FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended.................September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from............to....................
Commission file number....................................1-3268
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 14-0555980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
284 SOUTH AVENUE,POUGHKEEPSIE NEW YORK 12601-4879
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 452-2000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date. Common stock, par value $5.00
per share; 16,862,087 shares outstanding as of September 30, 1999.
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Consolidated Financial Statements
Consolidated Statement of Income -
Three Months Ended September 30, 1999
and 1998 1
Consolidated Statement of Income -
Nine Months Ended September 30, 1999
and 1998 2
Consolidated Balance Sheet - September 30, 1999
and December 31, 1998 3
Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 1999
and 1998 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Item 3 - Quantitative and Qualitative Disclosure about
Market Risk 18
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 19
Item 5 - Other Information 20
Item 6 - Exhibits and Reports on Form 8-K 22
Signatures 23
Exhibit Index 24
<PAGE>
PART I - FINANCIAL INFORMATION
Item I - Consolidated Financial Statements
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the 3 Months Ended September 30,
1999 1998
-------- --------
(Thousands of Dollars)
Operating Revenues
Electric.................................... $113,944 $108,262
Gas......................................... 12,415 10,569
-------- --------
Total - own territory..................... 126,359 118,831
Electric Sales to other utilities........... 7,921 6,886
Gas Sales to other utilities................ 43 6
-------- --------
134,323 125,723
-------- --------
Operating Expenses
Operation:
Fuel used in electric generation.......... 27,935 25,856
Purchased electricity..................... 13,521 10,906
Purchased natural gas..................... 7,960 4,479
Other expenses of operation............... 25,338 24,467
Maintenance................................. 6,325 6,766
Depreciation and amortization............... 11,699 11,413
Taxes, other than income tax................ 16,294 15,538
Federal income tax.......................... 7,151 7,948
-------- -------
116,223 107,373
-------- -------
Operating Income.............................. 18,100 18,350
-------- -------
Other Income and Deductions
Equity Earnings-Subcos...................... 925 (26)
Allowance for equity funds used during
construction............................. 41 95
Federal income tax.......................... (260) 159
Other - net................................. 2,968 1,973
-------- -------
3,674 2,201
-------- -------
Income before Interest Charges................ 21,774 20,551
-------- -------
Interest Charges
Interest on mortgage bonds.................. 3,205 3,559
Interest on other long-term debt............ 3,392 2,174
Other interest.............................. 1,099 896
Allowance for borrowed funds used during
construction............................. (44) (115)
Amortization of (premium) and expense on
debt - net............................... 251 227
-------- -------
7,903 6,741
-------- --------
Net Income.................................... 13,871 13,810
Dividends Declared on Cumulative Preferred
Stock...................................... 807 807
-------- --------
Income Available for Common Stock............. 13,064 13,003
Dividends Declared on Common Stock............ 9,106 9,129
--------- --------
Balance Retained in the Business.............. $3,958 $3,874
========= ========
Common Stock:
Average Shares Outstanding (000s)........... 16,862 16,961
Earnings Per Share on Average Shares
Outstanding.............................. $0.77 $0.77
Dividends Declared.......................... $0.54 $0.54
See Notes to Consolidated Financial Statements.
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the 9 Months Ended September 30,
1999 1998
-------- --------
(Thousands of Dollars)
Operating Revenues
Electric.................................... $305,889 $299,893
Gas......................................... 69,877 62,740
-------- --------
Total - own territory..................... 375,766 362,633
Electric Sales to other utilities........... 21,887 18,458
Gas Sales to other utilities................ 176 620
------- --------
397,829 381,711
------- --------
Operating Expenses
Operation:
Fuel used in electric generation.......... 68,720 62,731
Purchased electricity..................... 32,885 33,556
Purchased natural gas..................... 37,971 30,523
Other expenses of operation............... 71,975 72,600
Maintenance................................. 21,375 19,101
Depreciation and amortization............... 35,100 34,075
Taxes, other than income tax................ 48,353 48,075
Federal income tax.......................... 23,880 24,294
------- --------
340,259 324,955
------- --------
Operating Income.............................. 57,570 56,756
------- --------
Other Income and Deductions
Equity Earnings-Subcos...................... 88 22
Allowance for equity funds used during
construction............................. 152 284
Federal income tax.......................... (159) 733
Other - net................................. 6,702 5,425
------- --------
6,783 6,464
------- --------
Income before Interest Charges................ 64,353 63,220
------- --------
Interest Charges
Interest on mortgage bonds.................. 9,852 10,678
Interest on other long-term debt............ 8,309 6,524
Other interest.............................. 3,232 2,667
Allowance for borrowed funds used during
construction............................. (167) (346)
Amortization of (premium) and expense on
debt - net............................... 715 679
------- --------
21,941 20,202
------- --------
Net Income.................................... 42,412 43,018
Dividends Declared on Cumulative Preferred
Stock...................................... 2,422 2,422
------- --------
Income Available for Common Stock............. 39,990 40,596
Dividends Declared on Common Stock............ 27,317 27,462
------- --------
Balance Retained in the Business.............. $12,673 $13,134
======= ========
Common Stock:
Average Shares Outstanding (000s)........... 16,862 17,084
Earnings Per Share on Average Shares
Outstanding.............................. $2.37 $2.38
Dividends Declared.......................... $1.62 $1.615
See Notes to Consolidated Financial Statements.
