<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
--------------------------------------
<TABLE>
<CAPTION>
COMMISSION REGISTRANT, STATE OF INCORPORATION, I.R.S. EMPLOYER
FILE NUMBER ADDRESS AND TELEPHONE NUMBER IDENTIFICATION NO.
----------- ---------------------------------- -----------------
<S> <C> <C>
1-3526 THE SOUTHERN COMPANY 58-0690070
(A Delaware Corporation)
64 Perimeter Center East
Atlanta, Georgia 30346
(404) 393-0650
1-3164 ALABAMA POWER COMPANY 63-0004250
(An Alabama Corporation)
600 North 18th Street
Birmingham, Alabama 35291
(205) 250-1000
1-6468 GEORGIA POWER COMPANY 58-0257110
(A Georgia Corporation)
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
(404) 526-6526
0-2429 GULF POWER COMPANY 59-0276810
(A Maine Corporation)
500 Bayfront Parkway
Pensacola, Florida 32501
(904) 444-6111
0-6849 MISSISSIPPI POWER COMPANy 64-0205820
(A Mississippi Corporation)
2992 West Beach
Gulfport, Mississippi 39501
(601) 864-1211
1-5072 SAVANNAH ELECTRIC AND POWER COMPANY 58-0418070
(A Georgia Corporation)
600 Bay Street, East
Savannah, Georgia 31401
(912) 232-7171
</TABLE>
<PAGE> 2
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Each of the following securities registered pursuant to Section 12(b) of the
Act are registered on the New York Stock Exchange.
<TABLE>
<CAPTION>
TITLE OF EACH CLASS Registrant
- ------------------- ----------
<S> <C>
COMMON STOCK, $5 PAR VALUE THE SOUTHERN COMPANY
</TABLE>
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<TABLE>
<CAPTION>
CLASS A PREFERRED, CUMULATIVE, $25 STATED CAPITAL ALABAMA POWER COMPANY
<S> <C>
7.60% (First 1992 Series) 6.80% Series
7.60% (Second 1992 Series) 6.40% Series
Adjustable Rate (1993 Series)
</TABLE>
FIRST MORTGAGE BONDS
10 5/8% Series due 2017
9 1/4% Series due 2021
------------------------------------
<TABLE>
<S> <C>
PREFERRED STOCK, CUMULATIVE, $100 STATED VALUE GEORGIA POWER COMPANY
$7.72 Series
$7.80 Series
CLASS A PREFERRED, CUMULATIVE, $25 STATED VALUE
$2.125 Series $1.9375 Series
$1.90 Series Adjustable Rate (First 1993 Series)
$1.9875 Series Adjustable Rate (Second 1993 Series)
$1.925 Series
FIRST MORTGAGE BONDS
4 3/4% Series due 1996 6 7/8% Series due 2002
6 1/8% Series due 1999 10% Series due 2016
7% Series due 2000 7.95% Series due 2023
6% Series due 2000 7 5/8% Series due 2023
------------------------------------
PREFERRED STOCK, CUMULATIVE, $100 PAR VALUE MISSISSIPPI POWER COMPANY
Depositary Preferred Shares, each representing one-fourth of a share of:
7.25% Series
6.32% Series
6.65% Series
------------------------------------
PREFERRED STOCK, CUMULATIVE, $25 PAR VALUE SAVANNAH ELECTRIC AND POWER COMPANY
6.64% Series
</TABLE>
<PAGE> 3
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS REGISTRANT
- ------------------- ----------
PREFERRED STOCK, CUMULATIVE, $100 PAR VALUE ALABAMA POWER COMPANY
<S> <C> <C> <C>
4.20% Series 4.60% Series 4.72% Series 5.96% Series
4.52% Series 4.64% Series 4.92% Series 6.88% Series
</TABLE>
CLASS A PREFERRED, CUMULATIVE, $100,000 STATED CAPITAL
Auction (1993 Series)
CLASS A PREFERRED, CUMULATIVE, $100 STATED CAPITAL
Auction (1988 Series)
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<TABLE>
<CAPTION>
PREFERRED STOCK, CUMULATIVE, $100 STATED VALUE GEORGIA POWER COMPANY
<S> <C> <C> <C>
$4.60 Series $4.60 Series (1964) $4.96 Series $6.48 Series
$4.60 Series (1962) $4.72 Series $5.00 Series $6.60 Series
$4.60 Series (1963) $4.92 Series $5.64 Series
</TABLE>
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<TABLE>
<CAPTION>
PREFERRED STOCK, CUMULATIVE, $100 PAR VALUE GULF POWER COMPANY
<S> <C> <C>
4.64% Series 5.44% Series 7.88% Series
5.16% Series 7.52% Series 11.36% Series
</TABLE>
CLASS A PREFERRED, CUMULATIVE, $10 PAR, $25 STATED CAPITAL
7.00% Series 7.30% Series 6.72% Series
Adjustable Rate (1993 Series)
--------------------------------------------
<TABLE>
<CAPTION>
PREFERRED STOCK, CUMULATIVE, $100 PAR VALUE MISSISSIPPI POWER COMPANY
<S> <C> <C> <C>
4.40% Series 4.60% Series 4.72% Series 7.00% Series
</TABLE>
<PAGE> 4
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
Aggregate market value of voting stock held by non-affiliates of The
Southern Company at February 28, 1994: $13.4 billion. Each of such other
registrants are wholly-owned subsidiaries of The Southern Company and have no
voting stock other than their common stock. A description of registrants'
common stock follows:
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES OUTSTANDING
REGISTRANT COMMON STOCK AT FEBRUARY 28, 1994
- ---------- ------------ --------------------
<S> <C> <C>
The Southern Company Par Value $5 Per Share 648,346,540
Alabama Power Company Par Value $40 Per Share 5,608,955
Georgia Power Company No Par Value 7,761,500
Gulf Power Company No Par Value 992,717
Mississippi Power Company Without Par Value 1,121,000
Savannah Electric and Power Company Par Value $5 Per Share 10,844,635
</TABLE>
Documents incorporated by reference: specified portions of The Southern
Company's Proxy Statement relating to the 1994 Annual Meeting of Stockholders
are incorporated by reference into PART III.
This combined Form 10-K is separately filed by The Southern Company,
Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company and Savannah Electric and Power Company. Information contained
herein relating to any individual company is filed by such company on its own
behalf. Each company makes no representation as to information relating to the
other companies.
<PAGE> 5
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
PART I ----
Item 1 Business-
<S> <C> <C>
The SOUTHERN System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
New Business Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Certain Factors Affecting the Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Construction Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Financing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Fuel Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Territory Served . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Rate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Long-Term Power Sales Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . I-23
Executive Officers of SOUTHERN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
PART II
Item 5 Market for Registrants' Common Equity and Related Stockholder MattersII-1
Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Item 7 Management's Discussion and Analysis of Results of Operations
and Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Item 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
PART III
Item 10 Directors and Executive Officers of the Registrants . . . . . . . . . . . . . . . . . . . . . . III-1
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-13
Item 12 Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-30
Item 13 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . III-36
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
</TABLE>
i
<PAGE> 6
DEFINITIONS
When used in Items 1 through 5 and Items 10 through 14, the
following terms will have the meanings indicated. Other defined
terms specific only to Item 11 are found on page III-13.
<TABLE>
<CAPTION>
TERM MEANING
<S> <C>
AEC . . . . . . . . . . . . . . Alabama Electric Cooperative, Inc.
AFUDC . . . . . . . . . . . . . Allowance for Funds Used During Construction
ALABAMA . . . . . . . . . . . . Alabama Power Company
Alicura . . . . . . . . . . . . Hidroelectrica Alicura, S.A. (Argentina)
AMEA . . . . . . . . . . . . . Alabama Municipal Electric Authority
Clean Air Act . . . . . . . . Clean Air Act Amendments of 1990
Dalton . . . . . . . . . . . . City of Dalton, Georgia
DOE . . . . . . . . . . . . . United States Department of Energy
ECO Plan . . . . . . . . . . . Environmental Compliance Overview Plan
ECR Plan . . . . . . . . . . . Environmental Cost Recovery Plan
Edelnor . . . . . . . . . . . . Empressa, Electrica del Norte Grande, S.A. (Chile)
Energy Act . . . . . . . . . . Energy Policy Act of 1992
EMF . . . . . . . . . . . . . . Electromagnetic field
EPA . . . . . . . . . . . . . . United States Environmental Protection Agency
FERC . . . . . . . . . . . . . Federal Energy Regulatory Commission
FPC . . . . . . . . . . . . . . Florida Power Corporation
FP&L . . . . . . . . . . . . . Florida Power & Light Company
Freeport . . . . . . . . . . . Freeport Power Company (Bahamas)
GEORGIA . . . . . . . . . . . . Georgia Power Company
GULF . . . . . . . . . . . . . Gulf Power Company
Gulf States . . . . . . . . . . Gulf States Utilities Company
Holding Company Act . . . . . . Public Utility Holding Company Act of 1935, as amended
IBEW . . . . . . . . . . . . . International Brotherhood of Electrical Workers
JEA . . . . . . . . . . . . . . Jacksonville Electric Authority
MEAG . . . . . . . . . . . . . Municipal Electric Authority of Georgia
MISSISSIPPI . . . . . . . . . . Mississippi Power Company
NRC . . . . . . . . . . . . . Nuclear Regulatory Commission
OPC . . . . . . . . . . . . . . Oglethorpe Power Corporation
operating affiliates . . . . . ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SAVANNAH
PSC . . . . . . . . . . . . . . Public Service Commission
REA . . . . . . . . . . . . . Rural Electrification Administration
RICO . . . . . . . . . . . . . Racketeer Influenced and Corrupt Organizations Act
SAVANNAH . . . . . . . . . . . Savannah Electric and Power Company
SCS . . . . . . . . . . . . . . Southern Company Services, Inc.
SEC . . . . . . . . . . . . . . Securities and Exchange Commission
SEGCO . . . . . . . . . . . . . Southern Electric Generating Company
SEI . . . . . . . . . . . . . . Southern Electric International, Inc.
SEPA . . . . . . . . . . . . . Southeastern Power Administration
SERC . . . . . . . . . . . . . Southeastern Electric Reliability Council
SMEPA . . . . . . . . . . . . . South Mississippi Electric Power Association
SOUTHERN . . . . . . . . . . . The Southern Company
Southern Nuclear . . . . . . . Southern Nuclear Operating Company, Inc.
SOUTHERN system . . . . . . . . SOUTHERN, the operating affiliates, SEGCO, SEI
Southern Nuclear, SCS and other subsidiaries
TVA . . . . . . . . . . . . . . Tennessee Valley Authority
</TABLE>
ii
<PAGE> 7
PART I
ITEM 1. BUSINESS
SOUTHERN was incorporated under the laws of Delaware on November 9, 1945.
SOUTHERN is domesticated under the laws of Georgia and is qualified to do
business as a foreign corporation under the laws of Alabama. SOUTHERN owns all
the outstanding common stock of ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SAVANNAH, each of which is an operating public utility company. ALABAMA and
GEORGIA each own 50% of the outstanding common stock of SEGCO. The operating
affiliates supply electric service in the states of Alabama, Georgia, Florida,
Mississippi and Georgia, respectively, and SEGCO owns generating units at a
large electric generating station which supplies power to ALABAMA and GEORGIA.
More particular information relating to each of the operating affiliates is as
follows:
ALABAMA is a corporation organized under the laws of the State of Alabama on
November 10, 1927, by the consolidation of a predecessor Alabama Power
Company, Gulf Electric Company and Houston Power Company. The predecessor
Alabama Power Company had had a continuous existence since its incorporation
in 1906.
GEORGIA was incorporated under the laws of the State of Georgia on June 26,
1930, and admitted to do business in Alabama on September 15, 1948.
GULF is a corporation which was organized under the laws of the State of
Maine on November 2, 1925, and admitted to do business in Florida on January
15, 1926, in Mississippi on October 25, 1976 and in Georgia on November 20,
1984.
MISSISSIPPI was incorporated under the laws of the State of Mississippi on
July 12, 1972, was admitted to do business in Alabama on November 28, 1972,
and effective December 21, 1972, by the merger into it of the predecessor
Mississippi Power Company, succeeded to the business and properties of the
latter company. The predecessor Mississippi Power Company was incorporated
under the laws of the State of Maine on November 24, 1924, and was admitted
to do business in Mississippi on December 23, 1924, and in Alabama on
December 7, 1962.
SAVANNAH is a corporation existing under the laws of Georgia; its charter
was granted by the Secretary of State on August 5, 1921.
SOUTHERN also owns all the outstanding common stock of SEI, Southern
Nuclear, SCS (the system service company), and various other subsidiaries
related to foreign operations and domestic non-utility operations (see
Exhibit 21 herein). At this time, the operations of the other subsidiaries
are not material. SEI designs, builds, owns and operates power production
facilities and provides a broad range of technical services to industrial
companies and utilities in the United States and a number of international
markets. A further description of SEI's business and organization follows
later in this section. Southern Nuclear provides services to the Southern
electric system's nuclear plants.
SEGCO owns electric generating units with an aggregate capacity of 1,019,680
kilowatts at Plant Gaston on the Coosa River near Wilsonville, Alabama, and
ALABAMA and GEORGIA are each entitled to one-half of SEGCO's capacity and
energy. ALABAMA acts as SEGCO's agent in the operation of SEGCO's units and
furnishes coal to SEGCO as fuel for its units. SEGCO also owns three
230,000 volt transmission lines extending from Plant Gaston to the Georgia
state line at which point connection is made with the GEORGIA transmission
line system.
THE SOUTHERN SYSTEM
The transmission facilities of each of the operating affiliates and SEGCO are
connected to the respective company's own generating plants and other sources
of power and are interconnected with the transmission facilities of the other
operating affiliates and SEGCO by means of heavy-duty high voltage lines. (In
the case of GEORGIA's integrated transmission system, see Item 1 - BUSINESS -
"Territory Served" herein.)
Operating contracts covering arrangements in effect with principal
neighboring utility systems provide for capacity exchanges, capacity purchases
and sales, transfers of economy energy and other similar transactions.
Additionally, the operating affiliates have entered into voluntary reliability
agreements with the subsidiaries of Entergy Corporation, Florida Electric Power
Coordinating Group and TVA and with Carolina Power & Light Company, Duke Power
Company, South Carolina Electric & Gas Company and Virginia Electric
I-1
<PAGE> 8
and Power Company, each of which provides for the establishment and periodic
review of principles and procedures for planning and operation of generation
and transmission facilities, maintenance schedules, load retention programs,
emergency operations, and other matters affecting the reliability of bulk power
supply. The operating affiliates have joined with other utilities in the
Southeast (including those referred to above) to form the SERC to augment
further the reliability and adequacy of bulk power supply. Through the SERC,
the operating affiliates are represented on the National Electric Reliability
Council.
An intra-system interchange agreement provides for coordinating operations
of the power producing facilities of the operating affiliates and SEGCO and the
capacities available to such companies from non-affiliated sources and for the
pooling of surplus energy available for interchange. Coordinated operation of
the entire interconnected system is conducted through a central power supply
coordination office maintained by SCS. The available sources of energy are
allocated to the operating affiliates to provide the most economical sources of
power consistent with good operation. The resulting benefits and savings are
apportioned among the operating affiliates.
SCS has contracted with each operating affiliate, SEI, various of the other
subsidiaries, Southern Nuclear and SEGCO to furnish, at cost and upon request,
the following services: general executive and advisory services, power pool
operations, general engineering, design engineering, purchasing, accounting and
statistical, finance and treasury, taxes, insurance and pensions, corporate,
rates, budgeting, public relations, employee relations, systems and procedures
and other services with respect to business and operations. SOUTHERN also has
a contract with SCS for certain of these specialized services.
Southern Nuclear has contracted with ALABAMA to operate its Farley Nuclear
Plant, as authorized by amendments to the plant operating licenses. Southern
Nuclear also has a contract to provide GEORGIA with technical and other
services to support GEORGIA's operation of plants Hatch and Vogtle.
Applications are now pending before the NRC for amendments to the Hatch and
Vogtle operating licenses which would authorize Southern Nuclear to become the
operator. See Item 1 - BUSINESS - "Regulation - Atomic Energy Act of 1954"
herein.
NEW BUSINESS DEVELOPMENT
SOUTHERN continues to consider new business opportunities, particularly those
which allow use of the expertise and resources developed through its regulated
utility experience. These endeavors began in 1981 and are conducted through
SEI and other existing subsidiaries.
SEI's primary business focus is international and domestic cogeneration, the
independent power market, and the privatization of generation facilities in the
international market. SEI currently operates two domestic independent power
production projects totaling 225 megawatts and is one-third owner of one of
these (which produces 180 megawatts). It has a contract to sell electric
energy to Virginia Electric and Power Company from a facility SEI is developing
(through subsidiaries) in King George, Virginia. Upon completion, currently
planned for 1996, SEI will operate the 220 megawatt coal-fired plant and own
50% of the project.
In April 1993, SOUTHERN completed the purchase of a 50% interest in
Freeport, an electric utility on the Island of Grand Bahama, for a purchase
price of $35.5 million. Freeport has generating capacity of about 112
megawatts. In August 1993, SOUTHERN completed the purchase of a 55% interest
in Alicura, an entity that owns the right to use the generation from a 1,000
megawatt hydroelectric generating facility in Argentina, for a net purchase
price of approximately $188 million. In December 1993, SOUTHERN completed the
purchase of a 35% interest in Edelnor for the purchase price of $73 million.
Edelnor is a utility located in Northern Chile that owns and operates a
transmission grid and a 96 megawatt generating facility and is building an
additional 150 megawatt facility.
SEI has continued to render consulting services and market SOUTHERN system
expertise in the United States and throughout the world. It contracts with
other public utilities, commercial concerns and government agencies for the
rendition of services and the licensing of intellectual property. In addition,
SEI engages in energy management-related services and activities.
These continuing efforts to invest in and develop new business opportunities
offer the potential of earning returns which may exceed those of rate-regulated
operations. However, because of the absence of any assured return or rate of
return, they also involve a higher
I-2
<PAGE> 9
degree of risk. SOUTHERN expects to make substantial investments over the
period 1994-1996 in these and other new businesses.
CERTAIN FACTORS AFFECTING THE INDUSTRY
The electric utility industry is expected to become increasingly competitive in
the future as a result of the enactment of the Energy Act (see each
registrant's "Management's Discussion and Analysis - Future Earnings Potential"
in Item 7 herein), deregulation, competing technologies and other factors. In
recent years the electric utility industry in general has experienced problems
in a number of areas including the uncertain cost of capital needed for
construction programs, difficulty in obtaining sufficient return on invested
capital and in securing adequate rate increases when required, high costs and
other issues associated with compliance with environmental and nuclear
regulations, changes in regulatory climate, prudence audits and the effects of
inflation and other factors on the costs of operations and construction
expenditures. The SOUTHERN system has been experiencing certain of these
problems in varying degrees and management is unable to predict the future
effect of these or other factors upon its operations and financial condition.
CONSTRUCTION PROGRAMS
The subsidiary companies of SOUTHERN are engaged in continuous construction
programs to accommodate existing and estimated future loads on their respective
systems. Construction additions or acquisitions of property during 1994
through 1996 by the operating affiliates, SEGCO, SCS and Southern Nuclear are
estimated as follows: (in millions)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
1994 1995 1996
---------------------------------
<S> <C> <C> <C>
ALABAMA $ 588 $ 572 $ 531
GEORGIA 688 555 629
GULF 77 55 68
MISSISSIPPI 96 62 98
SAVANNAH 33 32 33
SEGCO 14 16 26
SCS 26 18 14
Southern Nuclear 1 2 2
SOUTHERN system* $1,524 $1,326 $1,411
- -----------------------------------------------------------
</TABLE>
*Does not add due to changes made in subsidiaries' construction budget
subsequent to approval of SOUTHERN system construction budget.
Reference is made to Note 4 to the financial statements of each registrant
in Item 8 herein for the amounts of AFUDC included in the above estimates. The
construction estimates for the period 1994 through 1996 do not include amounts
which may be spent by SEI (or the subsidiary(s) created to effect such
project(s)) on future power production projects or the projects discussed
earlier under "New Business Development." (See also Item 1 - BUSINESS -
"Financing Programs" herein.)
I-3
<PAGE> 10
Estimated construction costs in 1994 are expected to be apportioned
approximately as follows: (in millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
SOUTHERN
System* ALABAMA GEORGIA GULF MISSISSIPPI SAVANNAH
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Combustion turbines $ 239 $123 $103 $ - $ 5 $ 8
Other generating
facilities including
associated plant
substations 369 102 166 39 44 4
New business 276 114 130 13 11 8
Transmission 150 48 80 2 18 2
Joint line and substation 61 24 34 2 1 -
Distribution 126 50 49 11 9 7
Nuclear fuel 123 61 62 - - -
General plant 179 66 64 10 8 4
------------------------------------------------------------------------------------
$1,524 $588 $688 $77 $96 $33
====================================================================================
</TABLE>
*SCS and Southern Nuclear plan capital additions to general plant in 1994 of
$26 million and $1 million, respectively, while SEGCO plans capital additions
of $14 million to generating facilities. Does not add due to changes made in
subsidiaries' construction budget subsequent to approval of SOUTHERN system
construction budget.
The construction programs are subject to periodic review and revision, and
actual construction costs may vary from the above estimates because of numerous
factors. These factors include changes in business conditions; revised load
growth estimates; changes in environmental regulations; changes in existing
nuclear plants to meet new regulatory requirements; increasing cost of labor,
equipment and materials; cost of capital and SEI securing a contract(s) to buy
or build additional generating facilities.
The operating affiliates do not have any baseload generating plants under
construction and current energy demand forecasts do not require any additional
baseload generating facilities before 2011. However, within the service area,
the construction of combustion turbine peaking units with an aggregate capacity
of approximately 1,700 megawatts is planned to be completed by 1996. In
addition, significant construction of transmission and distribution facilities
and upgrading of generating plants will be continuing.
During 1991, the Georgia legislature passed legislation which requires
GEORGIA and SAVANNAH each to file an Integrated Resource Plan for approval by
the Georgia PSC. Under the plan rules, the Georgia PSC must pre-certify the
construction of new power plants. (See Item 1 - BUSINESS - "Rate Matters -
Integrated Resource Planning" herein.)
See Item 1 - BUSINESS - "Regulation - Environmental Regulation" herein for
information with respect to certain existing and proposed environmental
requirements and Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein for
additional information concerning ALABAMA's and GEORGIA's joint ownership of
certain generating units and related facilities with certain non-affiliated
utilities.
ROCKY MOUNTAIN HYDROELECTRIC PROJECT
For information regarding GEORGIA's Rocky Mountain Project, including a joint
ownership agreement with OPC and the uncertain recovery of GEORGIA's costs in
this project, reference is made to Note 4 to SOUTHERN's and to GEORGIA's
financial statements in Item 8 herein.
STOCKHOLDER SUIT
For information concerning a suit against certain current and former directors
and officers of SOUTHERN involving allegations related to Plant Vogtle, the
Rocky Mountain project and other matters, see Item 3 - LEGAL PROCEEDINGS
herein.
I-4
<PAGE> 11
FINANCING PROGRAMS
In early 1994, SOUTHERN sold - through a public offering - common stock for
proceeds totaling approximately $120 million. SOUTHERN may require additional
equity capital during the remainder of 1994. The amount and timing of raising
additional equity capital in 1994, as well as subsequent years, will be
contingent on SOUTHERN's investment opportunities. Equity capital can be
provided from any combination of public offerings, private placements, or its
various stock plans. The operating affiliates' construction programs are
expected to be financed primarily from internal sources. Short-term debt will
be utilized when necessary. The operating affiliates may issue additional
long-term debt and preferred stock primarily for the purposes of debt
maturities and for redeeming higher-cost securities.
In order to issue first mortgage bonds and preferred stock, each of the
operating affiliates must comply with earnings coverage requirements contained
in its respective mortgage and charter. These provisions require, for the
issuance of additional first mortgage bonds, a minimum, before income tax,
earnings coverage of twice the pro forma annual interest charges on first
mortgage bonds and indebtedness secured by prior or equal ranking lien and, for
the issuance of additional preferred stock, a minimum, after income tax,
earnings coverage of one and one-half times pro forma annual interest charges
and preferred stock dividends, in each case for a period of twelve consecutive
calendar months within the fifteen calendar months immediately preceding the
proposed new issue. On the basis of these requirements, the respective
mortgage and preferred stock coverages of the operating affiliates for the
twelve months ended December 31, 1993, are:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
Mortgage Preferred Stock
Coverages Coverages
--------- ---------------
<S> <C> <C>
ALABAMA 5.70 2.71
GEORGIA 7.75 2.61
GULF 5.79 2.56
MISSISSIPPI 5.78 2.67
SAVANNAH 3.94 2.20
- ---------------------------------------------------------
</TABLE>
The amounts of securities representing short-term unsecured indebtedness
allowable under the respective charters, and the maximum amounts of short-term
indebtedness authorized by the appropriate regulatory authorities, are shown in
the following table:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Short-term Unsecured Indebtedness
- ----------------------------------------------------------------------------
Allowable
Under Charter
at December 31, 1993
--------------------
Percent of
Secured
Indebtedness
and Other
Amount Capital(2)
------------- ----------------------
(Millions)
<S> <C> <C>
ALABAMA $ 542 10%
GEORGIA 1,736 20
GULF 92 10
MISSISSIPPI 133 20
SAVANNAH 70 20
SOUTHERN (1) (1)
- ----------------------------------------------------------------------------
Short-term Indebtedness
Maximum Regulatory
Authorization
-------------
Outstanding
at
Amount December 31, 1993
------------- ----------------------
(Millions)
ALABAMA $530 (3) $ 40
GEORGIA 900 (3) 482
GULF 100 (3) 6
MISSISSIPPI 140 (3) 40
SAVANNAH 70 (3) 3
SOUTHERN 500 (3) 222
</TABLE>
Notes:
(1) No limitation.
(2) Under the provisions of the respective charters, GEORGIA's,
MISSISSIPPI's and SAVANNAH's preferred stockholders have approved increases in
the amounts of securities representing short-term unsecured indebtedness which
the companies may have outstanding until July 1 in 2003, 1999 and 1999,
respectively. Such limitations were raised from 10% of secured indebtedness
and other capital to 20% thereof. These approved increases are reflected in
the above table. ALABAMA currently plans to seek approval of its preferred
stockholders to have the charter limitation on short-term indebtedness
increased above its current limitation and
I-5
<PAGE> 12
may seek that such increase be made on a permanent basis.
(3) ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SOUTHERN have
received SEC authorization to issue from time to time short-term and/or term
loan notes to banks and commercial paper to dealers in the amounts shown
through March 31, 1996. Each of the operating affiliates (excluding
MISSISSIPPI) must also receive authorization from their respective state PSC to
issue short-term debt. At December 31, 1993, the Alabama PSC authorization
limited ALABAMA's short-term debt to $450 million.
Reference is made to Note 5, 5, 8, 5, 5 and 5 to the financial statements
for SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH, respectively,
in Item 8 herein for information regarding the registrants' credit
arrangements.
I-6
<PAGE> 13
FUEL SUPPLY
The operating affiliates' and SEGCO's supply of electricity is derived
predominantly from coal. The sources of generation for the years 1991 through
1993 and the estimates for 1994 are shown below:
Oil
and
ALABAMA Coal Nuclear Hydro Gas Total
---- ------- ----- --- -----
1991 68% 23% 9% *% 100%
1992 70 21 9 * 100
1993 70 22 8 * 100
1994 71 21 8 * 100
GEORGIA
1991 78 19 3 * 100
1992 76 21 3 * 100
1993 77 20 3 * 100
1994 78 19 3 * 100
GULF
1991 100 ** ** * 100
1992 100 ** ** * 100
1993 99 ** ** 1 100
1994 100 ** ** * 100
MISSISSIPPI
1991 89 ** ** 11 100
1992 91 ** ** 9 100
1993 90 ** ** 10 100
1994 83 ** ** 17 100
SAVANNAH
1991 91 ** ** 9 100
1992 81 ** ** 19 100
1993 83 ** ** 17 100
1994 96 ** ** 4 100
SEGCO
1991 100 ** ** * 100
1992 100 ** ** * 100
1993 100 ** ** * 100
1994 100 ** ** * 100
SOUTHERN
SYSTEM
1991 77 17 5 1 100
1992 77 17 5 1 100
1993 78 17 4 1 100
1994 78 17 4 1 100
- -------------------------------------------------------------
*Less than 0.5%
**Not applicable
The average costs of fuel in cents per net kilowatt-hour generated are shown
below:
Oil
and Weighted
ALABAMA Coal Nuclear Gas Average
---- ------- --- --------
1991 2.06 0.57 * 1.69
1992 1.99 0.44 * 1.64
1993 2.11 0.51 * 1.73
GEORGIA
1991 1.77 0.75 * 1.57
1992 1.75 0.63 * 1.52
1993 1.75 0.58 * 1.52
GULF
1991 2.16 ** * 2.17
1992 2.07 ** * 2.07
1993 2.03 ** 4.50 2.05
MISSISSIPPI
1991 1.80 ** 1.71 1.80
1992 1.59 ** 3.05 1.60
1993 1.66 ** 2.97 1.71
SAVANNAH
1991 2.05 ** 3.41 2.18
1992 2.28 ** 3.55 2.53
1993 2.02 ** 4.70 2.49
SEGCO
1991 1.97 ** * 1.97
1992 1.81 ** * 1.81
1993 1.80 ** * 1.81
SOUTHERN
SYSTEM
1991 1.91 0.66 2.84 1.69
1992 1.86 0.54 4.81 1.62
1993 1.90 0.54 4.34 1.67
- ---------------------------------------------------------------
* Not meaningful because of minimal generation from fuel source
** Not applicable
I-7
<PAGE> 14
At March 4, 1994, the operating affiliates and SEGCO had stockpiles of coal
on hand at their respective coal-fired plants which represented an estimated
25-day recoverable supply, based on projected 1994 nameplate burn requirements.
It is estimated that approximately 53 million tons of coal will be consumed in
1994 by the operating affiliates and SEGCO (including those units GEORGIA owns
jointly with OPC, MEAG, Dalton, FP&L and JEA and the units ALABAMA owns jointly
with AEC). The operating affiliates and SEGCO currently have 32 coal
contracts. These contracts cover remaining terms of up to 16 years.
Approximately 30% of 1994 estimated coal requirements will be purchased in the
spot market. Management has set a goal whereby the spot market should be
utilized, absent the transition from coal contract expirations, for 20 to 25%
of the SOUTHERN system's coal supply. Additionally, it has been determined
that approximately 35 days of recoverable supply of coal is the appropriate
level for coal stockpiles. During 1993, the operating affiliates and SEGCO's
average price of coal delivered was approximately $46 per ton. The typical
sulfur content of coal purchased under contracts ranges from approximately 0.7%
to 3.0% sulfur by weight. Fuel sulfur restrictions and other environmental
limitations have increased significantly and may increase further the
difficulty and cost of obtaining an adequate coal supply. See Item 1 -
BUSINESS - "Regulation - Environmental Regulation" herein.
Changes in fuel prices are generally reflected in fuel adjustment clauses
contained in rate schedules. See Item 1 - BUSINESS - "Rate Matters - Rate
Structure".
ALABAMA owns coal lands and mineral rights in the Warrior Coal Field,
located northwest of Birmingham in the vicinity of its Gorgas Steam Plant.
SEGCO also owns coal reserves in the Warrior Coal Field and in the Cahaba Coal
Field, which is located southwest of Birmingham. ALABAMA has an agreement with
a non-affiliated industrial and mining firm to mine coal from ALABAMA's
reserves, as well as its own reserves, for supply to ALABAMA's generating
units.
Should the arrangement between the mining firm and ALABAMA be terminated
pursuant to its provisions, ALABAMA would be obligated to pay the mining firm's
net investment in the mine and take over ownership of equipment and facilities.
On December 31, 1993, the mining firm's investment was approximately $13
million.
The operating affiliates have renegotiated, bought out or otherwise
terminated various coal supply contracts. For more information on certain of
these transactions see Note 5 to the financial statements of SOUTHERN, GULF and
MISSISSIPPI in Item 8 herein.
Reference is made to Item 3 - LEGAL PROCEEDINGS herein for a discussion of
a complaint filed against GULF and SCS regarding the delivery of coal.
In 1974, MISSISSIPPI filed a civil suit against a supplier of natural gas
for violation of the antitrust laws, breach of contract and tortious
interference with its contracts on account of MISSISSIPPI's failure to receive
its full contracted quantities of natural gas. The aggregate amount of damages
sought is approximately $134 million. An internal review of this matter has
determined that the possibility of any recovery is remote.
ALABAMA and GEORGIA have contracts with the United States Enrichment
Corporation for nuclear fuel enrichment services on a total system basis.
These contracts provide that any or all enrichment needs in any fiscal year may
be terminated at no charge upon a 10- year advance notice. To provide
contracting flexibility, all enrichment needs during the period October 1, 1999
- - September 30, 2002 were terminated prior to April 1, 1992. Except for
enrichment requirements during this termination period, all enrichment services
needs of Plants Farley, Hatch and Vogtle until the years cited above may be
accommodated by such contracts.
ALABAMA and GEORGIA have contracts with the DOE that provide for the
permanent disposal of spent nuclear fuel. The service to be provided by the
DOE is scheduled to begin in 1998; however, the actual year this service will
begin is uncertain. Sufficient storage capacity currently is available to
permit operation into 2003 at Plant Hatch, into 2009 at Plant Vogtle, and into
2012 and 2014 at Plant Farley units 1 and 2, respectively. Management believes
that sufficient capacity for nuclear fuel processing exists to preclude the
impairment of normal operations of the SOUTHERN system's nuclear generating
units.
I-8
<PAGE> 15
The Energy Act imposed upon utilities with nuclear plants, including ALABAMA
and GEORGIA, obligations for the decontamination and decommissioning of federal
nuclear fuel enrichment facilities. See Note 1 to SOUTHERN's, ALABAMA's and
GEORGIA's financial statements in Item 8 herein.
TERRITORY SERVED
The territory in which the operating affiliates provide electric service
comprises most of the states of Alabama and Georgia together with the
northwestern portion of Florida and southeastern Mississippi. In this
territory there are non-affiliated electric distribution systems which obtain
some or all of their power requirements either directly or indirectly from the
operating affiliates. The territory has an area of approximately 120,000
square miles and an estimated population of approximately 11 million.
ALABAMA is engaged, within the State of Alabama, in the generation and
purchase of electricity and the distribution and sale of such electricity at
retail in over 1,000 communities (including Anniston, Birmingham, Gadsden,
Mobile, Montgomery and Tuscaloosa), and at wholesale to 15 municipally-owned
electric distribution systems, 11 of which are served indirectly through sales
to AMEA, and two rural distributing cooperative associations. ALABAMA also
supplies steam service in downtown Birmingham. ALABAMA owns coal reserves near
its steam-electric generating plant at Gorgas and uses the output of coal from
these reserves in its generating plants. ALABAMA also sells, and cooperates
with dealers in promoting the sale of, electric appliances.
GEORGIA is engaged in the generation and purchase of electricity and the
distribution and sale of such electricity within the State of Georgia at retail
in over 600 communities (including Athens, Atlanta, Augusta, Columbus, Macon,
Rome and Valdosta), as well as in rural areas, and at wholesale currently to 39
electric cooperative associations through OPC, a corporate cooperative of
electric membership cooperatives in Georgia, and to 50 municipalities, 47 of
which are served through MEAG, a public corporation and an instrumentality of
the State of Georgia.
GULF is engaged, within the northwestern portion of Florida, in the
generation and purchase of electricity and the distribution and sale of such
electricity at retail in 71 communities (including Pensacola, Panama City and
Fort Walton Beach), as well as in rural areas, and at wholesale to a
non-affiliated utility and a municipality. GULF also sells electric
appliances.
MISSISSIPPI is engaged in the generation and purchase of electricity and the
distribution and sale of such energy within the 23 counties of southeastern
Mississippi, at retail in 123 communities (including Biloxi, Gulfport,
Hattiesburg, Laurel, Meridian and Pascagoula), as well as in rural areas, and
at wholesale to one municipality and four rural electric cooperative
associations.
