent which would be issuedif all outeanding common stock pur-.
fuel has been included in nuclear fuel expense. Provisions chase warrants were con erted ir.o common stock have been for spent fuel disposal costs are currently being recorded at considered common stock equivalents.
the rate of one mill per kilowatthour of nuclear generation.
Such rate is reviewed periodically and the estimate is (2) Accumulated Deferred Income Taxes I
revised, as deemed appropriate, on a prospective basis. In a ACCUSulated deferred income taxes have been deducted pending rate proceeding before the Illinois Commerce Com.
Imm util.ny plant investment because a substannal portion mission, the Company is proposing to increase the rate to two mills per kilowa'tthour which would provide for es-thereof,like the accumulated provision fcr depreciation,is a timaud disposal costs of fuel currently in reactors, and also v lu ti n reservc and is deducted from plant investment in make additional provisions over a ten year period for es-arriving at the rate base used in ratemaking proceedings.
timated disposal costs of fuel already discharged from reac-tors. During the years 19S0,1979 and 1978, provisions for (3) Authorized Shares and Votmg amortization of nuclear fuel, including provisions for spent Rights of Capital Stocks fuel disposal costs, were 591,578,000, $79,299,000 and At December 31,1980, the authnized shares of capital
$80,460,000, respectively.
stocks were: common stock-125.000,000 shares; preference income Taxes. The Comp.nv provides for deferred in-stock-34,550.000 shares; St.425 convertible preferred come taxes on certain timing differences between book and stock-1,623,295 shares; and prior preferred stock-i 12
850.000 shares. The preferente stock is issuable in series redemption requirements outstanding. at December 31.
and may be issued with or without mandatory redemption 1980 are summarized as follows:
requirements. The preferred and preference stocks are non-participating. Holders of shares at any time outstanding, Anreeme Redempoon Pric e Per share regardless of dass, are entitled to one vote for each share shares
. stated i plus aurued and unp.nd series oumanding Value dnidends if ans 3 held on each matter submitted to a sote at a meeting of stoc kholders, with the right to cumulate votes in all elections
-Thousands for directors.
of Dollars-52.8'5 2.60A500 5 62A65 Non-ullable prior to Nmem-(4) Preferred and Preference Stocks Without Manda-ber I,1984, excepi for sink-tory Redemption Requirements ing fund. 526 50 from No-The ser;es of preferen(e stock without mandatorv
*h" I ' # lh'""Sh O' ~
recemption requirements outstanding at December 31',
"[
r 1980 are summanzed as follows:
$73 ;
ry. 00 M.564 526.50 through October 31.
1945. 525?5 from Nm ember Aggregate Redemption Pna Per Share 1,1985 through October 31.
Shaies 5tated (plus actrued and unpmd 1990; and $25.25 thereaher series Outstanding Value dividends, if am )
Ss 20
'50.000
'5.000 Non-callable pnor to Nmem.
-Thousand, bn 1.
"(ePt br sy-d Dollan-ing fund. 5105 from No.
51.90 4,249,549 5106.239 526 pnor to May 1,1981. and semler 1,19C through Or-525.25 thereafier tober 31.1992. 5103 from 52 00 2,000.000
- 51. 60 526 mi pnor to December 1, hember 1.1992 through 1981; and $26 04 thereafter October 31.199'; ar.d 5101 51 90 2.000,000 52.440 527 65 pnor to December 1, thereafter 1982; and 52?.l1 thereafter
$A 40
"!0 000
~4.494 Non-callable prior to Mav 1.
5124
~ 50.000
~4.340 5103 prior to March 1.1963.
Senes B 19% 5103 from May 1.
and $101 thereafter 1943 through April J4.198&
55 40
'50,000
" 4.1 ' 5 5103 prior to February 1,1944; and $101 thereafter and $101 thereafter Sy3 50 x sfoi Non-callable prior to August i.
58 3*
'50.000
'3.566 Non tallable pnor m Apnl I.
194. excepi for sinking 1962; 510115 from April 1.
fund. 5105 from August I, 19*2 through March 31, 19% through Julv 31 1993, 19s'; and 5100.16 thereaner
$103 from August 1. 1993 10.499.549 5432.320 through Juh 31.199C and
$101 thercaher 59 25 1,300.000 150MO Non-calm" p;or to August 1, The shares of the 51.425 comertible preferred sto(k are 1989, except for sinking romertible at the option of the holders thereof. at any time.
fund. 5105 from August 1.
into common sto(k currently at the rate of 8~'/100ths of a 1%9 through Juh 31.1994 share of common sto(k for each 3 hare of (omertible Slo 3 from Amst 1. I m preferred stot k, subject to future adjustment. The converti-through Julv 31 1994,and Lie preferred stut k mas he redeemed at 542 per share. plus
. 0000 3m. 3 Non-callable pnor to N.
i 511 0 m em-a(crued and unpaid da..dends, if au Dun.ne 1960.19'9 ber 1,1%9. mept for smk.
and loi 199.9s5 shares. ~22.443 shares and 299.302 ine fund. 5105 from hem.
shares, respectheh. of the comertible preferred stock were bn 1.19W through Onober con erted mio common sm(k.
- 31. U)94. 5103 from Nmem-No shares of preferred or preference sto(k without man-ber 1.1994 :hrough Ot tober datory redemption requirements were issued or redeemed 31.1999, and $ 101 therraher during 19so.19~9 and 19's.
51275 500 000 49 605 Ln-rallabic prior to August 1.
The imoluntary liquidation prices per share of the out.