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
September 30, December 31,
1999 1998
ASSETS (Unaudited) (Audited)
------------ ------------
(Thousands of Dollars)
Utility Plant
Electric................................... $1,245,331 $1,222,743
Gas........................................ 163,712 158,165
Common..................................... 98,727 94,271
Nuclear fuel............................... 42,322 42,317
------------ ------------
1,550,092 1,517,496
Less: Accumulated depreciation............ 627,457 597,383
Nuclear fuel amortization........... 37,500 35,381
------------ ------------
885,135 884,732
Construction work in progress.............. 36,812 43,512
------------ ------------
Net Utility Plant.................... 921,947 928,244
------------ ------------
Other Property and Plant...................... 26,768 19,059
------------ ------------
Investments and Other Assets
Prefunded Pension Costs.................... 44,582 40,218
Other...................................... 18,371 18,209
------------ ------------
Total Investments and Other Assets... 62,953 58,427
------------ ------------
Current Assets
Cash and cash equivalents.................. 7,177 10,499
Accounts receivable from customers-net of
allowance for doubtful accounts......... 56,261 45,564
Accrued unbilled utility revenues.......... 9,956 15,233
Other receivables.......................... 4,271 4,555
Fuel, materials and supplies, at average
cost.................................... 26,358 23,587
Special deposits and prepayments........... 131,729 34,823
------------ ------------
Total Current Assets................. 235,752 134,261
------------ ------------
Deferred Charges
Regulatory assets ......................... 143,430 149,261
Unamortized debt expense................... 6,508 5,062
Other...................................... 32,062 21,724
------------ ------------
Total Deferred Charges............... 182,000 176,047
------------ ------------
Total Assets.................... $1,429,420 $1,316,038
============ ============
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
September 30, December 31,
1999 1998
CAPITALIZATION AND LIABILITIES (Unaudited) (Audited)
----------- ------------
(Thousands of Dollars)
Capitalization
Common Stock Equity:
Common stock, 30,000,000 shares authorized;
shares issued($5 par value):
1999 - 17,554,987
1998 - 17,554,987............ $87,775 $87,775
Paid-in capital.............................. 284,465 284,465
Retained earnings............................ 145,960 133,287
Reacquired Capital Stock..................... (27,143) (27,143)
Capital stock expense........................ (6,149) (6,204)
---------- ---------
Total Common Stock Equity................. 484,908 472,180
---------- ---------
Cumulative Preferred Stock
Not subject to mandatory redemption........ 21,030 21,030
Subject to mandatory redemption............ 35,000 35,000
---------- ---------
Total Cumulative Preferred Stock.......... 56,030 56,030
---------- ---------
Long-term Debt............................... 347,151 356,918
---------- ---------
Total Capitalization...................... 888,089 885,128
---------- ---------
Current Liabilities
Current maturities of long-term debt......... 144,718 39,507
Notes payable................................ 4,300 18,000
Accounts payable............................. 32,965 23,591
Accrued taxes and interest................... 6,316 6,334
Dividends payable............................ 9,913 9,913
Accrued vacation............................. 4,344 4,400
Customer deposits............................ 4,313 4,248
Other........................................ 12,577 7,932
---------- ---------
Total Current Liabilities................. 219,446 113,925
---------- ---------
Deferred Credits and Other Liabilities
Regulatory liabilities....................... 84,430 81,065
Operating reserves........................... 6,247 5,995
Other........................................ 28,863 27,251
---------- ---------
Total Deferred Credits and Other Liabilities 119,540 114,311
---------- ---------
Accumulated Deferred Income Tax .............. 202,345 202,674
---------- ---------
Total Capitalization and Liabilities... $1,429,420 $1,316,038
=========== ===========
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the 9 Months Ended
September 30,
1999 1998
------ ------
Operating Activities: (Thousands of Dollars)
Net Income........................................... $42,412 $43,018
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization & nuclear fuel
amortization................................. 38,165 36,503
Deferred income taxes, net...................... 5,902 (1,195)
Allowance for equity funds used during
construction................................. (152) (284)
Nine Mile 2 Plant deferred finance charges,
net.......................................... (3,642) (3,642)
Provision for uncollectibles.................... 1,950 2,125
Accrued pension costs........................... (8,471) (8,106)
Deferred gas costs.............................. 3,285 (489)
Deferred gas refunds............................ (95) (1,465)
Other, net...................................... 715 (616)
Changes in current assets and liabilities, net:
Accounts receivable and unbilled revenues....... (7,086) 14,759
Fuel, materials and supplies.................... (2,771) (1,075)
Special deposits and prepayments................ (96,906) (5,036)
Accounts payable................................ 9,374 (5,675)
Accrued taxes and interest...................... (18) 11,957
Other current liabilities....................... 4,654 (79)
-------- --------
Net Cash Provided by (Used in) Operating Activities.. (12,684) 80,700
-------- --------
Investing Activities:
Additions to plant................................... (31,163) (34,082)
Allowance for equity funds used during construction.. 152 284
-------- --------
Net additions to plant............................ (31,011) (33,798)
Subsidiaries fixed asset additions................... (7,290) (827)
Nine Mile 2 Plant decommissioning trust fund......... (651) (651)
Other, net........................................... (666) (652)
-------- --------
Net Cash Used in Investing Activities................ (39,618) (35,928)
-------- --------
Financing Activities:
Proceeds from issuance of long-term debt............. 177,300 16,502
Net borrowings (repayments) of short-term debt....... (13,700) -
Retirement and redemption of long-term debt.......... (81,877) (1,233)
Dividends paid on cumulative preferred and common
stock............................................. (29,739) (30,000)
Reacquired capital stock............................. - (15,688)
Debt Issuance costs.................................. (3,004) -
-------- --------
Net Cash Provided by (Used in) Financing Activities.. 48,980 (30,419)
-------- --------
Net Change in Cash and Cash Equivalents............... (3,322) 14,353
Cash and Cash Equivalents - Beginning of Year......... 10,499 9,054
-------- --------
Cash and Cash Equivalents - End of Period............. $7,177 $23,407
======== ========
Supplemental Disclosure of Cash Flow Information
Interest paid (net of amounts capitalized)........... $14,490 $13,100
Federal income tax paid.............................. $22,825 $17,900
See Notes to Consolidated Financial Statements
-5-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Notes to Consolidated Financial Statements
NOTE 1 - GENERAL
The accompanying consolidated financial statements of Central Hudson Gas &
Electric Corporation (herein the Company) are unaudited but, in the opinion of
management, reflect adjustments (which include normal recurring adjustments)
necessary for a fair statement of the results for the interim periods presented.
These condensed unaudited quarterly consolidated financial statements do not
contain the detail or footnote disclosures concerning accounting policies and
other matters which would be included in annual consolidated financial
statements and, accordingly, should be read in conjunction with the audited
Consolidated Financial Statements (including the notes thereto) included in the
Company's Annual Report, on Form 10-K, for the year ended December 31, 1998
(Company's 10-K Report).