SAVANNAH is engaged, within a five-county area in eastern Georgia, in the
generation and purchase of electricity and the distribution and sale of such
electricity at retail and, as a member of the SOUTHERN system power pool, the
transmission and sale of wholesale energy.
I-9
<PAGE> 16
The sources of revenues for the SOUTHERN system and each of SOUTHERN's
operating affiliates are shown in Item 6 herein. For the year ended December
31, 1993, the registrants derived their respective industrial revenues as shown
in the following table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
SOUTHERN
System ALABAMA GEORGIA GULF MISSISSIPPI SAVANNAH
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Textiles 13% 10% 18% *% 3% -%
Chemical 11 14 7 25 14 32
Paper 11 11 10 11 4 32
Primary metal 8 14 4 * 2 -
Stone, clay,
glass and concrete 6 6 8 2 1 4
Utility services 8 8 9 3 10 6
Food 5 3 6 1 6 8
Government 5 3 5 35 10 -
Transportation
equipment 3 1 4 1 8 9
Lumber and wood
products 4 5 4 2 8 4
Other** 26 25 25 20 34 5
- --------------------------------------------------------------------------------------------------------------------------
100% 100% 100% 100% 100% 100%
==========================================================================================================================
</TABLE>
* Less than 0.5%
**Other major sources (more than 5%) of industrial revenues were: ALABAMA, coal
mining (5%); GULF, oil and gas extraction (8%); and MISSISSIPPI, petroleum
refining (21%) and electric machinery (5%).
A portion of the area served by SOUTHERN's operating affiliates adjoins
the area served by TVA and its municipal and cooperative distributors. An Act
of Congress limits the distribution of TVA power, unless otherwise authorized
by Congress, to specified areas or customers which generally were those served
on July 1, 1957.
The REA has authority to make loans to cooperative associations or
corporations to enable them to provide electric service to customers in rural
sections of the country. There are 70 electric cooperative organizations
operating in the territory in which the operating affiliates provide electric
service at retail or wholesale.
One of these, AEC, is a generating and transmitting cooperative selling
power to several distributing cooperatives, municipal systems and other
customers in south Alabama and northwest Florida. AEC owns generating units
with approximately 828 megawatts of nameplate capacity, including an undivided
ownership interest in ALABAMA's Plant Miller Units 1 and 2, and associated
transmission lines. AEC's facilities were financed with REA loans secured by
long-term contracts requiring distributing cooperatives to take their
requirements from AEC to the extent such energy is available. Two of the 14
distributing cooperatives operating in ALABAMA's service territory obtain a
portion of their power requirements directly from ALABAMA.
Four electric cooperative associations, financed by the REA, operate
within GULF's service area. These cooperatives purchase their full
requirements from AEC and SEPA. A non-affiliated utility also operates within
GULF's service area and purchases a portion of its requirements from GULF.
ALABAMA and GULF have entered into separate agreements with AEC
involving interconnection between the respective systems and, in the case of
ALABAMA, the delivery of capacity and energy from AEC to certain distributing
cooperatives. The rates for the various services provided by ALABAMA and GULF
to AEC are based on formulary approaches which result in the charges by each
company being updated annually, subject to FERC approval. See Item 2 -
PROPERTIES - "Jointly-Owned Facilities" herein for details of ALABAMA's
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<PAGE> 17
joint-ownership with AEC of a portion of Plant Miller.
Another of the 70 electric cooperatives is SMEPA, also a generating and
transmitting cooperative. SMEPA, which began operation in 1970, has a
generating capacity of 739,000 kilowatts and a transmission system estimated to
be 1,357 miles in length. MISSISSIPPI has an interchange agreement with SMEPA
pursuant to which various services are provided, including the furnishing of
protective capacity by MISSISSIPPI to SMEPA.
There are 43 electric cooperative organizations operating in, or in
areas adjoining, territory in the State of Georgia in which GEORGIA provides
electric service at retail or wholesale. Three of these organizations obtain
their power from TVA and one from other sources. Since July 1, 1975, OPC has
supplied the requirements of the remaining 39 of these cooperative
organizations from self-owned generation acquired from GEORGIA and, until
September 1991, through partial requirements purchases from GEORGIA. GEORGIA
entered into an agreement with OPC pursuant to which, effective in September
1991, OPC ceased to be a partial requirements wholesale customer of GEORGIA.
Instead, OPC began the purchase of 1,250 megawatts of capacity from GEORGIA
through 1999, subject to reduction or extension by OPC, and may satisfy the
balance of its needs through purchases from others. This agreement did not
have a material effect on SOUTHERN's or GEORGIA's revenues or earnings.
There are 65 municipally-owned electric distribution systems operating
in the territory in which SOUTHERN's operating affiliates provide electric
service at retail or wholesale.
AMEA was organized under an act of the Alabama legislature and is
comprised of 11 municipalities. In 1986, ALABAMA entered into a firm power
purchase contract with AMEA entitling AMEA to scheduled amounts of capacity (to
a maximum of 100 megawatts) for a period of 15 years commencing September 1,
1986. In October 1991, ALABAMA entered into a second firm power purchase
contract with AMEA entitling AMEA to scheduled amounts of additional capacity
(to a maximum 80 megawatts) for a period of 15 years beginning October 1, 1991.
In both contracts the power is being sold to AMEA for its member municipalities
that previously were served directly by ALABAMA as wholesale customers. Under
the terms of the contracts, ALABAMA received payments from AMEA representing
the net present value of the revenues associated with the respective capacity
entitlements.
Forty-six municipally-owned electric distribution systems formerly
served on a full requirements wholesale basis by GEORGIA and one county-owned
system now receive their requirements through MEAG, which was established by a
state statute in 1975. MEAG serves these requirements from self-owned
generation facilities acquired from GEORGIA and through purchases of capacity
and energy from GEORGIA under partial requirements rates. Similarly, since
1977 Dalton has filled its requirements from generation facilities acquired
from GEORGIA and through partial requirements purchases. The full requirements
of two municipally-owned electric distribution systems are still served at
wholesale by GEORGIA. (See Item 2 - PROPERTIES - "Jointly-Owned Facilities"
herein.) GULF and MISSISSIPPI provide wholesale requirements for one municipal
system each.
GEORGIA has entered into substantially similar agreements with OPC,
MEAG and Dalton providing for the establishment of an integrated transmission
system to carry the power and energy of each. The agreements require an
investment by each party in the integrated transmission system in proportion to
its respective share of the aggregate system load. (See Item 2 - PROPERTIES -
"Jointly-Owned Facilities" herein.)
ALABAMA, GEORGIA, GULF and MISSISSIPPI also have contracts with SEPA (a
federal power marketing agency) providing for the use of those companies'
facilities at government expense to deliver to certain cooperatives and
municipalities, entitled by federal statute to preference in the purchase of
power from SEPA, quantities of power equivalent to the amounts of power
allocated to them by SEPA from certain United States Government hydroelectric
projects. The operating affiliates also purchase certain amounts of capacity
from SEPA.
The retail service rights of all electric suppliers in the State of
Georgia are regulated by the 1973 State Territorial Electric Service Act.
Pursuant to the provisions of this Act, all areas within existing municipal
limits were assigned to the primary electric supplier
I-11
<PAGE> 18
therein on March 29, 1973 (451 municipalities, including Atlanta, Columbus,
Macon, Augusta, Athens, Rome and Valdosta, to GEORGIA; 115 to electric
cooperatives; and 50 to publicly-owned systems). Areas outside of such
municipal limits were either to be assigned or to be declared open for customer
choice of supplier by action of the Georgia PSC pursuant to standards set forth
in the Act. Consistent with such standards, the Georgia PSC has assigned
substantially all of the land area in the state to a supplier. Notwithstanding
such assignments, the Act provides that any new customer locating outside of
1973 municipal limits and having a connected load in excess of 900 kilowatts
may receive electric service from the supplier of its choice.
Under and subject to the provisions of its franchises and concessions
and the 1973 State Territorial Electric Service Act, SAVANNAH has the full but
nonexclusive right to serve the City of Savannah, the Towns of Bloomingdale,
Pooler, Garden City, Guyton, Newington, Oliver, Port Wentworth, Rincon, Tybee
Island, Springfield, Thunderbolt, Vernonburg, and in conjunction with a
secondary supplier, the Town of Richmond Hill. In addition, SAVANNAH has been
assigned certain unincorporated areas in Chatham, Effingham, Bryan, Bulloch and
Screven Counties by the Georgia PSC. No other electric utility operates in
competition with SAVANNAH in its service area.
Pursuant to the 1956 Utility Act, the Mississippi PSC issued
"Grandfather Certificates" of convenience and necessity to MISSISSIPPI and to
six distribution rural cooperatives operating in southeastern Mississippi, then
served in whole or in part by MISSISSIPPI, authorizing them to distribute
electricity in certain specified geographically described areas of the state.
The six cooperatives serve approximately 271,000 retail customers in a
certificated area of approximately 10,300 square miles. In areas included in a
"Grandfather Certificate", the utility holding such certificate may, without
further certification, extend its lines up to five miles; other extensions
within that area by such utility, or by other utilities, may not be made except
upon a showing of, and a grant of a certificate of, public convenience and
necessity. Areas included in such a certificate which are subsequently annexed
to municipalities may continue to be served by the holder of the certificate,
irrespective of whether it has a franchise in the annexing municipality. On
the other hand, the holder of the municipal franchise may not extend service
into such newly annexed area without authorization by the Mississippi PSC.
COMPETITION
The electric utility industry in general has become, and is expected to
continue to be, increasingly competitive as the result of factors including
regulatory and technological developments. The Energy Act, enacted in 1992,
was intended to foster competition in the wholesale market by, among other
things, facilitating participation by independent power producers. The Energy
Act includes provisions authorizing the FERC under certain conditions to order
utilities owning transmission facilities to provide wholesale transmission
services for other utilities or entities that generate energy.
As a result of the foregoing factors, SOUTHERN may experience
increasing competition for available off-system sales of capacity and energy
from neighboring utilities and alternative sources of energy. Additionally,
the future effect of cogeneration and small-power production facilities on the
SOUTHERN system cannot currently be determined but may be adverse. Reference
is made to each registrant's "Management's Discussion and Analysis - Future
Earnings Potential" in Item 7 herein for further discussion of competition.
ALABAMA currently has cogeneration contracts in effect with nine
industrial customers. Under the terms of these contracts, ALABAMA purchases
excess generation of such companies. During 1993, ALABAMA purchased 48.3
million kilowatt-hours from such companies at a cost of $0.8 million.
GEORGIA currently has cogeneration contracts in effect with seven
industrial customers. Under the terms of these contracts, GEORGIA purchases
excess generation of such companies. During 1993, GEORGIA purchased 4.6
million kilowatt-hours from such companies at a cost of $76,000.
GULF currently has cogeneration agreements for "as available" energy in
effect with two industrial customers. During 1993, GULF purchased 119 million
kilowatt-hours from such companies for $2.3 million.
SAVANNAH currently has cogeneration contracts in
I-12
<PAGE> 19
effect with four industrial customers. Under the terms of these contracts,
SAVANNAH purchases excess generation of such companies. During 1993, SAVANNAH
purchased 2.4 million kilowatt-hours from such companies at a cost of $51,000.
The competition for retail energy sales among competing suppliers of
energy is influenced by various factors, including price, availability,
technological advancements and reliability. These factors are, in turn,
affected by, among other influences, political and environmental
considerations, taxation and supply.
The operating affiliates have experienced, and expect to continue to
experience, competition in their respective retail service territories in
varying degrees as the result of self-generation (as described above) and fuel
switching by customers and other factors. (See also Item 1 - BUSINESS -
"Territory Served" herein for information concerning suppliers of electricity
operating within or near the areas served at retail by the operating
affiliates.) In addition, while the Energy Act does not provide for "retail
wheeling" (i.e., the transmission and distribution by an electric utility to
retail customers within its service territory of energy produced by another
entity), applicable legislative and regulatory bodies may consider imposing
such a requirement in the future, the effect of which may be adverse.
REGULATION
STATE COMMISSIONS
The operating affiliates and SEGCO are subject to the jurisdiction of their
respective state regulatory commissions, which have broad powers of supervision
and regulation over public utilities operating in the respective states,
including their rates, service regulations, sales of securities (except for the
Mississippi PSC) and, in the cases of the Georgia PSC and Mississippi PSC, in
part, retail service territories. (See Item 1 - BUSINESS - "Rate Matters" and
"Territory Served" herein.)
HOLDING COMPANY ACT
SOUTHERN is registered as a holding company under the Holding Company Act, and
it and its subsidiary companies are subject to the regulatory provisions of
said Act, including provisions relating to the issuance of securities, sales
and acquisitions of securities and utility assets, services performed by SCS
and Southern Nuclear, and the activities of certain of SOUTHERN's special
purpose subsidiaries.
FEDERAL POWER ACT
The Federal Power Act subjects the operating affiliates and SEGCO to regulation
by the FERC as companies engaged in the transmission or sale at wholesale of
electric energy in interstate commerce, including regulation of accounting
policies and practices.
ALABAMA and GEORGIA are also subject to the provisions of the Federal
Power Act or the earlier Federal Water Power Act applicable to licensees with
respect to their hydroelectric developments. Among the hydroelectric projects
subject to licensing by the FERC are 14 existing ALABAMA generating stations
having an aggregate installed capacity of 1,582,725 kilowatts and 17 existing
GEORGIA generating stations having an aggregate installed capacity of 859,440
kilowatts.
In December 1991, ALABAMA and GEORGIA filed with the FERC their
applications for new licenses on six of their existing hydroelectric projects.
The six projects, ALABAMA's Yates and Thurlow and GEORGIA's Lloyd Shoals,
Langdale, Riverview and North Georgia, with 272,340 kilowatts of capacity, had
licenses that expired December 31, 1993. Although the possibility of
competition existed for these licenses, no competing applications were filed
prior to the filing deadline of December 31, 1991.
The Lloyd Shoals, Langdale and Riverview projects were granted new
30-year licenses that expire 2023. Each of the remaining projects are
operating on annual licenses under the same terms and conditions as their
original licenses. Additionally, the FERC has issued an order granting a
combined, 40-year license for the Yates and Thurlow projects. ALABAMA has
applied to the FERC for rehearing of certain provisions of this license. As a
part of the application for the combined, 40-year license for the Yates and
Thurlow projects, ALABAMA agreed to expand the capacity of these units by a
total of approximately 10.3 megawatts.
I-13
<PAGE> 20
GEORGIA and OPC also have a license, expiring in 2027, for the Rocky
Mountain Project, a pure pumped storage facility of 847,800 kilowatt capacity.
In 1988, the FERC approved an amendment to GEORGIA's license for the project,
adding OPC as co-licensee and extending the commercial operation date to 1996.
(See Item 1 - BUSINESS - "Construction Programs - Rocky Mountain Hydroelectric
Project" and Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein.)
Licenses for all projects, excluding those discussed above, expire in
the period 2007-2023 in the case of ALABAMA's projects and in the period
1997-2020 in the case of GEORGIA's projects.
Upon or after the expiration of each license, the United States
Government, by act of Congress, may take over the project, or the FERC may
relicense the project either to the original licensee or to a new licensee. In
the event of takeover or relicensing to another, the original licensee is to be
compensated in accordance with the provisions of the Federal Power Act, such
compensation to reflect the net investment of the licensee in the project, not
in excess of the fair value of the property taken, plus reasonable damages to
other property of the licensee resulting from the severance therefrom of the
property taken.
ATOMIC ENERGY ACT OF 1954
ALABAMA, GEORGIA and Southern Nuclear are subject to the provisions of the
Atomic Energy Act of 1954, as amended, which vests jurisdiction in the NRC over
the construction and operation of nuclear reactors, particularly with regard to
certain public health and safety and antitrust matters. The National
Environmental Policy Act has been construed to expand the jurisdiction of the
NRC to consider the environmental impact of a facility licensed under the
Atomic Energy Act of 1954, as amended.
Reference is made to Notes 1 and 13 to SOUTHERN's, Notes 1 and 11 to
ALABAMA's and Notes 1 and 4 to GEORGIA's financial statements in Item 8 herein
for information on nuclear insurance and nuclear decommissioning costs.
Additionally, Note 3 to GEORGIA's financial statements contains information
regarding nuclear performance standards imposed by the Georgia PSC that may
impact retail rates.
ENVIRONMENTAL REGULATION
The operating affiliates and SEGCO are subject to federal, state and local
environmental requirements which, among other things, control emissions of
particulates, sulfur dioxide and nitrogen oxides into the air; the use,
transportation, storage and disposal of hazardous and toxic waste; and
discharges of pollutants, including thermal discharges, into waters of the
United States. The operating affiliates and SEGCO expect to comply with such
requirements, which generally are becoming increasingly stringent, through
technical improvements, the use of appropriate combinations of low-sulfur fuel
and chemicals, addition of environmental control facilities, changes in control
techniques and reduction of the operating levels of generating facilities.
Failure to comply with such requirements could result in the complete shutdown
of individual facilities not in compliance as well as the imposition of civil
and criminal penalties.
Reference is made to each registrant's "Management's Discussion and
Analysis" in Item 7 herein for a discussion of the Clean Air Act and other
environmental legislation and proceedings.
Possible adverse health effects of EMFs from various sources, including
transmission and distribution lines, have been the subject of a number of
studies and increasing public discussion. The scientific research currently is
inconclusive as to whether EMFs may cause adverse health effects. However,
there is the possibility of passage of legislation and promulgation of
rulemaking that would require measures to mitigate EMFs, with resulting
increases in capital and operating costs. In addition, the potential exists for
public liability with respect to lawsuits brought by plaintiffs alleging damages
caused by EMFs.
The operating affiliates' and SEGCO's estimated capital expenditures
for environmental quality control
I-14
<PAGE> 21
facilities for the years 1994, 1995 and 1996 are as follows: (in millions)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Estimated*
----------------------------------------------------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
ALABAMA $ 12.4 $ 12.3 $ 19.3
GEORGIA 87.2 7.8 1.0
GULF 26.0 3.0 7.6
MISSISSIPPI 33.0 2.0 4.0
SAVANNAH 1.9 0.5 0.5
SEGCO 7.2 2.6 7.4
----------------------------------------------------------------
SOUTHERN
system $167.7 $ 28.2 $ 39.8
===============================================================================
</TABLE>
*Such estimates are included in the current construction programs. (See
Item 1 - BUSINESS - "Construction Programs" herein.)
Additionally, each operating affiliate (excluding SAVANNAH) and SEGCO have
incurred costs for environmental remediation of various sites. Reference is
made to each applicable registrant's "Management's Discussion and Analysis" in
Item 7 herein for information regarding the registrants' environmental
remediation efforts.
The operating affiliates and SEGCO are unable to predict at this time what
additional steps they may be required to take as a result of the implementation
of existing or future quality control requirements for air, water and hazardous
or toxic materials, but such steps could adversely affect system operations and
result in substantial additional costs.
The outcome of the matters mentioned above under "Regulation" cannot now be
determined, except that these developments may result in delays in obtaining
appropriate licenses for generating facilities, increased construction and
operating costs, or reduced generation, the nature and extent of which, while
not determinable at this time, could be substantial.
RATE MATTERS
RATE STRUCTURE
The rates and service regulations of the operating affiliates are uniform for
each class of service throughout their respective service areas. Rates for
residential electric service are generally of the block type based upon
kilowatt-hours used and include minimum charges.
Residential and other rates contain separate customer charges. Rates for
commercial service are presently of the block type and, for large customers,
the billing demand is generally used to determine capacity and minimum bill
charges. These large customers' rates are generally based upon usage by the
customer (without differentiation between industrial and commercial
classifications) including those with special features to encourage off-peak
usage. With respect to GULF's and MISSISSIPPI's retail rates, fuel and
purchased power costs above base levels included in the various rate schedules
are billed to such customers under the fuel and energy adjustment clauses.
ALABAMA, GEORGIA and SAVANNAH are allowed by state law to recover fuel and net
purchased energy costs through fuel cost recovery provisions which are adjusted
to reflect increases or decreases in such costs. GULF's recovery of such costs
is based upon projections thereof for six-month periods; any over/under
recovery during any such period is reflected in the subsequent six-month
period. The adjustment factors for MISSISSIPPI's retail and wholesale rates
are levelized based on the estimated energy cost for the year, adjusted for any
actual over/under collection from the previous year. Revenues are adjusted for
differences between recoverable fuel costs and amounts actually recovered in
current rates.
INTEGRATED RESOURCE PLANNING
During 1991, the Georgia legislature passed certain legislation under which
both GEORGIA and SAVANNAH must file Integrated Resource Plans for approval by
the Georgia PSC. The plans must specify how GEORGIA and SAVANNAH each intend
to meet the future electrical needs of their customers through a combination of
demand-side and supply-side resources. The Georgia PSC must pre-certify these
new resources. Once certified, all prudently incurred construction costs will
be recoverable through rates.
In July 1992, the Georgia PSC approved Integrated Resource Plans for GEORGIA
and SAVANNAH. In January 1993, the Georgia PSC certified the construction of
two combustion turbine units by SAVANNAH, scheduled to be in service in 1994,
to meet its peaking needs. The Georgia PSC has certified the construction by
I-15
<PAGE> 22
GEORGIA of four combustion turbine generating units in 1994 and four units in
1995. GEORGIA has also completed a demonstration competitive bid process for
its supply-side resource requirements expected for 1996. In December 1993,
GEORGIA filed with the Georgia PSC a proposal to purchase from FPC 400
megawatts of capacity in 1996 and 1997 and 200 megawatts of capacity in 1998
and 1999 with options to increase or decrease capacity during those years.
Also, GEORGIA has proposed a joint venture combustion turbine project to be
completed in 1996, also with FPC, which would provide GEORGIA with a 1/3
ownership in a 147 megawatt combustion turbine located at FPC's Intercession
City Plant. GEORGIA would have exclusive rights to all capacity from the unit
for the four summer months and FPC would have the output for the other eight
months of the year. The process is designed to verify the need for capacity
and that the lowest cost alternatives have been selected. In January 1993, the
Georgia PSC also certified certain residential energy conservation programs for
GEORGIA and SAVANNAH and provided for the recovery by GEORGIA and SAVANNAH of
program costs. Depending on the success of these programs, GEORGIA and
SAVANNAH may each receive a reward or, in GEORGIA's case, a penalty. In August
1993, the Georgia PSC also certified certain commercial and industrial energy
conservation programs submitted by GEORGIA and SAVANNAH.
During 1991, the Georgia PSC approved pilot demand-side programs that
encourage conservation for retail customers. Pursuant to an Integrated
Resource Plan approved by the Georgia PSC, GEORGIA has implemented various
demand-side option programs and has been authorized by the Georgia PSC to
recover associated program costs through rate riders. On October 15, 1993, a
superior court judge ruled that recovery of these costs through rate riders is
unlawful. GEORGIA has ceased collection of the rate riders and is deferring
program costs as ordered by the Georgia PSC pending the final outcome of this
matter. See Note 3 to SOUTHERN's and GEORGIA's financial statements in Item 8
herein for further information.
ENVIRONMENTAL COST RECOVERY PLANS
In April 1993, the Florida Legislature adopted legislation for an ECR clause,
which allows a utility to petition the Florida PSC for recovery of all prudent
environmental compliance costs that are not being recovered through base rates
or any other rate-adjustment clause. Such environmental costs include
increased operation and maintenance expense, depreciation, and a return on
invested capital.
On January 12, 1994, the Florida PSC approved GULF's petition under ECR for
recovery of environmental costs that were projected to be incurred from July
1993 through September 1994. The order allows the recovery from customers of
such costs amounting to $7.8 million from February through September 1994.
Thereafter, recovery under ECR will be determined semi-annually and will
include a true-up of the prior period and a projection of the ensuing six-month
period.
The Mississippi PSC approved MISSISSIPPI's ECO Plan in 1992. The plan
establishes procedures to facilitate the Mississippi PSC's overview of
MISSISSIPPI's environmental strategy and provides for recovery of costs
associated with environmental projects approved by the Mississippi PSC. Under
the ECO Plan any increase in the annual revenue requirement is limited to 2
percent of retail revenues. However, the plan also provides for carryover of
any amount over the 2 percent limit into the next year's revenue requirement.
The ECO Plan resulted in an annual retail rate increase of $2.6 million
effective April 1993.
RATE INCREASE APPLICATIONS
Reference is made to Note 3 to each registrant's notes to the financial
statements in Item 8 herein for a discussion of retail and wholesale rate
proceedings. Also discussed therein is a review by the FERC concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on equity of 13.75% or greater.
LONG-TERM POWER SALES AGREEMENTS
The operating affiliates of the Southern electric system have entered into
long-term contractual agreements for the sale of capacity and energy to certain
non-affiliated utilities located outside the system's service area. Certain of
these agreements are non-firm and are based on capacity of the system in
general. Other agreements are
I-16
<PAGE> 23
firm and pertain to capacity related to specific generating units. Because the
energy is generally sold at cost under these agreements, profitability is
affected primarily by revenues from capacity sales. See Note 8, 7, 6, 7, 7 and
6 to the financial statements of SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI
and SAVANNAH, respectively, in Item 8 herein for the amounts of capacity
revenues recorded for each of the past three years.
Long-term non-firm power of 400 megawatts was sold to FPC in 1993. In
January 1994, the amount decreased to 200 megawatts, and the contract will
expire at year-end.
Unit power from specific generating plants is currently being sold to FP&L,
FPC, JEA, and the city of Tallahassee, Florida. Under these agreements, an
average of 1,700 megawatts of capacity is scheduled to be sold during 1994 and
1995. Thereafter, these sales will decline to some 1,600 megawatts and remain
at that approximate level, unless reduced by FP&L, FPC and JEA after 1999,
until the expiration of the contracts in 2010.
GULF STATES DISPUTE SETTLEMENT
Reference is made to Note 8, 7, 3, 7 and 7 to the financial statements of
SOUTHERN, ALABAMA, GEORGIA, GULF and MISSISSIPPI, respectively, in Item 8
herein for a discussion of the Gulf States settlement.
EMPLOYEE RELATIONS
The companies of the SOUTHERN system had a total of 28,743 employees on their
payrolls at December 31, 1993.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Employees
at
December 31, 1993
-----------------
<S> <C>
ALABAMA 8,009
GEORGIA 12,528
GULF 1,565
MISSISSIPPI 1,586
SAVANNAH 655
SCS 2,702
Southern Nuclear 1,453
Other 245
------
Total 28,743
======
</TABLE>
The operating affiliates have separate agreements with local unions of the
IBEW generally covering wages, working conditions and procedures for handling
grievances and arbitration. These agreements apply with certain exceptions to
operating, maintenance and construction employees.
ALABAMA has agreements with the IBEW on a three-year contract extending to
August 15, 1995. Upon notice given at least 60 days prior to that date,
negotiations may be initiated with respect to agreement terms to be effective
after such date.
GEORGIA has an agreement with the IBEW covering wages and working conditions
which is in effect through June 30, 1996. GEORGIA also has a contract with the
United Plant Guard Workers of America with respect to Plant Hatch which extends
through September 30, 1995.
GULF has an agreement with a local union of the IBEW on a three-year
contract extending to August 15, 1995.
MISSISSIPPI has agreements with local unions of the IBEW on a contract
extending to August 16, 1995.
Southern Nuclear has an agreement with the IBEW on a three-year contract
extending to August 15, 1995. Upon notice given at least 60 days prior to that
date, negotiations may be initiated with respect to agreement terms to be
effective after such date.
The agreements also subject the terms of the pension plans for the companies
discussed above to collective bargaining with the unions at five-year
intervals.
SAVANNAH has three-year labor agreements with the IBEW and the Office
and Professional Employees International Union that expire April 15, 1996 and
December 1, 1996, respectively.
I-17
<PAGE> 24
ITEM 2. PROPERTIES
ELECTRIC PROPERTIES
The operating affiliates and SEGCO, at December 31, 1993, operated 33
hydroelectric generating stations, 31 fossil fuel generating stations and three
nuclear generating stations. The amounts of capacity owned by each company are
shown in the table below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Nameplate
Generating Station Location Capacity
------------------ -------- --------
(Kilowatts)
<S> <C> <C>
FOSSIL STEAM
Gadsden Gadsden, AL 120,000
Gorgas Jasper, AL 1,221,250
Barry Mobile, AL 1,525,000
Chickasaw Chickasaw, AL 40,000
Greene County Demopolis, AL 300,000 (1)
Gaston, Unit 5 Wilsonville, AL 880,000
Miller Birmingham, AL 2,532,288 (2)
---------
ALABAMA TOTAL 6,618,538
---------
Arkwright Macon, GA 160,000
Atkinson Atlanta, GA 180,000
Bowen Cartersville, GA 3,160,000
Branch Milledgeville, GA 1,539,700
Hammond Rome, GA 800,000
McDonough Atlanta, GA 490,000
McManus Brunswick, GA 115,000
Mitchell Albany, GA 170,000
Scherer Macon, GA 1,021,682 (3)
Wansley Carrollton, GA 925,550 (4)
Yates Newnan, GA 1,250,000
---------
GEORGIA TOTAL 9,811,932
---------
Crist Pensacola, FL 1,045,000
Lansing Smith Panama City, FL 305,000
Scholz Chattahoochee, FL 80,000
Daniel Pascagoula, MS 500,000 (5)
Scherer Unit 3 Macon, GA 204,500 (3)
---------
GULF TOTAL 2,134,500
---------
Eaton Hattiesburg, MS 67,500
Sweatt Meridian, MS 80,000
Watson Gulfport, MS 1,012,000
Daniel Pascagoula, MS 500,000 (5)
Greene County Demopolis, AL 200,000 (1)
---------
MISSISSIPPI TOTAL 1,859,500
---------
- ----------------------------------------------------------------------------------
Nameplate
Generating Station Location Capacity
------------------ -------- --------------
(Kilowatts)
McIntosh Effingham County, GA 163,117
Kraft Port Wentworth, GA 281,136
Riverside Savannah, GA 102,278
----------
SAVANNAH TOTAL 546,531
----------
Gaston Units 1-4 Wilsonville, AL
(SEGCO) 1,000,000 (6)
----------
TOTAL FOSSIL STEAM 21,971,001
----------
NUCLEAR STEAM
Farley Dothan, AL
(ALABAMA) 1,720,000
----------
Hatch Baxley, GA 816,630 (7)
Vogtle Augusta, GA 1,060,240 (8)
----------
GEORGIA TOTAL 1,876,870
----------
TOTAL NUCLEAR STEAM 3,596,870
----------
COMBUSTION TURBINES
Arkwright Macon, GA 30,580
Atkinson Atlanta, GA 78,720
Bowen Cartersville, GA 39,400
McDonough Atlanta, GA 78,800
McManus Brunswick, GA 481,700
Mitchell Albany, GA 118,200
Wilson Augusta, GA 354,100
Wansley Carrollton, GA 26,322 (4)
----------
GEORGIA TOTAL 1,207,822
----------
Lansing Smith
Unit A (GULF) Panama City, FL 39,400
----------
Chevron Cogenerating
Station Pascagoula, MS 72,720 (9)
Sweatt Meridian, MS 39,400
Watson Gulfport, MS 39,360
----------
MISSISSIPPI TOTAL 151,480
----------
Boulevard Savannah, GA 59,100
Kraft Port Wentworth, GA 22,000
----------
SAVANNAH TOTAL 81,100
----------
Gaston(SEGCO) Wilsonville, AL 19,680 (6)
----------
TOTAL COMBUSTION TURBINES 1,499,482
----------
</TABLE>
I-18
<PAGE> 25
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Generating Nameplate
Station Location Capacity
------- -------- ----------
(Kilowatts)
<S> <C> <C>
HYDROELECTRIC FACILITIES
Weiss Leesburg, AL 87,750
Henry Ohatchee, AL 72,900
Logan Martin Vincent, AL 128,250
Lay Clanton, AL 177,000
Mitchell Verbena, AL 170,000
Jordan Wetumpka, AL 100,000
Bouldin Wetumpka, AL 225,000
Harris Wedowee, AL 135,000
Martin Dadeville, AL 154,200
Yates Tallassee, AL 32,000
Thurlow Tallassee, AL 58,000
Lewis Smith Jasper, AL 157,500
Bankhead Holt, AL 45,125
Holt Holt, AL 40,000
----------
ALABAMA TOTAL 1,582,725
----------
Barnett Shoals
(Leased) Athens, GA 2,800
Bartletts Ferry Columbus, GA 173,000
Goat Rock Columbus, GA 26,000
Lloyd Shoals Jackson, GA 14,400
Morgan Falls Atlanta, GA 16,800
North Highlands Columbus, GA 29,600
Oliver Dam Columbus, GA 60,000
Sinclair Dam Milledgeville, GA 45,000
Tallulah Falls Clayton, GA 72,000
Terrora Clayton, GA 16,000
Tugalo Clayton, GA 45,000
Wallace Dam Eatonton, GA 321,300
Yonah Toccoa, GA 22,500
6 Other Plants 18,080
----------
GEORGIA TOTAL 862,480
----------
TOTAL HYDROELECTRIC FACILITIES 2,445,205
----------
Total Generating Capacity 29,512,558
==========
</TABLE>
Notes:
(1) Owned by ALABAMA and MISSISSIPPI as tenants in common in the
proportions of 60% and 40%, respectively.
(2) Excludes the capacity owned by AEC. (See Item 2- PROPERTIES -
"Jointly-Owned Facilities" herein.)
(3) Capacity shown is GEORGIA's or GULF's (Unit 3 only) current portion:
8.4% of Units 1 and 2, 75% (25% for GULF) for Unit 3 and 33.1% for
Unit 4 of total plant capacity. See Item 2 - PROPERTIES - "Proposed
Sales of Property" and "Jointly-Owned Facilities" herein.
(4) Capacity shown is GEORGIA's portion (53.5%) of total plant capacity.
(5) Represents 50% of the plant which is owned as tenants in common by
GULF and MISSISSIPPI.
(6) SEGCO is jointly-owned by ALABAMA and GEORGIA. (See Item 1 - BUSINESS
herein.)
(7) Capacity shown is GEORGIA's portion (50.1%) of total plant capacity.
(8) Capacity shown is GEORGIA's portion (45.7%) of total plant capacity.
(9) Generation is dedicated to a single industrial customer.
Except as discussed below under "Titles to Property", the principal plants
and other important units of the SOUTHERN system are owned in fee by the
operating affiliates and SEGCO. It is the opinion of management of each such
company that its operating properties are adequately maintained and are
substantially in good operating condition.
MISSISSIPPI owns a 79-mile length of 500-kilovolt transmission line which is
leased to Gulf States. The line, completed in 1984, extends from Plant Daniel
to the Louisiana state line. Gulf States is paying a use fee over a forty-year
period covering all expenses and the amortization of the original $57 million
cost of the line.
The all-time maximum demand on the SOUTHERN system was 25,936,900 kilowatts
and occurred in July 1993. This amount excludes demand served by generation
retained by OPC, MEAG and Dalton and excludes demand associated with power
purchased from SEPA by its preference customers. At that time, 27,342,700
kilowatts were supplied by SOUTHERN system generation and 1,405,800 kilowatts
(net) were sold to other parties through net purchased and interchanged power.
The reserve margin for the Southern electric system at that time was 13.2%.
For information on the other registrants' peak demands reference is made to
Item 6 - SELECTED FINANCIAL DATA herein.
ALABAMA and GEORGIA will incur significant costs in decommissioning their
nuclear units at the end of their useful lives. (See Item 1 - BUSINESS -
I-19
<PAGE> 26
"Regulation - Atomic Energy Act of 1954" and Note 1 to SOUTHERN's, ALABAMA's
and GEORGIA's financial statements in Item 8 herein.)
OTHER ELECTRIC GENERATION FACILITIES
Through special purpose subsidiaries, SOUTHERN owns a 50% interest in
Freeport, a 35% interest in Edelnor, a 55.3% interest Alicura and a 33.3%
interest in a co-generation facility in Hawaii. For further discussion of
other SEI projects, see Item 1 - BUSINESS - "New Business Development" herein.