IM 5103 from August 1.
standing preferente stock without mandaturv redemption 1945 through Juh 31. 1990; requirements are 525.00 for the 51.90, 52.00 and 51.96 se-and $101 thereaher riet 599.12 for the 5E24 series; 59590 for the 9 40 series.
m 4o6.200
$6Noe i and 59m00 for the is M series, plus accrued and unpaid dnidends. if any. The in oluntan hquidation prue of the 51425 ton ertible preferred stock is $31 so per share, plus shares of preference stock subject to mandatory redemp-accrued and unpaid dividends. if anv tion requirements were issued as follows. 500.000 shares in 19so. 2.250.000 shares in 19'9 and 1.500.000 shares in (5) Preference Stock Subject to Mandatory Redemp-19 s.
tion Requirements The nandatorv sinking f und requirements of outstanding The ser.es of preterence simk subject m mandaton preference :.tmk are summarized as follow s:
13
Notes to Financial Statements continued 1
Annual Sinkmg Fund Requirement and At December 31,1980, the Company held in its treasury Price Per Share (plus accrued and 530 shares of its common sto k which were reacquired from senes unpaid dnidends. if any) participants who withdrew from the Automatic Disidend 52375.
150.000 shares at 525 Reimestment and Stock Purchase Plan.
52.375.
150&>0 snares ac $25 (7) Common Stock Purchase Warrants
""' j j
At December 31,19s0 and 1979, aB2,312 and 548.971 f Senes B.
r 5835 37,59) shares begmning in 19s4, at $100 c mmon stock purchase warrants, respectiselv, were out-59 25.,
75.Ono shares beginnmg in 1985, at $100 standing. Each warrant entitles the holder to purchase one 511?0.
F.500 shares beginning in 1985, at $100 share of common stock for 130 or to convert such warrant
$12.5.
50N>0 shares bezmnine in 1966. at $100 into common stod at a comersion rate of one share of com-mon stock for three warrants. The option to purchase shares Annual remaining sinking fund requirements will of :ommon stock will expire on April 30,19s t. Thereafter, aggregate $3,905.000 in 1981, $11.071,500 in 1982, any une tercised warrants will continue to be comertible in-
$14.071.500 in 1983, $17.321,500 in 1954 and $29,071.500 to common stock. During 1960.1979 and 1978, 66.659, in 1985. During 1980 and 1979, 293,800 shares and e3.352 and 99,522 warrants, respectively, were exercised 300.000 shares, respectisely, of preference stock subject to both to purchase and for comersion into common stock.
mandatory redemption requirements were reacquired or (8) Long-Term Debt redeemed No shares were reacquired or redeemed in 1978.
The Company has non-cumulative options to increase the smking fund requirements and scheduled maturities for annual sinking fund payments on each sinking fund re-the vears 1981 through 1965 for long term debt outstanding at December 31, 1980, after deducting debentures reac-quirement date to retire an additional 150.000 shares of both the $2.s75 series and the $2.375 series, an additional quired for satisfaction of future sinking fund requirements 30.000 shares of the $8 40 Series B beginning in 1983, an and deducting annual sinking fund requirements for mort-additional 37,500 shares of the $11.70 series beginning in gage bonds to be satisfied by available property additions, 4.re summarized as follows: 1981 - 539,343,000; 1982 -
1985 and an additional 50.000 shares of the $12.75 series 8-
.886M N-W,M3,000; beginning in 1986. The excess, if any, of the redemption
.and 1983-$169,300,000. Long term debt maturing withm price mer the carrying'ned earnings.value of preference shares retired One ye r has been meluded in current liabihties.
will be charged to retai
~
At December 31, 1960. the Company had outstanding The imoluntary liquidation prices per share of the out-I ng term notes payable to two bank holding companies due standing preference stock subject to mandatory redemption July 13,1981, f r an aggregate of $100.000,000, at the requirements are $24.10 for the $2.s75 series; $24J 5 for the Prevailing prime interest rate. Such rate at December 31,
$2.375 series, $100 00 for the $820 series; $99.326 for the 1980 was 21M %. These obhgations are meluded in current
$8.40 Series B. 5100.00 for the $8.85 and $9.25 series; maturities f ng-term debt.
$98.07 for the $11.70 series; and $99.21 for the $12.75 se-The Company's outstanding first mortgage brmd3 are ries; plus accrued and unpaid disidends, if any.
secured by a hen on substantially all property and fran-(6) Common Stock chises, other than expressly excepted property, owned by the Company.
At December 31,1980. 8.328.Os9 shares of common stock were resened for the following purposes. 1,412.266 shares (9) Notes Payable for comession of $1.425 comertible preferred stock; The Company has unused bank lines of credit of 482.312 shares for exercise of common stock purchase w ar-
$474.692.000 at December 31, 1980. Of that amount, rants; 5.307.20s shares for Automatic Dividend Reimest-
$326.700.000, substantially all of which expires September ment and Stock Purchase Plan: 061.229 shares for Employe
- 30. 1961, may be borrowed at prevailing prime interest Stock Purchase Plan.and 165.074 shares for Employe Stock rates. Borrowings may be made under these lines of credit Ownership Pim on unsecured notes of the Companv. The remaining Durmg 1981.19 9 and 1978, shares of common stock,
$147,992.000 of the unused bank lines of credit is provided
$12.50 par salue per share, were issued for the following in connection with the nuclear fuel lease agreement dis-purposes:
cussed in Note 16. The $300,000.000 maximum amount available undtr the nuclear fuel lease agreement is reduced
)
19s0 19'9 1978 by the amount of r.uclear fuellease obligations outstanding i
"I ""Y *I"e under the agreement. This line of credit expires Public OtTermes.
17.000MO ".rM000 6,000.000 htomauc DUdend Reimest.
January A-1% and borrowings made against this line meni and Stuk Purchase will be at various interest rates.
Plan 2.'99.931 19M 344 1.14e349 The Company maintains cash balances on deposit with Comersmn of $1425 con eru-h?nks to provide operating funds, to assure availability of its bir preferred sak 163.193 555.44s 220.954 Imes of credit and to compensate the banks for other senices Emplose Semk Purthase Plan.