Due to the seasonal nature of the Company's operations, financial results
for interim periods are not necessarily indicative of trends for a twelve-month
period.
NOTE 2 - REGULATORY MATTERS
Reference is made to Note 2 - Regulatory Matters to the Consolidated
Financial Statements of the Company's 10-K Report under the caption "Impact of
Amended Settlement Agreement on Accounting Policies," hereinafter the
(Settlement Agreement).
At September 30, 1999, net regulatory assets associated with the
fossil-fueled generating assets totaled $500,000. The Company did not charge
against income any of these net regulatory assets because recovery of such
assets is considered probable under the Settlement Agreement.
Holding Company Restructuring
As reported under the caption "Competitive Opportunities Proceeding
Settlement Agreement" in Note 2 to the Consolidated Financial Statements
included in the Company's 10-K Report, the Company has received approval from
its shareholders and regulators to form a holding company. It is expected that
the holding company restructuring will occur in December 1999. Prior to the
restructuring date, additional equity may be transferred from the Company to
unregulated operations. As of September 30, 1999, $25.5 million of the $100
million authorized by the Public Service Commission of the State of New York,
hereinafter the (PSC), has been transferred.
- 6 -
<PAGE>
NOTE 3 - SEGMENTS AND RELATED INFORMATION
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," was adopted by the Company during the fourth quarter of 1998 (see
Note 10 to the Consolidated Financial Statements included in the Company's 10-K
Report).
The Company's reportable operating segments are its electric and gas
operations. The Company's "Other Segment" consists primarily of Central Hudson
Enterprises Corporation and CH Resources, Inc., both of which are non-regulated
energy businesses and which are currently accounted for under the equity method
of accounting for subsidiaries. The results of operations influence earnings per
share but not revenues as reflected in the following table. All of the segments
currently operate in the northeast region of the United States.
Certain additional information regarding these segments is set forth in
the following table.
- 7 -
<PAGE>
Central Hudson Gas & Electric Segment Disclosure - FAS 131
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, 1999 September 30,1999
(Thousands of Dollars) (Thousands of Dollars)
Elect. Gas Other Total Elect. Gas Other Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues from $121,842 $12,142 $ - $133,984 $327,715 $69,287 $ - $397,002
external customers
Intersegment revenues 23 316 - 339 61 766 - 827
Total revenues 121,865 12,458 - 134,323 327,776 70,053 - 397,829
Earnings per share .83 (.11) .05 .77 2.04 .32 .01 2.37
Quarter Ended Nine Months Ended
September 30, 1998 September 30, 1998
(Thousands of Dollars) (Thousands of Dollars)
Elect. Gas Other Total Elect. Gas Other Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues from $115,126 $10,289 $ - $125,415 $318,288 $62,504 $ - $380,792
external customers
Intersegment revenues 22 286 - 308 63 856 - 919
Total revenues 115,148 10,575 - 125,723 318,351 63,360 - 381,711
Earnings per share .83 (.06) - .77 1.98 .40 - 2.38
</TABLE>
- 8 -
<PAGE>
NOTE 4 - NEW ACCOUNTING STANDARDS - DERIVATIVE AND HEDGING
ACCOUNTING
Reference is made to the subcaption "Derivatives and Hedging Accounting"
under the caption "New Accounting Standards and Other FASB Projects" of Note 1 -
Summary of Significant Accounting Policies, to the Consolidated Financial
Statements of the Company's 10-K Report. The Financial Accounting Standards
Board issued FASB Statement No. 137 in June 1999 amending FASB Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, to defer the
effective date by one year to all fiscal quarters of all fiscal years beginning
after June 15, 2000. This proposed change is made in response to requests to
consider delaying the effective date to provide more time to study, understand
and implement the provisions of the Statement. Entities had also requested more
time to complete information system modifications, particularly those related to
the year 2000 issue. The Company anticipates that it will implement this
Statement sometime before the required implementation date of January 1, 2001.
For information about market risk and Company activities relating to
derivative financial instruments and other financial instruments, see Item 3
"Quantitative and Qualitative Disclosure about Market Risk."
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company faces a number of contingencies which arise during the normal
course of business and which have been discussed in Note 9 Commitments and
Contingencies to the Consolidated Financial Statements included in the Company's
10-K Report. Except for what is disclosed in Part II of this Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1999, and all documents
previously filed with the Securities and Exchange Commission in 1999, there have
been no material changes in the subject matters discussed in said Note 9.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
The growth of retained earnings in the first nine months of 1999
contributed to the increase in the book value of common stock from $28.00 at
December 31, 1998 to $28.76 at September 30, 1999 and the increase in the common
equity ratio from 51.0% at December 31, 1998 to 52.1% at September 30, 1999.
- 9 -
<PAGE>
For the nine months ended September 30, 1999, cash expenditures related to
the construction program of the Company amounted to $31.0 million. The cash
requirements for such expenditures were funded from internal sources.
The Company has $51.5 million of committed short-term credit facilities
available. In order to diversify its sources of short-term financing, the
Company has also entered into short-term credit facilities with several
commercial banks. At September 30, 1999, the Company had $4.3 million of
short-term debt outstanding and had cash and cash equivalents totaling $7.2
million. Authorization from the New York State Public Service Commission (PSC)
limits the short-term borrowing amount the Company may have outstanding, at any
time, to $52 million in the aggregate.
The Company, on March 1, 1999, redeemed its 8.375% $16.7 million tax
exempt pollution control bonds issued by the New York State Energy Research
Development Authority (NYSERDA) due December 1, 2028. The bonds were refinanced
with lower cost NYSERDA tax exempt pollution control bonds supported by the
Company's Promissory Note of $16.7 million at a fixed rate of 4.20% for their
initial term of five years and thereafter are subject to repricing. (See caption
"First Mortgage Bonds" included in Note 7 to the Consolidated Financial
Statements of the Company's 10-K Report.)