The generating capacity of these utilities (or facilities) at December 31,
1993, was as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Nameplate
Type Facility Location Capacity
------------- -------- --------
(Megawatts)
<S> <C> <C>
Combined cycle
co-generation Northern Chile 96
Fossil steam Freeport,
Grand Bahamas 112
Combined cycle Barbers Point,
co-generation Oahu, HI 180
Hydroelectric Argentina 1,000*
</TABLE>
* Represents a concession contract that provides SEI with the rights to use
the generation.
I-20
<PAGE> 27
JOINTLY-OWNED FACILITIES
ALABAMA has sold an undivided interest in two units of Plant Miller to AEC.
GEORGIA has sold undivided interests in certain generating plants and other
related facilities to OPC, MEAG, Dalton, FP&L and JEA. The percentages of
ownership resulting from these sales are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Percentage Ownership
Total ----------------------------------------------------------------------------------
Capacity ALABAMA AEC GEORGIA OPC MEAG DALTON FP&L JEA
-------- ------- --- ------- --- ---- ------ ---- ---
(Megawatts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Plant Miller
Units 1 and 2 1,320 91.8% 8.2% -% -% -% -% -% -%
Plant Hatch 1,630 - - 50.1 30.0 17.7 2.2 - -
Plant Vogtle 2,320 - - 45.7 30.0 22.7 1.6 - -
Plant Scherer -
Units 1 and 2 1,636 - - 8.4 60.0 30.2 1.4 - -
Unit 4 818 - - 33.1 - - - 49.2 17.7
Plant Wansley 1,779 - - 53.5 30.0 15.1 1.4 - -
Rocky Mountain 848 - - 25.0* 75.0 - - - -
*Estimated ownership at completion
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ALABAMA and GEORGIA have contracted to operate and maintain the respective
units in which each has an interest (other than Rocky Mountain, as described
below) as agent for the joint owners. See "Proposed Sales of Property" below
for a description of the proposed sale of GEORGIA's remaining unsold ownership
interest in Plant Scherer Unit 4.
In connection with the joint ownership arrangements for Plant Vogtle,
GEORGIA has remaining commitments to purchase declining fractions of OPC's and
MEAG's capacity and energy until 1994 for Unit 1 and 1996 for Unit 2 and, with
regard to a portion of a 5% interest in Plant Vogtle owned by MEAG, until the
latter of the retirement of the plant or the latest stated maturity date of
MEAG's bonds issued to finance such ownership interest. The payments for
capacity are required whether any capacity is available. The energy cost is a
function of each unit's variable operating costs. Except for the portion of
the capacity payments related to the 1987 and 1990 write-offs of Plant Vogtle
costs, the cost of such capacity and energy is included in purchased power in
the Statements of Income in Item 8 herein.
In December 1988, GEORGIA and OPC completed a joint ownership agreement for
the Rocky Mountain project under which GEORGIA will retain its present
investment in the project and OPC will finance, complete and operate the
facility. Upon completion (scheduled for 1995), GEORGIA will own an undivided
interest in the project equal to the proportion its investment bears to the
total investment in the project (excluding each party's cost of funds and ad
valorem taxes). For purposes of the ownership formula, GEORGIA's investment
will be expressed in nominal dollars and OPC's investment will be expressed in
constant 1987 dollars. Based on current cost estimates, GEORGIA's final
ownership is estimated at approximately 25% of the project at completion.
GEORGIA has held preliminary discussions regarding the potential disposition of
its remaining interest in the project.
PROPOSED SALES OF PROPERTY
In 1991 and 1993, GEORGIA completed the first two in a series of four separate
transactions to sell Unit 4 of Plant Scherer to FP&L and JEA for a total price
of approximately $806 million, including any gains on these transactions. FP&L
would eventually own approximately 76.4% of this unit, with JEA owning the
remainder. The capacity from this unit was previously dedicated to off-system
sales contracts with Gulf States that were suspended in 1988. GEORGIA will
continue to operate the unit.
I-21
<PAGE> 28
The 1991 and 1993 sales and the remaining transactions are scheduled as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Percentage
Closing of Sales
Date Capacity Ownership Price
---- -------- ---------- -----
Megawatts (in millions)
<S> <C> <C> <C>
July 1991 290 35.46% $291
June 1993 258 31.44 253
June 1994 135 16.55 132
June 1995 135 16.55 130
- -----------------------------------------------------------
Total 818 100.00% $806
===========================================================
</TABLE>
Plant Scherer, a jointly owned coal-fired generating plant, has four
units with a total capacity of 3,272 megawatts. Unit 4 was completed in 1989.
TITLES TO PROPERTY
The operating affiliates' and SEGCO's interests in the principal plants (other
than certain pollution control facilities, one small hydroelectric generating
station leased by GEORGIA and the land on which four combustion turbine
generators of MISSISSIPPI are located, which is held by easement) and other
important units of the respective companies are owned in fee by such companies,
subject only to the liens of applicable mortgage indentures (except for SEGCO)
and to excepted encumbrances as defined therein. The operating affiliates own
the fee interests in certain of their principal plants as tenants in common.
(See Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein.) Properties such
as electric transmission and distribution lines and steam heating mains are
constructed principally on rights-of-way which are maintained under franchise
or are held by easement only. A substantial portion of lands submerged by
reservoirs is held under flood right easements. In substantially all of its
coal reserve lands, SEGCO owns or will own the coal only, with adequate rights
for the mining and removal thereof.
PROPERTY ADDITIONS AND RETIREMENTS
During the period from January 1, 1989, to December 31, 1993, the operating
affiliates, SEGCO, and other (i.e. SCS, Southern Nuclear and, beginning in
1993, various of the special purpose subsidiaries) gross property additions and
retirements were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Gross Property
Additions Retirements
-------------------- -----------
(in millions)
<S> <C> <C>
ALABAMA (1) $2,104 $ 375
GEORGIA (2) 3,017 1,519
GULF 341 86
MISSISSIPPI 355 65
SAVANNAH 161 15
SEGCO 90 15
Other (3) 132 53
- ------------------------------------------------------------
SOUTHERN
System $6,200 $2,128
============================================================
</TABLE>
(1) Includes approximately $62 million attributable to property sold to AEC in
1992.
(2) Includes approximately $480 million attributable to property sold to OPC,
FP&L and JEA, but excludes $231 million from the write-off of certain Plant
Vogtle costs in 1990.
(3) Net of intercompany eliminations.
ITEM 3. LEGAL PROCEEDINGS
(1) STEPAK V. CERTAIN SOUTHERN OFFICIALS
(U.S. District Court for the Southern District of Georgia)
In April 1991, two SOUTHERN stockholders filed a derivative action suit
against certain current and former directors and officers of SOUTHERN. The
suit alleges violations of RICO by officers and breaches of fiduciary duty
and gross negligence by all defendants resulting from alleged fraudulent
accounting for spare parts, illegal political campaign contributions,
violations of federal securities laws involving misrepresentations and
omissions in SEC filings, and concealment of the foregoing acts. The
complaint seeks damages, including treble damages pursuant to RICO, in an
unspecified amount, which if awarded, would be payable to SOUTHERN. The
plaintiffs' amended complaint was dismissed by the court in March 1992.
The court ruled the plaintiffs had failed to present adequately their
allegation that the
I-22
<PAGE> 29
SOUTHERN board of directors' refusal of an earlier demand by the plaintiffs
was wrongful. The plaintiffs appealed the dismissal to the U.S. Court of
Appeals for the Eleventh Circuit.
(2) JOHNSON V. ALABAMA
(Circuit Court of Shelby County, Alabama)
In September 1990, two customers of ALABAMA filed a civil complaint in the
Circuit Court of Shelby County, Alabama, against ALABAMA seeking to
represent all persons who, prior to June 23, 1989, entered into agreements
with ALABAMA for the financing of heat pumps and other merchandise
purchased from vendors other than ALABAMA. The plaintiffs contended that
ALABAMA was required to obtain a license under the Alabama Consumer Finance
Act to engage in the business of making consumer loans. The plaintiffs
were seeking an order declaring these agreements null and void and
requiring ALABAMA to refund all payments, principal and interest, made
under these agreements. The aggregate amount under these agreements,
together with interest paid, currently is estimated to be $40 million.
In June 1993, the court ordered ALABAMA to refund or forfeit interest of
approximately $10 million because of ALABAMA's failure to obtain such
license. However, the court's order did not require any refund or
forfeiture with respect to any principal payments under the agreements
at issue. ALABAMA has appealed the court's order to the Supreme Court of
Alabama.
The final outcome of this matter cannot be determined; however, in
management's opinion, the final outcome will not have a material adverse
effect on SOUTHERN's or ALABAMA's financial statements.
(3) OHIO RIVER COMPANY, ET AL.VS. GULF, ET AL.
(U.S. District Court for Southern District of Ohio, Western Division)
In 1993, a complaint against GULF and SCS was filed in federal district
court in Ohio by two companies with which GULF had contracted for the
transportation by barge for certain GULF coal supplies. The complaint
alleges breach of the contract by GULF and seeks damages estimated by
the plaintiffs to be in excess of $85 million.
The final outcome of this matter cannot now be determined; however, in
management's opinion the final outcome will not have a material adverse
effect on SOUTHERN's or GULF's financial statements.
See Item 1 - BUSINESS - "Construction Programs," "Fuel Supply," "Regulation
- - Federal Power Act" and "Rate Matters", for a description of certain other
administrative and legal proceedings discussed therein.
Additionally, each of the operating affiliates and SEI are, in the normal
course of business, engaged in litigation or administrative proceedings that
include, but are not limited to, acquisition of property, injuries and damages
claims, and complaints by present and former employees. In management's
opinion these various actions will not have a material adverse effect on any of
the registrants' financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
None.
I-23
<PAGE> 30
EXECUTIVE OFFICERS OF SOUTHERN
(Inserted in Part I in accordance with Regulation S-K,
Item 401(b), Instruction 3)
EDWARD L. ADDISON
Chairman and CEO
Age 63
Elected in 1983; responsible primarily for the formation
of overall corporate policy. He was elected Chairman
of SOUTHERN effective January 1994.
A. W. DAHLBERG
President and Director
Age 53
Elected in 1985; President and Chief Executive
Officer of GEORGIA from 1988 through 1993. He
was elected Executive Vice President of SOUTHERN
in 1991. He was elected President of SOUTHERN
effective January 1994.
PAUL J. DENICOLA
Executive Vice President and Director
Age 45
Elected in 1989; Executive Vice President of
SOUTHERN since 1991. Elected President and Chief
Executive Officer of SCS effective January 1994. He
previously served as Executive Vice President of SCS
from 1991 to 1993 and President and Chief Executive
Officer of MISSISSIPPI from 1989 to 1991.
H. ALLEN FRANKLIN
Executive Vice President and Director
Age 49
Elected in 1988; President and Chief Executive Officer
of SCS from 1988 through 1993 and, beginning 1991,
Executive Vice President of SOUTHERN. He was
elected President and CEO of GEORGIA effective
January 1994.
ELMER B. HARRIS
Executive Vice President and Director
Age 54
Elected in 1989; President and Chief Executive Officer
of ALABAMA since 1989 and, beginning 1991,
Executive Vice President of SOUTHERN. He previously
served as Senior Executive Vice President of GEORGIA
from 1986 to 1989.
W. L. WESTBROOK
Financial Vice President
Age 54
Elected in 1986; responsible primarily for all aspects of
financing for SOUTHERN. He has served as Executive
Vice President of SCS since 1986.
BILL M. GUTHRIE
Vice President
Age 60 Elected in 1991; serves as Chief Production Officer for
the SOUTHERN system. Senior Executive Vice
President of SCS effective January 1994. He has also
served as Executive Vice President of ALABAMA since
1988.
Each of the above is currently an officer of SOUTHERN, serving a term running
from the last annual meeting of the directors (May 26, 1993) for one year until
the next annual meeting or until his successor is elected and qualified.
I-24
<PAGE> 31
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The common stock of SOUTHERN is listed and traded on the New York
Stock Exchange. The stock is also traded on regional exchanges
across the United States. High and low stock prices, per the New
York Stock Exchange Composite Tape and as adjusted to reflect a
two-for-one stock split in the form of a stock distribution for each
share held as of February 7, 1994, during each quarter for the past
two years were as follows:
<TABLE>
<CAPTION>
---------------------------------------------
High Low
---- ---
<S> <C> <C>
1993
First Quarter $21-3/8 $18-3/8
Second Quarter 22-1/2 19-3/8
Third Quarter 23 20-1/2
Fourth Quarter 23-5/8 20-3/4
1992
First Quarter $17-3/8 $15-1/8
Second Quarter 17-5/8 15-5/8
Third Quarter 19 17-3/8
Fourth Quarter 19-1/2 17-5/8
---------------------------------------------
</TABLE>
There is no market for the other registrants' common stock, all of
which is owned by SOUTHERN. On February 28, 1994, the closing price
of SOUTHERN's common stock was $20-5/8.
(b) Number of SOUTHERN's common stockholders at December 31, 1993:
237,105
Each of the other registrants have one common stockholder, SOUTHERN.
(c) Common dividends are payable at the discretion of each registrant's
board of directors. The common dividends paid by SOUTHERN and the
operating affiliates to their stockholder(s) for the past two years
were as follows: (in thousands)
<TABLE>
<CAPTION>
=================================================
Registrant Quarter 1993 1992
-------------------------------------------------
<S> <C> <C> <C>
SOUTHERN First $180,381 $173,610
Second 180,948 173,610
Third 181,892 173,610
Fourth 182,351 174,052
ALABAMA First 62,900 60,800
Second 63,100 60,900
Third 63,400 60,700
Fourth 63,500 90,900
GEORGIA First 100,100 96,000
Second 100,400 96,200
Third 100,800 95,800
Fourth 101,100 96,000
GULF First 10,400 10,000
Second 10,400 10,000
Third 10,500 9,900
Fourth 10,500 10,000
MISSISSIPPI First 7,200 7,000
Second 7,200 7,000
Third 7,300 7,000
Fourth 7,300 7,000
SAVANNAH First 4,500 5,500
Second 5,500 5,500
Third 5,500 5,500
Fourth 5,500 5,500
-------------------------------------------------
</TABLE>
In January 1994, SOUTHERN's board of directors authorized a two-for-one
common stock split in the form of a stock distribution for each share held as
of February 7, 1994. For all reported common stock data, the number of common
shares outstanding and per share amounts for earnings, dividends, and market
price have been adjusted to reflect the stock distribution.
II-1
<PAGE> 32
The dividend paid per share by SOUTHERN was 27.5c. for each quarter of 1992
and 28.5c. for each quarter of 1993. SOUTHERN's common dividend for the first
quarter of 1994 was raised to 29.5c. per share.
The amount of common dividends that may be paid by the subsidiary
registrants is restricted in accordance with their respective first mortgage
bond indenture and charter. The amounts of earnings retained in the business
and the amounts restricted against the payment of cash dividends on common
stock at December 31, 1993, were as follows:
<TABLE>
<CAPTION>
Retained Restricted
Earnings Amount
---------- ----------
(in millions)
<S> <C> <C>
ALABAMA $ 997 $ 653
GEORGIA 1,316 742
GULF 158 101
MISSISSIPPI 129 86
SAVANNAH 93 55
Consolidated 2,968 1,639
- ------------------------------------------------------
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
SOUTHERN. Reference is made to information under the heading "Selected
Consolidated Financial and Operating Data," contained herein at pages II-38
through II-49.
ALABAMA. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-78 through II-91.
GEORGIA. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-123 through II-137.
GULF. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II- 166 through
II-179.
MISSISSIPPI. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-207 through II-220.
SAVANNAH. Reference is made to information under the heading "Selected
Financial and Operating Data," contained herein at pages II-245 through II-258.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
SOUTHERN. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-8 through II-15.
ALABAMA. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-53 through II-58.
GEORGIA. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-95 through II-101.
GULF. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-141 through II-147.
MISSISSIPPI. Reference is made to information under the heading
"Management's Discussion and Analysis of Results of Operations and Financial
Condition," contained herein at pages II-183 through II-189.
SAVANNAH. Reference is made to information under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
contained herein at pages II-224 through II-230.
II-2
<PAGE> 33
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO 1993 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES:
Report of Independent Public Accountants (in which their opinion on the
financial statements includes an explanatory paragraph which states that
an uncertainty exists with respect to the actions of the regulators
regarding recoverability of the investment in the Rocky Mountain pumped
storage hydroelectric project) II-7
Consolidated Statements of Income for the Years Ended December 31, 1993, 1992 and 1991 II-16
Consolidated Statements of Retained Earnings for the Years Ended December 31, 1993, 1992
and 1991 II-16
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and 1991 II-17
Consolidated Balance Sheets at December 31, 1993 and 1992 II-18
Consolidated Statements of Capitalization at December 31, 1993 and 1992 II-20
Consolidated Statements of Paid-In Capital for the Years Ended December 31, 1993, 1992 and 1991 II-21
Notes to Financial Statements II-22
ALABAMA:
Report of Independent Public Accountants II-52
Statements of Income for the Years Ended December 31, 1993, 1992 and 1991 II-59
Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and 1991 II-60
Balance Sheets at December 31, 1993 and 1992 II-61
Statements of Capitalization at December 31, 1993 and 1992 II-63
Statements of Retained Earnings for the Years Ended December 31, 1993, 1992 and 1991 II-64
Notes to Financial Statements II-65
GEORGIA:
Report of Independent Public Accountants (in which their opinion on the financial statements
includes an explanatory paragraph which states that an uncertainty exists with respect to the
actions of the regulators regarding the recoverability of Georgia Power's investment in the
Rocky Mountain pumped storage hydroelectric project) II-94
Statements of Income for the Years Ended December 31, 1993, 1992 and 1991 II-102
Balance Sheets at December 31, 1993 and 1992 II-103
Statements of Capitalization at December 31, 1993 and 1992 II-105
Statements of Retained Earnings for the Years Ended December 31, 1993, 1992 and 1991 II-107
Statements of Paid-In Capital for the Years Ended December 31, 1993, 1992 and 1991 II-107
Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and 1991 II-108
Notes to Financial Statements II-109
</TABLE>
II-3
<PAGE> 34
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GULF:
Report of Independent Public Accountants II-140
Statements of Income for the Years Ended December 31, 1993, 1992 and 1991 II-148
Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and 1991 II-149
Balance Sheets at December 31, 1993 and 1992 II-150
Statements of Capitalization at December 31, 1993 and 1992 II-152
Statements of Retained Earnings for the Years Ended December 31, 1993, 1992 and 1991 II-154
Statements of Paid-In Capital for the Years Ended December 31, 1993, 1992 and 1991 II-154
Notes to Financial Statements II-155
MISSISSIPPI:
Report of Independent Public Accountants II-182
Statements of Income for the Years Ended December 31, 1993, 1992 and 1991 II-190
Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and 1991 II-191
Balance Sheets at December 31, 1993 and 1992 II-192
Statements of Capitalization at December 31, 1993 and 1992 II-194
Statements of Retained Earnings for the Years Ended December 31, 1993, 1992 and 1991 II-195
Statements of Paid-In Capital for the Years Ended December 31, 1993, 1992 and 1991 II-195
Notes to Financial Statements II-196
SAVANNAH:
Report of Independent Public Accountants II-223
Statements of Income for the Years Ended December 31, 1993, 1992 and 1991 II-231
Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and 1991 II-232
Balance Sheets at December 31, 1993 and 1992 II-233
Statements of Capitalization at December 31, 1993 and 1992 II-235
Statements of Retained Earnings for the Years Ended December 31, 1993, 1992 and 1991 II-236
Statements of Paid-In Capital for the Years Ended December 31, 1993, 1992 and 1991 II-236
Notes to Financial Statements II-237
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
II-4
<PAGE> 35
THE SOUTHERN COMPANY
AND SUBSIDIARY COMPANIES
FINANCIAL SECTION
II-5
<PAGE> 36
MANAGEMENT'S REPORT
The Southern Company and Subsidiary Companies 1993 Annual Report
The management of The Southern Company has prepared -- and is responsible for
- -- the consolidated financial statements and related information included in
this report. These statements were prepared in accordance with generally
accepted accounting principles appropriate in the circumstances and necessarily
include amounts that are based on the best estimates and judgments of
management. Financial information throughout this annual report is consistent
with the financial statements.
The company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the company. Limitations exist in any
system of internal controls, however, based on a recognition that the cost of
the system should not exceed its benefits. The company believes its system of
internal accounting controls maintains an appropriate cost/benefit
relationship.
The company's system of internal accounting controls is evaluated on an
ongoing basis by the company's internal audit staff. The company's independent
public accountants also consider certain elements of the internal control
system in order to determine their auditing procedures for the purpose of
expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of three directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors, and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls, and financial reporting matters. The internal
auditors and independent public accountants have access to the members of the
audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the company's operations are conducted according to a high
standard of business ethics.
In management's opinion, the consolidated financial statements present
fairly, in all material respects, the financial position, results of
operations, and cash flows of The Southern Company and its subsidiaries in
conformity with generally accepted accounting principles. As discussed in Note
4 to the financial statements, an uncertainty exists with respect to the
actions of regulators regarding recoverability of the investment in the Rocky
Mountain pumped storage hydroelectric project. The outcome of this uncertainty
cannot be determined until regulatory proceedings are concluded. Accordingly,
no provision for any write-down of the costs associated with the Rocky Mountain
project resulting from the potential actions of the Georgia Public Service
Commission has been made in the accompanying financial statements.
/s/ E. L. Addison /s/ W. L. Westbrook
- ------------------------------------ ----------------------------
Edward L. Addison W. L. Westbrook
Chairman and Chief Executive Officer Financial Vice President
II-6
<PAGE> 37
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND TO THE STOCKHOLDERS OF THE SOUTHERN COMPANY:
We have audited the accompanying consolidated balance sheets and consolidated
statements of capitalization of The Southern Company (a Delaware corporation)
and its subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, retained earnings, paid-in capital, and cash
flows for each of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements (pages II-16 through II-37)
referred to above present fairly, in all material respects, the financial
position of The Southern Company and its subsidiaries as of December 31, 1993
and 1992, and the results of their operations and their cash flows for the
periods stated, in conformity with generally accepted accounting principles.
As explained in Notes 2 and 9 to the financial statements, effective January
1, 1993, The Southern Company changed its methods of accounting for
postretirement benefits other than pensions and for income taxes.
As more fully discussed in Note 4 to the financial statements, an
uncertainty exists with respect to the actions of the regulators regarding
recoverability of the investment in the Rocky Mountain pumped storage
hydroelectric project. The outcome of this uncertainty cannot be determined
until regulatory proceedings are concluded. Accordingly, no provision for any
write-down of the costs associated with the Rocky Mountain project resulting
from the potential actions of the Georgia Public Service Commission has been
made in the accompanying financial statements.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16, 1994
II-7
<PAGE> 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
The Southern Company and Subsidiary Companies 1993 Annual Report
RESULTS OF OPERATIONS
EARNINGS AND DIVIDENDS
The Southern Company's 1993 financial performance exceeded the strong results
recorded for 1992, and set several new records. The company's financial
strength continued to gain momentum for the third consecutive year. In January
1994, The Southern Company board of directors increased the quarterly dividend
rate by 3.5 percent, and approved a two-for-one common stock split in the form
of a stock distribution. For all reported common stock data, the number of
common shares outstanding and per share amounts for earnings, dividends, and
market price have been adjusted to reflect the stock distribution. For 1993,
The Southern Company's net income of $1.0 billion established a new record high
and the company's common stock reached an all-time high closing price during
the year of 23 3/8 -- surpassing the record of 19 1/2 set in 1992. Also,
return on average common equity reached the highest level since 1986.
Earnings reported for 1993 totaled $1,002 million or $1.57 per share, an
increase of $49 million or 6 cents per share from the previous year. Both 1993
and 1992 earnings were affected by special non-operating or non-recurring
items. After excluding these special items in both years, earnings from
operations of the ongoing business of selling electricity were $1,016 million
or $1.59 per share, an increase of $77 million or 10 cents per share compared
with 1992. The special items that affected 1993 and 1992 earnings were as
follows:
<TABLE>
<CAPTION>
Consolidated Earnings
Net Income Per Share
1993 1992 1993 1992
(in millions)
<S> <C> <C> <C> <C>
Earnings as reported $1,002 $953 $1.57 $1.51
Gulf States related (6) (16) (.01) (.03)
Sale of Scherer Unit 4 (18) -- (.03) --
Environmental
cleanup 25 2 .04 .01
Transportation fleet
reductions 13 -- .02 --
Total items excluded 14 (14) .02 (.02)
Earnings from
operations $1,016 $939 $1.59 $1.49
Amount and
percent change $77 8.2% $0.10 6.7%
</TABLE>
In 1993, several items -- both positive and negative -- had an impact on
earnings, which resulted in a net reduction of $14 million. These items were:
(1) The conclusion of a settlement agreement -- discussed later -- with Gulf
States Utilities (Gulf States) increased earnings. (2) The second in a series
of four separate transactions to sell Plant Scherer Unit 4 to two Florida
utilities increased earnings. (3) Environmental clean-up costs incurred at
sites located in Alabama and Georgia decreased earnings. (4) Costs associated
with a transportation fleet reduction program decreased earnings. The
improvements in 1993 earnings resulted primarily from increased retail energy
sales and continued emphasis on effective cost controls.
The special items that increased 1992 earnings were primarily related to
additional settlement provisions from Gulf States, and to gains on the sale of
Gulf States common stock received in 1991.
Returns on average common equity were 13.43 percent in 1993, 13.42 percent
in 1992, and 12.74 percent in 1991. Dividends paid on common stock during 1993
were $1.14 per share or 28 1/2 cents per quarter. During 1992 and 1991,
dividends paid per share were $1.10 and $1.07, respectively. In January 1994,
The Southern Company board of directors raised the quarterly dividend to 29 1/2
cents per share or an annual rate of $1.18 per share.
REVENUES
Operating revenues increased in 1993 and 1992 and decreased in 1991 as a result
of the following factors:
<TABLE>
<CAPTION>
Increase (Decrease)
From Prior Year
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Retail --
Change in base rates $ 3 $ 137 $ 46
Sales growth 104 138 122
Weather 198 (113) (19)
Fuel cost recovery
and other 199 (55) (36)
Total retail 504 107 113
Sales for resale --
Within service area 38 (8) 5
Outside service area (184) (87) (93)
Total sales for resale (146) (95) (88)
Other operating revenues 58 11 (28)
Total operating revenues $ 416 $ 23 $ (3)
Percent change 5.2% 0.3% 0.0%
</TABLE>
II-8
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
Retail revenues of $7.3 billion in 1993 increased 7.4 percent from last
year, compared with an increase of 1.6 percent in 1992. Under fuel cost
recovery provisions, fuel revenues generally equal fuel expense -- including
the fuel component of purchased energy -- and do not affect net income.
Sales for resale revenues within the service area were $447 million in 1993,
up 9.2 percent from the prior year. This increase resulted primarily from the
prolonged hot summer weather, which increased the demand for electricity.
Revenues from sales for resale within the service area were $409 million in
1992, down 1.9 percent from the prior year. The decrease resulted from certain
municipalities and cooperatives in the service area retaining more of their own
generation at facilities jointly owned with Georgia Power.
Revenues from sales to utilities outside the service area under long-term
contracts consist of capacity and energy components. Capacity revenues reflect
the recovery of fixed costs and a return on investment under the contracts.
Energy is generally sold at variable cost. The capacity and energy components
were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Capacity $350 $457 $490
Energy 230 330 366
Total $580 $787 $856
</TABLE>
Capacity revenues decreased in 1993 and 1992 because the amount of capacity
under contract declined by some 500 megawatts and 300 megawatts, respectively.
In 1994, the contracted capacity will decline another 400 megawatts.
Changes in revenues are influenced heavily by the amount of energy sold each
year. Kilowatt-hour sales for 1993 and the percent change by year were as
follows:
<TABLE>
<CAPTION>
(billions of Amount Percent Change
kilowatt-hours) 1993 1993 1992 1991
<S> <C> <C> <C> <C>
Residential 36.8 9.5% 0.0% 1.5%
Commercial 32.8 5.9 2.1 2.4
Industrial 48.7 1.9 3.8 0.2
Other 0.9 4.6 (4.8) 1.2
Total retail 119.2 5.3 2.1 1.2
Sales for resale --
Within service area 13.3 9.5 (1.7) 10.7
Outside service area 12.4 (25.2) (16.2) (18.7)
Total 144.9 2.1 (0.7) (1.4)
</TABLE>
The rate of growth in 1993 retail energy sales was the highest since 1986.
Residential energy sales registered the highest annual increase in two decades
as a result of hotter-than-normal summer weather and the addition of 46,000 new
customers. Commercial sales were also affected by the warm summer. Industrial
energy sales in 1993 and 1992 showed moderate growth, reflecting a recovery in
the business and economic conditions in The Southern Company's service area.
Energy sales to retail customers are projected to grow at an average annual
rate of 1.7 percent during the period 1994 through 2004.
Energy sales for resale outside the service area are predominantly unit
power sales under long-term contracts to Florida utilities. Economy sales and
amounts sold under short-term contracts are also sold for resale outside the
service area. Sales to customers outside the service area have decreased for
the third consecutive year primarily as a result of the scheduled decline in
megawatts of capacity under contract. In addition, the decline in 1992 and
1991 sales was also influenced by fluctuations in prices for oil and natural
gas, the primary fuel sources for utilities with which the company has
long-term contracts. When oil and gas prices fall below a certain level, these
customers can generate electricity to meet their requirements more
economically. However, the fluctuation in these energy sales, excluding the
impact of contractual declines, had minimal effect on earnings because The
Southern Company is paid for dedicating specific amounts of its generating
capacity to these utilities.
EXPENSES
Total operating expenses of $6.7 billion for 1993 were up 6.5 percent compared
with the prior year. The increase was attributable to higher production
expenses of $75 million to meet increased energy demands and an additional $50
million in depreciation expenses and property taxes resulting from additional
utility plant being placed into service. The transportation fleet reduction
program and environmental clean-up costs discussed earlier increased expenses
by some $62 million. Also, a $67 million change in deferred Plant Vogtle
expenses compared with the amount in 1992 contributed to the rise in total
operating expenses.
In 1992, total operating expenses of $6.3 billion were at the same level
reported for 1991. The costs to produce and deliver electricity in 1992
declined by $165 million primarily as a result of less energy being sold and
continued effective cost controls. However, expenses in 1991 were reduced by
proceeds from a settlement
II-9
<PAGE> 40
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
agreement with Gulf States that more than offset the decline in 1992 expenses
when compared with 1991. Deferred expenses related to Plant Vogtle in 1992
increased by $47 million when compared with the prior year.
Fuel costs constitute the single largest expense for The Southern Company.
The mix of fuel sources for generation of electricity is determined primarily
by system load, the unit cost of fuel consumed, and the availability of hydro
and nuclear generating units. The amount and sources of generation and the
average cost of fuel per net kilowatt-hour generated were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Total generation
(billions of kilowatt-hours) 144 140 142
Sources of generation
(percent) --
Coal 78 77 77
Nuclear 17 17 17
Hydro 4 5 5
Oil and gas 1 1 1
Average cost of fuel per net
kilowatt-hour generated
(cents) --
Coal 1.90 1.86 1.91
Nuclear 0.54 0.54 0.66
Oil and gas 4.34 4.81 2.84
Total 1.67 1.62 1.69
</TABLE>
Fuel and purchased power expenses of $2.6 billion in 1993 increased 1.3
percent compared with the prior year because of increased energy demands and
slightly higher average cost of fuel per net kilowatt-hour generated. Fuel and
purchased power costs in 1992 decreased $137 million or 5.0 percent compared
with 1991 primarily because 1.1 billion fewer kilowatt-hours were needed to
meet customer requirements. Also, the decrease in these costs was attributable
to a lower average cost of fuel per net kilowatt-hour generated.
Income taxes for 1993 increased $69 million compared with the prior year.
The increase is attributable to a number of factors, including a 1 percent
increase in the corporate federal income tax rate effective January 1993, the
second sale of additional ownership interest in Plant Scherer Unit 4, and the
increase in taxable income from operations. For 1992, income taxes rose $11
million or 1.7 percent above the amount reported for 1991.
For the fifth consecutive year, total gross interest charges and preferred
stock dividends declined from amounts reported in the previous year. The
declines are attributable to lower interest rates and significant refinancing
activities during the past two years. In 1993, these costs were $831 million
- -- down $21 million or 2.3 percent. These costs for 1992 decreased $71
million. As a result of favorable market conditions during 1993, some $3.0
billion of senior securities was issued for the primary purpose of retiring
higher-cost debt and preferred stock.
EFFECTS OF INFLATION
The Southern Company is subject to rate regulation and income tax laws that are
based on the recovery of historical costs. Therefore, inflation creates an
economic loss because the company is recovering its costs of investments in
dollars that have less purchasing power. While the inflation rate has been
relatively low in recent years, it continues to have an adverse effect on The
Southern Company because of the large investment in long-lived utility plant.
Conventional accounting for historical cost does not recognize this economic
loss nor the partially offsetting gain that arises through financing facilities
with fixed-money obligations such as long-term debt and preferred stock. Any
recognition of inflation by regulatory authorities is reflected in the rate of
return allowed.
FUTURE EARNINGS POTENTIAL
The results of operations for the past three years are not necessarily
indicative of future earnings potential. The level of future earnings depends
on numerous factors ranging from growth in energy sales to regulatory matters.
Georgia Power has completed two of four separate transactions to sell Unit 4
of Plant Scherer to two Florida utilities. The remaining transactions are
scheduled to take place in 1994 and 1995. If the sales take place as planned,
Georgia Power could realize an after-tax gain currently estimated to total
approximately $20 million. See Note 7 to the financial statements for
additional information.
In early 1994, Georgia Power and the system service company announced work
force reduction programs that are estimated to reduce 1994 earnings by some $55
million. These actions will assist in efforts to control the growth in
operating expenses.
II-10
<PAGE> 41
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
See Note 4 to the financial statements for information on an uncertainty
regarding full recovery of an investment in the Rocky Mountain pumped storage
hydroelectric project.
Future earnings in the near term will depend upon growth in energy sales,
which are subject to a number of factors. Traditionally, these factors have
included changes in contracts with neighboring utilities, energy conservation
practiced by customers, the elasticity of demand, weather, competition, and the
rate of economic growth in the company's service area. However, the Energy
Policy Act of 1992 (Energy Act) will have a profound effect on the future of
the electric utility industry. The Energy Act promotes energy efficiency,
alternative fuel use, and increased competition for electric utilities. The
law also includes provisions to streamline the licensing process for new
nuclear plants. The Southern Company is preparing to meet the challenge of
this major change in the traditional business practices of selling electricity.
The Energy Act allows independent power producers (IPPs) to access a utility's
transmission network in order to sell electricity to other utilities, and this
may enhance the incentive for IPPs to build cogeneration plants for a utility's
large industrial and commercial customers and sell excess energy generation to
other utilities. Although the Energy Act does not require transmission access
to retail customers, pressure for legislation to allow retail wheeling will
continue. If The Southern Company does not remain a low-cost producer and
provide quality service, the company's retail energy sales growth, as well as
new long-term contracts for energy sales outside the service area, could be
limited, and this could significantly erode earnings.
An important part of the Energy Act was to amend the Public Utility Holding
Company Act of 1935 (PUHCA) and allow holding companies to form exempt
wholesale generators and foreign utility companies to sell power largely free
of regulation under PUHCA. These new entities are able to sell power to
affiliates -- under certain restrictions -- and to own and operate power
generating facilities in other domestic and international markets. To take
advantage of these opportunities, Southern Electric International (Southern
Electric) -- founded in 1981 -- is focusing on international and domestic
cogeneration, the independent power market, and the privatization of generating
facilities in the international market. During 1993, investments of some $315
million were made in entities that own and operate generating facilities in
various international markets. In the near term, Southern Electric is expected
to have minimal effect on earnings, but the possibility exists that it could
be a prime contributor to future earnings growth.
Demand-side options -- programs that enable customers to lower or alter
their peak energy requirements -- have been implemented by some of the system
operating companies and are a significant part of integrated resource planning.