431.910 341.515 2r.609 they perform for the Company. These bank balances for the Con ersion of w arrants.
22M2 2'.570 33.019 Company and consolidated subsidiaries are mamtained at Purthased with warrants.
~3 127
'5 an aserage leTel of approximately $13,000.000 without for-20 41 1109 9 233.00s '.690.296 mal commitments to do 50. As demand deposits, these balances may be legally withdrawn at any time.
F 14
=
(10) Service Annuity Systems and Post Retirement puo gy 9 pi s Health Care Benefits JI houunds ot D..Hars.--
The Company and D>mmonwealth Edison Compam of 5
5 Indiana. Inc., a consolidated subsidiary. (the "compames")
'[ d#P'""""n.
hase non4ontributort senie annuity nstems which cmer G erheads rapitalued 20346 193 r 19.250 -
all regular empimes. The senice annuity systems were
%,.urd rw ard,
13 m (M na) resised as of January 1.19~9 to increase pension benefits.
s p,n t nui tcar f uel disposal Prmisions for contributions to the related trust funds for.
, osa (123326 t 12.3*n) 411.134 )
1969,1979 and 19'8 w ere S54.095.000, $36s04J100 and Addnional res enun from i han4e
$ 49,308.000 respecthely, and wcre equivalem to actuanal to monthly hilhng 6.762 15,243 normal costs based on the aggregate u.st method. Parts of uber uenw-net.
4F1 A224
( 2. l oA )
the prmisions are charged to construuion costs.
5118 334 55.x 429 S w 43 The net assets as ailable for ser, ice annuttv plan benefits at January 1.1980. the latest actuarial saluation date. w as
$61079.000 and the actuarial present salue of accumulat-At December 31,1%0, unused imestment tax credits ed plan benefits, based on participants' earnings and senice were approximately $316.0M000, of w huh $93.000,000 rendered to such date and using a ".0% rate of return, was may be carried forward through 1985. 5140.000.000 may be
$554.695.000.of which 5504.171.000 related io s ested bene-carried forward through 1986 and $85.000.000 may be fits. The mmpanies also prmide certain post retirement carried forward through 19A7 The 1979 loss for income tax health care benetits to their retirees and their dependents purposes may be carried forward through 1986. It is cur-and to surthing dependents of deceased retirees. The ac.
rently expected that, with reasonable rate relief, the unused iuarial present value of the liabilits for post-retirement imestment tax credits and the loss carrvforward will be health care benefits at January 1.1980. the latest actuartal utilized by the expiration dates.
saluatim date, was approximatelv 546.902,000, the fund-(13) Taxes, Except Income Taxes ing of which will be prmided by the companies prospecti e-Prmisium for mn, euept inenme taxes. for 1980.1979 lv through a trust fund.
and 19~8 me a follows (11) Employe Stock Purchase Plan D' A" 19'O 19's Under the Compan)'s I;mpime 5to<k Purchase Plan, all
-Thousands of Dollars-regular full-time emploves. imludmg of ficers but not direc.
tors w ho are not oliiter, or empim es, may an umulate up to Real esta:e. personal property 10% of their regular pay and on deuenated dates twice cat h and s apital stin.
S co,e25 5 34.232 5124.506 tear,in April and Ottober, use such an umulated sasings to llHnois im eued < apital 64366 2% 4 Ur pun base. at their opuon common sto< k of the Company at it!inon pubbe unhtv resenue.
13'446 12sE-I l 3.90a 90 # of the iIming market prit e on sut h dates. but at not less Stunnip.d utiliit gross re.
' CiP" 59MI 41~4" 45 514 than par s alue.
Stunn spal compensation.
44n32 h I'5 32,970 (l'2) Income Taxes other 3.604 3.'x4 3M2 Provisions bir currem and deferred state and federal in.
5340.244 530Uo3 5320.C6 come taxes and imestment tax credits deferred lor 1950.
19 N and 10~- resulted m etiecthe tax rates of 35.M.
Personal propertv taxes were abolished etretti e Januarv
_ s 4 % and a.
3,,.
respecthch;. on pre book income for st.ch s cars of approximatch 3s90.1..; tax 4
1000. 3414.205.000 L g o.9 hv the Illinois Constitution. Replacement tax legis.
lation. ell.ectne Julv 1.19'9. established a new state tax of and r. 11.610.000, respenh elt. The principal diti.erences 0.5,,,a on imested capital of utilities el increased the state betw een these rates and the federal sdiutory rates of.40.0%
.mcome tax rate on cor wirations fr(>m the previotis rate of t
46 0 % and 4o h"; for 1950.197 and 197. respectiselv.
4,. t o 0
- r,,.o unulJaauan I,1981 and to 63 % therraher.
o were ii : the etl.ect of, state inmme taxes which increases the
[3ecause of the delav.n enanment of. suc h legalation and cornposite statutory rates to 40 04 %. 45 %,, and 50.06 %
uncertamnes regarding the imposition of replac ment taxes, for 19o0.19 4 and 19.8. respectn ely. and n iil the csclusion the C.ompany s mienm prmismns for taxes ( except income) from uxable income of the equitv componem of allowance for the tear '19~9 included estimates which required adjust-for funds used during wnstru(non. the federal income tax ment in the fourth quarter to reflect expected liabilities.
erTeu of u hit h. tated as a percentage of pre 7 ax book in-IIad the expected liabilities for 1979 real estate and im ested t
come. was 12.0 - 1.0 u.md 10.8 % for 1950.19M and rapual taxes been recorded ratabh dunne the year. carn.