The Company, on August 3, 1999, refinanced its fixed rate 7-3/8% series
1984 tax exempt pollution control bonds issued by NYSERDA, $33.4 million
principal amount, by the issuance through NYSERDA of a new series of tax exempt
pollution control bonds at a fixed rate of 5.45% (discounted to 99.75% to yield
5.468%). The maturity of these bonds, which are supported by the Company's
promissory note of $33.4 million, was extended from October 1, 2014 to August 1,
2027 but these bonds may be redeemed any time after August 1, 2009, at the
Company's option. The 7-3/8% series was redeemed on October 1, 1999.
The Company, on August 3, 1999, refinanced its 1985 tax exempt pollution
control bonds ($72.25 million principal amount) and its 1987 tax exempt NYSERDA
pollution control bonds ($43.6 million principal amount) by the issuance,
through NYSERDA, of several series of tax exempt pollution control bonds, in an
aggregate principal amount of $115.85 million, in multi-modal form, and
supported by the Company's promissory note of $115.85 million. The new bonds
will be set in a form of variable rate known as "Dutch Auction" mode. A Dutch
Auction is a periodic offering of a certain amount of short-term, tax exempt
debt to investors by broker/dealers on an auction-bid basis. Prospective
investors' bids are reviewed by an independent auction agent who determines the
rate that will place or clear all of the offered debt. The maturity of these new
bonds reflects effectively an
- 10 -
<PAGE>
extension of the maturity of the 1985 pollution control bonds from
November 1, 2020 to August 1, 2028, and an extension of the maturity of the
1987 pollution control bonds from June 1, 2027 to August 1, 2028 (except
that the maturity of those 1987 pollution control bonds subject to the federal
alternative minimum tax effectively will be extended from June 1, 2027 to July
1, 2034). The 1985 refinanced pollution control bonds were redeemed on November
1, 1999 and the 1987 refinanced pollution control bonds were redeemed on
September 1, 1999.
EARNINGS PER SHARE
Earnings per share of common stock were $.77 for the third quarter of
1999, remaining the same as the third quarter of 1998. Earnings per share of
common stock were $2.37 for the first nine months ended September 30, 1999, as
compared to $2.38 for the nine months ended September 30, 1998.
Increased revenue resulting from a warm summer and an increase in earnings
from expanded subsidiary operations helped to hold third quarter earnings at
last year's level. Operating revenues increased 7%. The increase was actually
higher, but under the Company's Settlement Agreement with the PSC (described
under the caption "Competitive Opportunities Proceeding Settlement Agreement" in
Note 2 to the Consolidated Financial Statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 (Company's 10-K
Report)), the Company deferred $3.7 million of electric revenues, or $.14 per
share, in excess of the 10.6% rate of return cap set forth in said Settlement
Agreement and described under said caption. In addition to an increase in sales
of electricity due to the warmer weather, the higher revenues include increases
in amounts collected under the Company's electric fuel cost adjustment, sales of
electricity for resale and interruptible gas sales for electric generation. The
increase in revenues was largely offset by an increase in operating expenses of
8%, relating primarily to increases in the cost of fuel used in electric
generation, purchased electricity and purchased natural gas caused by the higher
electric sales (including sales for resale) and interruptible gas sales.
Earnings were also enhanced by an increase in earnings from subsidiary
operations (other income), primarily from the operations by an affiliate of
newly acquired electric generating facilities. The increase in other income also
includes interest earned on proceeds held in escrow from debt issued for the
refinancing of debt as discussed in the "Capital Resources and Liquidity"
section of Item 2. This interest earned on the escrow balance serves to offset,
in the interim, that portion of the increase in interest charges related to the
new issuances.
In September 1999, the Company incurred an estimated $8 million of
incremental storm expenses for Tropical Storm Floyd.
- 11 -
<PAGE>
These expenses were deferred in anticipation that they will be offset by
electric earnings in excess of said rate of return cap which are deferred under
the Company's Settlement Agreement with the PSC. Reported earnings per share for
the third quarter were not affected by the storm.
Earnings for the nine months ended September 30, 1999 decreased by $.01
per share as compared to the same period in 1998. An increase in operating
expenses (excluding fuel used in electric generation, purchased electricity and
natural gas costs) and a reduction in gas net operating revenues (less purchased
gas costs) were offset largely by an increase in electric net operating revenues
(less fuel and purchased electricity costs) due to increased sales and the net
favorable impact of non-recurring adjustments recorded in both time periods.
Earnings were also enhanced by the reduction in the number of shares of common
stock. The increase in operating expenses is primarily due to increases in the
cost of maintenance for electric
generating plant and overhead lines and increased depreciation expense and
property taxes. As with the results for the quarter, the nine month change in
electric net operating revenues also reflects the deferral of revenues in excess
of the rate of return cap. A total of $4.7 million or $.18 per share was
deferred.
RESULTS OF OPERATIONS
The following table reports the variation in the results of operations for
the three months and the nine months ended September 30, 1999 compared to the
same periods in 1998:
3 MONTHS ENDED SEPTEMBER 30,
INCREASE
1999 1998 (DECREASE)
(Thousands of Dollars)
Operating Revenues............... $134,323 $125,723 $ 8,600
Operating Expenses............... 116,223 107,373 8,850
------- ------- -------
Operating Income................. 18,100 18,350 (250)
Other Income..................... 3,674 2,201 1,473
------- ------- -------
Income before Interest
Charges......................... 21,774 20,551 1,223
Interest Charges................. 7,903 6,741 1,162
------- ------- -------
Net Income....................... 13,871 13,810 61
Dividends Declared on Cumulative
Preferred Stock................. 807 807 0
------- ------- -------
Income Available for Common
Stock........................... $ 13,064 $ 13,003 $ 61
======= ======= =======
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<PAGE>
9 MONTHS ENDED SEPTEMBER 30,
INCREASE
1999 1998 (DECREASE)
(Thousands of Dollars)
Operating Revenues............... $397,829 $381,711 $ 16,118
Operating Expenses............... 340,259 324,955 15,304
------- ------- -------
Operating Income................. 57,570 56,756 814
Other Income..................... 6,783 6,464 319
------- ------- -------
Income before Interest
Charges......................... 64,353 63,220 1,133
Interest Charges................. 21,941 20,202 1,739
------- ------- -------
Net Income....................... 42,412 43,018 (606)
Dividends Declared on Cumulative
Preferred Stock................. 2,422 2,422 0
------- ------- -------
Income Available for Common
Stock........................... $ 39,990 $ 40,596 $ (606)
======= ======= =======
OPERATING REVENUES
Operating revenues increased $8.6 million (7%) for the third quarter of
1999 as compared to the third quarter of 1998 and increased $16.1 million (4%)
for the nine months ended September 30, 1999. Details of these revenue changes
by electric and gas segments are as follows:
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
Electric Gas Electric Gas
(Thousands of Dollars)
Customer Sales*........ $3,969 $2,402** $4,543 $ 5,591**
Sales to Other
Utilities.............. 1,035 37 3,429 (444)
Fuel and Gas Cost
Adjustment............. 5,243 (54) 5,908 2,844
Deferred Revenues....... (3,162)*** (779) (4,080)*** (1,562)
Miscellaneous........... (368) 277 (375) 264
----- ----- ----- ------
$6,717 $1,883 $9,425 $ 6,693
===== ===== ===== ======
*Including electricity and gas supplied by others.