See Note 3 to the financial statements under "Georgia Power's Demand-Side
Conservation Programs" for information concerning the recovery of certain
costs. Customers can receive cash incentives for participating in these
programs as well as reduce their energy requirements. Expansion and increased
utilization of these programs will be contingent upon sharing of cost savings
between the customers and the utility. Besides promoting energy efficiency,
another benefit of these programs could be the ability to defer the need to
construct baseload generating facilities further into the future. The ability
to defer major construction projects in conjunction with precertification
approval processes of such projects by the respective state public service
commissions in Alabama, Georgia, and Mississippi will diminish the possible
exposure to prudency disallowances and the resulting impact on earnings. In
addition, Georgia Power has conducted a competitive bidding process for
additional peaking capacity needed in 1996 and 1997. To meet expected
requirements for 1996, Georgia Power has filed a plan with the state public
service commission for certification of a four-year purchase power contract and
for an ownership interest in a combustion turbine peaking unit.
Rates to retail customers served by the system operating companies are
regulated by the respective state public service commissions in Alabama,
Florida, Georgia, and Mississippi. Rates for Alabama Power and Mississippi
Power are adjusted periodically within certain limitations based on earned
retail rate of return compared with an allowed return. See Note 3 to the
financial statements for information about other regulatory matters.
The Federal Energy Regulatory Commission (FERC) regulates wholesale rate
schedules and power sales contracts that The Southern Company has with its
sales for resale customers. The FERC currently is reviewing the rate of return
on common equity included in some of these schedules and contracts and may
require such returns to be lowered, possibly retroactively. See Note 3 to the
financial statements under "FERC Reviews Equity Returns" for additional
information.
Compliance costs related to the Clean Air Act Amendments of 1990 (Clean Air
Act) could reduce earnings if such costs are not fully recovered. The Clean
Air Act is discussed later under "Environmental Matters."
II-11
<PAGE> 42
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued Statement No. 112,
Employers' Accounting for Postemployment Benefits, which must be effective by
1994. The new standard requires that all types of benefits provided to former
or inactive employees and their families prior to retirement be accounted for
on an accrual basis. These benefits include salary continuation, severance
pay, supplemental unemployment benefits, disability-related benefits, job
training, and health and life insurance coverage. In 1993, The Southern
Company adopted Statement No. 112, with no material effect on the financial
statements.
The FASB has issued Statement No. 115, Accounting for Certain Investments in
Debt and Equity Securities, which is effective in 1994. Statement No. 115
supersedes FASB Statement No. 12, Accounting for Certain Marketable Securities.
The Southern Company adopted the new rules January 1, 1994, with no material
effect on the financial statements.
FINANCIAL CONDITION
OVERVIEW
The Southern Company's financial condition is now the strongest since the
mid-1980s. Record levels of performance were set in 1993 related to earnings,
market price of common stock, and energy sold to retail customers. In January
1994, The Southern Company board of directors increased the common stock
dividend for the third consecutive year, and approved a two-for-one common
stock split in the form of a stock distribution.
Another major change in The Southern Company's financial condition was gross
property additions of $1.4 billion to utility plant. The majority of funds
needed for gross property additions since 1990 have been provided from
operating activities, principally from earnings and non-cash charges to income
such as depreciation and deferred income taxes. The Consolidated Statements of
Cash Flows provide additional details.
On January 1, 1993, The Southern Company changed its methods of accounting
for postretirement benefits other than pensions and for income taxes. See
notes 2 and 9 to the financial statements, regarding the impact of these
changes.
CAPITAL STRUCTURE
The company achieved a ratio of common equity to total capitalization --
including short-term debt -- of 43.5 percent in 1993, compared with 42.8
percent in 1992 and 41.5 percent in 1991. The company's goal is to maintain
the common equity ratio generally within a range of 40 percent to 45 percent.
During 1993, the operating companies sold $2.2 billion of first mortgage
bonds and, through public authorities, $385 million of pollution control
revenue bonds, at a combined weighted interest rate of 6.5 percent. Preferred
stock of $426 million was issued at a weighted dividend rate of 5.7 percent.
The operating companies continued to reduce financing costs by retiring
higher-cost bonds and preferred stock. Retirements, including maturities, of
bonds totaled $2.5 billion during 1993, $2.8 billion during 1992, and $1.0
billion during 1991. Retirements of preferred stock totaled $516 million
during 1993, $326 million during 1992, and $125 million during 1991. As a
result, the composite interest rate on long-term debt decreased from 9.2
percent at December 31, 1990, to 7.6 percent at December 31, 1993. During this
same period, the composite dividend rate on preferred stock declined from 8.5
percent to 6.4 percent.
In 1993, The Southern Company raised $205 million from the issuance of new
common stock under the Dividend Reinvestment and Stock Purchase Plan (DRIP) and
the Employee Savings Plan. At the close of 1993, the company's common stock
had a market value of $22.00 per share, compared with a book value of $11.96
per share. The market-to-book value ratio was 184 percent at the end of 1993,
compared with 168 percent at year-end 1992 and 156 percent at year-end 1991.
CAPITAL REQUIREMENTS FOR CONSTRUCTION
The construction program of the operating companies is budgeted at $1.5 billion
for 1994, $1.3 billion for 1995, and $1.5 billion for 1996. The total is $4.3
billion for the three years. Actual construction costs may vary from this
estimate because of factors such as changes in environmental regulations;
changes in existing nuclear plants to meet new regulations; revised load
projections; the cost and efficiency of construction labor, equipment, and
materials; and the cost of capital.
The operating companies do not have any baseload generating plants under
construction, and current energy demand forecasts do not require any additional
baseload facilities until well into the future. However, within the
II-12
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
service area, the construction of combustion turbine peaking units of
approximately 1,700 megawatts of capacity is planned to be completed by 1996 to
meet increased peak-hour demands. In addition, significant construction of
transmission and distribution facilities and upgrading of generating plants
will be continuing.
OTHER CAPITAL REQUIREMENTS
In addition to the funds needed for the construction program, approximately
$789 million will be required by the end of 1996 for present sinking fund
requirements, redemptions announced, and maturities of long-term debt. Also,
the operating subsidiaries plan to continue a program to retire higher-cost
debt and preferred stock and replace these obligations with lower-cost capital.
ENVIRONMENTAL MATTERS
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on The Southern Company. Specific reductions in sulfur
dioxide and nitrogen oxide emissions from fossil-fired generating plants will
be required in two phases. Phase I compliance must be implemented in 1995 and
affects eight generating plants -- some 10,000 megawatts of capacity or 35
percent of total capacity -- in the Southern electric system. Phase II
compliance is required in 2000, and all fossil-fired generating plants in the
Southern electric system will be affected.
Beginning in 1995, the Environmental Protection Agency (EPA) will allocate
annual sulfur dioxide emission allowances through the newly established
allowance trading program. An emission allowance is the authority to emit one
ton of sulfur dioxide during a calendar year. The method for allocating
allowances is based on the fossil fuel consumed from 1985 through 1987 for each
affected generating unit. Emission allowances are transferable and can be
bought, sold, or banked and used in the future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The market for emission allowances is developing slower
than expected. However, The Southern Company's sulfur dioxide compliance
strategy is designed to take advantage of allowances as the market develops.
The Southern Company expects to achieve Phase I sulfur dioxide compliance at
the eight affected plants by switching to low-sulfur coal, and this has
required some equipment upgrades. This compliance strategy is expected to
result in unused emission allowances being banked for later use. Additional
construction expenditures are required to install equipment for the control of
nitrogen oxide emissions at these eight plants. Also, continuous emissions
monitoring equipment would be installed on all fossil-fired units. Under this
Phase I compliance approach, additional construction expenditures are estimated
to total approximately $275 million through 1995.
Phase II compliance costs are expected to be higher because requirements are
stricter and all fossil-fired generating plants are affected. For sulfur
dioxide compliance, The Southern Company could use emission allowances banked
during Phase I, increase fuel switching, install flue gas desulfurization
equipment at selected plants, and/or purchase more allowances depending on the
price and availability of allowances. Also, in Phase II, equipment to control
nitrogen oxide emissions will be installed on additional system fossil-fired
plants as required to meet anticipated Phase II limits. Therefore, during the
period 1996 to 2000, compliance could require total construction expenditures
ranging from approximately $450 million to $800 million. However, the full
impact of Phase II compliance cannot now be determined with certainty, pending
the development of a market for emission allowances, the completion of EPA
regulations, and the possibility of new emission reduction technologies.
An average increase of up to 3 percent in revenue requirements from
customers could be necessary to fully recover the cost of compliance for both
Phase I and Phase II of the Clean Air Act. Compliance costs include
construction expenditures, increased costs for switching to low-sulfur coal,
and costs related to emission allowances.
There can be no assurance that all Clean Air Act costs will be recovered.
Metropolitan Atlanta is classified as a non-attainment area with regard to
the ozone ambient air quality standards. Title I of the Clean Air Act requires
the state of Georgia to conduct specific studies and establish new control
rules by November 1994 -- affecting sources of nitrogen oxides and volatile
organic compounds -- to achieve attainment by 1999. As the required first
step, the state has issued rules for the application of reasonably available
control technology to reduce nitrogen oxide emissions by May 31, 1995. The
results of these new rules require nitrogen oxide controls, above Title IV
II-13
<PAGE> 44
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
requirements, on some Georgia Power plants. Final attainment rules, based on
modeling studies, could require installation of additional controls for
nitrogen oxide emissions as early as 1997. Compliance with any new rules could
result in significant additional costs. The impact of new rules will depend on
the development and implementation of such rules.
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The study will serve as the basis
for a decision on whether additional regulatory control of these substances is
warranted. Compliance with any new control standards could result in
significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA is expected to take some action on this issue in 1994. The impact of
any new standard will depend on the level chosen for the standard and cannot be
determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air
quality standards for particulate matter, nitrogen oxides, and ozone. The
impact of any new standard will depend on the level chosen for the standard and
cannot be determined at this time.
In 1994 or 1995, the EPA is expected to issue revised rules on air quality
control regulations related to stack height requirements of the Clean Air Act.
The full impact of the final rules cannot be determined at this time, pending
their development and implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of coal
ash. However, the EPA has until 1998 to classify co-managed utility wastes --
coal ash and other utility wastes -- as either non-hazardous or hazardous. If
the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The Southern Company must comply with other environmental laws and
regulations that cover the handling and disposal of hazardous waste. Under
these various laws and regulations, the company could incur costs to clean up
properties currently or previously owned. The company conducts studies to
determine the extent of any required clean-up costs and has recognized in the
financial statements costs to clean up known sites.
Several major pieces of environmental legislation are in the process of
being reauthorized or amended by Congress. These include: the Clean Water
Act; the Comprehensive Environmental Response, Compensation, and Liability Act;
and the Resource Conservation and Recovery Act. Changes to these laws could
affect many areas of The Southern Company's operations. The full impact of
these requirements cannot be determined at this time, pending the development
and implementation of applicable regulations.
Compliance with possible new legislation related to global climate change,
electromagnetic fields, and other environmental and health concerns could
significantly affect The Southern Company. The impact of new legislation -- if
any -- will depend on the subsequent development and implementation of
applicable regulations. In addition, the potential for lawsuits alleging
damages caused by electromagnetic fields exists.
SOURCES OF CAPITAL
In early 1994, The Southern Company sold -- through a public offering -- common
stock with proceeds totaling $120 million. The company may require additional
equity capital during the remainder of 1994. The amount and timing of
additional equity capital to be raised in 1994 -- as well as in subsequent
years -- will be contingent on The Southern Company's investment opportunities.
Equity capital can be provided from any combination of public offerings,
private placements, or the company's stock plans. Any portion of the common
stock required during 1994 for the DRIP and the employee stock plans that is
not provided from the issuance of new stock will be acquired on the open market
in accordance with the terms of such plans.
The operating subsidiaries plan to obtain the funds required for
construction and other purposes from sources similar to those used in the past.
However, the type and timing of any financings -- if needed -- will depend on
market conditions and regulatory approval.
II-14
<PAGE> 45
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
Completing the sale of Unit 4 of Plant Scherer will provide some $260
million of cash during the years 1994 and 1995.
As required by the Nuclear Regulatory Commission, Alabama Power and Georgia
Power established external sinking funds for nuclear decommissioning costs.
For 1994 through 2000, the combined amount to be funded for both Alabama Power
and Georgia Power totals $36 million annually. The cumulative effect of
funding over this period will diminish internally funded capital and may
require capital from other sources. For additional information concerning
nuclear decommissioning costs, see Note 1 to the financial statements under
"Depreciation and Nuclear Decommissioning."
To meet short-term cash needs and contingencies, the system companies had
approximately $178 million of cash and cash equivalents and $1.1 billion of
unused credit arrangements with banks at the beginning of 1994.
To issue additional first mortgage bonds and preferred stock, the operating
companies must comply with certain earnings coverage requirements designated in
their mortgage indentures and corporate charters. The ability to issue
securities in the future will depend on coverages at that time. The coverage
ratios were, at the end of the respective years, as follows:
<TABLE>
<CAPTION>
Mortgage Charter
Coverage Coverage
(2.00* (1.50
Required) Required)
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Alabama Power 5.70 5.86 2.71 2.56
Georgia Power 7.75 6.38 2.61 2.23
Gulf Power 5.79 5.27 2.56 2.35
Mississippi Power 5.78 5.68 2.67 2.51
Savannah Electric 3.94 5.01 2.20 2.65
</TABLE>
*Savannah Electric's requirement is 2.50.
II-15
<PAGE> 46
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 1993, 1992, and 1991
The Southern Company and Subsidiary Companies 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
OPERATING REVENUES $8,489 $8,073 $8,050
OPERATING EXPENSES:
Operation --
Fuel 2,265 2,114 2,237
Purchased power 336 454 468
Proceeds from settlement of disputed contracts (Note 8) (3) (7) (181)
Other 1,448 1,317 1,321
Maintenance 653 613 637
Depreciation and amortization 793 768 763
Amortization of deferred Plant Vogtle expenses, net (Note 1) 36 (31) 16
Taxes other than income taxes 462 436 432
Federal and state income taxes 734 647 618
Total operating expenses 6,724 6,311 6,311
OPERATING INCOME 1,765 1,762 1,739
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 9 10 13
Deferred return on Plant Vogtle (Note 1) -- -- 35
Interest income 30 32 30
Other, net (41) (50) (57)
Income taxes applicable to other income 57 39 21
INCOME BEFORE INTEREST CHARGES 1,820 1,793 1,781
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on long-term debt 595 684 757
Allowance for debt funds used during construction (13) (12) (18)
Interest on notes payable 30 16 20
Amortization of debt discount, premium, and expense, net 26 14 9
Other interest charges 87 34 29
Preferred dividends of subsidiary companies 93 104 108
Net interest charges and preferred dividends 818 840 905
CONSOLIDATED NET INCOME $1,002 $ 953 $ 876
COMMON STOCK DATA: (Note 10)
Average number of shares of common stock outstanding (in millions) 637 632 632
Earnings per share of common stock $1.57 $1.51 $ 1.39
Cash dividends paid per share of common stock $1.14 $1.10 $ 1.07
</TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $2,721 $2,490 $2,296
Consolidated net income 1,002 953 876
3,723 3,443 3,172
Cash dividends on common stock 726 695 676
Capital and preferred stock transactions, net 29 27 6
BALANCE AT END OF YEAR (Note 14) $2,968 $2,721 $2,490
</TABLE>
The accompanying notes are an integral part of these statements.
II-16
<PAGE> 47
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993, 1992, and 1991
The Southern Company and Subsidiary Companies 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Consolidated net income $ 1,002 $ 953 $ 876
Adjustments to reconcile consolidated net income
to net cash provided by operating activities --
Depreciation and amortization 1,011 969 968
Deferred income taxes and investment tax credits 189 215 15
Allowance for equity funds used during construction (9) (10) (13)
Deferred Plant Vogtle costs (Note 1) 36 (31) (19)
Non-cash proceeds from settlement of disputed
contracts (Note 8) -- (7) (141)
Gain on asset sales (36) -- (37)
Other, net (9) (25) 82
Changes in certain current assets and liabilities --
Receivables, net (55) (10) 68
Fossil fuel stock 138 53 21
Materials and supplies (2) (76) (1)
Accounts payable 43 35 (13)
Other (61) (71) 61
Net cash provided from operating activities 2,247 1,995 1,867
INVESTING ACTIVITIES:
Gross property additions (1,441) (1,105) (1,123)
Foreign utility operations (465) -- --
Sales of property 262 44 291
Other (37) 61 (45)
Net cash used for investing activities (1,681) (1,000) (877)
FINANCING ACTIVITIES:
Proceeds --
Common stock 205 30 --
Preferred stock 426 410 100
First mortgage bonds 2,185 1,815 380
Other long-term debt 592 256 140
Prepaid capacity revenues -- -- 53
Retirements --
Preferred stock (516) (326) (125)
First mortgage bonds (2,178) (2,575) (881)
Other long-term debt (450) (296) (200)
Increase in notes payable, net 114 525 180
Payment of common stock dividends (726) (695) (676)
Miscellaneous (137) (148) (41)
Net cash used for financing activities (485) (1,004) (1,070)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 81 (9) (80)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 97 106 186
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 178 $ 97 $ 106
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for --
Interest (net of amount capitalized) $ 673 $ 743 $ 802
Income taxes 530 458 428
</TABLE>
The accompanying notes are an integral part of these statements.
II-17
<PAGE> 48
CONSOLIDATED STATEMENTS OF BALANCE SHEETS
At December 31, 1993, and 1992
The Southern Company and Subsidiary Companies 1993 Annual Report
<TABLE>
<CAPTION>
ASSETS 1993 1992
(in millions)
<S> <C> <C>
UTILITY PLANT:
Plant in service (Note 1) $27,687 $27,033
Less accumulated provision for depreciation 8,934 8,280
18,753 18,753
Nuclear fuel, at amortized cost 229 257
Construction work in progress (Note 4) 1,031 665
Total 20,013 19,675
Less property-related accumulated deferred income taxes (Note 9) -- 3,186
Total 20,013 16,489
OTHER PROPERTY AND INVESTMENTS:
Foreign utility operations, being amortized (Note 5) 559 --
Nuclear decommissioning trusts 88 52
Miscellaneous 89 75
Total 736 127
CURRENT ASSETS:
Cash and cash equivalents 178 97
Investment securities -- 199
Receivables, less accumulated provisions for uncollectible accounts
of $9 million in 1993 and $7 million in 1992 1,147 919
Fossil fuel stock, at average cost 254 392
Materials and supplies, at average cost 535 533
Prepayments 148 220
Vacation pay deferred (Note 1) 73 70
Total 2,335 2,430
DEFERRED CHARGES:
Deferred charges related to income taxes (Note 9) 1,546 --
Deferred Plant Vogtle costs (Note 1) 507 383
Debt expense, being amortized 33 28
Premium on reacquired debt, being amortized 288 222
Deferred fuel charges (Note 5) 70 89
Miscellaneous 383 270
Total 2,827 992
TOTAL ASSETS $25,911 $20,038
</TABLE>
The accompanying notes are an integral part of these balance sheets.
II-18
<PAGE> 49
CONSOLIDATED BALANCE SHEETS (continued)
At December 31, 1993 and 1992
The Southern Company and Subsidiary Companies 1993 Annual Report
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES 1993 1992
(in millions)
<S> <C> <C>
CAPITALIZATION (See accompanying statements):
Common stock equity $7,684 $ 7,234
Preferred stock 1,332 1,351
Preferred stock subject to mandatory redemption 1 8
Long-term debt 7,412 7,241
Total 16,429 15,834
CURRENT LIABILITIES:
Preferred stock due within one year 1 65
Long-term debt due within one year 156 188
Notes payable 941 827
Accounts payable 698 646
Customer deposits 103 99
Taxes accrued --
Federal and state income 34 27
Other 172 145
Interest accrued 186 191
Vacation pay accrued 90 86
Miscellaneous 190 242
Total 2,571 2,516
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes (Note 9) 3,979 --
Deferred credits related to income taxes (Note 9) 1,051 --
Accumulated deferred investment tax credits 900 957
Disallowed Plant Vogtle capacity buyback costs 63 72
Prepaid capacity revenues 144 148
Miscellaneous 774 511
Total 6,911 1,688
COMMITMENTS AND CONTINGENT MATTERS (Notes 1, 3, 4, 5, 6, 7, 8, and 13)
TOTAL CAPITALIZATION AND LIABILITIES $25,911 $20,038
</TABLE>
The accompanying notes are an integral part of these balance sheets.
II-19
<PAGE> 50
CONSOLIDATED STATEMENTS OF CAPITALIZATION
At December 31, 1993 and 1992
The Southern Company and Subsidiary Companies 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1993 1992
(in millions) (percent of total)
<S> <C> <C> <C> <C>
COMMON STOCK EQUITY:
Common stock, par value $5 per share --
Authorized -- 1 billion shares
Outstanding -- 1993: 637 million shares, 1992:
632 million shares (Note 10) $ 3,213 $ 1,582
Paid-in capital 1,502 2,929
Premium on preferred stock 1 2
Retained earnings (Note 14) 2,968 2,721
Total common stock equity 7,684 7,234 46.8% 45.7%
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES:
$100 par or stated value --
4.20% to 5.96% 199 199
6.32% to 7.88% 205 182
8.04% to 8.80% -- 225
$25 par or stated value --
$1.90 to $2.125 295 295
6.40% to 9.50% 323 200
Auction rates -- at January 1, 1994;
2.72% to 2.92% 70 50
Adjustable rates -- at January 1, 1994;
4.80% to 7.57% 240 200
Total (annual dividend requirement -- $85 million) 1,332 1,351 8.1 8.5
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES
SUBJECT TO MANDATORY REDEMPTION:
$100 par value --
11.36% 2 3
$25 stated value --
$2.43 -- 45
$2.50 -- 25
Total 2 73
Less amount due within one year 1 65
Total excluding amount due within one year 1 8 0.0 0.1
</TABLE>
II-20
<PAGE> 51
CONSOLIDATED STATEMENTS OF CAPITALIZATION (continued)
At December 31, 1993 and 1992
The Southern Company and Subsidiary Companies 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1993 1992
(in millions) (percent of total)
<S> <C> <C> <C> <C> <C>
LONG-TERM DEBT:
First mortgage bonds of subsidiaries --
Maturity Interest Rates
1994 4 5/8% 26 78
1995 4 3/4% to 5 1/8% 141 211
1996 4 1/2% to 6 1/4% 235 100
1997 5 7/8% to 7 1/8% 25 113
1998 5% to 9.2% 249 98
1999 through 2003 6% to 8 3/4% 1,580 1,626
2004 through 2008 6 7/8% to 9% 230 182
2014 through 2018 9 3/8% to 10 3/4% 85 975
2019 through 2023 7.3% to 9 3/8% 1,909 1,040
2020 Variable rates -- 50
2032 Variable rates 200 200
Total first mortgage bonds 4,680 4,673
Other long-term debt (Note 11) 2,962 2,820
Unamortized debt premium (discount), net (74) (64)
Total long-term debt (annual interest
requirement -- $581 million) 7,568 7,429
Less amount due within one year (Note 12) 156 188
Long-term debt excluding amount due within one year 7,412 7,241 45.1 45.7
TOTAL CAPITALIZATION 16,429 $ 15,834 100.0% 100.0%
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF PAID-IN CAPITAL
For The Years Ended December 31, 1993, 1992, and 1991
1993 1992 1991
(in millions)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $2,929 $2,906 $2,906
Proceeds from sales of common stock over the par value -- 9.7 million
and 1.6 million shares in 1993 and 1992, respectively 179 23 --
Two-for-one stock split (Note 10) (1,606) -- --
BALANCE AT END OF YEAR $1,502 $2,929 $2,906
</TABLE>
The accompanying notes are an integral part of these statements.
II-21
<PAGE> 52
NOTES TO FINANCIAL STATEMENTS
The Southern Company and Subsidiary Companies 1993 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
GENERAL
The Southern Company is the parent company of five operating companies, a
system service company, Southern Electric International (Southern Electric),
Southern Nuclear Operating Company (Southern Nuclear), and various other
subsidiaries related to foreign utility operations and domestic non-utility
operations. At this time, the operations of the other subsidiaries are not
material. The operating companies provide electric service in four
Southeastern states. Contracts among the companies -- dealing with jointly
owned generating facilities, interconnecting transmission lines, and the
exchange of electric power -- are regulated by the Federal Energy Regulatory
Commission (FERC) or the Securities and Exchange Commission (SEC). The system
service company provides, at cost, specialized services to The Southern Company
and to the subsidiary companies. Southern Electric designs, builds, owns, and
operates power production facilities and provides a broad range of technical
services to industrial companies and utilities in the United States and a
number of international markets. Southern Nuclear provides services to The
Southern Company's nuclear power plants.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both the company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. The
operating companies also are subject to regulation by the FERC and their
respective state regulatory commissions. The companies follow generally
accepted accounting principles and comply with the accounting policies and
practices prescribed by their respective commissions.
All material intercompany items have been eliminated in consolidation.
Consolidated retained earnings at December 31, 1993, include $2.6 billion of
undistributed retained earnings of subsidiaries.
Certain prior years' data presented in the consolidated financial statements
have been reclassified to conform with current year presentation.
REVENUES AND FUEL COSTS
The operating companies accrue revenues for service rendered but unbilled at
the end of each fiscal period. Fuel costs are expensed as the fuel is used.
The operating companies' electric rates include provisions to adjust billings
for fluctuations in fuel and the energy component of purchased power costs.
Revenues are adjusted for differences between recoverable fuel costs and
amounts actually recovered in current rates.
Fuel expense includes the amortization of the cost of nuclear fuel and a
charge, based on nuclear generation, for the permanent disposal of spent
nuclear fuel. Total charges for nuclear fuel included in fuel expense amounted
to $137 million in 1993, $132 million in 1992, and $162 million in 1991.
Alabama Power and Georgia Power have contracts with the U.S. Department of
Energy (DOE) that provide for the permanent disposal of spent nuclear fuel,
which was scheduled to begin in 1998. However, the actual year this service
will begin is uncertain. Sufficient storage capacity currently is available to
permit operation into 2003 at Plant Hatch, into 2009 at Plant Vogtle, and into
2012 and 2014 at Plant Farley units 1 and 2, respectively.
Also, the Energy Policy Act of 1992 required the establishment in 1993 of a
Uranium Enrichment Decontamination and Decommissioning Fund, which is to be
funded in part by a special assessment on utilities with nuclear plants. This
assessment will be paid over a 15-year period, which began in 1993. This fund
will be used by the DOE for the decontamination and decommissioning of its
nuclear fuel enrichment facilities. The law provides that utilities will
recover these payments in the same manner as any other fuel expense. Georgia
Power -- based on its ownership interests -- and Alabama Power currently
estimate their liability under this law to be approximately $39 million and $46
million, respectively. These obligations are recorded in the Consolidated
Balance Sheets.
DEPRECIATION AND NUCLEAR DECOMMISSIONING
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates, which approximated
3.3 percent in 1993, 1992, and 1991. When property subject to depreciation is
retired or otherwise disposed of in the normal course of business, its cost --
together with the cost of removal, less salvage -- is charged to the
accumulated provision for depreciation. Minor items of property included in
the original cost of the plant are retired when the related property unit is
retired. Depreciation expense includes an amount for the expected costs of
decommissioning nuclear facilities.
II-22
<PAGE> 53
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
In 1988, the Nuclear Regulatory Commission (NRC) adopted regulations
requiring all licensees operating commercial power reactors to establish a plan
for providing, with reasonable assurance, funds for decommissioning.
Reasonable assurance may be in the form of an external sinking fund, a surety
method, or prepayment. Alabama Power and Georgia Power have established
external sinking funds to comply with the NRC's regulations. Prior to the
enactment of these regulations, Alabama Power and Georgia Power had reserved
nuclear decommissioning costs. The NRC's minimum external funding requirements
are based on a generic estimate of the cost to decommission the radioactive
portions of a nuclear unit based on the size and type of reactor. Alabama
Power and Georgia Power have filed plans with the NRC to ensure that -- over
time -- the deposits and earnings of the external trust funds will provide the
minimum funding amounts prescribed by the NRC.
The estimated cost of decommissioning and the amounts being recovered
through rates at December 31, 1993, for Alabama Power's Plant Farley and
Georgia Power's plants Hatch and Vogtle -- based on its ownership interests --
were as follows:
<TABLE>
<CAPTION>
Plant Plant Plant
Farley Hatch Vogtle
<S> <C> <C>
Site study basis (year) 1993 1990 1990
Estimated completion of
decommissioning (year) 2029 2027 2037
(in millions)
Cost of decommissioning:
Radiated structures $409 $184 $155
Non-radiated structures 75 35 62
Other 94 55 54
Total cost $578 $274 $271
(in millions)
Approved for ratemaking $578 $184 $155
Amount expensed in 1993 14 6 6
Balance in external trust fund 50 22 16
Balance in internal reserve 53 33 11
</TABLE>
The amounts in the internal reserve are being transferred into the external
trust fund over a set period of time as approved by the respective state public
service commissions.
The decommissioning cost estimates are based on prompt dismantlement and
removal of the plant from service. The actual decommissioning costs may vary
from the above estimates because of regulatory requirements, changes in
technology, and changes in costs of labor, materials, and equipment.
PLANT VOGTLE PHASE-IN PLANS
In 1987 and 1989, the Georgia Public Service Commission (GPSC) ordered that the
allowed costs of Plant Vogtle, a two-unit nuclear facility of which Georgia
Power owns 45.7 percent, be phased into rates under plans that meet the
requirements of Financial Accounting Standards Board (FASB) Statement No. 92,
Accounting for Phase-In Plans. Under these plans, Georgia Power deferred
financing costs and depreciation expense until the allowed investment was fully
reflected in rates as of October 1991. In 1991, the GPSC modified the Plant
Vogtle phase-in plan to begin earlier amortization of the costs deferred under
the plan. Also, the GPSC levelized capacity buyback expense from co-owners of
Plant Vogtle. See Note 3 for additional information regarding Georgia Power's
1991 rate order. Previously, pursuant to two separate interim accounting
orders by the GPSC, Georgia Power deferred substantially all operating expenses
and financing costs related to Plant Vogtle. Units 1 and 2 began commercial
operation in May 1987 and May 1989, respectively. The accounting orders were
for the periods from the date of each unit's commercial operation until October
1987 and 1989, respectively. Under phase-in plans and accounting orders from
the GPSC, Georgia Power deferred and began amortizing the costs -- recovered
through rates -- related to Plant Vogtle as follows:
<TABLE>
<CAPTION>
Unrecovered
Balance
Year-End
1993 1992 1991 1993
(in millions)
<S> <C> <C>
Deferred:
Financing costs $ -- $ -- $ 35 $388
Capacity buyback
expense 38 100 30 168
Other operating
expenses -- -- 7 279
Amortization of
amounts deferred (74) (69) (53) (328)
Net deferred amounts $ (36) $31 $ 19 $507
</TABLE>
The unrecovered balance above includes approximately $160 million related
to the adoption in 1993 of FASB Statement No. 109, Accounting for Income Taxes.
See Note 9 for information about Statement No. 109.
II-23
<PAGE> 54
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
Each GPSC order calls for recovery of deferred costs within 10 years. Also,
the orders authorized Georgia Power to impute a return similar to allowance for
funds used during construction (AFUDC) on its investment in Plant Vogtle units
1 and 2 after the units began commercial operation. These deferred returns are
included in the above amounts, except for the equity component in the case of
the Unit 2 accounting order.
INCOME TAXES
The companies provide deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
In years prior to 1993, income taxes were accounted for and reported under
Accounting Principles Board Opinion No. 11. Effective January 1, 1993, The
Southern Company adopted FASB Statement No. 109, Accounting for Income Taxes.
Statement No. 109 required, among other things, conversion to the liability
method of accounting for accumulated deferred income taxes. See Note 9 for
additional information about Statement No. 109.
AFUDC AND DEFERRED RETURN
AFUDC represents the estimated debt and equity costs of capital funds that are
necessary to finance the construction of new facilities. While cash is not
realized currently from such allowance, it increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The composite rates used by the companies to calculate
AFUDC during the years 1991 through 1993 ranged from a before-income-tax rate
of 4.9 percent to 11.4 percent. Deferred income taxes related to capitalized
debt cost were $5 million, $4 million, and $7 million in 1993, 1992, and 1991,
respectively. After Plant Vogtle units 1 and 2 began commercial operation in
1987 and 1989, respectively, Georgia Power imputed a deferred return similar to
AFUDC on its investment in the units under the short-term cost deferrals and
phase-in plans, as discussed earlier. AFUDC and the deferred return, net of
income tax, as a percent of consolidated net income were 1.7 percent in 1993,
1.8 percent in 1992, and 6.0 percent in 1991. The deferred return was
discontinued in October 1991 after the allowed investment in Plant Vogtle was
fully reflected in rates.
UTILITY PLANT
Utility plant is stated at original cost less regulatory disallowances.
Original cost includes: materials; labor; minor items of property; appropriate
administrative and general costs; payroll-related costs such as taxes,
pensions, and other benefits; and the estimated cost of funds used during
construction. The cost of maintenance, repairs, and replacement of minor items
of property is charged to maintenance expense. The cost of replacements of
property (exclusive of minor items of property) is charged to utility plant.
CASH AND CASH EQUIVALENTS
For purposes of the Consolidated Statements of Cash Flows, temporary cash
investments are considered cash equivalents. Temporary cash investments are
securities with original maturities of 90 days or less.
FINANCIAL INSTRUMENTS
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, all financial instruments of The Southern Company -- for
which the carrying amount does not approximate fair value -- are shown in the
table below at December 31:
<TABLE>
<CAPTION>
1993
Carrying Fair
Amount Value
(in millions)
<S> <C> <C>
Nuclear decommissioning trusts $ 88 $ 90
Long-term debt 7,321 7,729
Preferred stock subject
to mandatory redemption 2 2
1992
Carrying Fair
Amount Value
(in millions)
Nuclear decommissioning trusts $ 52 $ 53
Investment securities 199 221
Long-term debt 7,165 7,566
Preferred stock subject
to mandatory redemption 73 79
</TABLE>
The fair values of nuclear decommissioning trusts and investment securities
were based on listed closing market prices. The fair values for long-term debt
and preferred
II-24
<PAGE> 55
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
stock subject to mandatory redemption were based on either closing market
prices or closing prices of comparable instruments.
MATERIALS AND SUPPLIES
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to
inventory when purchased and then expensed or capitalized to plant, as
appropriate, when installed. In 1992, Georgia Power converted to the inventory
method of accounting for certain emergency spare parts. This conversion
resulted in a regulatory liability that will be amortized as a credit to income
over approximately four years. This conversion will not have a material effect
on net income.
VACATION PAY
The operating companies' employees earn their vacation in one year and take it
in the subsequent year. However, for ratemaking purposes, vacation pay is
recognized as an allowable expense only when paid. Consistent with this
ratemaking treatment, the companies accrue a current liability for earned
vacation pay and record a current asset representing the future recoverability
of this cost. The amount was $73 million and $70 million at December 31, 1993
and 1992, respectively. In 1994, an estimated 71 percent of the 1993 deferred
vacation cost will be expensed, and the balance will be charged to construction
and other accounts.
2. RETIREMENT BENEFITS
PENSION PLAN
The system companies have defined benefit, trusteed, non-contributory pension
plans that cover substantially all regular employees. Benefits are based on
the greater of amounts resulting from two different formulas: years of service
and final average pay or years of service and a flat-dollar benefit.
Primarily, the companies use the "entry age normal method with a frozen initial
liability" actuarial method for funding purposes, subject to limitations under
federal income tax regulations. Amounts funded to the pension fund are
primarily invested in equity and fixed-income securities. FASB Statement No.
87, Employers' Accounting for Pensions, requires use of the "projected unit
credit" actuarial method for financial reporting purposes.