10 m respeon elv mes per mmmon and common equivalem share would base Prm isiom for deterred inwme taxes on timing ditieren$ es increased approximatelv 50 0 and 50 00 in he first and between hod and tax mounvie, net ut rnersals. ot w han
" "d 9"#en o 1,).9 respecthelv, and decreased ap-5110333.000, 552.212.000 and f 42.8%.000 were charged proximatelv 30.13 m the fourth quarter of 191 to eletinc operations for t odo. !O.9 and 19.i respectis elv.
and $6.001.000. %.2 P.ooo nd 52.~0'.000 w cre charged (14) Revenues Subject to Possible Refund a
to other imome and deducuans for 1%o.107 and 19's re-Sira e October 31, 19'4 the Company has hilled spenneh. w ere as follow t
$41.213.000 to resale custemers <ubject to possible refund 15
-_ ~
Notes to Financial Statements continued with interest pending fmal decisions on revised wholesale fuel lease and the other capitalizable leases rderred to rate ubedules filed with the Federal Energy Regulatory abme. are estimawd to aggregate 5330.053.000, including Commission. On September 14, 1979, the Commission
$20,933.000 in 1981, S47,541,000 in 1982, 592,440,000 in issued an order with aspect to the rate scheduks effectise 19s3. 566.164,000 in 1984 550,907,000 in 19s5, October 31, 1974 requiring that additional studies be 550.810,000 in 1986-90 and 51.251000 in 1991. The es-prepared and filed with the Commission. The studies con-timated interest component of such rental payraents ag-cluded that any refunds required would be nominal, and in gregates $69,036,000.
November 199, the Company transferred to operating res enues 58,434,000, representing that portion of such prior (17) Joint Plant Ownership years billings which had been recorded in other deferred The Company has a 5 fo undisided ownership interest credits pending a final decision. This transfer increased in the Quad-Cities nuclear generating station. The Com-earnings per common and common equivalent share ap-pany is responsible for 75 % of all costs, and such costs are proximately 50.05 in the year 1979. On November 12, charged to appropriate insestment, operation or mainte-1980, the Commission approved the rate schedules elTectise nance accounts. The Company prosides its own financing.
October 31,1974. Such order is presently being appealed to At December 31,1980, for its 5 T proportion, the Com-the U.S. Court of Appeals for the District of Columbia Cir-pany had insested 5211.469,000 in utility plant in service, cuit. Of the $41,215.000 subject to refund, S7,131.000 S23,910,000 in construction work in progress and reflects billings under revised wholesale rate schedules etiec-S37,860,000 in unamortized nuclear fuel. The related ac-tise September 1,1979.
cumulated provision for depreciation of utility plant was At December 31,1980, billings to retail customers subject
$ 59,319,000.
to possible refund with interest were approximately
$ 20,966.000, which represents billings under the Illinois (18) Commitments, Contingent Liabilities Commerce Comrnission interim rate order efTectise and the Construction Program Nmember 20,1980. These billings to resale and retail cus-Purchase commitments, principally related tc construe-tomers collected subject to possible refund are included in tion and nuclear fuel, approximated 51,868,000,000 at operating revenues.
December 31,1980. In addition, the companies have sub.
stantial commitments for the purchase of coal under long-(15) Effect of Change to N!onthly Billing term coal contracts.
Pursuant to an order of the Illinois Commerce Commis-The Company is a member of Nuclear NIutual Limited, sion, the Company, beginning during the latter part of established to provide insurance coverage against property Niarch 1979, changed from bi-monthly to monthly billing damage to members' nuclear generating facilities. The for residential and certain commercial customers. This Company would be subject to a maximum assessment of ap-change resulted in additionaloperating revenues of approxi-proximately $90,000,000 in the event of losses.
mately $33,700,000 and additional earnings per common The Company also is a member of Nuclear Electric In-and common equivalent share of approximately $0.12 for surance Limited, established to provide insurance coserage the year 1979.
against the cost of replacement power during certain prolonged accidental outages of nuclear generating units.
(16) Lease Obligations The Company would be subject to a maximum assessment Under a nuclear fuel lease agreement entered into in Jan-of approximately S47,000,000 in the event of losses.
uary 1960, a trust may purchase nuclear fuel and lease it to In addition, the Nuclear Regulatory Commission's in-the Company. The trust can borrow a maximum of demmty for publie liability coverage under the Price-Ander.
5300,000,000 to finance nuclear fuel lease transactions. At son Act is supported by a mandatory industry wide program December 31,1980, the Company's obligation to the trust under which owners of nuclear generating facilities could be for nuclear fuel sold and leased back amounted to assessed in the event of nuclear incidents. Based on the
$ 152,214.000. Lease payments coser the amortization of the number of nuclear reactors presently in sersice, the Com-nuclear fuel used in the Company's reactors plus the lessor's pany would be subject to a maximum assessment of related fmance expenses.
S32,500.000 in the event of an incident, limited to a maxi.
In addition, the Company ha.i leased certain other mum of $65,000,000 in any calendar year. For each ad-property w hich would meet the criteria requiring capi-ditional nuclear reactor placed in service, such maximum talization under an accoutsting standard issued by the Fi.
assessments will increase 55.000,000 and $10,000,000. re-nancial Accounting Standards Board. Howeser, since the spectively.
leases including the nuclear fuelleases, are being treated as The continuation of the Company's const uction piogram operating leases for ratemakmg purposes, they have been is dependent upon adequate and timely rate relief. Refer-accounted for in the same manner. If such leases had been ence is made to the third paragrapn in Nianagement's Di3 capitalized, related assets and liabilities of approximately cussion and Analysis of Financial Condition and Results of
$184.850,000 and $60,995,000 would has e been recorded at Operations.
December 31,1990 and 1979, respectisely. The effect on The Company is involved in administrative and legal expenses for 10s0,1979 and 1978 would not hase been proceedin ts concerning air quality, water quality and other material.
matters. The outcome of these proceedings may or may not Future minimum remal payments. net of executory costs.
require increases in the Company's future construction ex-at December 31,1960 for such leases, including the nuclear penditures and operating expenses.