**Both firm and interruptible revenues.
***Includes the deferral and restoration of revenues related to the Company's
Retail Access Program and earnings in excess of the rate of return cap under
said Settlement Agreement with the PSC.
- 13 -
<PAGE>
SALES
The Company's sales vary seasonally in response to weather conditions.
Generally electric sales peak in the summer and gas sales peak in the winter.
Total kilowatt-hour sales of electricity within the Company's service
territory increased 5%, and sales of natural gas to firm customers increased 1%,
for the third quarter of 1999 as compared to the third quarter of 1998. For the
nine months ended September 30, 1999, electric sales increased 4% and gas sales
to firm customers increased 9% compared to the same period last year. Changes in
sales by major customer classifications, including energy supplied by others,
are set forth below.
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
Electric Gas Electric Gas
Residential.............. 10% (1)% 6% 6%
Commercial............... 5 2 4 9
Industrial............... 1 14 1 6
Interruptible............ N/A 35 N/A 20
As indicated, interruptible gas sales increased in both periods, resulting
primarily from an increase in boiler gas usage for electric generation.
Cooling degree days were 37% higher for the quarter ended September 30,
1999 as compared to the quarter ended September 30, 1998. For the comparable
nine months ended September 30 in 1999 and 1998, favorable weather also
contributed to the increase in electric and gas sales. Cooling degree days were
32% higher and heating degree days increased by 6%.
OPERATING EXPENSES
The following table reports the variation in the operating expenses for
the three months and nine months ended September 30, 1999 compared to the same
periods in the prior year:
- 14 -
<PAGE>
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
Amount Percent Amount Percent
(Thousands of Dollars)
Operating Expenses
Fuel and Purchased
Electricity............ $4,694 13% $ 5,318 6%
Purchased Natural
Gas..................... 3,481 78 7,448 24
Other Expenses of
Operation............... 871 4 (625) (1)
Maintenance.............. (441) (7) 2,274 12
Depreciation and
Amortization............ 286 3 1,025 3
Taxes, Other than Income
Tax..................... 756 5 278 1
Federal Income tax....... (797) (10) (414) (2)
----- --- ------ --
Total......... $8,850 8% $15,304 5%
===== ======
Fuel and purchased electricity costs increased $4.7 million (13%) for the
third quarter of 1999 and $5.3 million (6%) for the nine months ended September
30, 1999 both largely attributable to an increase in electric sales including
sales for resale.
Purchased natural gas costs increased $3.5 million (78%) for the third
quarter of 1999 resulting primarily from an increase in interruptible gas sales
due to an increase in boiler gas usage for electric generation. Purchased
natural gas costs increased $7.4 million (24%) for the nine months ended
September 30, 1999 due both to an increase in residential, commercial and
industrial sales as well as interruptible gas sales due to an increase in boiler
gas usage for electric generation.
Maintenance expenses increased $2.3 million (12%) for the nine months
ended September 30, 1999 primarily due to increased costs related to tree
trimming operations and scheduled maintenance performed on one of the Company's
electric generating plants for a major outage.
COMMON STOCK DIVIDENDS
Reference is made to the caption "Common Stock Dividends and Price Ranges"
of Part II, Item 7 of the Company's 10-K Report, for a discussion of the
Company's dividend payments. On September 24, 1999, the Board of Directors of
the Company declared a quarterly dividend of $.54 per share, payable November 1,
1999 to shareholders of record as of October 11, 1999 maintaining the $.54 per
share level established in June 1998.
- 15 -
<PAGE>
OTHER MATTERS
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q and the documents incorporated by
reference contain statements which, to the extent they are not recitations of
historical fact, constitute "forward-looking statements" within the meaning of
the Securities Litigation Reform Act of 1995 (Reform Act). The statements will
contain words such as "believes," "expects," "intends," "plans," and other
similar words. All such forward-looking statements are intended to be subject to
the safe harbor protection provided by the Reform Act. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions which are difficult to predict. A number of important factors
affecting the Company's business and financial results could cause actual
results to differ materially from those stated in the forward-looking
statements. Those factors include weather, energy supply and demand,
developments in the legislative, regulatory and competitive environment,
electric and gas industry restructuring and cost recovery and certain
environmental matters as well as such other factors as set forth in the
Company's 10-K Report and all documents subsequently filed with the Securities
and Exchange Commission. The Company undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.
Given these uncertainties, undue reliance should not be placed on these
forward-looking statements.
Labor Relations
Reference is made to the subcaption "Labor Relations" under the caption
"Other Matters" of Item 1 - Business, of the Company's 10-K Report. The Company
has agreements with the International Brotherhood of Electrical Workers ("IBEW")
Locals 2218 and 320 for its unionized employees, representing production and
maintenance employees, customer representatives, service workers and clerical
employees (excluding persons in managerial, professional or supervisory
positions), which agreements were renegotiated effective July 1, 1998.