POSTRETIREMENT BENEFITS
The system companies also provide certain medical care and life insurance
benefits for retired employees. Substantially all employees may become
eligible for these benefits when they retire. A qualified trust for medical
benefits has been established for funding amounts to the extent deductible
under federal income tax regulations. Amounts funded are primarily invested in
debt and equity securities. Accrued costs of life insurance benefits, other
than current cash payments for retirees, currently are not being funded.
Effective January 1, 1993, the system companies adopted FASB Statement No.
106, Employers' Accounting for Postretirement Benefits Other Than Pensions, on
a prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service." In October
1993, the GPSC ordered Georgia Power to phase in the adoption of Statement No.
106 to cost of service over a five-year period, whereby one-fifth of the
additional costs would be expensed in 1993 and the remaining costs would be
deferred. An additional one-fifth of the costs would be expensed each
succeeding year until the costs are fully reflected in cost of service in 1997.
The costs deferred during the five-year period will be amortized to expense
over a 15-year period beginning in 1998. As a result of regulatory treatment
allowed by the operating companies' respective public service commissions, the
adoption of Statement No. 106 did not have a material impact on consolidated
net income.
Prior to 1993, the system companies, except for Georgia Power and Savannah
Electric, recognized these benefit costs on an accrual basis using the
"aggregate cost" actuarial method, which spreads the expected cost of such
benefits over the remaining periods of employees' service as a level percentage
of payroll costs. Consistent with regulatory treatment in these years, Georgia
Power and Savannah Electric recognized these costs on a cash basis as payments
were made. The total costs of such benefits recognized by system companies in
1992 and 1991 were $42 million and $36 million, respectively.
STATUS AND COST OF BENEFITS
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of FASB Statement Nos. 87 and 106, respectively. Retiree medical
and life insurance information is shown only for 1993 because Statement
II-25
<PAGE> 56
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
No. 106 was adopted as of January 1, 1993, on a prospective basis. The funded
status of the plans at December 31 was as follows:
<TABLE>
<CAPTION>
Pension
1993 1992
(in millions)
<S> <C> <C>
Actuarial present value of
benefit obligation:
Vested benefits $ 1,534 $ 1,293
Non-vested benefits 76 62
Accumulated benefit obligation 1,610 1,355
Additional amounts related to
projected salary increases 558 638
Projected benefit obligation 2,168 1,993
Less:
Fair value of plan assets 3,337 2,994
Unrecognized net gain (1,060) (891)
Unrecognized prior service cost 72 77
Unrecognized transition asset (152) (164)
Prepaid asset recognized in the
Consolidated Balance Sheets $ 29 $ 23
</TABLE>
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
(in millions)
<S> <C> <C>
Actuarial present value of
benefit obligation:
Retirees and dependents $ 243 $ 75
Employees eligible to retire 48 --
Other employees 389 96
Accumulated benefit obligation 680 171
Less:
Fair value of plan assets 95 2
Unrecognized net loss (gain) 76 (13)
Unrecognized transition obligation 419 113
Accrued liability recognized in the
Consolidated Balance Sheets $ 90 $ 69
</TABLE>
The weighted average rates assumed in the above
actuarial calculations were:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Discount 7.5% 8.0% 8.0%
Annual salary increase 5.0 6.0 6.0
Long-term return on
plan assets 8.5 8.5 8.5
</TABLE>
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 11.3 percent for 1993, decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate by 1 percent would increase the accumulated
medical benefit obligation at December 31, 1993, by $129 million and the
aggregate of the service and interest cost components of the net retiree
medical cost by $14 million.
Components of the plans' net cost are shown below:
<TABLE>
<CAPTION>
Pension
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Benefits earned during the year $ 76 $ 75 $ 71
Interest cost on projected
benefit obligation 156 146 138
Actual return on plan assets (432) (135) (745)
Net amortization and deferral 186 (85) 551
Net pension cost (income) $ (14) $ 1 $ 15
</TABLE>
Of the above net pension amounts, pension income of $9 million in 1993 and
pension expense of $2 million in 1992 and $11 million in 1991 were recorded in
operating expenses, and the remainder was recorded in construction and other
accounts.
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
(in millions)
<S> <C> <C>
Benefits earned during the year $ 21 $ 6
Interest cost on accumulated
benefit obligation 43 13
Amortization of transition
obligation over 20 years 22 6
Actual return on plan assets (12) --
Net amortization and deferral 5 --
Net postretirement cost $ 79 $ 25
</TABLE>
Of the above net postretirement medical and life insurance costs recorded in
1993, $64 million was charged to operating expenses, $21 million was deferred,
and the remainder was charged to construction and other accounts.
II-26
<PAGE> 57
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
WORK FORCE REDUCTION PROGRAMS
The system companies have incurred additional costs for work force reduction
programs. The costs related to these programs were $35 million, $37 million,
and $72 million for the years 1993, 1992, and 1991, respectively. A portion of
the cost of these programs was deferred and is being amortized in accordance
with regulatory treatment. The unamortized balance of these costs was $19
million at December 31, 1993.
3. LITIGATION AND REGULATORY MATTERS
RETAIL RATEPAYERS' SUIT CONCLUDED
In March 1993, several retail ratepayers of Georgia Power filed a civil
complaint in the Superior Court of Fulton County, Georgia, against Georgia
Power, The Southern Company, the system service company, and Arthur Andersen &
Co. The complaint alleged that Georgia Power obtained excessive rate increases
by improper accounting for spare parts and sought actual damages estimated by
the plaintiffs to be in excess of $60 million -- plus treble and punitive
damages -- for alleged violations of the Georgia Racketeer Influenced and
Corrupt Organizations Act and other state statutes, statutory and common law
fraud, and negligence. These state law allegations were substantially the
same as those included in a 1989 suit brought in federal district court in
Georgia. That suit and similar ones filed in Alabama, Florida, and
Mississippi federal courts were subsequently dismissed.
The defendants' motions to dismiss the current complaint were granted by the
Superior Court of Fulton County, Georgia, in July 1993. In January 1994, the
plaintiffs' appeal of the dismissal to the Supreme Court of Georgia was
rejected, and this matter is concluded.
STOCKHOLDER SUIT
In April 1991, two Southern Company stockholders filed a derivative action suit
in the U.S. District Court for the Southern District of Georgia against certain
current and former directors and officers of The Southern Company. The suit
alleges violations of the Federal Racketeer Influenced and Corrupt
Organizations Act (RICO) by officers and breaches of fiduciary duty and gross
negligence by all defendants resulting from alleged fraudulent accounting for
spare parts, illegal political campaign contributions, violations of federal
securities laws involving misrepresentations and omissions in SEC filings, and
concealment of the foregoing acts. The complaint seeks damages -- including
treble damages pursuant to RICO -- in an unspecified amount, which if awarded,
would be payable to The Southern Company. The plaintiffs' amended complaint
was dismissed by the court in March 1992. The court ruled the plaintiffs had
failed to present adequately their allegation that The Southern Company board
of directors' refusal of an earlier demand by the plaintiffs was wrongful. The
plaintiffs have appealed the dismissal to the U.S. Court of Appeals for the
11th Circuit.
ALABAMA POWER HEAT PUMP FINANCING SUIT
In September 1990, two customers of Alabama Power filed a civil complaint in
the Circuit Court of Shelby County, Alabama, against Alabama Power seeking to
represent all persons who, prior to June 23, 1989, entered into agreements with
Alabama Power for the financing of heat pumps and other merchandise purchased
from vendors other than Alabama Power. The plaintiffs contended that Alabama
Power was required to obtain a license under the Alabama Consumer Finance Act
to engage in the business of making consumer loans. The plaintiffs were
seeking an order declaring these agreements null and void and requiring Alabama
Power to refund all payments -- principal and interest -- made under these
agreements. The aggregate amount under these agreements, together with interest
paid, currently is estimated to be $40 million.
In June 1993, the court ordered Alabama Power to refund or forfeit interest
of approximately $10 million because of Alabama Power's failure to obtain such
license. However, the court's order did not require any refund or forfeiture
with respect to any principal payments under the agreements at issue. Alabama
Power has appealed the court's order to the Supreme Court of Alabama.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material adverse effect
on the company's financial statements.
GULF POWER COAL BARGE TRANSPORTATION SUIT
In 1993, a complaint against Gulf Power and the system service company was
filed in federal district court in Ohio by two companies with which Gulf Power
had contracted for the transportation by barge for certain Gulf Power coal
supplies. The complaint alleges breach of the contract by Gulf Power and seeks
damages estimated by the plaintiffs to be in excess of $85 million.
II-27
<PAGE> 58
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material adverse effect
on the company's financial statements.
ALABAMA POWER RATE ADJUSTMENT PROCEDURES
In November 1982, the Alabama Public Service Commission (APSC) adopted rates
that provide for periodic adjustments based upon Alabama Power's earned return
on end-of-period retail common equity. The rates also provide for adjustments
to recognize the placing of new generating facilities in retail service. Both
increases and decreases have been placed into effect since the adoption of
these rates. The rate adjustment procedures allow a return on common equity
range of 13.0 percent to 14.5 percent and limit increases or decreases in rates
to 4 percent in any calendar year.
The APSC issued an order in December 1991 that reduced a scheduled 2.03
percent annual increase in rates to 1.03 percent, effective January 1992. The
1 percent reduction will remain in effect through 1994. The rate reduction was
designed to refund to retail ratepayers a portion of the benefits from a
settled contract dispute with Gulf States Utilities Company (Gulf States). The
present value of this portion of the settlement -- amounting to some $60
million -- is being amortized to income to offset the rate reduction in
accordance with the APSC's rate order. See Note 8 for additional information
concerning the Gulf States settlement.
Also in the December 1991 rate order, the APSC reaffirmed its satisfaction
with the ratemaking mechanism and stated that it did not foresee any further
review or changes in the procedures until after 1994. The ratemaking
procedures will remain in effect after 1994 unless the APSC votes to modify or
discontinue them.
GEORGIA POWER'S DEMAND-SIDE CONSERVATION PROGRAMS
In October 1993, a Superior Court of Fulton County, Georgia, judge ruled that
rate riders previously approved by the GPSC for recovery of Georgia Power's
costs incurred in connection with demand-side conservation programs were
unlawful. The judge held that the GPSC lacked statutory authority to approve
such rate riders except through general rate case proceedings and that those
procedures had not been followed. Georgia Power suspended collection of the
demand-side conservation costs and appealed the court's decision to the Georgia
Court of Appeals. In December 1993, the GPSC approved Georgia Power's request
for an accounting order allowing Georgia Power to defer all current unrecovered
and future costs related to these programs until the superior court's decision
is reversed or until the next general rate case proceedings. An association of
industrial customers has filed a petition for review of the accounting order in
superior court. Georgia Power's costs related to these conservation programs
through 1993 were $60 million, of which $15 million has been collected and the
remainder deferred. The estimated costs, assuming no change in the programs
certified by the GPSC, are $38 million in 1994 and $40 million in 1995.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material adverse effect
on the company's financial statements.
GEORGIA POWER 1991 RATE ORDER; PHASE-IN PLAN MODIFICATIONS
Georgia Power received a rate order in 1991 from the GPSC that modified the
Plant Vogtle phase-in plans to begin earlier amortization of the costs deferred
under the plans. The amortization period began October 1991 -- rather than
October 1994 as originally scheduled -- and extends through September 1999. In
addition, the GPSC ordered the levelization of capacity buyback expense from
the co-owners of Plant Vogtle over a six-year period beginning October 1991.
This results in net cost deferrals during the first three years and subsequent
amortization of the deferred amounts in the last three years.
MISSISSIPPI POWER RETAIL RATE ADJUSTMENT PLAN
Mississippi Power's retail base rates have been set under a Performance
Evaluation Plan (PEP) since 1986 with various modifications in 1991 and the
latest in 1994. In 1993, the Mississippi Public Service Commission (MPSC)
ordered Mississippi Power to review and propose changes that would enhance the
plan. Mississippi Power filed a revised plan, and the MPSC approved PEP-2 on
January 4, 1994. Under PEP-2, Mississippi Power's rate of return will be
measured on retail net investment rather than on common equity, as previously
calculated. Also, the number of indicators used to evaluate Mississippi
Power's performance was reduced to three with emphasis on price and service to
the customer. In addition, PEP-2 provides for the sharing of rate adjustments
based on low rates and on the performance rating. The evaluation periods for
PEP-2 are semiannual. Any change in rates is limited to 2 percent of retail
revenues per period before a public hearing is required. PEP-2 will remain in
effect until the MPSC modifies or terminates the plan.
II-28
<PAGE> 59
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
FERC REVIEWS EQUITY RETURNS
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on common equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power, and other similar contracts.
Any changes in the rate of return on common equity that may occur as a result
of this proceeding would be effective 60 days after a proper notice of the
proceeding is published. A notice was published on May 10, 1991.
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC
staff has filed exceptions to the administrative law judge's opinion, and the
matter remains pending before the FERC.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material adverse effect
on the company's financial statements.
4. CONSTRUCTION PROGRAM
GENERAL
The operating companies are engaged in continuous construction programs,
currently estimated to total some $1.5 billion in 1994, $1.3 billion in 1995,
and $1.5 billion in 1996. These estimates include AFUDC of $34 million in
1994, $41 million in 1995, and $35 million in 1996. The construction programs
are subject to periodic review and revision, and actual construction costs may
vary from the above estimates because of numerous factors. These factors
include changes in business conditions; revised load growth estimates; changes
in environmental regulations; changes in existing nuclear plants to meet new
regulatory requirements; increasing costs of labor, equipment, and materials;
and cost of capital. At December 31, 1993, significant purchase commitments
were outstanding in connection with the construction program. The operating
companies do not have any new baseload generating plants under construction.
However, within the service area, the construction of combustion turbine
peaking units of approximately 1,700 megawatts is planned to be completed by
1996. In addition, significant construction will continue related to
transmission and distribution facilities and the upgrading and extension of the
useful lives of generating plants.
See Management's Discussion and Analysis under "Environmental Matters" for
information on the impact of the Clean Air Act Amendments of 1990 and other
environmental matters.
ROCKY MOUNTAIN PROJECT STATUS
In its 1985 financing order, the GPSC concluded that completion of the Rocky
Mountain pumped storage hydroelectric project in 1991 was not economically
justifiable and reasonable and withheld authorization for Georgia Power to
spend funds from approved securities issuances on that project. In 1988,
Georgia Power and Oglethorpe Power Corporation (OPC) entered into a joint
ownership agreement for OPC to assume responsibility for the construction and
operation of the project, as discussed in Note 6. However, full recovery of
Georgia Power's costs depends on the GPSC's treatment of the project's cost and
disposition of the project's capacity output. In the event Georgia Power
cannot demonstrate to the GPSC the project's economic viability based on
current ownership, construction schedule, and costs, then part or all of such
costs may have to be written off. At December 31, 1993, Georgia Power's
investment in the project amounted to approximately $197 million. AFUDC
accrued on the Rocky Mountain project has not been credited to income or
included in the project cost since December 1985. If accrual of AFUDC is not
resumed, Georgia Power's portion of the estimated total plant additions at
completion would be approximately $199 million. The plant is currently
scheduled to begin commercial operation in 1995. Georgia Power has held
preliminary discussions with other parties regarding the potential disposition
of its remaining interest in the project.
The ultimate outcome of this matter cannot now be determined.
5. FINANCING, INVESTMENT, AND
COMMITMENTS
GENERAL
In early 1994, The Southern Company sold -- through a public offering -- 5.6
million shares of common stock with proceeds totaling $120 million. The
company may require additional equity capital during the remainder of 1994.
The amount and timing of additional equity capital to be raised in 1994 -- as
well as in subsequent years -- will be contingent on The Southern Company's
investment opportunities. Equity capital can be provided from any combination
of public offerings, private placements, or the company's stock plans.
II-29
<PAGE> 60
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
To the extent possible, the operating companies' construction programs are
expected to be financed primarily from internal sources. Short-term debt will
be utilized when necessary; the amounts available are discussed below. The
subsidiary companies may issue additional long-term debt and preferred stock
primarily for the purposes of debt maturities and for redeeming higher-cost
securities.
FOREIGN UTILITY OPERATIONS
During 1993, The Southern Company made investments of approximately $315
million in utilities that own and operate generating facilities in various
foreign markets. The consolidated financial statements reflect these
investments in majority-owned subsidiaries on a consolidated basis and other
investments on an equity basis.
BANK CREDIT ARRANGEMENTS
At the beginning of 1994, unused credit arrangements with banks totaled $1.1
billion, of which approximately $500 million expires at various times during
1994 and 1995; $130 million expires at May 1, 1996; $400 million expires at
June 30, 1996; and $70 million expires at December 1, 1996.
Georgia Power's revolving credit agreements of $150 million, of which $130
million remained unused as of December 31, 1993, expire May 1, 1996. During
the term of these agreements, Georgia Power may convert short-term borrowings
into term loans, payable in 12 equal quarterly installments, with the first
installment due at the end of the first calendar quarter after the applicable
termination date or at an earlier date at Georgia Power's option. In
connection with these credit arrangements, Georgia Power agrees to pay
commitment fees based on the unused portions of the commitments or to maintain
compensating balances with the banks.
The $400 million expiring June 30, 1996, is under revolving credit
arrangements with several banks providing The Southern Company, Alabama Power,
and Georgia Power up to the total credit amount of $400 million. To provide
liquidity support to commercial paper programs, $135 million and $165 million
of the $400 million available credit are currently dedicated to the exclusive
use of Alabama Power and Georgia Power, respectively. During the term of these
agreements, short-term borrowings may be converted into term loans, payable in
12 equal quarterly installments, with the first installment due at the end of
the first calendar quarter after the applicable termination date or at an
earlier date at the companies' option. In addition, these agreements require
payment of commitment fees based on the unused portions of the commitments or
the maintenance of compensating balances with the banks.
Mississippi Power has $70 million of revolving credit agreements expiring
December 1, 1996. These agreements allow short-term borrowings to be converted
into term loans, payable in 12 equal quarterly installments, with the first
installment due at the end of the first calendar quarter after the applicable
termination date or at an earlier date at Mississippi Power's option. In
connection with these credit arrangements, Mississippi Power agrees to pay
commitment fees based on the unused portions of the commitments or to maintain
compensating balances with the banks.
Savannah Electric has $20 million of revolving credit arrangements expiring
December 31, 1995. These agreements allow short-term borrowings to be
converted into term loans, payable in 12 equal quarterly installments, with the
first installment due at the end of the first calendar quarter after the
applicable termination date or at an earlier date at Savannah Electric's
option. In connection with these credit arrangements, Savannah Electric agrees
to pay commitment fees based on the unused portions of the commitments.
In connection with all other lines of credit, the companies have the option
of paying fees or maintaining compensating balances, which are substantially
all the cash of the companies except for daily working funds and similar items.
These balances are not legally restricted from withdrawal.
In addition, the companies from time to time borrow under uncommitted lines
of credit with banks, and in the case of Alabama Power and Georgia Power,
through commercial paper programs that have the liquidity support of committed
bank credit arrangements.
ASSETS SUBJECT TO LIEN
The operating companies' mortgages, which secure the first mortgage bonds
issued by the companies, constitute a direct first lien on substantially all of
the companies' respective fixed property and franchises.
FUEL COMMITMENTS
To supply a portion of the fuel requirements of the system's generating plants,
the subsidiary companies have
II-30
<PAGE> 61
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
entered into various long-term commitments for the procurement of fossil and
nuclear fuel. In most cases, these contracts contain provisions for price
escalations, minimum purchase levels, and other financial commitments. Total
estimated long-term obligations were approximately $15 billion at December 31,
1993. Additional commitments for coal and nuclear fuel will be required in the
future to supply the operating companies' fuel needs.
To take advantage of lower-cost coal supplies, agreements were reached in
1986 for the payment of $121 million to terminate two contracts for the supply
of coal to Plant Daniel, which is jointly owned by Gulf Power and Mississippi
Power. Also, in March 1988, Gulf Power made an advance payment of $60 million
to a coal supplier under an agreement to lower the cost of future coal
purchased under an existing contract. These amounts are being amortized to
expense. The remaining unamortized amount included in deferred charges at
December 31, 1993, was $70 million.
OPERATING LEASES
The operating companies have entered into coal rail car rental agreements with
various terms and expiration dates. Rental expense totaled $11 million, $9
million, and $7 million for 1993, 1992, and 1991, respectively. At December
31, 1993, estimated minimum rental commitments for noncancelable operating
leases were as follows:
<TABLE>
<CAPTION>
Amounts
(in millions)
<S> <C>
1994 $ 12
1995 14
1996 12
1997 12
1998 12
1999 and thereafter 226
Total minimum payments $ 288
</TABLE>
6. FACILITY SALES AND JOINT OWNERSHIP
AGREEMENTS
In 1992, Alabama Power sold an undivided interest in units 1 and 2 of Plant
Miller and related facilities to Alabama Electric Cooperative, Inc.
Since 1975, Georgia Power has sold undivided interests in plants Vogtle,
Hatch, Scherer, and Wansley in varying amounts, together with transmission
facilities, to OPC, the Municipal Electric Authority of Georgia (MEAG), and the
city of Dalton, Georgia. Georgia Power has completed two of four separate
transactions to sell Unit 4 of Plant Scherer to two Florida utilities. See
Note 7 for additional information concerning these sales. In addition, Georgia
Power has entered into a joint ownership agreement with OPC with respect to the
Rocky Mountain project, as discussed later.
At December 31, 1993, Alabama Power's and Georgia Power's ownership and
investment (exclusive of nuclear fuel) in jointly owned facilities with the
above entities were as follows:
<TABLE>
<CAPTION>
Jointly Owned Facilities
Percent Amount of Accumulated
Ownership Investment Depreciation
(in millions)
<S> <C> <C> <C>
Plant Vogtle
(nuclear) 45.7% $3,285 $540
Plant Hatch
(nuclear) 50.1 840 325
Plant Miller
(coal)
Units 1 and 2 91.8 703 247
Plant Scherer
(coal)
Units 1 and 2 8.4 111 33
Unit 4 33.1 236 31
Plant Wansley
(coal) 53.5 286 125
Rocky Mountain
(pumped storage) 25.0* 197 --
</TABLE>
*Estimated ownership at date of completion.
Georgia Power and OPC have entered into a joint ownership agreement
regarding the 848-megawatt Rocky Mountain pumped storage hydroelectric project.
Under the agreement, Georgia Power will retain its present investment in the
project and OPC will finance, complete, and operate the facility. Upon
completion, Georgia Power will own an undivided interest in the project equal
to the proportion its investment bears to the total investment in the project
(excluding each party's cost of funds and ad valorem taxes). Based on current
cost estimates, Georgia Power's final ownership is estimated at approximately
25 percent of the project at completion. Georgia Power has held preliminary
discussions with other parties regarding the potential disposition of its
remaining interest in the project.
II-31
<PAGE> 62
NOTES (continued)
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES 1993 ANNUAL REPORT
Alabama Power and Georgia Power have contracted to operate and maintain
the jointly owned facilities -- except for the Rocky Mountain project -- as
agents for their respective co-owners. The companies' proportionate share of
their plant operating expenses is included in the corresponding operating
expenses in the Consolidated Statements of Income.
In connection with a joint ownership arrangement at Plant Vogtle, Georgia
Power has remaining commitments to purchase declining fractions of OPC's and
MEAG's capacity and energy from this plant for periods of up to 10 years
following commercial operation (and, with regard to a portion of the 5 percent
additional interest in Plant Vogtle owned by MEAG, until the latter of the
retirement of the plant or the latest stated maturity date of MEAG's bonds
issued to finance such ownership interest). The payments for such capacity are
required whether any capacity is available. The energy cost of these purchases
is a function of each unit's variable operating costs. Except as noted below,
the cost of such capacity and energy is included in purchased power in the
Consolidated Statements of Income. Capacity payments totaled $183 million,
$289 million, and $320 million, for 1993, 1992, and 1991, respectively.
Projected capacity payments for the next five years are as follows: $132
million in 1994; $77 million in 1995; $70 million in 1996; $59 million in 1997;
and $59 million in 1998. Also, a portion of the above capacity payments
relates to Plant Vogtle costs that were written off after being disallowed for
retail ratemaking purposes.
In 1991, the GPSC ordered that the Plant Vogtle capacity buyback expense be
levelized over a six-year period. The amounts deferred and not expensed in the
year paid totaled $38 million in 1993, $100 million in 1992, and $30 million in
1991. The projected net amount to be deferred in 1994 is $1 million. The
projected net amortization of the deferred expense is $49 million in 1995, $62
million in 1996, and $57 million in 1997.
7. PLANNED SALES OF INTEREST IN PLANT
SCHERER
Georgia Power has completed two of four separate transactions to sell Unit 4 of
Plant Scherer to Florida Power & Light Company (FP&L) and Jacksonville Electric
Authority (JEA) for a total price of approximately $806 million, including any
gains on these transactions. FP&L would eventually own approximately 76.4
percent of the unit, with JEA owning the remainder. The capacity from this
unit was previously dedicated to long-term power sales contracts with Gulf
States that were suspended in 1988. Georgia Power will continue to operate the
unit.
The completed and scheduled remaining transactions are as follows:
<TABLE>
<CAPTION>
Closing Percent
Date Capacity Ownership Amount
(megawatts) (in millions)
<S> <C> <C> <C>
July 1991 290 35.46% $291
June 1993 258 31.44 253
June 1994 135 16.55 132
June 1995 135 16.55 130
Total 818 100.00% $806
</TABLE>
Plant Scherer -- a jointly owned coal-fired generating plant -- has four
units with a total capacity of 3,272 megawatts. Unit 4 was completed in 1989.
See Note 6 for information regarding current plant ownership.
8. LONG-TERM POWER SALES
AGREEMENTS
GENERAL
The operating subsidiaries of The Southern Company have entered into long-term
contractual agreements for the sale of capacity and energy to certain
non-affiliated utilities located outside the system's service area. Certain of
these agreements are non-firm and are based on capacity of the system in
general. Other agreements are firm and pertain to capacity related to specific
generating units. Because the energy is generally sold at cost under these
agreements, revenues from capacity sales primarily affect profitability. The
capacity revenues have been as follows:
<TABLE>
<CAPTION>
Unit Other
Year Power Long-Term Total
(in millions)
<S> <C> <C> <C>
1993 $312 $38 $350
1992 435 22 457
1991 468 22 490
</TABLE>
Long-term non-firm power of 400 megawatts was sold in 1993 to Florida Power
Corporation (FPC). In January 1994, this amount decreased to 200 megawatts,
and the contract will expire at year-end.
Unit power from specific generating plants is currently being sold to FP&L,
FPC, JEA, and the city of Tallahassee, Florida. Under these agreements, an
average
II-32
<PAGE> 63
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
of 1,700 megawatts of capacity is scheduled to be sold during 1994 and 1995.
Thereafter, these sales will decline to some 1,600 megawatts and remain at that
approximate level -- unless reduced by FP&L, FPC, and JEA for the periods after
1999 -- until the expiration of the contracts in 2010.
GULF STATES SETTLEMENT COMPLETED
On November 7, 1991, subsidiaries of The Southern Company entered into a
settlement agreement with Gulf States that resolved litigation between the
companies that had been pending since 1986 and arose out of a dispute over
certain unit power and other long-term power sales contracts. In 1993, all
remaining terms and obligations of the settlement agreement were satisfied.
Based on the value of the settlement proceeds received -- less the amounts
to be refunded to customers and the amounts previously included in income --
The Southern Company recorded an increase in consolidated net income of $114
million, or 18 cents per share, in November 1991. With respect to Alabama
Power's portion of proceeds received in 1991, see Note 3 concerning the
regulatory treatment of amounts being refunded to retail customers over a
three-year period.
9. INCOME TAXES
Effective January 1, 1993, The Southern Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption of Statement No. 109 resulted in
cumulative adjustments that had no material effect on consolidated net income.
The adoption also resulted in the recording of additional deferred income taxes
and related assets and liabilities. The related assets of $1.5 billion are
revenues to be received from customers. These assets are attributable to tax
benefits flowed through to customers in prior years and to taxes applicable to
capitalized AFUDC. The related liabilities of $1.1 billion are revenues to be
refunded to customers. These liabilities are attributable to deferred taxes
previously recognized at rates higher than current enacted tax law and to
unamortized investment tax credits. Additionally, deferred income taxes
related to accelerated tax depreciation previously shown as a reduction to
utility plant were reclassified.
Details of the federal and state income tax provisions are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Total provision for income taxes:
Federal --
Currently payable $424 $343 $506
Deferred -- current year 224 225 139
-- reversal of
prior years (51) (41) (121)
Deferred investment tax
credits (20) (6) (11)
577 521 513
State --
Currently payable 64 50 76
Deferred -- current year 39 46 23
-- reversal of
prior years (3) (9) (15)
100 87 84
Total 677 608 597
Less income taxes charged
(credited) to other income (57) (39) (21)
Federal and state income
taxes charged to operations $734 $647 $618
</TABLE>
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities, are as follows:
<TABLE>
<CAPTION>
1993
(in millions)
<S> <C>
Deferred tax liabilities:
Accelerated depreciation $2,496
Property basis differences 1,741
Deferred plant costs 161
Other 289
Total 4,687
Deferred tax assets:
Federal effect of state deferred taxes 102
Other property basis differences 292
Deferred costs 69
Pension and other benefits 46
Other 210
Total 719
Net deferred tax liabilities 3,968
Portion included in current assets, net 11
Accumulated deferred income taxes
in the Consolidated Balance Sheets $3,979
</TABLE>
II-33
<PAGE> 64
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Consolidated Statements of Income. Credits amortized in
this manner amounted to $29 million in 1993, $41 million in 1992, and $48
million in 1991. At December 31, 1993, all investment tax credits available to
reduce federal income taxes payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Federal statutory rate 35.0% 34.0% 34.0%
State income tax,
net of federal deduction 3.7 3.4 3.5
Non-deductible book
depreciation 1.9 2.2 2.9
Difference in prior years'
deferred and current tax rate (1.3) (1.5) (1.5)
Other (1.1) (1.6) (1.1)
Effective income tax rate 38.2% 36.5% 37.8%
</TABLE>
The Southern Company and its subsidiaries file a consolidated federal income
tax return. Under a joint consolidated income tax agreement, each company's
current and deferred tax expense is computed on a stand-alone basis, and
consolidated tax savings are allocated to each company based on its ratio of
taxable income to total consolidated taxable income.
10. COMMON STOCK
STOCK DISTRIBUTION
In January 1994, The Southern Company board of directors authorized a
two-for-one common stock split in the form of a stock distribution for each
share held as of February 7, 1994. For all reported common stock data, the
number of common shares outstanding and per share amounts for earnings,
dividends, and market price have been adjusted to reflect the stock
distribution.
SHARES RESERVED
At December 31, 1993, a total of 24 million shares was reserved for issuance
pursuant to the Dividend Reinvestment and Stock Purchase Plan, the Employee
Savings Plan, and the Executive Stock Option Plan.
EXECUTIVE STOCK OPTION PLAN
The Southern Company's Executive Stock Option Plan authorizes the granting of
non-qualified stock options to key employees of The Southern Company, including
officers. Currently, 34 employees are eligible to participate in the plan. As
of December 31, 1993, 38 current and former employees participated in the plan.
The maximum number of shares of common stock that may be issued under the
Executive Stock Option Plan may not exceed 6 million. The price of options
granted to date has been at the fair market value of the shares on the date of
grant. Options granted to date become exercisable pro rata over a maximum
period of four years from date of grant, such that all options generally are
exercisable by 1997. Options outstanding will expire upon termination of the
plan, which will occur on December 7, 1997, unless terminated earlier by the
board of directors. Stock option activity in 1992 and 1993 is summarized
below:
<TABLE>
<CAPTION>
Shares Average
Subject Option Price
To Option Per Share
<S> <C> <C>
Balance at December 31, 1991 1,399,088 $13.02
Options granted 434,840 18.09
Options canceled -- --
Options exercised (644,806) 12.75
Balance at December 31, 1992 1,189,122 15.02
Options granted 359,492 21.22
Options canceled -- --
Options exercised (183,804) 14.14
Balance at December 31, 1993 1,364,810 $16.77
Shares reserved for future grants:
At December 31, 1991 4,508,776
At December 31, 1992 4,073,936
At December 31, 1993 3,714,444
Options exercisable:
At December 31, 1992 243,566
At December 31, 1993 475,795
</TABLE>
II-34
<PAGE> 65
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
11. OTHER LONG-TERM DEBT
Details of other long-term debt are as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(in millions)
<S> <C> <C>
Obligations incurred in connection
with the sale by public authorities
of tax-exempt pollution control
revenue bonds:
Collateralized --
5.375% to 10.0% due 2003-2023 $ 708 $ 512
Variable rates (3.05% to 3.40%)
due 2016-2022 63 23
Non-collateralized --
5.9% to 7.25% due 2003-2006 6 32
7.2% to 9.2% due 2007-2010 -- 92
Variable rate (3.7% at 1/1/94)
due 2011 10 10
7.2% to 12.25% due 2013-2014 644 738
6.75% to 10.6% due 2015-2017 890 891
5.8% due 2022 10 --
Variable rate (3.55% at 1/1/94)
due 2019 59 59
Variable rates (3.7% to 6.2% at
1/1/94) due 2021 and 2022 23 23
Less funds on deposit with trustees -- 2
2,413 2,378
Capitalized lease obligations:
Nuclear fuel 96 104
Buildings 146 154
Other 5 6
247 264
Notes payable:
8.25% due 1993-1995 35 51
7.5% due 1993-1995 2 3
9.75% due 1993-2010 10 10
8.0% due 1993 -- 2
4.36% to 8.00% due 1993-1995 101 20
4.62% to 9.4% due 1996-2000 94 25
Adjustable rates (3.45% to
4.41% at 1/1/94) due 1994 60 67
302 178
Total $2,962 $2,820
</TABLE>
With respect to the collateralized pollution control revenue bonds, the
operating companies have authenticated and delivered to trustees a like
principal amount of first mortgage bonds as security for obligations under
installment sale or loan agreements. The principal and interest on the first
mortgage bonds will be payable only in the event of default under the
agreements.
Assets acquired under capital leases are recorded as utility plant in
service, and the related obligation is classified as other long-term debt. The
net book value of capitalized leases was $217 million and $236 million at
December 31, 1993 and 1992, respectively. At December 31, 1993, the composite
interest rates for nuclear fuel, buildings, and other were 3.6 percent, 9.7
percent, and 12.0 percent, respectively. Sinking fund requirements and/or
serial maturities through 1998 applicable to other long-term debt are as
follows: $89 million in 1994; $154 million in 1995; $58 million in 1996; $26
million in 1997; and $7 million in 1998.
12. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund requirements and scheduled maturities and
redemptions of long-term debt due within one year is as follows:
<TABLE>
<CAPTION>
1993 1992
(in millions)
<S> <C> <C>
Bond improvement fund requirements $ 51 $ 54
Less:
Portion to be satisfied by certifying
property additions 3 2
Reacquired bonds 25 --
Cash sinking fund requirements 23 52
First mortgage bond maturities
and redemptions 44 57
Other long-term debt maturities
(Note 11) 89 79
Total $156 $188
</TABLE>
The first mortgage bond improvement (sinking) fund requirements amount to 1
percent of each outstanding series of bonds authenticated under the indentures
prior to January 1 of each year, other than those issued to collateralize
pollution control and other obligations. The requirements may be satisfied by
depositing cash or reacquiring bonds, or by pledging additional property equal
to 166 2/3 percent of such requirements.
II-35
<PAGE> 66
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
13. NUCLEAR INSURANCE
Under the Price-Anderson Amendments Act of 1988, Alabama Power and Georgia
Power maintain agreements of indemnity with the NRC that, together with private
insurance, cover third-party liability arising from any nuclear incident
occurring at the companies' nuclear power plants. The act limits to $9.4
billion public liability claims that could arise from a single nuclear
incident. Each nuclear plant is insured against this liability to a maximum of
$200 million by private insurance, with the remaining coverage provided by a
mandatory program of deferred premiums that could be assessed, after a nuclear
incident, against all owners of nuclear reactors. A company could be assessed
up to $79 million per incident for each licensed reactor it operates but not
more than an aggregate of $10 million per incident to be paid in a calendar
year for each reactor. Such maximum assessment, excluding any applicable state
premium taxes, for Alabama Power and Georgia Power -- based on its ownership
and buyback interests -- is $159 million and $171 million, respectively, per
incident but not more than an aggregate of $20 million and $22 million,
respectively, to be paid for each incident in any one year.