16
(19) Quarteriv Financial Information
.berage Number of Earmngs Per Elcoric Elet inc Common and Common and Operaung Operating Net Net income on Common Equisalent Ci nmon Res enues income Income Common Sim k Shares Outstanding Equn alem 5 hare Three N!onths 1.nded.
Stan h 31.19'9 5668349 5 56.147 5 48.140 5 29.956 82.054 50 37 1
June 30.19'9.
5604.322 5 96.333 5 87,195 5 66,959 86,221 50 ~8 sepiember 30. 1979 5735,404 5128.110 5120.254 5 99.267 86.9~ 8 51.14 Dn ember 31.19'9.
5652.64' S 54.440 5 41.089 5 18,'74 87,782
$0.21
.\\lan h 31.1%0 5'79.'d 5 91,565 5 69,035 5 4;.734 90332 50 50 June W.19%0 5721280 5104.244 5 ~6A06 5 53.532 97.317 50 55 s piember 30. PMO 59m0.011 5164 C O 5142.063 5118.454 9 (080 51 21 e
December 31.1980.
505.969 5131_694 5 94.099 5 69.373 100.046 50.69 Referen< e a made to Notes 13 and 14.
(20) Subsequent Event The effects of inflation hase not been adequately recog-On January 29.1981, the Company issued $ 150.000.000 nized for income tax or utility ratemaking purposes. When principal amount of First.\\lortgage 14"h Bonds. Series 41, rates of innation were low, the Company was able to olfset due January 13,1991. Proceeds from the sale amounted to them with technological improvements and producuuty 5148.483.300.
gains resulting from installation of larger and more efficient generating, transmission and distribution facilities. How.
(21) Supplementary Infoemation Concerm,ng ewr,in today's economy with double digit inflation and in-the Effects of Changmg Prices (Unaudited) t reasing costs of emironmental wntrols, the failure of Intlation. or the loss in the salue or purchasing power of regulatory and taxing authorities to give adequate recogni-resulting from increases in the lesels of pnces, is tidn to th'e elTetts of inflation has placed a severe financial mones caused by a tariety of factors including emernment deficits, hurden on the Companv.
sharp increases in fmsil fuel costs, low product!sity gains Whether the effects of inflation on the Company will be and a proliferation of gmernment regulations.
horne in future years in part by customers or taxing authori-Bminess corporations, as well as indisiduah, are atre ted ties or entirely by common stockholders will depend upon by inflation because sasings, or retentions of dollars earned the actions of state and federal regulatory authorities, prin-alter pavmg all business or household expenses and taxes, as cipally the Illinois Commerce Conunission, and upon poten.
well as tapital retmeries of dollars presiously imested do tial changes in income tax laws to recognize the effects of not prmide an adequate means. at today's inflated prices. to inflation.
~
replace the productise assets being depleted Regulated elec.
The Company's estimates of the effects of changing prices tric utihues. the most capital intensise of major industries.
(inflation) on its operations for the years 1980 and 1979, are seserek atiected by inflation because the amounts of in-shown below, are presented in response to the Financial Ac-sestment in plant and nuclear fuel which can be reemered counting Scandards Board Statement No. 33, " Financial through resenues are limited by the regulatory process.
Reporting and Char.ging Prices" ("FASB 33"). The for-New capital is required to prmide funds for replacing facili-mat has been resised frem that presented in the 1979 An-ties thai wear out or become obsolete, as well as for new nual Report in order to show more clearly the cumulauve f acilines necessary to accommodate growth in consumers' effect of past inflation on earnings for the current > ear and demands and to modify existing facilities to meet new en-the etreet of the current year's generalintiation on common sironmental requirements.
stoc kholders' investment in the Company.
~
Five-Year Comparison of Selected Supplementary Financial Data Adjusted for the Effects of Changing Prices 1980 19 9 1978 Pr-19 6 Eininc operaung resenues i mdlions of doilars t
.b repor'ed 53.324 52 ~21 52,443 52.095 S t.90s Resmed in aserne 1%o dollars 53.324 53.089 53.086 52349 52,762 Cash dnidends declared per mmmon share:
.b repined 5 2.60 5 160 5 145 5 240 5 240 Renated n a erage Uko dolLrs 5 160 5 2.45 5 3.00 5 329 53.4'
.\\larket pru e per mmmon share at December 31:
.b reported S P412 $20 00 525 7 52838 531.53 Restated in seir-end 1%o do!Iars 518.12 52148 532.~9 540 10 546M9 Net. men i common um k equm i at Dnember 31, renated n s ear-end 19M dollart as ad-juved for ger.eca! intiaoon ar.d reflerung reduuion el net unha plant to reemerable amount. mubons ot dollars i ( No'e g i
$1913 51848 $ 2.021 5230' 51631 berace Consumer Priie Index aase scar 1"6N inoi.
24o 8 2114 195 4 161.5 l'O 5 Year-end Consumer Pn<e Index + base s ear 19 % I00 '
258 4 2240 202 9 186.1 174 3 0
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- Notes to Financial Statements continued f
Statements of Income From Continuing Operations Adjusted for Changing Prices 1980 1979 Adjusted Adjusted
. Adjusted Adjusted for General for Changes in for General for Changes in J
Inflation
- Specific Prices
- Inflation" Specific Prices"
- (Constant Dollars)
(Current Cost)
(Constant Dollars)
(Current Cost)
(Note a)
(Note a)
(Note a)
- (Note a)
-Millions of Dollars-Cumulative Effect of Past Inflation on the Current Year Net income on common stock from continuing operations as reported, stated in average 1966 dollars,
$ 237
$ 287
$ 244 244' Decrease for effect of additional provisions for de-preciation of plant and amortization of nuclear i
fuel to reflect the cumulative :ticci of inflation smce acquisition of such assets ( Note d)
(317)
(530)
(275)
(542)
Proportionate ofTset to above amount of additional depreciation and amortization primarily be-cause of debt and non-convertible preference stock financing of utility property (Note h)..