Local 2218 and Local 320 merged on August 1, 1999, and will continue as
Local 320. There will be no impact to the Company as a result of the merger. The
contracts remain in effect for Non-Production Plant Workers through April 30,
2003 and Production Plant Workers through August 31, 2003.
- 16 -
<PAGE>
CH RESOURCES, INC.
Reference is made to the subcaption "CH Resources, Inc." under the caption
"Other Matters" of Item 1 - Business, of the Company's 10-K Report.
In June 1999, CH Resources acquired a 50 megawatt coal-burning fluidized
bed electric cogeneration plant in Niagara Falls, New York.
THE YEAR 2000 ISSUE
Reference is made to the caption "The Year 2000 Issue" of Item 7 of the
Company's 10-K Report for a discussion related to the Year 2000 issue with the
following updates noted:
On June 1, 1999, Company officials reported to the Northeast Reliability
Council (NERC) and announced that they believe all of the utility's computerized
components considered to be "mission critical" to the safe and reliable flow of
energy and to the protection of the environment have been remediated and are
Year 2000 (Y2K) ready; however, the Company plans to continue its vigilance to
be sure that it is prepared for the unexpected on New Year's Eve 1999 and
beyond.
As part of the Y2K readiness plan, Company employees will be on duty at
key customer service locations on New Year's Eve 1999 and, if necessary,
thereafter. The Company will also continue testing of its computerized systems
to ensure that all remediations perform properly within a coordinated
environment. In August, the Company participated in the successful Year 2000
Interoperability Verification Tests of the telecommunications network and
electric utility power control systems. The Company has also developed a
comprehensive Contingency Plan. On September 9, 1999 the Company participated in
a successful North America-wide drill to test the readiness of the electric
power industry for the Year 2000, including its Contingency Plan. Response to
Y2K-related emergencies will also be coordinated with local emergency services
agencies, as is done during storms and other emergencies.
The Company has also established a hot-line for more information,
available toll-free to customers, and has additional data available on its
website.
Regarding total project costs, of a total estimate of $3.0 million,
approximately $2.3 million has been expended through September 1999, including
$1.1 million of internal labor charges. The Company does not expect final costs
to exceed this estimate; however, no assurances can be given.
- 17 -
<PAGE>
DIRECTORS OF THE COMPANY
Reference is made to the caption "Directors and Executive Officers of the
Company," Part III, Item 10, of the Company's 10-K Report.
Effective May 28, 1999, Stanley J. Grubel was appointed to the Board of
Directors of the Company. He will also serve on the Committee on Compensation
and Succession. He is the Chief Executive Officer of MiCRUS, an advanced
semiconductor manufacturing company located in East Fishkill, New York, since
January 1, 1995.
MiCRUS, which was formed as a joint venture between IBM and Cirrus Logic,
Inc., began operations on January 1, 1995, currently employs 1,000 workers, and
is a major customer of the Company.
Prior to his present position with MiCRUS, he was with IBM since 1965,
including his 1990 appointment as IBM East Fishkill's Semiconductor Plant
Manager.
He is currently a member of the Boards of Directors of the New York
Business Council, Mid-Hudson Pattern for Progress, Asyst Technologies, and also
serves as Chairman of the Marist College School of Management's Advisory
Council.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to commodity price risks related to its purchases
of natural gas, fuel for electric generation and other power supplies is
mitigated by its electric and gas cost adjustment clauses. These adjustment
mechanisms provide for the return or collection of costs to or from customers
for costs below or in excess of base costs included in rates. Addi-tionally,
variations in electric fuel costs are subject to a fuel costs incentive
mechanism with an annual exposure of up to $3.0 million in additional revenues
or costs.
The Company has also implemented its energy risk management program with
its primary goal being to further manage, through the use of defined risk
management practices, price risk associated with commodity purchases in its
operations. The Company's written policy and procedures for this program allows
for the use of derivative financial instruments to hedge price risk and
prohibits the use of these instruments for speculative purposes. Additionally,
the PSC, in a Memorandum and Resolution (Resolution) effective April 13, 1999,
authorized the inclusion of risk management costs as a recoverable component of
the Gas Adjustment Clause (GAC). The Resolution defines them as "costs
- 18 -
<PAGE>
associated with transactions that are intended to reduce price volatility or
reduce overall costs to customers. These costs include transaction costs, and
gains and losses associated with transactions made in commodities exchanges and
with other risk management entities."
In September 1999, the Company purchased NYMEX gas futures contracts and
entered into a basis swap contract with a counterparty to hedge the cost of gas
purchases for its Fixed Price Gas Program for the period November 1999 through
October 2000. The fair value of these derivative financial instruments at
September 30, 1999 is not material to the Company's financial position or
results of operations. Transaction costs and resultant gains or losses will be
included in the Company's GAC, as indicated in the preceding paragraph.
The Company manages it interest rate risk through the issuance of
fixed-rate debt with varying maturities and through economic refundings of debt
through optional refunding. A portion of the Company's long-term debt consists
of variable rate debt for which interest is reset on a periodic basis reflecting
current market conditions. The difference between costs associated with actual
interest rates and costs embedded in current tariffs are deferred for eventual
passback or recovery to or from customers.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Asbestos Litigation. For a discussion of lawsuits against the Company
involving asbestos, see Note 9 - Commitments and Contingencies, under the
caption "Asbestos Litigation," in Part II, Item 8 of the Company's Report.
Since 1987, the Company has been involved as a defendant in the "mass
tort" asbestos litigation in the United States District Courts for the Southern
and Eastern Districts of New York and the New York State Supreme Court, County
of New York. This litigation involves thousands of plaintiffs who seek large
amounts of compensatory and punitive damages from numerous defendants for death
and injuries allegedly caused by exposure to asbestos. As of September 30, 1999,
the Company has been a defendant in approximately 1,800 such individual
lawsuits. Many of these lawsuits have been disposed of without any payment by
the Company, or for immaterial amounts. While the amounts demanded in all the
remaining lawsuits total several billions of dollars, it is the Company's
opinion, based on its experience in such litigation and on information and
relevant circumstances known to it at this time, that these lawsuits will not
have a material adverse effect on the Company's financial position. However, if
the Company were ultimately held liable under these
- 19 -
<PAGE>
lawsuits and insurance coverage were not available, the cost thereof could have
a material adverse effect (a reasonable estimate of which cannot be made at this
time) on the financial condition of the Company if the Company could not recover
all or a substantial portion thereof in rates. The Company's insurance does not
extend to punitive damages.