Alabama Power and Georgia Power are members of Nuclear Mutual Limited (NML),
a mutual insurer established to provide property damage insurance in an amount
up to $500 million for members' nuclear generating facilities. The members are
subject to a retrospective premium adjustment in the event that losses exceed
accumulated reserve funds. Alabama Power's and Georgia Power's maximum annual
assessments are limited to $14 million and $18 million, respectively, under
current policies.
Additionally, both companies have policies that currently provide
decontamination, excess property insurance, and premature decommissioning
coverage up to $2.25 billion for losses in excess of the $500 million NML
coverage. This excess insurance is provided by Nuclear Electric Insurance
Limited (NEIL), a mutual insurance company, and American Nuclear
Insurers/Mutual Atomic Energy Liability Underwriters.
NEIL also covers the additional costs that would be incurred in obtaining
replacement power during a prolonged accidental outage at a member's nuclear
plant. Members can be insured against increased costs of replacement power in
an amount up to $3.5 million per week -- starting 21 weeks after the outage --
for one year and up to $2.3 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if
losses each year exceed the accumulated funds available to the insurer under
that policy. The maximum annual assessments under current policies for Alabama
Power and Georgia Power for excess property damage would be $16 million and $15
million, respectively. The replacement power assessments are $9 million for
Alabama Power and $13 million for Georgia Power.
For all on-site property damage insurance policies for commercial nuclear
power plants, the NRC requires that the proceeds of such policies issued or
renewed on or after April 2, 1991, shall be dedicated first for the sole
purpose of placing the reactor in a safe and stable condition after an
accident. Any remaining proceeds are to be applied next toward the costs of
decontamination and debris removal operations ordered by the NRC, and any
further remaining proceeds are to be paid either to the company or to its bond
trustees as may be appropriate under the policies and applicable trust
indentures.
Alabama Power and Georgia Power participate in an insurance program for
nuclear workers that provides coverage for worker tort claims filed for bodily
injury caused at commercial nuclear power plants. In the event that claims for
this insurance exceed the accumulated reserve funds, Alabama Power and Georgia
Power could be subject to a maximum total assessment of $6 million and $7
million, respectively.
II-36
<PAGE> 67
NOTES (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
14. COMMON STOCK DIVIDEND
RESTRICTIONS
The income of The Southern Company is derived primarily from equity in earnings
of its operating subsidiaries. At December 31, 1993, $1.6 billion of
consolidated retained earnings was restricted against the payment by the
operating companies of cash dividends on common stock under terms of bond
indentures or charters.
15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial data for 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Per Common Share*
Operating Operating Consolidated Price Range
Quarter Ended Revenues Income Net Income Earnings Dividends High Low
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
March 1993 $1,840 $377 $177 $0.28 $0.285 21 3/8 18 3/8
June 1993 2,068 426 250 0.39 0.285 22 1/2 19 3/8
September 1993 2,636 637 442 0.70 0.285 23 20 1/2
December 1993 1,945 324 133 0.20 0.285 23 5/8 20 3/4
March 1992 $1,808 $387 $185 $0.29 $0.275 17 3/8 15 1/8
June 1992 2,011 428 223 0.36 0.275 17 5/8 15 5/8
September 1992 2,386 609 404 0.64 0.275 19 17 3/8
December 1992 1,868 338 141 0.22 0.275 19 1/2 17 5/8
</TABLE>
*Common stock data have been adjusted to reflect a two-for-one stock split in
the form of a stock distribution for each share held as of February 7, 1994.
The company's business is influenced by seasonal weather conditions and the
timing of rate changes.
II-37
<PAGE> 68
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The Southern Company and Subsidiary Companies 1993 Annual Report
(See Note Below)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (in millions) $ 8,489 $ 8,073 $ 8,050
CONSOLIDATED NET INCOME (in millions) $ 1,002 $ 953 $ 876
EARNINGS PER SHARE OF COMMON STOCK $ 1.57 $ 1.51 $ 1.39
CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK $ 1.14 $ 1.10 $ 1.07
RETURN ON AVERAGE COMMON EQUITY (percent) 13.43 13.42 12.74
TOTAL ASSETS (in millions) $ 25,911 $ 20,038 $ 19,863
GROSS PROPERTY ADDITIONS (in millions) $ 1,441 $ 1,105 $ 1,123
CAPITALIZATION (in millions):
Common stock equity $ 7,684 $ 7,234 $ 6,976
Preferred stock 1,332 1,351 1,207
Preferred and preference stock subject
to mandatory redemption 1 8 126
Long-term debt 7,412 7,241 7,992
Total excluding amounts due within one year $ 16,429 $ 15,834 $ 16,301
CAPITALIZATION RATIOS (percent):
Common stock equity 46.8 45.7 42.8
Preferred stock 8.1 8.6 8.2
Long-term debt 45.1 45.7 49.0
Total excluding amounts due within one year 100.0 100.0 100.0
OTHER COMMON STOCK DATA:
Book value per share (year-end) $ 11.96 $ 11.43 $ 11.05
Market price per share:
High 23 5/8 19 1/2 17 3/8
Low 18 3/8 15 1/8 12 7/8
Close 22 19 1/4 17 1/8
Market-to-book ratio (year-end) (percent) 183.9 168.4 155.5
Price-earnings ratio (year-end) (times) 14.0 12.7 12.4
Dividends paid (in millions) $ 726 $ 695 $ 676
Dividend yield (year-end) (percent) 5.2 5.7 6.2
Dividend payout ratio (percent) 72.4 72.9 77.1
Cash coverage of dividends (year-end) (times) 2.9 2.8 2.5
Proceeds from sales of stock (in millions) $ 204 $ 30 --
Shares outstanding (in thousands):
Average 637,319 631,844 631,307
Year-end 642,662 632,917 631,307
Stockholders of record (year-end) 237,105 247,378 254,568
FIRST MORTGAGE BONDS (in millions):
Issued $ 2,185 $ 1,815 $ 380
Retired 2,178 2,575 881
PREFERRED STOCK (in millions):
Issued $ 426 $ 410 $ 100
Retired 516 326 125
CUSTOMERS (year-end) (in thousands):
Residential 2,996 2,950 2,903
Commercial 427 414 403
Industrial 18 18 18
Other 4 4 4
Total 3,445 3,386 3,328
EMPLOYEES (year-end) 28,743 29,085 30,402
</TABLE>
Note: Common stock data have been adjusted to reflect a two-for-one stock split
in the form of a stock distribution for each share held as of February 7, 1994.
II-38
<PAGE> 69
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The Southern Company and Subsidiary Companies 1993 Annual Report
(See Note Below)
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 8,053 $ 7,620 $ 7,287 $ 7,204 $ 7,033 $ 6,999 $ 6,350 $ 5,673
$ 604 $ 846 $ 846 $ 577 $ 903 $ 845 $ 735 $ 604
$ 0.96 $ 1.34 $ 1.36 $ 0.96 $ 1.56 $ 1.56 $ 1.47 $ 1.32
$ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.0325 $ 0.975 $ 0.915 $ 0.8625
8.85 12.49 13.03 9.27 15.61 16.59 16.55 15.67
$ 19,955 $ 20,092 $ 19,731 $ 19,518 $ 18,483 $ 16,855 $ 15,327 $ 13,790
$ 1,185 $ 1,346 $ 1,754 $ 1,853 $ 2,367 $ 2,242 $ 2,130 $ 1,722
$ 6,783 $ 6,861 $ 6,686 $ 6,307 $ 6,133 $ 5,443 $ 4,741 $ 4,135
1,207 1,209 1,259 1,139 1,214 1,114 1,004 954
151 191 206 224 178 194 206 214
8,458 8,575 8,433 8,333 7,812 7,220 6,774 6,439
$ 16,599 $ 16,836 $ 16,584 $ 16,003 $ 15,337 $ 13,971 $ 12,725 $ 11,742
40.9 40.8 40.3 39.4 40.0 38.9 37.3 35.2
8.2 8.3 8.8 8.5 9.1 9.4 9.5 9.9
50.9 50.9 50.9 52.1 50.9 51.7 53.2 54.9
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
$ 10.74 $ 10.87 $ 10.60 $ 10.28 $ 10.35 $ 9.72 $ 9.08 $ 8.60
14 5/8 14 7/8 12 1/8 14 1/2 13 5/8 11 5/8 9 3/8 8 7/8
11 1/2 11 10 1/8 8 7/8 10 1/8 8 7/8 7 1/8 7 1/4
13 7/8 14 1/2 11 1/8 11 1/8 12 5/8 11 1/8 9 3/8 8 1/8
129.7 134.0 105.5 108.8 122.5 114.5 103.9 95.2
14.6 10.9 8.2 11.7 8.2 7.1 6.4 6.2
$ 676 $ 675 $ 661 $ 628 $ 583 $ 512 $ 444 $ 380
7.7 7.3 9.6 9.6 8.4 9.2 10.2 11.0
111.8 79.8 78.1 108.9 64.6 60.6 60.4 63.0
2.8 2.6 2.3 2.0 2.7 2.6 3.1 3.4
-- $ 4 $ 194 $ 247 $ 379 $ 373 $ 318 $ 333
631,307 631,303 622,292 601,390 580,252 541,244 501,313 456,262
631,307 631,307 630,898 613,565 592,364 560,063 522,018 480,649
263,046 273,751 290,725 296,079 297,302 318,221 336,165 351,012
$ 300 $ 280 $ 335 $ 700 $ 735 $ 20 $ 150 $ 129
146 201 273 369 875 69 71 53
$ -- $ -- $ 120 $ 125 $ 100 $ 150 $ 50 $ 50
96 21 10 160 53 6 6 11
2,865 2,824 2,781 2,733 2,675 2,611 2,541 2,473
396 392 384 374 362 348 336 324
18 18 18 18 17 17 17 17
4 4 4 4 4 4 4 4
3,283 3,238 3,187 3,129 3,058 2,980 2,898 2,818
30,263 30,530 32,523 32,612 32,358 32,354 31,753 31,499
</TABLE>
II-39
<PAGE> 70
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (in millions):
Residential $ 2,696 $ 2,402 $ 2,391
Commercial 2,313 2,181 2,122
Industrial 2,200 2,126 2,088
Other 68 64 65
Total retail 7,277 6,773 6,666
Sales for resale within service area 447 409 417
Sales for resale outside service area 613 797 884
Total revenues from sales of electricity 8,337 7,979 7,967
Other revenues 152 94 83
Total $ 8,489 $ 8,073 $ 8,050
KILOWATT-HOUR SALES (in millions):
Residential 36,807 33,627 33,622
Commercial 32,847 31,025 30,379
Industrial 48,738 47,816 46,050
Other 814 777 817
Total retail 119,206 113,245 110,868
Sales for resale within service area 13,258 12,107 12,320
Sales for resale outside service area 12,445 16,632 19,839
Total 144,909 141,984 143,027
AVERAGE REVENUE PER KILOWATT-HOUR (cents):
Residential 7.32 7.14 7.11
Commercial 7.04 7.03 6.99
Industrial 4.51 4.45 4.53
Total retail 6.10 5.98 6.01
Sales for resale 4.12 4.20 4.05
Total sales 5.75 5.62 5.57
AVERAGE ANNUAL KILOWATT-HOUR USE PER RESIDENTIAL CUSTOMER 12,378 11,490 11,659
AVERAGE ANNUAL REVENUE PER RESIDENTIAL CUSTOMER $ 906.60 $ 820.67 $ 829.18
PLANT NAMEPLATE CAPACITY RATINGS (year-end) (megawatts) 29,513 29,830 29,915
MAXIMUM PEAK-HOUR DEMAND (megawatts):
Winter 19,432 19,121 19,166
Summer 25,937 24,146 25,261
SYSTEM RESERVE MARGIN (at peak) (percent) 13.2 14.3 16.5
ANNUAL LOAD FACTOR (percent) 59.4 60.3 58.3
PLANT AVAILABILITY (percent):
Fossil-steam 87.9 88.6 91.3
Nuclear 85.9 85.2 83.4
SOURCE OF ENERGY SUPPLY (percent):
Coal 72.2 71.7 72.6
Nuclear 16.1 16.2 16.2
Hydro 3.9 4.6 4.4
Oil and gas 0.7 0.5 0.6
Purchased power 7.1 7.0 6.2
Total 100.0 100.0 100.0
TOTAL FUEL ECONOMY DATA:
BTU per net kilowatt-hour generated 9,994 9,976 10,022
Cost of fuel per million BTU (cents) 166.85 162.58 168.28
Average cost of fuel per net kilowatt-hour generated (cents) 1.67 1.62 1.69
</TABLE>
II-40
<PAGE> 71
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA (continued)
The Southern Company and Subsidiary Companies 1993 Annual Report
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,342 $ 2,194 $ 2,103 $ 2,042 $ 1,996 $ 1,825 $ 1,751 $ 1,641
2,062 1,965 1,835 1,692 1,613 1,512 1,410 1,284
2,085 2,011 1,945 1,870 1,845 1,830 1,790 1,600
64 60 56 54 52 50 47 42
6,553 6,230 5,939 5,658 5,506 5,217 4,998 4,567
412 401 480 461 511 436 456 439
977 928 777 1,028 957 1,289 854 619
7,942 7,559 7,196 7,147 6,974 6,942 6,308 5,625
111 61 91 57 59 57 42 48
$ 8,053 $ 7,620 $ 7,287 $ 7,204 $ 7,033 $ 6,999 $ 6,350 $ 5,673
33,118 31,627 31,041 30,583 29,501 27,088 26,163 25,425
29,658 28,454 27,005 25,593 24,166 22,512 20,816 19,512
45,974 45,022 43,675 42,113 40,503 39,804 39,055 35,618
806 787 763 737 723 713 663 645
109,556 105,890 102,484 99,026 94,893 90,117 86,697 81,200
11,134 11,419 14,806 13,282 14,347 11,079 11,193 10,829
24,402 24,228 15,860 22,905 16,909 27,881 21,374 15,509
145,092 141,537 133,150 135,213 126,149 129,077 119,264 107,538
7.07 6.94 6.77 6.68 6.77 6.74 6.69 6.45
6.96 6.91 6.79 6.61 6.67 6.71 6.77 6.58
4.53 4.47 4.45 4.44 4.56 4.60 4.58 4.49
5.98 5.88 5.80 5.71 5.80 5.79 5.76 5.62
3.91 3.73 4.10 4.11 4.69 4.43 4.02 4.02
5.47 5.34 5.40 5.29 5.53 5.38 5.29 5.23
11,637 11,287 11,255 11,307 11,157 10,515 10,434 10,395
$ 822.93 $ 782.90 $ 762.42 $ 754.96 $ 754.93 $ 708.46 $ 698.26 $ 670.76
29,532 29,532 27,552 27,610 26,262 26,262 25,397 25,377
17,629 20,772 18,685 18,185 19,665 19,347 16,353 15,502
25,981 24,399 23,641 23,194 23,255 21,778 20,210 20,999
14.0 21.0 15.0 16.2 11.4 17.6 32.8 27.0
56.6 58.6 59.8 58.7 57.2 57.4 58.9 53.9
91.9 92.2 91.3 91.2 90.3 90.5 90.5 90.5
83.0 87.0 78.4 84.5 74.2 80.3 66.9 75.8
72.1 71.5 77.7 77.8 79.4 78.5 77.3 75.2
15.6 15.7 14.5 13.1 11.5 12.0 11.8 13.2
4.4 5.2 2.3 3.3 2.2 3.1 5.6 6.4
1.3 1.1 0.7 0.6 0.9 0.3 0.2 0.5
6.6 6.5 4.8 5.2 6.0 6.1 5.1 4.7
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
10,065 10,086 10,094 10,122 10,171 10,193 10,208 10,357
172.81 171.00 170.36 176.64 185.89 191.24 191.44 184.25
1.74 1.72 1.72 1.78 1.89 1.95 1.95 1.91
</TABLE>
II-41
<PAGE> 72
CONSOLIDATED STATEMENTS OF INCOME
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 1991
(Millions of Dollars)
<S> <C> <C> <C>
OPERATING REVENUES $ 8,489 $ 8,073 $ 8,050
OPERATING EXPENSES:
Operation --
Fuel 2,265 2,114 2,237
Purchased power 336 454 468
Proceeds from settlement of disputed contracts (3) (7) (181)
Other 1,448 1,317 1,321
Maintenance 653 613 637
Depreciation and amortization 793 768 763
Deferred Plant Vogtle expenses, net 36 (31) 16
Taxes other than income taxes 462 436 432
Federal and state income taxes 734 647 618
Total operating expenses 6,724 6,311 6,311
OPERATING INCOME 1,765 1,762 1,739
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 9 10 13
Deferred return on Plant Vogtle - - 35
Write-off of Plant Vogtle costs - - -
Income tax reduction for write-off of Plant Vogtle costs - - -
Interest income 30 32 30
Other, net (41) (50) (57)
Income taxes applicable to other income 57 39 21
INCOME BEFORE INTEREST CHARGES 1,820 1,793 1,781
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on long-term debt 595 684 757
Allowance for debt funds used during construction (13) (12) (18)
Interest on interim obligations 30 16 20
Amortization of debt discount, premium, and expense, net 26 14 9
Other interest charges 87 34 29
Preferred and preference dividends of subsidiary companies 93 104 108
Net interest charges and preferred and preference dividends 818 840 905
CONSOLIDATED INCOME BEFORE REFUND OF RETAIL REVENUES
BILLED SUBJECT TO REFUND IN PRIOR YEARS AND CUMULATIVE
EFFECT OF A CHANGE IN METHOD OF RECORDING REVENUES 1,002 953 876
Refund of Retail Revenues Billed Subject to Refund in Prior
Years--Less Income Taxes - - -
Cumulative Effect as of Jan. 1, of Accruing Unbilled
Revenues--Less Income Taxes - - -
CONSOLIDATED NET INCOME AS REPORTED $ 1,002 $ 953 $ 876
EARNINGS PER SHARE OF COMMON STOCK $ 1.57 $ 1.51 $ 1.39
AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
(THOUSANDS) 637,319 631,844 631,307
</TABLE>
II-42
<PAGE> 73
CONSOLIDATED STATEMENTS OF INCOME
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 8,053 $ 7,620 $ 7,287 $ 7,204 $ 7,033 $ 6,999 $ 6,350 $ 5,673
2,327 2,241 2,213 2,303 2,316 2,431 2,197 1,944
642 575 562 552 386 456 435 281
- - - - - - - -
1,161 1,103 1,167 1,219 1,045 941 840 759
602 542 547 574 576 562 494 429
749 698 632 563 510 471 444 420
31 (39) (8) (142) - - - -
397 356 362 349 315 303 283 255
520 525 412 517 672 649 576 533
6,429 6,001 5,887 5,935 5,820 5,813 5,269 4,621
1,624 1,619 1,400 1,269 1,213 1,186 1,081 1,052
33 71 138 190 312 269 212 146
83 48 107 115 - - - -
(281) - - (358) - - - -
63 - - 129 - - - -
28 28 46 77 66 70 61 61
(55) (50) (30) (59) (20) - 46 (6)
36 30 23 19 - (19) (42) (20)
1,531 1,746 1,684 1,382 1,571 1,506 1,358 1,233
788 791 784 776 782 755 679 644
(34) (63) (130) (157) (260) (254) (199) (142)
22 12 22 24 4 21 16 2
10 11 10 8 6 3 2 2
26 26 32 29 15 17 15 13
115 123 120 125 121 119 110 106
927 900 838 805 668 661 623 625
604 846 846 577 903 845 735 608
- - - - - - - (11)
- - - - - - - 7
$ 604 $ 846 $ 846 $ 577 $ 903 $ 845 $ 735 $ 604
$ 0.96 $ 1.34 $ 1.36 $ 0.96 $ 1.56 $ 1.56 $ 1.47 $ 1.32
631,307 631,303 622,292 601,390 580,252 541,244 501,313 456,262
</TABLE>
II-43
<PAGE> 74
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 1991
(Millions of Dollars)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,002 $ 953 $ 876
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 1,011 969 968
Deferred income taxes, net 209 221 26
Deferred investment tax credits, net (20) (6) (11)
Allowance for equity funds used during constuction (9) (10) (13)
Deferred Plant Vogtle costs 36 (31) (19)
Write-off of Plant Vogtle costs - - -
Non-cash proceeds from settlement of disputed contracts - (7) (141)
Other, net (45) (25) 45
Changes in certain current assets and liabilities --
Receivables (55) (10) 68
Inventories 136 (23) 20
Payables 43 35 (13)
Taxes accrued 3 (62) 107
Other (64) (9) (46)
Net cash provided from operating activities 2,247 1,995 1,867
INVESTING ACTIVITIES:
Gross property additions (1,441) (1,105) (1,123)
Foreign utility operations (465) - -
Sales of property 262 44 291
Other (37) 61 (45)
Net cash used for investing activities (1,681) (1,000) (877)
FINANCING ACTIVITIES:
Proceeds:
Common stock 205 30 -
Preferred stock 426 410 100
First mortgage bonds 2,185 1,815 380
Pollution control bonds 386 208 126
Other long-term debt 206 48 14
Prepaid capacity revenues - - 53
Retirements:
Preferred and preference stock (516) (326) (125)
First mortgage bonds (2,178) (2,575) (881)
Pollution control bonds (351) (208) (130)
Other long-term debt (99) (88) (70)
Interim obligations, net 114 525 180
Payment of common stock dividends (726) (695) (676)
Miscellaneous (137) (148) (41)
Net cash provided from (used for) financing activities (485) (1,004) (1,070)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 81 (9) (80)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 97 106 186
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 178 $ 97 $ 106
( ) Denotes use of cash.
</TABLE>
II-44
<PAGE> 75
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 604 $ 846 $ 846 $ 577 $ 903 $ 845 $ 735 $ 604
982 951 837 742 674 623 581 522
158 225 206 198 465 242 243 280
- (1) 27 20 132 184 245 202
(33) (71) (138) (190) (312) (269) (212) (146)
(52) (87) (115) (257) - - - -
281 - - 358 - - - -
- - - - - - - -
(10) (28) 46 87 15 17 (190) (21)
8 (123) (21) (113) 38 (89) (27) (147)
(82) 6 (47) (62) (37) 127 (69) (31)
(41) (23) (6) 125 48 38 187 65
(5) (15) 29 (34) 24 (65) 32 25
(34) 156 (40) 42 (56) 84 70 19
1,776 1,836 1,624 1,493 1,894 1,737 1,595 1,372
(1,185) (1,346) (1,754) (1,853) (2,367) (2,242) (2,130) (1,722)
- - - - - - - -
35 - - 12 - 1 321 -
14 54 (2) 64 46 126 110 74
(1,136) (1,292) (1,756) (1,777) (2,321) (2,115) (1,699) (1,648)
- 4 194 247 379 373 318 333
- - 120 125 100 150 50 50
300 280 335 700 735 20 150 129
- 104 73 228 386 635 368 59
74 74 68 81 367 68 28 186
- - - - 100 - - -
(96) (21) (10) (160) (53) (6) (6) (11)
(146) (201) (273) (369) (875) (69) (71) (53)
(3) (55) (1) (122) (21) - (4) (1)
(207) (83) (108) (56) (55) (54) (99) (103)
78 27 (300) 313 (37) (77) 118 (2)
(676) (675) (661) (628) (583) (512) (444) (380)
(8) (10) (20) (58) (82) (24) (22) (6)
(684) (556) (583) 301 361 504 386 201
(44) (12) (715) 17 (66) 126 282 (75)
230 242 957 940 1,006 880 598 673
$ 186 $ 230 $ 242 $ 957 $ 940 $ 1,006 $ 880 $ 598
</TABLE>
II-45
<PAGE> 76
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Millions of Dollars)
ASSETS
ELECTRIC PLANT:
<S> <C> <C> <C>
Production-
Fossil $ 8,006 $ 8,033 $ 7,997
Nuclear 5,930 5,912 5,902
Hydro 1,263 1,253 1,247
Total production 15,199 15,198 15,146
Transmission 3,224 3,093 2,955
Distribution 6,848 6,430 6,092
General 2,395 2,291 2,196
Construction work in progress 1,031 665 603
Nuclear fuel, at amortized cost 229 257 301
Total electric plant 28,926 27,934 27,293
STEAM HEAT PLAINT 21 21 20
Total utility plant 28,947 27,955 27,313
ACCUMULATED PROVISION FOR DEPRECIATION:
Electric 8,924 8,271 7,676
Steam heat 10 9 8
Total accumulated provision for depreciation 8,934 8,280 7,684
Total 20,013 19,675 19,629
Less property-related accumulated deferred income taxes - 3,186 3,020
Total 20,013 16,489 16,609
OTHER PROPERTY AND INVESTMENTS:
Securities received from settlement of disputed contracts - - 202
Foreign utility operations, being amortized 559 - -
Nuclear decommissioning trusts 88 52 26
Miscellaneous 89 75 83
Total 736 127 311
CURRENT ASSETS:
Cash and cash equivalents 178 97 106
Investment securities - 199 -
Receivables, net 962 742 723
Accrued utility revenues 185 177 160
Fossil fuel stock, at average cost 254 392 445
Materials and supplies, at average cost 535 533 457
Prepayments 148 220 222
Vacation pay deferred 73 70 70
Total current assets 2,335 2,430 2,183
DEFERRED CHARGES:
Deferred charges related to income taxes 1,546 - -
Deferred Plant Vogtle costs 507 383 375
Deferred fuel charges 70 89 106
Debt expense, being amortized 33 28 23
Premium on reacquired debt, being amortized 288 222 126
Miscellaneous 383 270 130
Total deferred charges 2,827 992 760
TOTAL ASSETS $25,911 $20,038 $19,863
</TABLE>
II-46
<PAGE> 77
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 7,661 $ 7,565 $ 6,226 $ 6,157 $ 5,415 $ 5,274 $ 4,740 $ 4,606
5,820 5,976 4,995 4,987 2,490 2,341 2,312 2,229
1,222 1,215 1,197 1,192 1,184 1,162 863 854
14,703 14,756 12,418 12,336 9,089 8,777 7,915 7,689
2,824 2,683 2,500 2,388 2,254 2,001 1,878 1,747
5,738 5,365 4,944 4,510 4,131 3,793 3,491 3,225
2,078 2,026 1,865 1,674 1,504 1,243 1,037 876
1,092 1,006 3,071 2,519 5,162 4,278 3,830 2,906
354 402 481 479 520 497 455 422
26,789 26,238 25,279 23,906 22,660 20,589 18,606 16,865
20 20 20 20 35 32 26 26
26,809 26,258 25,299 23,926 22,695 20,621 18,632 16,891
7,079 6,492 5,885 5,355 4,879 4,472 4,056 3,669
8 7 6 6 13 11 11 11
7,087 6,499 5,891 5,361 4,892 4,483 4,067 3,680
19,722 19,759 19,408 18,565 17,803 16,138 14,565 13,211
2,911 2,759 2,559 2,371 2,212 1,976 1,792 1,589
16,811 17,000 16,849 16,194 15,591 14,162 12,773 11,622
- - - - - - - -
- - - - - - - -
2 - - - - - - -
83 85 88 70 69 36 32 12
85 85 88 70 69 36 32 12
186 230 242 957 940 1,006 880 598
- - - - - - - -
793 765 687 687 657 685 613 566
151 189 148 139 83 92 76 96
467 427 490 513 501 503 649 614
456 413 348 278 228 188 169 135
193 192 174 136 70 22 18 34
64 65 63 59 56 53 49 48
2,310 2,281 2,152 2,769 2,535 2,549 2,454 2,091
- - - - - - - -
364 322 270 173 - - - -
126 143 157 112 121 - - -
23 24 24 25 24 24 22 20
99 103 102 95 70 - - -
137 134 89 80 73 84 46 45
749 726 642 485 288 108 68 65
$19,955 $20,092 $19,731 $19,518 $18,483 $16,855 $15,327 $13,790
</TABLE>
II-47
<PAGE> 78
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Millions of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
<S> <C> <C> <C>
Common stock $ 3,213 $ 1,582 $ 1,578
Paid-in capital 1,502 2,929 2,906
Premium on preferred stock 1 2 2
Retained Earnings 2,968 2,721 2,490
Total common equity 7,684 7,234 6,976
Preferred stock 1,332 1,351 1,207
Preferred stock subject to mandatory redemption 1 8 126
Long-term debt 7,412 7,241 7,992
Total capitalization 16,429 15,834 16,301
(excluding amount due within one year)
CURRENT LIABILITIES:
Notes payable to banks 865 567 302
Commercial paper 76 260 -
Preferred stock due within one year 1 65 7
Long-term debt due within one year 156 188 217
Accounts payable 698 646 585
Customer deposits 103 99 95
Taxes accrued 206 172 215
Interest accrued 186 191 221
Vacation pay accrued 90 86 84
Miscellaneous 190 242 229
Total current liabilities 2,571 2,516 1,955
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 3,979 - -
Deferred credits related to income taxes 1,051 - -
Accumulated deferred investment tax credits 900 957 1,004
Prepaid capacity revenues, net 144 148 149
Disallowed Plant Vogtle capacity buyback costs 63 72 110
Miscellaneous 774 511 344
Total deferred credits and other liabilities 6,911 1,688 1,607
Total Capitalization and Liabilities $25,911 $20,038 $19,863
</TABLE>
II-48
<PAGE> 79
CONSOLIDATED BALANCE SHEETS
The Southern Company and Subsidiary Companies
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,578 $ 1,578 $ 1,577 $ 1,534 $ 1,481 $ 1,400 $ 1,305 $ 1,202
2,906 2,906 2,903 2,752 2,558 2,259 1,981 1,767
3 3 3 3 5 7 7 6
2,296 2,374 2,203 2,018 2,089 1,777 1,448 1,160
6,783 6,861 6,686 6,307 6,133 5,443 4,741 4,135
1,207 1,209 1,259 1,139 1,214 1,114 1,004 954
151 191 206 224 177 194 205 214
8,458 8,575 8,433 8,333 7,813 7,220 6,775 6,439
16,599 16,836 16,584 16,003 15,337 13,971 12,725 11,742
122 44 17 317 4 41 118 -
- - - - - - - -
7 61 17 9 15 51 6 3
308 169 190 192 251 303 162 140
616 676 728 747 737 689 651 464
91 89 83 86 82 80 83 76
144 181 203 221 259 144 208 196
246 233 240 233 221 226 208 181
75 75 74 68 66 63 58 55
233 252 104 110 111 117 91 73
1,842 1,780 1,656 1,983 1,746 1,714 1,585 1,188
- - - - - - - -
- - - - - - - -
1,063 1,111 1,161 1,180 1,208 1,114 968 767
100 102 81 104 101 - - -
136 73 104 79 - - - -
215 190 145 169 91 56 49 93
1,514 1,476 1,491 1,532 1,400 1,170 1,017 860
$19,955 $20,092 $19,731 $19,518 $18,483 $16,855 $15,327 $13,790
</TABLE>
II-49
<PAGE> 80
ALABAMA POWER COMPANY
FINANCIAL SECTION
II-50
<PAGE> 81
MANAGEMENT'S REPORT
Alabama Power Company 1993 Annual Report
The management of Alabama Power Company has prepared -- and is responsible for
- -- the financial statements and related information included in this report.
These statements were prepared in accordance with generally accepted accounting
principles appropriate in the circumstances and necessarily include amounts
that are based on the best estimates and judgments of management. Financial
information throughout this annual report is consistent with the financial
statements.
The company maintains a system of internal accounting controls to
provide reasonable assurance that assets are safeguarded and that the books and
records reflect only authorized transactions of the company. Limitations exist
in any system of internal controls based on a recognition that the cost of the
system should not exceed its benefits. The company believes its system of
internal accounting controls maintains an appropriate cost/benefit
relationship.
The company's system of internal accounting controls is evaluated on
an ongoing basis by the company's internal audit staff. The company's
independent public accountants also consider certain elements of the internal
control system in order to determine their auditing procedures for the purpose
of expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls, and financial reporting matters. The internal
auditors and independent public accountants have access to the members of the
audit committee at any time.
Management believes that its policies and procedures provide
reasonable assurance that the company's operations are conducted according to a
high standard of business ethics. In management's opinion, the financial
statements present fairly, in all material respects, the financial position,
results of operations and cash flows of Alabama Power Company in conformity
with generally accepted accounting principles.
/s/ Elmer B. Harris /s/ William B. Hutchins, III
- -------------------------- ------------------------------
Elmer B. Harris William B. Hutchins III
President Senior Vice President
and Chief Executive Officer and Chief Financial Officer
II-51
<PAGE> 82
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS
OF ALABAMA POWER COMPANY:
We have audited the accompanying balance sheets and statements of
capitalization of Alabama Power Company (an Alabama corporation and wholly
owned subsidiary of The Southern Company) as of December 31, 1993 and 1992, and
the related statements of income, retained earnings, and cash flows for each of
the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements (pages II-59 through II-77)
referred to above present fairly, in all material respects, the financial
position of Alabama Power Company as of December 31, 1993 and 1992, and the
results of its operations and its cash flows for the periods stated, in
conformity with generally accepted accounting principles.
As explained in Notes 2 and 8 to the financial statements, effective
January 1, 1993, the company changed its methods of accounting for
postretirement benefits other than pensions, and for income taxes.
/s/ Arthur Andersen & Co.
Birmingham, Alabama
February 16, 1994
II-52
<PAGE> 83
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Alabama Power Company 1993 Annual Report
RESULTS OF OPERATIONS
EARNINGS
The company's 1993 net income after dividends on preferred stock was $346
million, representing a 2.3 percent increase over the prior year. This
improvement can be attributed to higher retail energy sales and lower financing
costs. Retail energy sales increased 5.1 percent from 1992 levels. This was
primarily due to the extreme weather during 1993, especially when compared to
the unusually mild weather of 1992. Long-term debt interest expense and
preferred stock dividends decreased in 1993 reflecting the continued redemption
and refinancing of higher cost debt and preferred stock. These positive
factors were partially offset by higher operating costs and a scheduled
reduction in capacity sales to non-affiliated utilities.
When comparing 1992 earnings with the prior year, it should be noted
that 1991 earnings included an unusual item -- the settlement of litigation
with Gulf States Utilities Company (Gulf States) that resulted in an after-tax
gain of $9 million. A comparison of 1992 to 1991, excluding this unusual
item, would reflect a 1992 increase in earnings of $8 million.
The return on average common equity for 1993 was 13.9 percent compared
to 14.0 percent in 1992, and 14.6 percent in 1991.
REVENUES
The following table summarizes the principal factors that affected operating
revenues for the past three years:
<TABLE>
<CAPTION>
Increase (Decrease)
From Prior Year
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Retail --
Change in
base rates $ -- $ 36,348 $ 16,831
Sales growth 24,960 36,237 47,769
Weather 58,536 (42,709) (7,318)
Fuel cost recovery
and other 96,437 (31,318) 25,719
Total retail 179,933 (1,442) 83,001
Sales for Resale --
Non-affiliates (43,686) (121) (27,084)
Affiliates 23,887 (1,287) 65,902
Total sales for resale (19,799) (1,408) 38,818
Other operating
revenues 635 2,896 2,551
Total operating
revenues $160,769 $ 46 $124,370
Percent change 5.6% -- % 4.6%
</TABLE>
Retail revenues of $2.4 billion in 1993 increased $180 million (8.0
percent) over the prior year, compared with no increase in 1992. The extreme
weather during 1993 and sales growth contributed to the increase in retail
revenues over 1992. Fuel revenues increased substantially during 1993.
However, changes in fuel revenues are offset with corresponding changes in
recoverable fuel expenses and have no effect on net income. Gains in 1992
retail revenues, due to higher rates and sales growth, were partially offset by
lower fuel cost recovery revenues.