224 374 195 384 Net income on common stock from continuing
~
operations as adjusted for the cumulative effect of past inflation on the current year "*
$ 194 5 131
$ 164 5
86 r
t I
Net income per common and comraon equivalent share.
As reported, stated in average 1980 dollars.,
$ 2.97 2.97
$ 2.85
$ ' 2.85 As adjusted for the cumulauve eticct of past in-
~ flation on the current year *"
$ 2.01
$ 1.36
$ 1.91 3 1.00 EfTect of Current Year's General inflation on Common Stockholders' Investment Cost of current year's general inflation on com-mon stockholders' iniestment arising from reg-5 ulatory restnctions upon the amount of net utility plant and nuclear fuel costs recos erable as depreciation and amortization (Note g)""
$(1,127)
$(l 197)
Offset to the cost of regulatory restrictions primarily because d debt and non convertible preference stock financing (Note h) 798 857 Net cost of current year's general inflation on common stockholders' investmem
$ (329)
$ (3])
' At average 1980 price levels.
" Restated to average 1980 price levels based on the Consumer Price Index for all Urban Consumers.
- "If additional provisions for depreciation and amartization are reflected without the ofTsetting efTects resulting primarily because of debt and non convertible preference stock financing, s.et income (loss) on common stock from continuing operations at aserage 1980 price levels would be a loss of $30 million or 50.31 per share in 1980 and a losof $31 million or $0.36 per share in 1979 adjusted for general in-v
?
flation and a loss of $243 million or $2.52 per share in 1980 and a loss of $298 million or $3 47 per share in 1979 on a current cost basis.
"" At December 31.1980, the current cost of net utility plant, including nuclear fuel, before reduction for accumulated deferred income taxes is estimated at $19,769 million and the histoncal net cost presently recoverable through depreciation and amortization was
$9.862 million; at December 31.1979, the current cost of net utility plant, including nuclear fuel, before reduction for accumulated deferred income taxes, at December 31,1980 price levels, is estimated at $21,126 million and the historical net cost presently recoser.
l able through depreciation and amortization was $10,199 million.
I L
l-Notes to Supplementary Information Concerning the l
Effects of Changing Pricest a General. The data adjusted for general inflation were The data adjusted for changes in specific prices (current determined by converting the historical cost of plant and cost) of nuclear generating equipment were based on the equipment, nuclear fuel and certain other items into dollars cost of constructing new capacity at current price levels. The of the same general purchasing power using the Consumer current cost of all other plant and equipment was estimated i
Price Index for All Urban Consumers (the " Consumer by applying the Flandy Whitman Index of Public Iltility Price Ir.dex"). The adjustments to recognize the efTects of Construction Costs to plant accounts by vintage years. The general inflation are intended to measure income after current cost of nuclear fuel was estimated by applying cur.
reflecting the cost of maintaining purchasing power of in-rent prices to existing nuclear fuel. The adjustments to vestors dollars invested in the Company's assets.
recognize the effects of current cost are intended to measure 18 L,.._,
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. _ _. ~,. _. - _ _ _ _ _.., _.
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income after reflecting the cost of maintaining the capability the adjuurd wst data fo~r plam and equipment.
of the Companyi s> stem to provide electric senke at cur-
- c. /ncome tavs. Present inmme tax laws do not permii -
rent prke lesels...
the use of higher depreciation or amortization (harges in the The difference between these two mettmds of measuring computation of taxable income to reflect the ef fects of infla-the effects of inflation resuhs from current et of utility tion. As a result, income taxes levied, in real terms, are sig-plam assets hasing increased at a rate diflerent from the rate nificantly in excess of the etfertise and the statutory income oi general inflation.
tax rates.
The adjustments for changing prices reflected in the f; Excee/mcreaw m the gewralprece /cr elocer the in.
Statements of income from Continuing Operations Adjusted creuw m current cml /
9 net unhty plant. The inc rease in the for Changing Pric es were limited to depreciation of phnt general price level of net utility plant at aserage 1980 price and equipment and amortization of nuclear fuel in ac-leven was $2.286 miliin and 52,463 million in 1980 and cordame with FA2 33.
1979, respectively. The increase in the current cost of net 4 I. hhty plaw. The dain er plant and equipment, in-utility plant at aserage 1980 pri<e lesels was 5969 million duding construction work in progress, were adjusted for and 52,048 million in 1980 and 1979, respectisely. The ceneral inflation and for current cost as described alme.
excess of the increase in the general price lesci mer the in-The resulting adjusted data for plant and equipment are not crease in current cost of net utility plant of $1,317 million indicatise of the Company's future capital requirements and 5415 million in 1980 and 1979, respecthely, shows that because the actual replacement of existing plant and equip-the rate of general inflation as measured by the Consumer ment will take place mer many years and is not likely to Price Index was greater than the increase in the current cost imohe a reproduuion of presently existing assets. The ac-of net utility plant in both 1980 and 1979. Howeser, the cumulated prmisions for depreciation of plant and equip-current cost of net utility plant at December 31, !980 and -
ment in ser ice under both of the methods described abme 1979 was higher than net utility plant as adjusted for gener-were estimated for each major class of plant and equip-al intiation because the current cost of net utilitv plant in-ment-nuclear production, fossil production, other produc.
creased at a greater rate than the rate of general inflation' tion, transmission, distribution and general plant by multi-over the life of the plant.
plving the adjusted ' cost data by a percentage representing
- g. E1/cci of inflatmn on common 3tockholdm' inmt-the ratio of the accumulated look depreciation to the book ment. Because the regulatory process limits the amount of cost of existing depreciable plant in service for each class of depreciation expense included in the Company's resenue al.
properts at December 31,1980,1979 and 1978.