The Company is insured under successive comprehensive general liability
policies issued by a number of insurers, has put such insurers on notice of the
asbestos lawsuits and has demanded indemnification and reimbursement for its
defense costs.
In December 1994, the Company commenced a lawsuit against eight such
insurers in the New York State Supreme Court, Dutchess County. By order dated
October 2, 1998, the Court granted a motion by the Company against one insurer,
Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety
Company) (Travelers), seeking a declaration that Travelers owed the Company the
cost of defense in the underlying asbestos litigation. Travelers has since paid
the Company approximately $3.2 million consisting of a portion of the Company's
past defense costs together with prejudgment interest. Travelers has made this
payment subject to the October 2, 1998 order of the Court and without prejudice
to its rights to appeal or to seek contribution from the other insurers and from
the Company.
Item 5. Other Information
(a) Independent System Operator. Reference is made to the caption "New
York Power Pool/Independent System Operator" referred to in Item 2 of Part I of
the Company's 10-K Report for a discussion of the member systems of the New York
Power Pool (NYPP) proposal to establish an Independent System Operator (ISO),
and a New York State Reliability council (Reliability Council) to supersede the
NYPP. On September 15, 1999, the Federal Energy Regulatory Commission gave its
final approval for the ISO and the Reliability Council. The Company expects the
ISO and the Reliability Council to begin operation in November 1999 at which
time the NYPP would terminate. The Company does not expect such restructuring to
have a material adverse effect on its financial position or results of
operations.
(b) Environmental Litigation. Reference is made to Part II, Item 1(d) of
the Company's Quarterly Report, on Form 10-Q, for the quarterly period ended
March 31, 1999 for a discussion of the Citizen suit commenced against the
Company under Section 11 of the Endangered Species Act, 16 U.S.C. Section 1540.
- 20 -
<PAGE>
Although the Company continues to believe it has not violated such Act, if
the court were to grant the relief requested by plaintiffs, the Company could be
required temporarily to cease operations of the Roseton Steam Electric
Generating Plant ("Roseton Plant," described in Item 2 of the Company's 10-K
Report, under the captions "Electric - General" and "Electric - Roseton Plant")
and the Danskammer Plant Steam Electric Generating Station ("Danskammer Plant",
described in Item 2 of the Company's 10-K Report under the caption "Electric -
General"). If the Company were required to cease such operations for a
substantial period of time, it would have a material adverse effect on the
Company's financial position and results of operations.
(c) Auction of the Roseton and Danskammer Plants. Reference is made to the
caption "Auction of Fossil Generation Plants," in Note 2 of the Notes to
Financial Statements referred to in Item 8 of the Company's 10-K Report for a
discussion of the required sale of the Danskammer and the Roseton Plants by
auction. The Company now expects approval by the PSC of the auction plan early
in 2000 and sale of these Plants in early 2001.
(d) Environmental Quality. Reference is made to the caption "Environmental
Quality - Air" in Item 1 of the Company's 10-K Report for a discussion of the
federal and state regulations of air emissions from the Danskammer and Roseton
Plants. Published reports on October 14 and 15, 1999 indicate that New York
State Governor Pataki will order electric generation plants in New York State to
reduce dramatically sulfur dioxide and nitrogen dioxide emissions beyond the
reductions mandated by federal law. Until the issuance and analysis of any such
order, the Company can make no predication as to the effect of such order on the
operation of the Danskammer and Roseton Plants; however, the effect of such
Order, if legally binding, would be to increase the costs of operating such
Plants and could require capital improvements.
Such published reports also indicate that the New York State Attorney
General is investigating eight (8) New York State older power plants for
possible violations of federal and state air emission rules. By letter, dated
October 12, 1999, from the Office of said Attorney General, the Company was
notified that such investigation indicates that the Company, "may have
constructed, and continues to operate, major modifications to its Danskammer
[Plant...] without obtaining [certain] requisite pre-construction permits." Such
letter requests that the Company provide certain information with respect to
such investigation. The Company is in the process of reviewing this matter in
depth, but believes any required permits were obtained.
- 21 -
<PAGE>
(e) Nine Mile 2 Plant. Reference is made (i) to the description of the
Nine Mile 2 Plant (in which the Company has a 9% interest as a tenant-in-common)
contained in Note 3 of the Notes to Financial Statements referred to in Item 8
of the 10-K Report and (ii) to the proposed sale of the cotenancy interests
thereon of Niagara Mohawk Power Corporation (Niagara Mohawk) and New York State
Electric and Gas Corporation, as described in the subcaption "Nuclear
Operations" of Item 7 of the 10-K Report and in Item 5(a) of the Company's
Quarterly Report, on Form 10-Q, for the quarterly period ended June 30, 1999.
On September 30, 1999, the Nuclear Regulatory Commission (NRC) issued a
Plant Performance Review on the Nine Mile 2 and Nine Mile 1 (wholly owned by
Niagara Mohawk) plants. The NRC stated that it will increase its scrutiny of the
operation of the Nine Mile plants over the next six months as a result of a
decline in the performance of those plants due to weaknesses in areas such as
plant maintenance, work planning and scheduling, and engineering support.
Niagara Mohawk has announced significant management changes at the Nine Mile
plants, including the reassignment of several experienced PECO Energy employees
to the site.
If operating performance of the Nine Mile 2 Plant deteriorates further,
significant expenditures may be required to improve performance, the impact of
which on the Company cannot now be predicted.
Item 6. Exhibits and Reports of Form 8-K
(a) The following exhibits are furnished in accordance with the provisions
of Item 601 of Regulation S-K:
Exhibit No.