Revenues from sales to non-affiliated utilities under long-term contracts
consist of capacity and energy components. Capacity revenues reflect the
recovery of fixed costs and a return on investment under the contracts. Energy
is generally sold at variable cost. The capacity and energy components were:
II-53
<PAGE> 84
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Capacity $158,709 $185,689 $179,754
Energy 79,631 111,958 111,971
Total $238,340 $297,647 $291,725
</TABLE>
Capacity revenues decreased in 1993 due to a scheduled reduction in
capacity dedicated to unit power sales customers for the first five months of
the year. The major factor contributing to the increase in capacity revenues
in 1992 and 1991 was a new generating unit, Plant Miller Unit 4, that was
placed in commercial service in March 1991 and dedicated to unit power sales.
This unit's fixed costs are higher than those of the unit it replaced, which
previously provided energy to unit power sales customers.
Sales to affiliated companies within the Southern electric system will
vary from year to year depending on demand and the availability and cost of
generating resources at each company. These sales have no material impact on
earnings.
Kilowatt-hour (KWH) sales for 1993 and the percent change by year were
as follows:
<TABLE>
<CAPTION>
KWH Percent Change
1993 1993 1992 1991
(millions)
<S> <C> <C> <C> <C>
Residential 13,185 9.2% (2.1)% 2.7%
Commercial 9,185 6.4 1.2 4.0
Industrial 18,595 1.8 4.3 (1.1)
Other 182 2.8 1.2 2.5
Total retail 41,147 5.1 1.6 1.2
Sales for resale-
Non-affiliates 7,144 (14.8) (4.9) (14.3)
Affiliates 8,081 12.1 (7.4) 72.2
Total 56,372 3.0% (0.7)% (4.3)%
</TABLE>
EXPENSES
Total operating expenses of $2.4 billion for 1993 were up 7.0 percent
compared with the prior year. The increase was mainly attributable to higher
production expenses of $95 million to meet increased energy demands.
Total operating expenses for 1992 increased moderately over those
recorded in 1991. However, absent the Gulf States settlement, which reduced
1991 operating expenses, total operating expenses would have decreased $6
million.
Fuel costs are the single largest expense for the company. The mix of
fuel sources for generation of electricity is determined primarily by system
load, the unit cost of fuel consumed, and the availability of hydro and nuclear
generating units. Fuel expense increases in 1993 represent $83 million of the
production expense increase mentioned above. Fuel expense decreased in 1992 as
a result of the reduction in the cost of both coal and nuclear fuel, offset
somewhat by a small increase in generation. Fuel cost per kilowatt-hour
generated was 1.73 cents in 1993, 1.64 cents in 1992 and 1.69 cents in 1991.
Purchased power expenses decreased in 1992 primarily due to less purchased
energy and a decrease in the price of such energy.
Other operation expenses increased 6.0 percent in 1993 following a
minimal increase in 1992. The increase in 1993 is primarily the result of
environmental cleanup costs, net expenses of a March snowstorm, and the
one-time cost of a transportation fleet reduction program, which together
totaled $16.1 million.
Depreciation and amortization expense increased 3.4 percent in 1993
and 3.5 percent in 1992. This is principally due to continued growth in
depreciable plant in service. Taxes other than income taxes increased 4.0
percent in 1993 and 1.4 percent in 1992. These increases were the result of
the addition of new facilities and higher revenue-related taxes.
The increase in income tax expense of 2.6 percent for 1993 is
primarily attributable to a one percent increase in the corporate federal
income tax rate effective January 1, 1993.
Interest expense and dividends on preferred stock decreased $7.5
million (2.8 percent) and $7.2 million (2.6 percent) in 1993 and 1992,
respectively. These reductions are due to significant refinancing of long-term
debt and preferred stock.
II - 54
<PAGE> 85
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1993 Annual Report
EFFECTS OF INFLATION
The company is subject to rate regulation that is based on the recovery of
historical costs and, therefore is subject to economic losses caused by
inflation. While the inflation rate has been relatively low in recent years,
it continues to have an adverse effect on the company because of the large
investment in long-lived utility plant. Conventional accounting for historical
cost does not recognize this economic loss nor the partially offsetting gain
that arises through financing facilities with fixed-money obligations, such as
long-term debt and preferred stock. Any recognition of inflation by regulatory
authorities is reflected in the rate of return allowed.
FUTURE EARNINGS POTENTIAL
The results of operations for the past three years are not necessarily
indicative of future earnings potential. The level of future earnings depends
on numerous factors ranging from growth in energy sales to regulatory matters.
Future earnings in the near term will also depend upon growth in
electric sales, which are subject to a number of factors. Traditionally, these
factors have included changes in contracts with neighboring utilities, energy
conservation practiced by customers, the elasticity of demand, weather,
competition, and the rate of economic growth in the company's service area. In
addition, the Energy Policy Act of 1992 (Energy Act) will have a profound
effect on the future of the electric utility industry. The Energy Act promotes
energy efficiency, alternative fuel use, and increased competition for electric
utilities. The law also includes provisions to streamline the licensing
process for new nuclear plants. The company is preparing to meet the challenge
of this major change in the traditional business practices of selling
electricity. The Energy Act allows independent power producers (IPPs) to
access a utility's transmission network in order to sell electricity to other
utilities, and this may enhance the incentive for IPPs to build cogeneration
plants for a utility's large industrial and commercial customers and sell
excess energy generation to other utilities. Although the Energy Act does not
require transmission access to retail customers, pressure for legislation to
allow retail wheeling will continue. If the company does not remain a low-cost
producer and provide quality service, the company's retail energy sales growth,
as well as any new long-term contracts for energy sales outside the service
area, could be limited, and this could significantly erode earnings.
Rates to retail customers served by the company are regulated by the
Alabama Public Service Commission (APSC). Rates for the company can be
adjusted periodically within certain limitations based on earned retail rate of
return compared with an allowed return. See Note 3 to the financial statements
for information about other regulatory matters.
The Federal Energy Regulatory Commission (FERC) regulates wholesale
rate schedules and power sales contracts that the company has with its sales
for resale customers. The FERC currently is reviewing the rate of return on
common equity included in these schedules and contracts and may require such
returns to be lowered, possibly retroactively. See Note 3 to the financial
statements under "FERC Reviews Equity Returns" for additional information.
Compliance costs related to the Clean Air Act Amendments of 1990
(Clean Air Act) could reduce earnings if such costs are not fully recovered.
The Clean Air Act is discussed later under "Environmental Matters."
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued Statement No. 112,
Employers' Accounting for Postemployment Benefits, which must be effective by
1994. The new standard requires that all types of benefits provided to former
or inactive employees and their families prior to retirement be accounted for
on an accrual basis. These benefits include salary continuation, severance
pay, supplemental unemployment benefits, disability-related benefits, job
training, and health and life insurance coverage. In 1993, the company adopted
Statement No. 112, with no material effect on the financial statements.
The FASB has issued Statement No. 115, Accounting for Certain
Investments in Debt and Equity Securities, which is effective in 1994.
Statement No. 115 supersedes FASB Statement No. 12, Accounting for Certain
Marketable Securities. The company adopted the new rules January 1, 1994, with
no material effect on the financial statements.
II-55
<PAGE> 86
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1993 Annual Report
FINANCIAL CONDITION
OVERVIEW
The company's financial condition remained stable in 1993. Growth in energy
sales combined with a significant lowering of the cost of capital, achieved
through the refinancing and/or redemption of higher-cost long-term debt and
preferred stock contributed to this stability.
The company had gross property additions of $436 million in 1993. The
majority of funds needed for gross property additions since 1990 have been
provided from operating activities, principally from earnings and non-cash
charges to income such as depreciation and deferred income taxes. The
Statements of Cash Flows provide additional details.
On January 1, 1993, the company changed its methods of accounting for
postretirement benefits other than pensions, and for income taxes. See Notes 2
and 8 to the financial statements, regarding the impact of these changes.
CAPITAL STRUCTURE
The company's ratio of common equity to total capitalization was 47.4 percent
in 1993, compared with 47.6 percent in 1992, and 45.4 percent in 1991.
In 1993, the company issued $860 million of first mortgage bonds, $158
million of preferred stock and, through public authorities, $144 million of
pollution control revenue bonds. The company continued to reduce financing
costs by retiring higher-cost bonds and preferred stock. Retirements,
including maturities, of bonds totaled $835 million, and preferred stock
retirements totaled $207 million. Composite financing rates as of year-end for
1991 through 1993 were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Composite interest rate on
long-term debt 7.35% 8.00% 8.64%
Composite dividend rate on
preferred stock 5.80% 6.76% 7.10%
</TABLE>
The company's current securities ratings are as follows:
<TABLE>
<CAPTION>
Duff & Standard
Phelps Moody's & Poor's
<S> <C> <C> <C>
First Mortgage Bonds A+ A1 A
Preferred Stock A- a2 A-
</TABLE>
CAPITAL REQUIREMENTS
Capital expenditures are estimated to be $588 million for 1994, $572 million
for 1995, and $531 million for 1996. The total is $1.7 billion for the three
years. Actual capital costs may vary from this estimate because of factors
such as changes in environmental regulations; changes in the existing nuclear
plant to meet new regulations; revised load projections; increasing costs of
labor, equipment, and materials; and the cost of capital.
The company does not have any baseload generating plants under construction,
and current energy demand forecasts do not require any additional baseload
generating units until well into the future. However, the construction of
combustion turbine peaking units of approximately 720 megawatts of capacity is
planned by 1996 to meet increased peak-hour demands. In addition, significant
construction of transmission and distribution facilities and upgrading of
generating plants will continue.
In addition to the funds needed for the capital budget, approximately $80
million will be required by the end of 1996 for present sinking fund
requirements, redemptions announced, and maturities of first mortgage bonds.
Also, the company plans to continue a program to retire higher-cost debt and
preferred stock and replace these obligations with lower-cost capital.
ENVIRONMENTAL MATTERS
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on the Southern electric system. Specific reductions in
sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants
will be required in two phases. Phase I compliance must be implemented in 1995
and affects eight generating plants -- some 10,000
II-56
<PAGE> 87
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1993 Annual Report
megawatts of capacity or 35 percent of total capacity -- in the Southern
electric system. Phase II compliance is required in 2000, and all fossil-fired
generating plants in the Southern electric system will be affected.
Beginning in 1995, the Environmental Protection Agency (EPA) will allocate
annual sulfur dioxide emission allowances through the newly established
allowance trading program. An emission allowance is the authority to emit one
ton of sulfur dioxide during a calendar year. The method for allocating
allowances is based on the fossil fuel consumed from 1985 through 1987 for each
affected generating unit. Emission allowances are transferable and can be
bought, sold, or banked and used in the future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The market for emission allowances is developing slower
than expected. However, The Southern Company's sulfur dioxide compliance
strategy is designed to take advantage of allowances as the market develops.
The Southern Company expects to achieve Phase I sulfur dioxide compliance at
the eight affected plants by switching to low-sulfur coal, and this has
required some equipment upgrades. This compliance strategy is expected to
result in unused emission allowances being banked for later use. Additional
construction expenditures are required to install equipment for the control of
nitrogen oxide emissions at these eight plants. Also, continuous emissions
monitoring equipment would be installed on all fossil-fired units. Under this
Phase I compliance approach, additional construction expenditures are estimated
to total approximately $275 million through 1995 for The Southern Company, of
which the company's portion is approximately $30 million.
Phase II compliance costs are expected to be higher because requirements are
stricter and all fossil-fired generating plants are affected. For sulfur
dioxide compliance, The Southern Company could use emission allowances banked
during Phase I, increase fuel switching, install flue gas desulfurization
equipment at selected plants, and/or purchase more allowances depending on the
price and availability of allowances. Also, in Phase II, equipment to control
nitrogen oxide emissions will be installed on additional system fossil-fired
plants as required to meet anticipated Phase II limits. Therefore, during the
period 1996 to 2000, compliance could require total construction expenditures
ranging from approximately $450 million to $800 million for The Southern
Company, of which the company's portion is approximately $225 million to $350
million. However, the full impact of Phase II compliance cannot now be
determined with certainty, pending the development of a market for emission
allowances, the completion of EPA regulations, and the possibility of new
emission reduction technologies.
An increase of up to 2 percent in annual revenue requirements from customers
could be necessary to fully recover the company's cost of compliance for both
Phase I and Phase II of the Clean Air Act. Compliance costs include
construction expenditures, increased costs for switching to low-sulfur coal,
and costs related to emission allowances.
There can be no assurance that all Clean Air Act costs will be recovered.
Title III of the Clean Air Act requires a multi-year EPA study of power plant
emissions of hazardous air pollutants. The study will serve as the basis for a
decision on whether additional regulatory control of these substances is
warranted. Compliance with any new control standards could result in
significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA is expected to take some action on this issue in 1994. The impact of
any new standard will depend on the level chosen for the standard and cannot be
determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air quality
standards for particulate matter, nitrogen oxides, and ozone. The impact of
any new standard will depend on the level chosen for the standard
II-57
<PAGE> 88
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1993 Annual Report
and cannot be determined at this time.
In 1994 or 1995, the EPA is expected to issue revised rules on air quality
control regulations related to stack height requirements of the Clean Air Act.
The full impact of the final rules cannot be determined at this time, pending
their development and implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of coal
ash. However, the EPA has until 1998 to classify co-managed utility wastes --
coal ash and other utility wastes -- as either non-hazardous or hazardous. If
the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws
and regulations, the company could incur costs to clean up properties currently
or previously owned. The company conducts studies to determine the extent of
any required clean-up costs and has recognized in the financial statements
costs to clean up known sites.
Several major pieces of environmental legislation are in the process of being
reauthorized or amended by Congress. These include: the Clean Water Act; the
Comprehensive Environmental Response, Compensation, and Liability Act; and the
Resource Conservation and Recovery Act. Changes to these laws could affect
many areas of The Southern Company's operations. The full impact of these
requirements cannot be determined at this time, pending the development and
implementation of applicable regulations.
Compliance with possible new legislation related to global climate change,
electromagnetic fields, and other environmental and health concerns could
significantly affect the Southern electric system. The impact of new
legislation -- if any -- will depend on the subsequent development and
implementation of applicable regulations. In addition, the potential for
lawsuits alleging damages caused by electromagnetic fields exists.
SOURCES OF CAPITAL
It is anticipated that the funds required will be derived from sources in form
and quantity similar to those used in the past. To issue additional first
mortgage bonds and preferred stock, the company must comply with certain
earnings coverage requirements designated in its mortgage indenture and
corporate charter. The company's coverages are at a level that would permit
any necessary amount of security sales at current interest and dividend rates.
As required by the Nuclear Regulatory Commission and as ordered by the APSC,
the company has established external trust funds for nuclear decommissioning
costs. Also, during 1993, the APSC issued a policy statement which will
require external funding of postretirement benefits. The cumulative effect of
funding these items over a long period will diminish internally funded capital
and may require capital from other sources. For additional information
concerning nuclear decommissioning costs, see Note 1 to the financial
statements under "Depreciation and Nuclear Decommissioning."
II-58
<PAGE> 89
STATEMENTS OF INCOME
For the Years Ended December 31, 1993, 1992, and 1991
Alabama Power Company
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES (NOTES 1, 3 AND 7):
Revenues $ 2,825,634 $ 2,688,752 $ 2,687,419
Revenues from affiliates 181,975 158,088 159,375
Total operating revenues 3,007,609 2,846,840 2,846,794
OPERATING EXPENSES:
Operation --
Fuel 877,099 794,438 812,667
Purchased power from non-affiliates 15,230 14,242 21,080
Purchased power from affiliates 120,330 107,230 119,602
Proceeds from settlement of disputed contracts (Note 7) (2,568) (641) (14,819)
Other 473,383 446,477 435,908
Maintenance 252,506 237,071 229,114
Depreciation and amortization 290,310 280,881 271,433
Taxes other than income taxes 178,997 172,095 169,639
Federal and state income taxes (Note 8) 207,210 201,925 200,612
Total operating expenses 2,412,497 2,253,718 2,245,236
OPERATING INCOME 595,112 593,122 601,558
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction (Note 1) 3,260 2,071 2,368
Income from subsidiary (Note 6) 4,127 4,635 4,576
Charitable foundation (3,000) (6,887) (6,500)
Interest income 20,775 14,804 14,356
Other, net (24,420) (11,019) (9,926)
Income taxes applicable to other income 10,239 8,947 7,523
INCOME BEFORE INTEREST CHARGES 606,093 605,673 613,955
INTEREST CHARGES:
Interest on long-term debt 184,861 206,871 214,107
Allowance for debt funds used during construction (Note 1) (2,992) (2,416) (6,903)
Interest on interim obligations 3,760 3,704 13,385
Amortization of debt discount, premium, and expense, net 8,937 4,392 2,634
Other interest charges 35,474 19,381 14,927
Net interest charges 230,040 231,932 238,150
NET INCOME 376,053 373,741 375,805
DIVIDENDS ON PREFERRED STOCK 29,559 35,186 36,139
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 346,494 $ 338,555 $ 339,666
</TABLE>
The accompanying notes are an integral part of these statements.
II-59
<PAGE> 90
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993, 1992, and 1991
Alabama Power Company
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 376,053 $ 373,741 $ 375,805
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 356,499 338,421 337,978
Deferred income taxes and investment tax credits 32,994 23,514 (6,868)
Allowance for equity funds used during construction (3,260) (2,071) (2,368)
Non-cash proceeds from settlement of disputed contracts (Note 7) - (641) (13,750)
Other, net 36,493 (2,657) 26,614
Changes in certain current assets and liabilities --
Receivables, net 19,215 (11,010) 9,178
Inventories 51,630 12,704 (17,374)
Payables 31,544 2,158 28,889
Taxes accrued (9,959) (21,120) 24,828
Energy cost recovery, retail (56,128) 45,509 (12,304)
Other (21,110) 10,629 (37,906)
Net cash provided from operating activities 813,971 769,177 712,722
INVESTING ACTIVITIES:
Gross property additions (435,843) (367,463) (397,011)
Sales of property - 43,556 -
Other (741) (13,379) (36,083)
Net cash used for investing activities (436,584) (337,286) (433,094)
FINANCING ACTIVITIES:
Proceeds:
Preferred stock 158,000 150,000 -
First mortgage bonds 860,000 745,000 250,000
Other long-term debt 180,314 48,382 12,906
Prepaid capacity revenues - - 52,900
Retirements:
Preferred stock (207,000) (145,000) (17,500)
First mortgage bonds (699,788) (931,797) (227,695)
Other long-term debt (181,329) (54,223) (48,678)
Interim obligations, net (156,917) 120,917 (13,500)
Payment of preferred stock dividends (32,099) (35,704) (36,829)
Payment of common stock dividends (252,900) (273,300) (232,900)
Miscellaneous (56,064) (53,697) (17,732)
Net cash used for financing activities (387,783) (429,422) (279,028)
NET CHANGE IN CASH (10,396) 2,469 600
CASH AT BEGINNING OF YEAR 13,629 11,160 10,560
CASH AT END OF YEAR $ 3,233 $ 13,629 $ 11,160
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for --
Interest (net of amount capitalized) $ 176,805 $ 219,263 $ 220,154
Income taxes 175,591 197,693 148,721
</TABLE>
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
II-60
<PAGE> 91
BALANCE SHEETS
At December 31, 1993 and 1992
Alabama Power Company
<TABLE>
<CAPTION>
ASSETS 1993 1992
(in thousands)
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost (Note 1) $9,757,141 $9,491,083
Less accumulated provision for depreciation 3,384,156 3,131,543
6,372,985 6,359,540
Nuclear fuel, at amortized cost 93,551 101,128
Construction work in progress 225,786 164,588
Total 6,692,322 6,625,256
Less property-related accumulated deferred income taxes (Note 8) - 1,170,982
Total 6,692,322 5,454,274
OTHER PROPERTY AND INVESTMENTS:
Southern Electric Generating Company, at equity (Note 6) 29,201 30,703
Nuclear decommissioning trusts (Note 1) 49,550 32,390
Miscellaneous 20,434 19,189
Total 99,185 82,282
CURRENT ASSETS:
Cash 3,233 13,629
Investment securities (Note 7) - 64,832
Receivables-
Customer accounts receivable 312,090 266,670
Other accounts and notes receivable 48,808 34,801
Affiliated companies 40,216 37,128
Accumulated provision for uncollectible accounts (2,632) (1,482)
Refundable income taxes 11,940 7,817
Fossil fuel stock, at average cost 88,481 134,328
Materials and supplies, at average cost 176,728 182,511
Prepayments-
Income taxes 18,980 66,250
Other 60,227 42,004
Vacation pay deferred 22,680 21,879
Total 780,751 870,367
DEFERRED CHARGES:
Deferred charges related to income taxes (Note 8) 469,010 -
Debt expense, being amortized 7,064 6,118
Premium on reacquired debt, being amortized 102,634 74,835
Uranium enrichment decontamination and decommissioning fund (Note 1) 45,554 47,730
Miscellaneous 52,163 58,012
Total 676,425 186,695
TOTAL ASSETS $8,248,683 $6,593,618
</TABLE>
The accompanying notes are an integral part of these statements.
II-61
<PAGE> 92
BALANCE SHEETS
At December 31, 1993 and 1992
Alabama Power Company
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES 1993 1992
(in thousands)
<S> <C> <C>
CAPITALIZATION (SEE ACCOMPANYING STATEMENTS):
Common stock equity $2,526,348 $2,443,493
Preferred stock 440,400 489,400
Long-term debt 2,362,852 2,202,473
Total 5,329,600 5,135,366
CURRENT LIABILITIES:
Long-term debt due within one year (Note 10) 58,998 67,379
Notes payable to banks 40,000 71,000
Commercial paper - 125,917
Accounts payable-
Affiliated companies 62,507 64,318
Other 272,491 232,413
Customer deposits 31,198 31,286
Taxes accrued-
Federal and state income 25,730 10,854
Other 14,414 13,519
Interest accrued 52,809 41,675
Vacation pay accrued 22,680 21,879
Miscellaneous 50,426 93,836
Total 631,253 774,076
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes (Note 8) 1,165,127 -
Accumulated deferred investment tax credits 329,909 344,707
Prepaid capacity revenues, net 143,762 147,658
Deferred revenues from settlement of disputed contracts (Note 3) 19,871 46,721
Uranium enrichment decontamination and decommissioning fund (Note 1) 39,644 44,548
Deferred credits related to income taxes (Note 8) 441,240 -
Miscellaneous 148,277 100,542
Total 2,287,830 684,176
COMMITMENTS AND CONTINGENT MATTERS (NOTES 1, 3, 4, 5, 6, 7, AND 11)
TOTAL CAPITALIZATION AND LIABILITIES $8,248,683 $6,593,618
</TABLE>
The accompanying notes are an integral part of these statements.
II-62
<PAGE> 93
STATEMENTS OF CAPITALIZATION
At December 31, 1993 and 1992
Alabama Power Company
<TABLE>
<CAPTION>
1993 1992 1993 1992
(thousands) (percent of total)
<S> <C> <C> <C> <C>
COMMON STOCK EQUITY:
Common stock, par value $40 per share --
Authorized -- 6,000,000 shares
Outstanding -- 5,608,955 shares in
1993 and 1992 $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645
Premium on preferred stock 146 342
Retained earnings (Note 12) 997,199 914,148
Total common stock equity 2,526,348 2,443,493 47.4 % 47.6 %
CUMULATIVE PREFERRED STOCK:
$1 par value --
Authorized -- 27,500,000 shares
Outstanding -- 12,020,200 shares
$25 stated capital --
6.40% 50,000 -
6.80% 38,000 -
7.60% 150,000 150,000
Adjustable rate
4.95% - at January 1, 1994 50,000 -
6.08% - at January 1, 1993 - 50,000
$100 stated capital --
Auction rate - at January 1, 1994: 2.92% 50,000 50,000
$100,000 stated capital --
Auction rate - at January 1, 1994: 2.72% 20,000 -
$100 par value --
Authorized -- 3,850,000 shares
Outstanding -- 824,000 shares
4.20% to 4.52% 41,400 41,400
4.60% to 4.92% 29,000 29,000
5.96% to 8.04% 12,000 32,000
8.16% to 9.44% - 137,000
Total (annual dividend requirement -- $25,547,000) 440,400 489,400 8.3 9.5
LONG-TERM DEBT:
First mortgage bonds --
Maturity Interest Rates
May 1, 1994 4 5/8% - 24,105
September 1, 1995 4 7/8% - 33,284
March 1, 1996 4 1/2% 60,000 -
October 1, 1996 6 1/4% - 29,374
October 1, 1997 6 1/2% - 28,000
February 1, 1998 5 1/2% 50,000 -
November 1, 1998 7% - 25,000
1999 through 2003 6% to 8 1/4% 670,000 533,500
2004 through 2008 7 1/4% 175,000 175,000
2009 through 2013 - - -
2014 through 2018 9 3/8% to 10 5/8% 15,243 311,768
2019 through 2023 7.30% to 9 1/4% 900,000 550,000
Total first mortgage bonds 1,870,243 1,710,031
Pollution control obligations 476,140 467,019
Other long-term debt 106,414 116,550
Unamortized debt premium (discount), net (30,947) (23,748)
Total long-term debt (annual interest
requirement -- $180,046,000) 2,421,850 2,269,852
Less amount due within one year (Note 10) 58,998 67,379
Long-term debt excluding amount due within one year 2,362,852 2,202,473 44.3 42.9
TOTAL CAPITALIZATION $ 5,329,600 $ 5,135,366 100.0 % 100.0 %
</TABLE>
The accompanying notes are an integral part of these statements.
II-63
<PAGE> 94
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1993, 1992, and 1991
Alabama Power Company
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $ 914,148 $ 857,734 $ 751,126
Net income after dividends on preferred stock 346,494 338,555 339,666
Cash dividends on common stock (252,900) (273,300) (232,900)
Preferred stock transactions, net (10,587) (8,732) (362)
Other adjustments to retained earnings 44 (109) 204
BALANCE AT END OF PERIOD (NOTE 12) $ 997,199 $ 914,148 $ 857,734
</TABLE>
The accompanying notes are an integral part of these statements.
II-64
<PAGE> 95
NOTES TO FINANCIAL STATEMENTS
Alabama Power Company 1993 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
GENERAL
The company is a wholly owned subsidiary of The Southern Company which is the
parent company of five operating companies, a system service company, Southern
Electric International (Southern Electric), Southern Nuclear Operating Company
(Southern Nuclear), and various other subsidiaries related to foreign utility
operations and domestic non-utility operations. At this time, the operations
of the other subsidiaries are not material. The operating companies (Alabama
Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power
Company, and Savannah Electric and Power Company) provide electric service in
four Southeastern states. Contracts among the companies -- dealing with
jointly-owned generating facilities, interconnecting transmission lines, and
the exchange of electric power -- are regulated by the Federal Energy
Regulatory Commission (FERC) or the Securities and Exchange Commission (SEC).
The system service company provides, at cost, specialized services upon request
to The Southern Company and to the subsidiary companies. Southern Electric
designs, builds, owns and operates power production facilities and provides a
broad range of technical services to industrial companies and utilities in the
United States and a number of international markets. Southern Nuclear provides
services to The Southern Company's nuclear power plants.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. The
company is also regulated by the FERC and the Alabama Public Service Commission
(APSC). The company follows generally accepted accounting principles and
complies with the accounting policies and practices prescribed by the
respective commissions.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
REVENUES AND FUEL COSTS
The company accrues revenues for services rendered but unbilled at the end of
each fiscal period. Fuel costs are expensed as the fuel is used. The
company's electric rates include provisions to adjust billings for fluctuations
in fuel and the energy component of purchased power costs. Revenues are
adjusted for differences between recoverable fuel costs and amounts actually
recovered in current rates.
Fuel expense includes the amortization of the cost of nuclear fuel and a
charge, based on nuclear generation, for the permanent disposal of spent
nuclear fuel. Total charges for nuclear fuel included in fuel expense amounted
to $62 million in 1993, $48 million in 1992, and $69 million in 1991. The
company has a contract with the U.S. Department of Energy (DOE) that provides
for the permanent disposal of spent nuclear fuel, which was scheduled to begin
in 1998. However, the actual year this service will begin is uncertain.
Sufficient storage capacity currently is available to permit operation into
2012 and 2014 at Plant Farley units 1 and 2, respectively.
Also, the Energy Policy Act of 1992 required the establishment in 1993 of a
Uranium Enrichment Decontamination and Decommissioning Fund, which is to be
funded in part by a special assessment on utilities with nuclear plants. This
assessment will be paid over a 15-year period, which began in 1993. This fund
will be used by the DOE for the decontamination and decommissioning of its
nuclear fuel enrichment facilities. The law provides that utilities will
recover these payments in the same manner as any other fuel expense. The
company currently estimates its liability under this law to be approximately
$46 million. This obligation is recognized in the accompanying Balance Sheets.
DEPRECIATION AND NUCLEAR DECOMMISSIONING
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates which approximated
3.3 percent in 1993, 1992, and 1991. When property subject to depreciation is
retired or otherwise disposed of in the normal course of business, its cost --
together with the cost of removal, less salvage -- is charged to the
accumulated provision for depreciation. Minor items of property included in
the original cost of the plant are retired when the related property unit is
retired. Depreciation expense includes an amount for the expected cost of
decommissioning nuclear facilities.
II-65
<PAGE> 96
NOTES (continued)
Alabama Power Company 1993 Annual Report
In 1988, the Nuclear Regulatory Commission (NRC) adopted regulations
requiring all licensees operating commercial power reactors to establish a plan
for providing, with reasonable assurance, funds for decommissioning.
Reasonable assurance may be in the form of an external trust fund, a surety
method, or prepayment. The company has established external trust funds to
comply with the NRC's regulations. Prior to the enactment of these
regulations, the company had reserved nuclear decommissioning costs. The NRC's
minimum external funding requirements are based on a generic estimate of the
cost to decommission the radioactive portions of a nuclear unit based on the
size and type of reactor. The company has filed plans with the NRC to ensure
that -- over time -- the deposits and earnings of the external trust funds will
provide the minimum funding amount prescribed by the NRC.
The estimated cost of decommissioning and the amounts being recovered
through rates at December 31, 1993, for Plant Farley were as follows:
<TABLE>
<CAPTION>
Plant
Farley
<S> <C>
Site study basis (year) 1993
Estimated completion of
decommissioning (year) 2029
(in millions)
Cost of decommissioning:
Radiated structures $409
Non-radiated structures 75
Other 94
Total cost $578
(in millions)
Approved for ratemaking $578
Amount expensed in 1993 14
Balance in external trust funds 50
Balance in internal reserve 53
</TABLE>
The amount in the internal reserve is being transferred into the external
trust funds over the remaining life of the license for Plant Farley as approved
by the APSC.
The decommissioning cost estimates are based on prompt dismantlement and
removal of the plant from service. The actual decommissioning costs may vary
from the above estimates because of regulatory requirements, changes in
technology, and changes in costs of labor, materials, and equipment.
INCOME TAXES
The company provides deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
In years prior to 1993, income taxes were accounted for and reported under
Accounting Principles Board Opinion No. 11. Effective January 1, 1993, the
company adopted Financial Accounting Standards Board (FASB) Statement No. 109,
Accounting for Income Taxes. Statement No. 109 required, among other things,
conversion to the liability method of accounting for accumulated deferred
income taxes. See Note 8 for additional information about Statement No. 109.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
(AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are
necessary to finance the construction of new facilities. While cash is not
realized currently from such allowance, it increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The composite rate used to determine the amount of
allowance, net of deferred income tax, was 6.2 percent in 1991. Such method of
computing AFUDC ceased upon the commercial operation of Plant Miller Unit 4 in
March 1991. For construction projects begun after 1986, deferral of taxes
related to capitalized interest is no longer permitted. For those projects,
the composite rate used to determine the amount of allowance was 7.8 percent in
1993, 7.9 percent in 1992, and 8.3 percent in 1991. AFUDC, net of income tax,
as a percent of net income after dividends on preferred stock was 1.5 percent
in 1993, 1.1 percent in 1992, and 2.0 percent in 1991.
UTILITY PLANT
Utility plant is stated at original cost. Original cost includes: materials;
labor; minor items of property; appropriate administrative and general costs;
payroll-related costs such as taxes, pensions, and other benefits; and the
estimated cost of funds used during construction. The cost of maintenance,
repairs and replacements of minor items of property is charged to maintenance
expense. The cost of replacements of property (exclusive
II-66
<PAGE> 97
NOTES (continued)
Alabama Power Company 1993 Annual Report
of minor items of property) is charged to utility plant.
FINANCIAL INSTRUMENTS
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, all financial instruments of the company -- for which
the carrying amount does not approximate fair value -- are shown in the table
below as of December 31:
<TABLE>
<CAPTION>
1993
Carrying Fair
Amount Value
(in millions)
<S> <C> <C>
Nuclear decommissioning trusts $ 49.6 $ 50.4
Long-term debt 2,315.4 2,439.4
1992
Carrying Fair
Amount Value
(in millions)
Nuclear decommissioning trusts $ 32.4 $ 32.4
Investment securities 64.8 69.5
Long-term debt 2,154.7 2,255.8
</TABLE>
The fair values of nuclear decommissioning trusts and investment securities
were based on listed closing market prices. The fair values for long-term debt
were based on either closing market prices or closing prices of comparable
instruments.
MATERIALS AND SUPPLIES
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to
inventory when purchased and then expensed or capitalized to plant, as
appropriate, when installed.
VACATION PAY
The company's employees earn their vacation in one year and take it in the
subsequent year. However, for ratemaking purposes, vacation pay is recognized
as an allowable expense only when paid. Consistent with this ratemaking
treatment, the company accrues a current liability for earned vacation pay and
records a current asset representing future recoverability of this cost. The
amount was $23 million and $22 million at December 31, 1993 and 1992,
respectively. In 1994, an estimated 65 percent of the 1993 deferred vacation
cost will be expensed and the balance will be charged to construction and other
accounts.
2. RETIREMENT BENEFITS
PENSION PLAN
The company has a defined benefit, trusteed, non-contributory pension plan that
covers substantially all regular employees. Benefits are based on the greater
of amounts resulting from two different formulas: years of service and final
average pay or years of service and a flat-dollar benefit. The company uses
the "entry age normal method with a frozen initial liability" actuarial method
for funding purposes, subject to limitations under federal income tax
regulations. Amounts funded to the pension fund are primarily invested in
equity and fixed-income securities. FASB Statement No. 87, Employers'
Accounting for Pensions, requires use of the "projected unit credit" actuarial
method for financial reporting purposes.
POSTRETIREMENT BENEFITS
The company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. A qualified trust for medical benefits has been
established for funding amounts to the extent deductible under federal income
tax regulations. Amounts funded are primarily invested in debt and equity
securities. Accrued costs of life insurance benefits, other than current cash
payments for retirees, currently are not being funded. However, in December
1993, the APSC issued an accounting policy statement which requires the company
to externally fund all postretirement benefits. It is expected that an
external funding program will begin in 1994.
Effective January 1, 1993, the company adopted FASB Statement No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service."
II-67
<PAGE> 98
NOTES (continued)
Alabama Power Company 1993 Annual Report
Because the adoption of Statement No. 106 was reflected in rates, it did not
have a material impact on net income.
Prior to 1993, the company recognized these benefit costs on an accrual basis
using the "aggregate cost" actuarial method, which spreads the expected cost of
such benefits over the remaining periods of employees' service as a level
percentage of payroll costs. The total costs of such benefits recognized by
the company in 1992 and 1991 were $15.2 million and $15.4 million,
respectively.