Iowance to the original cost of utility plant investment, that The nuclear fuel data adjusted for general inflation were allowance produces cash tiows which are inadequate to estimated by applying the appropriate Consumer Price prmide for replacement of that im estment in future years or Index to the hismocal cost of nuclear fuel. The current cost presene the purchasing power of common equity capital data were estimated by applying the current prices of previousiv invested. While this effect is partially utiset by nuclear fuel at December 31,1980,1979 and 19'8. I'nder the existence of debt and non-comertible preference sto(k both methods appropriate reductions were made for ac.
having fixed dollar obligations, the Company has a sig-rumulated amortization and spent fuel disposal costs. The nificant net cost due to inflation w hich has an effect on the accumulated amortization for current cost was calculated by imestment of common stot kholders. As shown in the multipivmg the current cost of nuclear fuel by a percentage Statements, the common stockholders' investment in plant representing the expired life at December 31,1980,1979 and nuclear fuel at aserage 1980 price lesels was eroded by and 19~8. The accumulated amortization adjusted for gen.
5329 million and 5340 million in 1980 and 1979, respective-eral intlanon was calculated by applying the appropriate ly, as a result of each y ear's general inflation. Such costs are Consumer Price Index to the historical accumulated amor-not includable for ratemaking purposes. Although a small nianon at December 31,1980,1979 and 1978.
portion thereof is included n the additional depreciation Ahhough a substantial portion of accumulated deferred and amonization in the statements showing the t umulathe in ome taxes is deducted from utility plant imestment in effect of past milation on the current year; the majority of arrising at the rate base used in ratemaking proceedings, ac-such costs will be inch;-i as similar adjustments in future cumulated deferred income taxes at December 31. 1980, years The cost of curunt year's general inflation on com-19'9 and 1978 were treated as monetary liabilities. in mon sto(kholders' investment in plant and nuclear fuel, accordame with FA3B 33.
before reflecting the o!fset primarily because of debt and o Ca. ed twlmi menww3. The historical rost of in-non-convertible preference stock financing, includes-the ad-senm% ct coal and fuel oil at December 31.1980.19~9 ditional depreciation of pbmt and amortization of nuclear and Iral was not adjusted for (hanging prices during the fuel at aserage 1980 prite lesels of $31 million arid $275 Scar because the eticct on earnings would not be material million for 1950 and 1979. respectisely, as well as the reduc-due to the relatheh short turnmer period.
tion of utility plant to lower reemerable amount which is t Fuci und derw atu expena Fuel expense was ad-original cor at aserage 1980 pnce les els of 5810 millioa and Justed for the amortization of nuclear f uel. Nuclear fuel S922 million. for 1980 and 19~9. respecthely. This reduc-amortization was calculated by applying the nuticar fuel tion may be necessary if ratemaking (onunues to limit the l
usage to the adjusted cost data for nuclear fuel and adding recovery of plant imestment to original cost.
j appropriate allowances for spent fuci disposal cosit The detnmental efTects of the erosion of common stock-
]
Depreciation expense was determined bv applying the holders' imestment can be asnided to the extent the regula-rate > and methods used for computing book depreciation to tory process takes a rount of inflation in determining the 19 i
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Notes to Financial Statements concluded
- h. Ofset to the cost of regulatory restrictions primarily amount of common stockholders' investment to be recovered f
by provisions for deoreciation and amortization in the fu-because of debt and non-comert ble preference stock financ.
ture. Therefore, the Company believes that a change in the eng. By holding monetary assets, such as cash and receis-basic principles upon which its rates are set is now required '
ables, the Company loses purchasing power during periods l
to allow for such increased provisions. If present ratemaking of inflation because these items can purchase less at a future -
practices are not changed in the future to gise appropriate date. Conversely, monetary liabilities, primarily long-te.rm recognition to the full effects of inflation, the effect of the debt and non-convertible preference stocks will be satisfied ~
current year's general inflation woul:1, at least in part, rep-with payme; ts of fixed dollar amounts which are not affect-resent a current loss to common stockholders and would ed by inflation subsequent to issuance. Because such obliga-reduce net income for the year. In that eunt, the Company's tions are fixed, there is a partial offset of the cost arising net income on common uutk from continuing operations ad-from regulatory use of original cost for determining the justed for generalinflation would be a loss at average 1980 amount of utility plant and nuclear fuel costs recoverable as price lesels of as much as 542 million and as much as $96 depreciation and amortization. Non-cor,vertible preference million, in 1960 and 1979, respectisely. While a recent deci-stocks were treated in the same manner as long-term debt sion of the Illinois Supreme Court reaffirmed a statutory because there is no exriectation that the purchasing power of requirement that the Illinois Commerce Commission con-such investments wil; be maintained, but rather dividends sider " fair value" in ratemaking proceedings, the regulatory and redumption amounts are expected to be paid in fixed consequences of this decision, if any, are far from clear.
numbers of dollars.
if i
To the Audit Committee of the Board of Directors Commonwealth Edison Company:
We have made a study and evaluation of the system properly to permit the preparation of Snancial state-of internal accounting control of Commonwealth Edi-ments in accordance with generally accepted account-son Company and subsidiary companies in effect at ing principles.
December 31, 1980. Our study and evaluation was Because of inherent limitations in any system of in-conducted in accordance with standards established by ternal accounting control, errors er irregularities may the American Institute of Certi6ed Public Account-occur and not be detected. Also, projection of any ants.
evaluation of the system to future periods is subject to The management of Commonwealth Edison Com-the risk that procedures may become inadequate pany is responsible for establishing and maintaining a because of changes in conditions, or that the degree of system of internal accounting control. In ful611ing this compliance with the procedures may deteriorate.
responsibility, estimates and judgments by manage-In our opinion, the system of internal accounting ment are required to assess the expected benents and control of Commonwealth Edison Company and sub-related costs of control procedures. The objectives of a sidiary companies in effect at December 31,1980, taken system are to provide management with reasonable, as a whole, was suf6cient to meet the objectives stated but not absolute, assurance that assets are safe-above insofar as those objectives pertain to the preven-guarded against loss from unauthorized use or dispo-tion or detection of errors or irregularities in amounts sition and that transactions are executed in accord-that would be material in r41ation to the consolidated ance with management's authorization and recorded 6nancial statements.