Regulation S-K
Item 601
Designation Exhibit Description
(12) -- Statement Showing Computation of the Ratio of Earnings to Fixed
Charges and the Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
(27) -- Financial Data Schedule, pursuant to Item 601(c) of Regulation S-K.
(b) Reports on Form 8-K. During the period covered by this Report on Form
10-Q, the Company filed the following Current Report on Form 8-K:
None.
- 22 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Registrant)
By: /s/ Donna S. Doyle
Donna S. Doyle
Controller
Authorized Officer and Chief
Accounting Officer
Dated: November 8, 1999
-23-
<PAGE>
EXHIBIT INDEX
Following is the list of Exhibits, as required by Item 601 of Regulation
S-K, filed as part of this Report on Form 10-Q:
Exhibit No.
Regulation S-K
Item 601
Designation Exhibit Description
(12) -- Statement Showing Computation of the Ratio of Earnings to Fixed
Charges and the Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
(27) -- Financial Data Schedule, pursuant to Item 601(c) of Regulation S-K.
- 24 -
<TABLE>
<CAPTION>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
1999 Year Ended December 31,
(Thousands of Dollars)
3 Months 9 Months 12 Months
Ended Ended Ended
Sept.30 Sept.30 Sept. 30 1998 1997(1) 1996(1) 1995
--------- --------- ---------- ---- ---- ---- ----
Earnings:
<S> <C> <C> <C> <C> <C> <C> <C>
A. Net Income $ 13,871 $ 42,412 $ 51,938 $ 52,544 $ 55,086 $ 56,082 $ 52,722
B. Federal Income Tax 7,411 24,039 29,105 28,627 26,237 31,068 28,687
-------- -------- -------- -------- -------- -------- --------
C. Earnings before Income Taxes $ 21,282 $ 66,451 $ 81,043 $ 81,171 $ 81,323 $ 87,150 $ 81,409
======== ======== ======== ======== ======== ======== ========
D. Fixed Charges
Interest on Mortgage Bonds 3,205 9,852 13,399 14,225 14,237 15,112 16,862
Interest on Other Long-Term Debt 3,392 8,309 10,675 8,890 8,860 8,505 9,063
Other Interest 2 107 133 3,639 2,647 2,626 1,917
Interest Portion of Rents 244 747 1,000 1,004 1,020 1,094 1,522
Amortization of Premium & Expense
on Debt 251 715 959 924 906 940 1,069
-------- -------- -------- -------- -------- -------- --------
7,094 19,730 26,166 28,682 27,670 28,277 30,433
-------- -------- -------- -------- -------- -------- --------
E. Total Earnings $ 28,376 $ 86,181 $107,209 $109,853 $108,993 $115,427 $111,842
======== ======== ======== ======== ======== ======== ========
Preferred Dividend Requirements:
F. Allowance for Preferred Stock
Dividends Under IRC Sec 247 $ 807 $ 2,422 $ 3,230 $ 3,230 $ 3,230 $ 3,230 $ 4,903
G. Less Allowable Dividend Deduction 32 96 127 127 127 127 528
-------- -------- -------- -------- -------- -------- --------
H. Net Subject to Gross-up 775 2,326 3,103 3,103 3,103 3,103 4,375
I. Ratio of Earnings before Income
Taxes to Net Income (C/A) 1.534 1.567 1.560 1.545 1.476 1.554 1.544
-------- -------- -------- -------- -------- -------- --------
J. Pref. Dividend (Pre-tax) (HxI) 1,189 3,645 4,841 4,794 4,580 4,822 6,755
K. Plus Allowable Dividend Deduction 32 96 127 127 127 127 528
-------- -------- -------- -------- -------- -------- --------
L. Preferred Dividend Factor 1,221 3,741 4,968 4,921 4,707 4,949 7,283
M. Fixed Charges (D) 7,094 19,730 26,166 28,682 27,670 28,277 30,433
-------- -------- -------- -------- -------- -------- --------
N. Total Fixed Charges
and Preferred Dividends $ 8,315 $ 23,471 $ 31,134 $ 33,603 $ 32,377 $ 33,226 $ 37,716
======== ======== ======== ======== ======== ======== ========
O. Ratio of Earnings to Fixed
Charges (E/D) 4.00 4.37 4.10 3.83 3.94 4.08 3.68
======== ======== ======== ======== ======== ======== ========
P. Ratio of Earnings to Fixed Charges
and Preferred Dividends (E/N) 3.41 3.67 3.44 3.27 3.37 3.47 2.97
======== ======== ======== ======== ======== ======== ========
(1)Restated to properly reflect the exclusion of AFUDC from fixed charges.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED
STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Sep-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $921,947
<OTHER-PROPERTY-AND-INVEST> $89,721
<TOTAL-CURRENT-ASSETS> $235,752
<TOTAL-DEFERRED-CHARGES> $182,000
<OTHER-ASSETS> $0
<TOTAL-ASSETS> $1,429,420
<COMMON> $87,775
<CAPITAL-SURPLUS-PAID-IN> $251,173
<RETAINED-EARNINGS> $145,960
<TOTAL-COMMON-STOCKHOLDERS-EQ> $484,908
$35,000
$21,030
<LONG-TERM-DEBT-NET> $247,151
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $4,300
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $144,718
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $392,313
<TOT-CAPITALIZATION-AND-LIAB> $1,429,420
<GROSS-OPERATING-REVENUE> $397,829
<INCOME-TAX-EXPENSE> $23,880
<OTHER-OPERATING-EXPENSES> $316,379
<TOTAL-OPERATING-EXPENSES> $340,259
<OPERATING-INCOME-LOSS> $57,570
<OTHER-INCOME-NET> $6,783
<INCOME-BEFORE-INTEREST-EXPEN> $64,353
<TOTAL-INTEREST-EXPENSE> $21,949
<NET-INCOME> $42,412
$2,422
<EARNINGS-AVAILABLE-FOR-COMM> $39,990
<COMMON-STOCK-DIVIDENDS> $27,317
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> ($12,684)
<EPS-BASIC> $2.37
<EPS-DILUTED> $0
</TABLE>