1Mm bAew%b.
-ja a 19 1.
20
Board of Directors James J. O'Connor -
Donald P. Jacobs. s.
4 William Wood Prin(e.
a o
(:hairman and Prcudent of the Company Dean. J. I.. Kelk.gg (iraduate N hool Preudem of.\\ lanagemem F lt Prinie & Co. Inc.
.h.rris A. Aldren 1 - o Nonhwesiern Unnersav e lmeumenn and real estate)
Imrmer (:baarman and President A.1)ean Swift
.\\meroe k Corporation George E, jonnson 2 4,
4 i Cabinet hardw are >
Chairinan and Preudent Former l' resident Johnson Produ< ts ('ompans. Inc.
%rs. Rochut k and Co.
Jean Allard '
i llair ure and Liud uismenu i
! M en handiuno
+
Part ner wonnenu hein Carbn Nath & Ros nihal liarsey Kapnick.o ;4, Jrneph & Wright.o 4,
i.\\norne m Finannal Consuham
{Zenich Radio Corporation
- hairman
.I.homas G. Ayers.
'C""'"'""'d""'""i"'
.g homas L Niartin. Jr. s co I ormer ( h nrman of the (:ompans and now Ch.urman W the Emutne Commmee nstnute of Tet hnoings Wallace B. Behnke. Jr. o, o Edward A. N!ason m o
Vite Ch.urnun of the U.,mpans Vire Presdent. Research (iordon 10 Corey i Nandard Ud Comp.m (Indiana)
I ormer Yn e (:hairman of the Company r Petroleum and petroleum pn.duas >
Albert B. Dit k Ill o, +
Brooks NicCormic k + a,
' i 1.an ume comnunce Ch.urman of the Board I ormer Chairman. Executne Comminee
' h bdn Comnunce 10 Dn k Compam Imernational liarseuer Company i 4, Founi c i omrmere
> Cops mg. dupli.uing and prinong i Tru< ks and agio uhural. induurial i 4 i compensanon comnunce equipmem and supplies i and < onstrunion equipment i i ; i Mminaang C..mn'ince Report of Management The management of the Company has prepared and is the recognition that the cost of a system of internal responsible for the consolidated Snancial statements accounting nintrols must be related to the benents and the related nnancial data contained in this annual derised and the balancing of those factors requires report. In its opinion. the statements base been pre-estimates and judgment.
pared in mnformit) with generally accepted account-The Board of Directors carries out its responsibility ing principles.
for the financial statements and the related financi:d In meeting its respons;hilities for the reliability of data through its Audit Comminee. which is (omposed the tinancial statements and the related financial data, solelv of outside directors. The Audit Comminee meets the Compans maintains a system of internal auount.
periodically with managemem. the internal auditor.
me mntrols and supports an extensive program of in.
and the independent public auountants to ensure that ternal audits. In order to assure itself of the adequacy each is carrving out its responsibilities. and to discuss of this system. the Company has retentiv made a auditine. internal control. and 6nancial reporting mat-review of the entire svstem of internal accountine con-ters. Borb the internal auditor and the independent trols. The t euew disclosed that the system is adequate-publit accountants have free access to the Audit Com-Iv designed and do< umented and is fun (tioning as de-mittee. without management present. to discuss the re-ugned. It is managementi opinion that the system of sults of their audit work and their opinions on other internal accountine con ~ nls is adequate to provide nnand d matters.
teasonalde assurance that assets are safeguarded from a
g f W:W/ jf#pA&dw low or unauthorized use and that Snancial remrds are wad James J(O'Connor reliable for preparine 6nancial information in mn-j bm.tv w ith generally accepted attounting princ i.
Wallate lL Behnke.Jr.
pies. The concept of reasonable assurance is based on Chaittaan and President Vice Chairman
-g:
Commonwealth Edison Company Post Ofhte Box 767 Chicago, Illinois 60690 Officers Stanagers Division Vice Presidents James J. O'Connor Robert L. Bolger William J. Cormack Chairman and President
.\\ssistant Vice Prnident Chicago-North Wallace B. Behnke. Jr.
Paul J. Fenoglio Lester J. Dugas Vire Chairman
.\\lanager of Computer Senises Chicago South Byron Lee, Jr.
Arthur W. Kleinrath Anthony E. Enrietto Executise Vice President N!anager of 5tation Construction Northern i Nonhbrook )
Bide L. Thomas Thomas J. N!aiman Charles G. Harnach Lxecutise Vice President
.\\ssistant Vite President Southern (Joliet )
Hubert H. Nexon James J..N!aley Robert J. Alanning Senior Vice President
.\\ tanager of Projects Chu aso-Central John G. Eilering Donald A. Petkus Leslie W.,\\lilligan Vice President
.\\ tanager of Community Relations Western i Lombard )
James W. Johnson Ernest N1. Roth Arthur J. Aloore Vice President N!anacer of Insestments Roik Riser ( Ru ktordi Preston B. Kwanagh J. Patrick Sanders Frank A. Palmer
. lanager of Industrial Relations Nuclear Stations
\\
Vi<e Presidem Cordell Reed James A. Schneider Richard li VanDerway
[
Vire Presideni Operating.\\ tanager Fossil stations George P. Rifakes Walter J. Shewski Vice President Nianager of Quality.\\ssurance Robert J. Schultz Klaus H. Wisiol l
Vite President Nianager of Load.\\tanagement and Consenation John J. \\..iera Vice President Raymond P. Bachert Secretary and Treasurer Ralph L. Heumann Comptroller l
l
-