Status and Cost of Benefits
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of Statement Nos. 87 and 106, respectively. Retiree medical and
life insurance information is shown only for 1993 because Statement No. 106 was
adopted as of January 1, 1993, on a prospective basis. The funded status of
the plans at December 31 was as follows:
<TABLE>
<CAPTION>
Pension
1993 1992
(in millions)
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefits $ 523 $ 449
Non-vested benefits 20 19
Accumulated benefit obligation 543 468
Additional amounts related to
projected salary increases 153 183
Projected benefit obligation 696 651
Less:
Fair value of plan assets 1,121 1,014
Unrecognized net gain (349) (295)
Unrecognized prior service cost 25 27
Unrecognized transition asset (56) (62)
Prepaid asset recognized in the
Balance Sheets $ 45 $ 33
Postretirement
Medical Life
1993 1993
(in millions)
Actuarial present value of
benefit obligations:
Retirees and dependents $ 67 $ 27
Employees eligible to retire 21 -
Other employees 95 29
Accumulated postretirement
benefit obligation 183 56
Less:
Fair value of plan assets 39 1
Unrecognized net loss (gain) 18 (4)
Unrecognized transition
obligation 102 26
Accrued liability recognized
in the Balance Sheets $ 24 $ 33
</TABLE>
The weighted average rates assumed in the actuarial calculations were:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Discount 7.5% 8.0% 8.0%
Annual salary increase 5.0 6.0 6.0
Long-term return on
plan assets 8.5 8.5 8.5
</TABLE>
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 11.3 percent for 1993, decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate by 1.0 percent would increase the accumulated
medical benefit obligation as of December 31, 1993, by $32.8 million and the
aggregate of the service and interest cost components of the net retiree
medical cost by $3.4 million.
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Alabama Power Company 1993 Annual Report
Components of the plans' net cost are shown below:
<TABLE>
<CAPTION>
Pension
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Benefits earned during
the year $ 20.6 $ 20.6 $ 21.7
Interest cost on projected
benefit obligation 50.4 48.2 47.5
Actual return on plan assets (146.3) (45.8) (260.5)
Net amortization and deferral 63.3 (29.3) 193.2
Net pension cost (income) $ (12.0) $ (6.3) $ 1.9
</TABLE>
Of the above net pension amounts, $(8.9) million in 1993, $(5.1) million in
1992, and $0.7 million in 1991 were recorded in operating expenses, and the
remainder was recorded in construction and other accounts.
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
(in millions)
<S> <C> <C>
Benefits earned during the year $ 5 $ 2
Interest cost on accumulated
benefit obligation 12 4
Amortization of transition
obligation over 20 years 5 1
Actual return on plan assets (5) -
Net amortization and deferral 2 -
Net postretirement cost $ 19 $ 7
</TABLE>
Of the above net postretirement medical and life insurance costs recorded in
1993, $22 million was charged to operating expenses and the remainder was
charged to construction and other accounts.
WORK FORCE REDUCTION PROGRAM
The company has incurred additional costs for work force reduction programs.
The costs related to these programs were $16.1 million, $13.4 million and $6.7
million for the years 1993, 1992 and 1991, respectively. A portion of the cost
of these programs was deferred and is being amortized in accordance with
regulatory treatment. The unamortized balance of these costs was $15.3 million
at December 31, 1993.
3. LITIGATION AND REGULATORY MATTERS
RETAIL RATE ADJUSTMENT PROCEDURES
In November 1982, the APSC adopted rates that provide for periodic adjustments
based upon the company's earned return on end-of-period retail common equity.
The rates also provide for adjustments to recognize the placing of new
generating facilities in retail service. Both increases and decreases have been
placed into effect since the adoption of these rates. The rate adjustment
procedures allow a return on common equity range of 13.0 percent to 14.5
percent and limit increases or decreases in rates to 4 percent in any calendar
year.
The APSC issued an order in December 1991 that reduced a scheduled 2.03
percent annual increase in rates to 1.03 percent, effective January 1992. The
1 percent reduction will remain in effect through 1994. The rate reduction was
designed to refund to retail ratepayers a portion of the benefits from a
settled contract dispute with Gulf States Utilities Company (Gulf States). The
present value of this portion of the settlement amounting to approximately $60
million is being amortized to revenues to offset the rate reduction in
accordance with the APSC's rate order. See Note 7 for additional information
concerning the Gulf States settlement.
Also in the December 1991 rate order, the APSC reaffirmed its satisfaction
with the ratemaking mechanism and stated that it did not foresee any further
review or changes in the procedures until after 1994. The ratemaking
procedures will remain in effect after 1994 unless the APSC votes to modify or
discontinue them.
In February 1993, the APSC ordered - at the company's request - a moratorium
on rate increases for the first two quarters of 1993, which facilitated the
transition of an accounting change. This accounting change permitted the
accrual of estimated operation and maintenance expenses related to nuclear
refueling outages during the period between outages rather than at the time the
expenses are incurred.
HEAT PUMP FINANCING SUIT
In September 1990, two customers of the company filed a civil complaint in the
Circuit Court of Shelby County, Alabama, against the company seeking to
represent all
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Alabama Power Company 1993 Annual Report
persons who, prior to June 23, 1989, entered into agreements with the company
for the financing of heat pumps and other merchandise purchased from vendors
other than the company. The plaintiffs contended that the company was required
to obtain a license under the Alabama Consumer Finance Act to engage in the
business of making consumer loans. The plaintiffs were seeking an order
declaring these agreements null and void and requiring the company to refund
all payments -- principal and interest -- made under these agreements. The
aggregate amount under these agreements, together with interest paid, currently
is estimated to be $40 million.
In June, 1993, the court ordered the company to refund or forfeit interest
of approximately $10 million because of the company's failure to obtain such
license. However, the court's order did not require any refund or forfeiture
with respect to any principal payments under the agreements at issue. The
company has appealed the court's order to the Supreme Court of Alabama.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material effect on the
company's financial statements.
FERC REVIEWS EQUITY RETURNS
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on common equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power and other similar contracts. Any
changes in the rate of return on common equity that may occur as a result of
this proceeding would be effective 60 days after a proper notice of the
proceeding is published. A notice was published on May 10, 1991.
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC
staff has filed exceptions to the administrative law judge's opinion, and the
matter remains pending before the FERC.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material effect on the
company's financial statements.
4. CAPITAL BUDGET
The company's capital expenditures are currently estimated to total $588
million in 1994, $572 million in 1995 and $531 million in 1996. The estimates
include AFUDC of $10 million in 1994, $11 million in 1995 and $12 million in
1996. The estimates for property additions for the three-year period includes
$36.5 million committed to meeting the requirements of the Clean Air Act. The
capital budget is subject to periodic review and revision, and actual capital
cost incurred may vary from the above estimates because of numerous factors.
These factors include changes in business conditions; revised load growth
projections; changes in environmental regulations; changes in the existing
nuclear plant to meet new regulatory requirements; increasing costs of labor,
equipment, and materials; and cost of capital. At December 31, 1993,
significant purchase commitments were outstanding in connection with the
construction program. The company does not have any new baseload generating
plants under construction. However, the construction of combustion turbine
peaking units of approximately 720 megawatts is planned to be completed by
1996. In addition, significant construction will continue related to
transmission and distribution facilities and the upgrading and extension of the
useful lives of generating plants.
5. FINANCING, INVESTMENT, AND COMMITMENTS
GENERAL
To the extent possible, the company's construction program is expected to be
financed primarily from internal sources. Short-term debt will be utilized
when necessary; the amounts available are discussed below. The company may
issue additional long-term debt and preferred stock primarily for the purposes
of debt maturities and for redeeming higher-cost securities.
FINANCING
The ability of the company to finance its capital budget depends on the amount
of funds generated internally and the funds it can raise by external financing.
The
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NOTES(continued)
Alabama Power Company 1993 Annual Report
company's primary sources of external financing are sales of first mortgage
bonds and preferred stock to the public, receipt of additional paid-in capital
from The Southern Company, and leasing of nuclear material. In order to issue
additional first mortgage bonds and preferred stock, the company must comply
with certain earnings coverage requirements contained in its mortgage indenture
and corporate charter. The most restrictive of these provisions requires, for
the issuance of additional first mortgage bonds, that before-income-tax
earnings, as defined, cover pro forma annual interest charges on outstanding
first mortgage bonds at least twice; and for the issuance of additional
preferred stock, that gross income available for interest cover pro forma
annual interest charges and preferred stock dividends at least one and one-half
times. These coverages, for first mortgage bonds and for preferred stock for
the year ended December 31, 1993, were 5.70 and 2.71, respectively.
BANK CREDIT ARRANGEMENTS
The company, along with The Southern Company and Georgia Power Company, has
entered into agreements with several banks outside the service area to provide
$400 million of revolving credit to the companies through June 30, 1996. To
provide liquidity support for commercial paper programs, the company and
Georgia Power Company have exclusive right to $135 million and $165 million,
respectively, of the available credit. The companies have the option of
converting the short-term borrowings into term loans, payable in 12 equal
quarterly installments, with the first installment due at the end of the first
calendar quarter after the applicable termination date or at an earlier date at
the companies' option. In addition, these agreements provide for payment of
commitment fees based on the unused portions of the commitments or the
maintenance of compensating balances with the banks.
Additionally, the company maintains committed lines of credit in the amount
of $350 million which expire at various times during 1994 and, in certain
cases, provide for average annual compensating balances. Because the
arrangements are based on an average balance, the company does not consider any
of its cash balances to be restricted as of any specific date. Moreover, the
company borrows from time to time pursuant to arrangements with banks for
uncommitted lines of credit.
In connection with all other lines of credit, the company has the option of
paying fees or maintaining compensating balances, which are substantially all
the cash of the company except for daily working funds and similar items.
These balances are not legally restricted from withdrawal.
At December 31, 1993, the company had regulatory approval to have
outstanding up to $450 million of short-term borrowings.
ASSETS SUBJECT TO LIEN
The company's mortgage, as amended and supplemented, securing the first
mortgage bonds issued by the company, constitutes a direct lien on
substantially all of the company's fixed property and franchises.
FUEL COMMITMENTS
To supply a portion of the fuel requirements of its generating plants, the
company has entered into various long-term commitments for the procurement of
fossil and nuclear fuel. In most cases, these contracts contain provisions for
price escalations, minimum purchase levels and other financial commitments.
Total estimated long-term obligations through the year 2013 were approximately
$8 billion at December 31, 1993.
In addition, a contract with a certain coal contractor requires
reimbursement or purchase, at net book value, of the investment in the mine or
equipment upon termination of the contract. At December 31, 1993, such net
book value was approximately $13 million. Additional commitments for coal and
for nuclear fuel will be required in the future to supply the company's fuel
needs.
6. FACILITY SALES AND JOINT OWNERSHIP
AGREEMENTS
The company and Georgia Power Company own equally all of the outstanding
capital stock of Southern Electric Generating Company (SEGCO), which owns
electric generating units with a total rated capacity of 1,019,680 kilowatts,
together with associated transmission facilities. The capacity of these units
is sold equally to the company and Georgia Power Company under a contract
expiring in 1994 which, in substance, requires payments sufficient to provide
for the operating expenses, taxes, interest expense
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NOTES(continued)
Alabama Power Company 1993 Annual Report
and a return on equity, whether or not SEGCO has any capacity and energy
available. The company's share of expenses totaled $86 million in 1993, $73
million in 1992 and $82 million in 1991, and is included in "Purchased power
from affiliates" in the Statements of Income. An amended contract has been
filed with the FERC with substantially the same provisions, but the term
thereof would be extended automatically for two year periods, subject to any
party's right to cancel upon two years' notice.
In addition, the company has guaranteed unconditionally the obligation of
SEGCO under an installment sale agreement for the purchase of certain pollution
control facilities at SEGCO's generating units, pursuant to which $24.5 million
principal amount of pollution control revenue bonds are outstanding. Georgia
Power Company has agreed to reimburse the company for the pro rata portion of
such obligation corresponding to its then proportionate ownership of stock of
SEGCO if the company is called upon to make such payment under its guaranty.
At December 31, 1993, the capitalization of SEGCO consisted of $58 million
of equity and $84 million of long-term debt on which the annual interest
requirement is $3.8 million. SEGCO paid dividends totaling $11.3 million in
1993, $12.0 million in 1992, and $4.5 million in 1991, of which one-half of
each was paid to the company. SEGCO's net income was $8.3 million, $9.3
million and $9.2 million for 1993, 1992 and 1991, respectively.
In June 1992 the company completed the sale of a portion of Plant Miller
Units 1 and 2 to Alabama Electric Cooperative, Inc. (AEC). The company's
percentage ownership and investment in jointly-owned generating plants at
December 31, 1993, follows:
<TABLE>
<CAPTION>
Total
Megawatt Company
Facility (Type) Capacity Ownership
<S> <C> <C>
Greene County 500 60.00%(1)
(coal)
Plant Miller
Units 1 and 2 1,320 91.84%(2)
(coal)
</TABLE>
(1) Jointly owned with an affiliate, Mississippi Power Company.
(2) Jointly owned with AEC.
<TABLE>
<CAPTION>
Company Accumulated
Facility (Type) Investment Depreciation
(in millions)
<S> <C> <C>
Greene County $ 81 $ 37
(coal)
Plant Miller
Units 1 and 2 $ 703 $ 247
(coal)
</TABLE>
7. LONG-TERM POWER SALES AGREEMENTS
GENERAL
The operating subsidiaries of The Southern Company, including the company, have
entered into long-term and short-term contractual agreements for the sale of
capacity and energy to certain non-affiliated utilities located outside the
system's service area. Certain of these agreements are non-firm and are based
on capacity of the system in general. Other agreements are firm and pertain to
capacity related to specific generating units. Because the energy is generally
sold at cost under these agreements, revenues from capacity sales primarily
affect profitability. The company's portion of off-system capacity revenues
has been as follows:
<TABLE>
<CAPTION>
Other
Long-Term
and
Unit Short-Term
Year Power Non-Firm Total
(in millions)
<S> <C> <C> <C>
1993 $144 $15 $159
1992 177 9 186
1991 172 8 180
</TABLE>
Long-term non-firm power of 400 megawatts was sold by the Southern electric
system in 1993 to Florida Power Corporation (FPC). In January 1994, this
amount decreased to 200 megawatts, and the contract will expire at year-end.
Unit power from Plant Miller is being sold to FPC, Florida Power & Light
Company (FP&L), Jacksonville Electric Authority (JEA) and the City of
Tallahassee, Florida (Tallahassee). Under these agreements, an average of
1,100 megawatts of capacity is scheduled to be
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<PAGE> 103
NOTES(continued)
Alabama Power Company 1993 Annual Report
sold during 1994. Thereafter, these sales will increase to some 1,200
megawatts and remain at that approximate level -- unless reduced by FP&L, FPC,
and JEA for the periods after 1999 -- until the expiration of the contracts in
2010.
GULF STATES SETTLEMENT COMPLETED
On November 7, 1991, subsidiaries of The Southern Company entered into a
settlement agreement with Gulf States that resolved litigation between the
companies that had been pending since 1986 and arose out of a dispute over
certain unit power and other long-term power sales contracts. In 1993, all
remaining terms and obligations of the settlement agreement were satisfied.
With respect to the company's portion of proceeds received in 1991, see Note
3 concerning the regulatory treatment of amounts being refunded to retail
customers over a three-year period.
ALABAMA MUNICIPAL ELECTRIC AUTHORITY (AMEA)
CAPACITY CONTRACTS
In August 1986, the company entered into a firm power purchase contract with
AMEA entitling AMEA to scheduled amounts of capacity (to a maximum 100
megawatts) for a period of 15 years commencing September 1, 1986 (1986
Contract). In October 1991, the company entered into a second firm power
purchase contract with AMEA entitling AMEA to scheduled amounts of additional
capacity (to a maximum 80 megawatts) for a period of 15 years commencing
October 1, 1991 (1991 Contract). In both contracts the power will be sold to
AMEA for its member municipalities that previously were served directly by the
company as wholesale customers. Under the terms of the contracts, the company
received payments from AMEA representing the net present value of the revenues
associated with the respective capacity entitlements, discounted at effective
annual rates of 9.96 percent and 11.19 percent for the 1986 and 1991 Contracts,
respectively. These payments are being recognized as operating revenues and
the discounts are being amortized to other interest expense as scheduled
capacity is made available over the terms of the contracts.
In order to secure AMEA's advance payments and the company's performance
obligation under the contracts, the company issued and delivered to an escrow
agent first mortgage bonds representing the maximum amount of liquidated
damages payable by the company in the event of a default under the contracts.
No principal or interest is payable on such bonds unless and until a default by
the company occurs. As the liquidated damages decline under the contracts, a
portion of the bonds equal to the decreases are returned to the company. At
December 31, 1993, $153 million of such bonds were held by the escrow agent
under the contracts.
8. INCOME TAXES
Effective January 1, 1993, the company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption of Statement No. 109 resulted in
cumulative adjustments that had no material effect on net income. The adoption
also resulted in the recording of additional deferred income taxes and related
assets and liabilities. The related assets of $469 million are revenues to be
received from customers. These assets are attributable to tax benefits flowed
through to customers in prior years and to taxes applicable to capitalized
AFUDC. The related liabilities of $441 million are revenues to be refunded to
customers. These liabilities are attributable to deferred taxes previously
recognized at rates higher than current enacted tax law and to unamortized
investment tax credits. Additionally, deferred income taxes related to
accelerated tax depreciation previously shown as a reduction to utility plant
were reclassified.
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NOTES (continued)
Alabama Power Company 1993 Annual Report
Details of the federal and state income tax provisions are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Federal --
Currently payable $149,680 $152,481 $181,070
Deferred --
current year 9,636 27,760 28,382
reversal of prior years 19,653 (7,827) (34,911)
Deferred investment tax
credits (2,106) - (1,089)
176,863 172,414 173,452
State --
Currently payable 14,297 16,983 18,887
Deferred --
current year 1,898 6,387 2,256
reversal of prior years 3,913 (2,806) (1,506)
20,108 20,564 19,637
Total 196,971 192,978 193,089
Less income taxes charged
(credited) to other income (10,239) (8,947) (7,523)
Federal and state income
taxes charged to operations $207,210 $201,925 $200,612
</TABLE>
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1993
(in millions)
<S> <C>
Deferred tax liabilities:
Accelerated depreciation $ 697
Property basis differences 536
Premium on reacquired debt 38
Fuel clause underrecovered 11
Other 17
Total 1,299
Deferred tax assets:
Capacity prepayments 44
Other deferred costs 8
Pension and other benefits 15
Accrued nuclear outage costs 7
Unbilled revenue 7
Other 39
Total 120
Net deferred tax liabilities 1,179
Portion included in current liabilities, net (14)
Accumulated deferred income taxes
in the Balance Sheets $ 1,165
</TABLE>
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $13 million in 1993, $18 million in 1992, and $16 million in 1991.
At December 31, 1993, all investment tax credits available to reduce federal
income taxes payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Effective tax rate 34.4% 34.1% 34.0%
State income tax, net of
federal income tax benefit (2.3) (2.4) (2.3)
Non-deductible book
depreciation (1.6) (1.6) (1.8)
Differences in prior years'
deferred and current tax rates 1.6 1.9 1.8
Other 2.9 2.0 2.3
Statutory federal tax rate 35.0% 34.0% 34.0%
</TABLE>
The Southern Company and its subsidiaries file a consolidated federal income
tax return. Under a joint consolidated income tax agreement, each company's
current and deferred tax expense is computed on a stand-alone basis, and
consolidated tax savings are allocated to each company based on its ratio of
taxable income to total consolidated taxable income.
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NOTES (continued)
Alabama Power Company 1993 Annual Report
9. OTHER LONG-TERM DEBT
Details of other long-term debt are as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(in thousands)
<S> <C> <C>
Obligations incurred in
connection with the
sale of tax-exempt
pollution control
revenue bonds by
public authorities-
2003-2013 6% to
9-3/8% $ 27,050 $162,365
2014-2023 3.05%
to 10-7/8% 449,090 306,200
Less funds on deposit
with trustees - 1,546
476,140 467,019
Capitalized lease obligations
and other long-term debt:
Nuclear fuel 95,943 104,058
Office buildings 7,710 8,069
Street light and other 2,761 4,423
106,414 116,550
Total $582,554 $583,569
</TABLE>
Pollution control obligations represent installment purchases of pollution
control facilities financed by funds derived from sales by public authorities
of revenue bonds. The company is required to make payments sufficient for the
authorities to meet principal and interest requirements of such bonds. With
respect to $154.5 million of such pollution control obligations, the company
has authenticated and delivered to the trustees a like principal amount of
first mortgage bonds as security for its obligations under the installment
purchase agreements. No principal or interest on these first mortgage bonds is
payable unless and until a default occurs on the installment purchase
agreements.
The company has capitalized leased nuclear material and recorded the related
lease obligations. The arrangement provides for the payment of interest at
varying rates and times dependent on options selected by the company from types
of loans available under the arrangement. At the end of 1993 the effective
rate of this lease arrangement, including applicable fees, was 3.58 percent.
Principal payments are required under the arrangement based on the cost of fuel
burned.
The company has also capitalized certain office building leases and a street
light lease. Monthly principal payments plus interest are required, and at
December 31, 1993, the interest rate was 9.5 percent for office buildings and
13.0 percent for street lights.
The net book value of capitalized leases included in utility plant in service
was $94.7 million and $103.0 million at December 31, 1993 and 1992,
respectively. The estimated aggregate annual maturities of other long-term
debt through 1998 are as follows: $38.9 million in 1994, $33.3 million in 1995,
$18.7 million in 1996, $6.4 million in 1997 and $3.0 million in 1998.
10. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund requirements and scheduled maturities and
redemptions of long-term debt due within one year is as follows:
<TABLE>
<CAPTION>
1993 1992
(in thousands)
<S> <C> <C>
Cash sinking fund requirements $20,135 $18,525
Other long-term debt maturities
(Note 9) 38,863 48,854
Total $58,998 $67,379
</TABLE>
The annual first mortgage bond improvement fund requirement is one percent
of the aggregate principal amount of bonds of each series authenticated, so
long as a portion of that series is outstanding, and may be satisfied by the
deposit of cash and/or reacquired bonds, the certification of unfunded property
additions or a combination thereof. The 1994 requirement of $20.1 million was
satisfied by the deposit of cash in 1994, which was used for the partial
redemption of various series of outstanding bonds. In addition, maturing in
1994 are other long-term debt of $38.9 million consisting primarily of
capitalized nuclear fuel obligations.
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NOTES (continued)
Alabama Power Company 1993 Annual Report
11. NUCLEAR INSURANCE
Under the Price-Anderson Amendments Act of 1988 (Act), the company maintains
agreements of indemnity with the NRC that, together with private insurance,
cover third-party liability arising from any nuclear incident occurring at
Plant Farley. The Act limits to $9.4 billion, public liability claims that
could arise from a single nuclear incident. Plant Farley is insured against
this liability to a maximum of $200 million by private insurance, with the
remaining coverage provided by a mandatory program of deferred premiums which
could be assessed, after a nuclear incident, against all owners of nuclear
reactors. A company could be assessed up to $79 million per incident for each
licensed reactor it operates but not more than an aggregate of $10 million per
incident to be paid in a calendar year for each reactor. Such maximum
assessment, excluding any applicable state premium taxes, for the company is
$159 million per incident but not more than an aggregate of $20 million to be
paid for each incident in any one year.
The company is a member of Nuclear Mutual Limited (NML), a mutual insurer
established to provide property damage insurance in an amount up to $500
million for members' nuclear generating facilities. The members are subject to
a retrospective premium adjustment in the event that losses exceed accumulated
reserve funds. The company's maximum annual assessment per incident is limited
to $14 million under the current policy.
Additionally, the company has policies that currently provide
decontamination, excess property insurance, and premature decommissioning
coverage up to $2.25 billion for losses in excess of the $500 million NML
coverage. This excess insurance is provided by Nuclear Electric Insurance
Limited (NEIL), a mutual insurance company, and American Nuclear
Insurers/Mutual Atomic Energy Liability Underwriters.
NEIL also covers the additional cost that would be incurred in obtaining
replacement power during a prolonged accidental outage at a member's nuclear
plant. Members can be insured against increased cost of replacement power in
an amount up to $3.5 million per week (starting 21 weeks after the outage) for
one year and up to $2.3 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if losses
each year exceed the accumulated funds available to the insurer under that
policy. The maximum annual assessments per incident under current policies for
the company would be $16 million for excess property damage and $9 million for
replacement power.
For all on-site property damage insurance policies for commercial nuclear
power plants, the NRC requires that the proceeds of such policies issued or
renewed on or after April 2, 1991, shall be dedicated first for the sole
purpose of placing the reactor in a safe and stable condition after an
accident. Any remaining proceeds are to be applied next toward the costs of
decontamination and debris removal operations ordered by the NRC, and then, any
further remaining proceeds are to be paid either to the company or to its bond
trustees as may be appropriate under applicable trust indentures.
The company participates in an insurance program for nuclear workers that
provides coverage for worker tort claims filed for bodily injury caused at
commercial nuclear power plants. In the event that claims for this insurance
exceed the accumulated reserve funds, the company could be subject to a maximum
total assessment of $6.4 million.
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NOTES (continued)
Alabama Power Company 1993 Annual Report
12. COMMON STOCK DIVIDEND
RESTRICTIONS
The company's first mortgage bond indenture contains various common stock
dividend restrictions that remain in effect as long as the bonds are
outstanding. At December 31, 1993, $653 million of retained earnings was
restricted against the payment of cash dividends on common stock under terms of
the mortgage indenture. Supplemental indentures in connection with future
first mortgage bond issues may contain more stringent common stock dividend
restrictions than those currently in effect.
13. QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
Summarized quarterly financial data for 1993 and 1992 are as follows:
<TABLE>
<CAPTION> Net Income
After
Dividends
Quarter Operating Operating on Preferred
Ended Revenues Income Stock
(in thousands)
<S> <C> <C> <C>
MARCH 1993 $635,559 $124,356 $ 57,856
JUNE 1993 733,589 159,023 91,448
SEPTEMBER 1993 919,934 205,151 150,818
DECEMBER 1993 718,527 106,582 46,372
March 1992 $649,554 $140,574 $ 75,044
June 1992 720,661 146,488 83,545
September 1992 821,469 200,262 136,744
December 1992 655,156 105,798 43,222
</TABLE>
The company's business is influenced by seasonal weather conditions and the
timing of rate adjustments.
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<PAGE> 108
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS) $3,007,609 $2,846,840 $2,846,794
NET INCOME AFTER DIVIDENDS
ON PREFERRED STOCK (IN THOUSANDS) $346,494 $338,555 $339,666
CASH DIVIDENDS ON COMMON STOCK (IN THOUSANDS) $252,900 $273,300 $232,900
RETURN ON AVERAGE COMMON EQUITY (PERCENT) 13.94 14.02 14.55
TOTAL ASSETS (IN THOUSANDS) $8,248,683 $6,593,618 $6,549,462
GROSS PROPERTY ADDITIONS (IN THOUSANDS) $435,843 $367,463 $397,011
CAPITALIZATION (IN THOUSANDS):
Common stock equity $2,526,348 $2,443,493 $2,387,198
Preferred stock 440,400 489,400 484,400
Preferred stock subject to mandatory redemption - - -
Long-term debt 2,362,852 2,202,473 2,382,635
Total (excluding amounts due within one year) $5,329,600 $5,135,366 $5,254,233
CAPITALIZATION RATIOS (PERCENT):
Common stock equity 47.4 47.6 45.4
Preferred stock 8.3 9.5 9.2
Long-term debt 44.3 42.9 45.4
Total (excluding amounts due within one year) 100.0 100.0 100.0
FIRST MORTGAGE BONDS (IN THOUSANDS):
Issued 860,000 745,000 250,000
Retired 699,788 931,797 227,695
PREFERRED STOCK (IN THOUSANDS):
Issued 158,000 150,000 -
Retired 207,000 145,000 17,500
SECURITY RATINGS:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Duff & Phelps A+ A A
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps A- A- A-
CUSTOMERS (YEAR-END):
Residential 1,027,130 1,012,294 997,585
Commercial 157,337 152,530 148,228
Industrial 5,391 5,434 5,496
Other 713 704 697
Total 1,190,571 1,170,962 1,152,006
EMPLOYEES (YEAR-END) 8,009 8,116 8,513
</TABLE>
II-78
<PAGE> 109
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$2,722,424 $2,629,354 $2,476,626 $2,574,634 $2,549,574 $2,518,699 $2,236,560 $2,030,649
$ 312,803 $ 311,146 $ 283,475 $ 257,239 $ 273,456 $ 264,562 $ 233,252 $ 229,011
$ 220,800 $ 217,300 $ 212,700 $ 201,100 $ 191,300 $ 185,700 $ 161,900 $ 145,200
14.00 14.53 14.03 13.56 15.12 15.41 14.74 16.12
$6,362,293 $6,279,431 $6,180,945 $5,912,000 $5,570,653 $5,722,263 $5,496,197 $5,120,607
$ 444,680 $ 459,199 $ 643,892 $ 600,589 $ 553,767 $ 568,073 $ 575,173 $ 522,140
$2,280,590 $2,188,811 $2,094,815 $1,946,747 $1,847,608 $1,770,156 $1,664,295 $1,499,909
484,400 484,400 484,400 384,400 384,400 384,400 424,400 424,400
12,500 17,500 22,500 27,500 30,000 35,000 37,224 38,034
2,397,931 2,435,129 2,496,492 2,386,258 2,210,108 2,349,373 2,402,713 2,404,565
$5,175,421 $5,125,840 $5,098,207 $4,744,905 $4,472,116 $4,538,929 $4,528,632 $4,366,908
44.1 42.7 41.1 41.0 41.3 39.0 36.7 34.3
9.6 9.8 9.9 8.7 9.3 9.3 10.2 10.6
46.3 47.5 49.0 50.3 49.4 51.7 53.1 55.1
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
- - 150,000 200,000 125,000 - - -
33,122 75,650 42,445 108,082 405,765 39,460 21,250 16,189
- - 100,000 - - - - 50,000
5,000 5,000 2,500 5,000 42,224 - 810 4,200
A1 A1 A1 A1 A1 A1 A2 A3
A A A A A A A- BBB+
A A 6 6 6 6 7 8
a2 a2 a2 a2 a2 a2 a3 baa2
A- A- A- A- A- A- BBB+ BBB
A- A- 7 7 7 7 8 9
985,566 974,622 964,581 950,101 934,798 918,777 905,239 889,372
144,340 141,265 137,955 134,533 130,540 126,644 123,561 120,749
5,322 5,200 5,120 4,955 4,725 4,619 4,467 4,325
690 684 678 713 697 755 759 757
1,135,918 1,121,771 1,108,334 1,090,302 1,070,760 1,050,795 1,034,026 1,015,203
9,473 9,698 10,302 10,457 10,367 10,212 10,144 9,917
</TABLE>
II-79
<PAGE> 110
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS):
Residential $ 947,277 $ 845,660 $ 864,347
Commercial 634,895 589,816 582,730
Industrial 832,938 800,311 790,224
Other 13,344 12,734 12,662
Total retail 2,428,454 2,248,521 2,249,963
Sales for resale - non-affiliates 364,105 407,791 407,912
Sales for resale - affiliates 181,975 158,088 159,375
Total revenues from sales of electricity 2,974,534 2,814,400 2,817,250
Other revenues 33,075 32,440 29,544
Total $ 3,007,609 $ 2,846,840 $ 2,846,794
KILOWATT-HOUR SALES (IN THOUSANDS):
Residential 13,185,062 12,069,268 12,324,898
Commercial 9,185,462 8,629,869 8,526,131
Industrial 18,595,237 18,260,274 17,511,579
Other 181,673 176,798 174,760
Total retail 41,147,434 39,136,209 38,537,368
Sales for resale - non-affiliates 7,143,672 8,382,571 8,810,442
Sales for resale - affiliates 8,081,324 7,210,697 7,784,285
Total 56,372,430 54,729,477 55,132,095
AVERAGE REVENUE PER KILOWATT-HOUR (CENTS):
Residential 7.18 7.01 7.01
Commercial 6.91 6.83 6.83
Industrial 4.48 4.38 4.51
Total retail 5.90 5.75 5.84
Sales for resale 3.59 3.63 3.42
Total sales 5.28 5.14 5.11
RESIDENTIAL AVERAGE ANNUAL KILOWATT-HOUR
USE PER CUSTOMER 12,936 12,017 12,435
RESIDENTIAL AVERAGE ANNUAL REVENUE
PER CUSTOMER $ 929.36 $ 842.00 $ 872.04
PLANT NAMEPLATE CAPACITY RATINGS (NOTE 1)
(year-end) (megawatts) 10,431 10,431 10,539
TERRITORIAL PEAK-HOUR DEMAND (MEGAWATTS) (NOTE 2):
Winter 7,152 7,077 6,586
Summer 9,457 8,801 8,627
ANNUAL LOAD FACTOR (PERCENT) (NOTE 2) 58.6 59.6 59.9
PLANT AVAILABILITY (PERCENT):
Fossil-steam 89.7 88.9 93.1
Nuclear 86.6 80.2 87.0
SOURCE OF ENERGY SUPPLY (PERCENT):
Coal 63.9 64.3 61.5
Nuclear 20.1 19.0 20.8
Hydro 6.9 8.5 8.2
Oil and gas * * *
Purchased power -
From non-affiliates 1.1 1.2 1.6
From affiliates 8.0 7.0 7.9
Total 100.0 100.0 100.0
TOTAL FUEL ECONOMY DATA (NOTE 1):
BTU per net kilowatt-hour generated 10,003 10,000 9,985
Cost of fuel per million BTU (cents) 173.66 164.57 170.49
Average cost of fuel per net kilowatt-hour generated (cents) 1.74 1.65 1.70
</TABLE>
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50%
portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
II-80
<PAGE> 111
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 825,645 $ 781,982 $ 761,805 $ 759,957 $ 738,864 $ 684,970 $ 664,286 $ 629,478
551,634 533,487 510,910 501,088 481,676 453,651 430,400 398,827
777,580 762,274 738,755 721,298 705,395 717,078 692,177 631,440
12,103 11,743 11,255 10,968 10,811 10,129 9,615 8,914
2,166,962 2,089,486 2,022,725 1,993,311 1,936,746 1,865,828 1,796,478 1,668,659
434,996 409,202 355,362 443,880 472,938 539,343 317,890 225,535
93,473 104,488 76,691 118,746 120,911 95,733 108,812 119,610
2,695,431 2,603,176 2,454,778 2,555,937 2,530,595 2,500,904 2,223,180 2,013,804
26,993 26,178 21,848 18,697 18,979 17,795 13,380 16,845
$ 2,722,424 $ 2,629,354 $ 2,476,626 $ 2,574,634 $ 2,549,574 $ 2,518,699 $ 2,236,560 $ 2,030,649
11,996,794 11,346,736 11,332,285 11,149,225 10,606,698 9,814,814 9,634,285 9,176,413
8,201,534 7,915,685 7,711,092 7,476,924 7,015,589 6,593,645 6,270,899 5,816,678
17,713,153 17,360,791 16,881,342 15,969,075 15,025,806 15,215,276 15,134,188 13,688,096
170,420 166,485 165,122 159,422 153,282 146,119 143,785 138,901
38,081,901 36,789,697 36,089,841 34,754,646 32,801,375 31,769,854 31,183,157 28,820,088
10,277,060 10,292,329 7,905,750 10,523,554 9,064,049 12,158,464 8,587,936 6,473,574
4,519,275 5,048,743 3,551,142 4,963,997 4,456,360 3,588,338 4,270,493 3,904,285
52,878,236 52,130,769 47,546,733 50,242,197 46,321,784 47,516,656 44,041,586 39,197,947
6.88 6.89 6.72 6.82 6.97 6.98 6.90 6.86
6.73 6.74 6.63 6.70 6.87 6.88 6.86 6.86
4.39 4.39 4.38 4.52 4.69 4.71 4.57 4.61
5.69 5.68 5.60 5.74 5.90 5.87 5.76 5.79
3.57 3.35 3.77 3.63 4.39 4.03 3.32 3.33
5.10 4.99 5.16 5.09 5.46 5.26 5.05 5.14
12,256 11,717 11,839 11,848 11,457 10,781 10,755 10,400
$ 843.50 $ 807.50 $ 795.84 $ 807.61 $ 798.09 $ 752.43 $ 741.58 $ 713.40
9,879 9,879 9,279 9,337 9,337 9,337 8,580 8,629
6,293 7,264 6,377 6,138 6,257 6,191 5,696 5,456
8,878 8,256 7,991 7,886 7,892 7,570 6,946 7,147
57.4 59.5 59.6 58.3 56.2 57.2 59.8 55.0
92.2 90.7 91.3 90.2 88.5 90.5 91.2 90.4
86.5 83.1 91.9 83.3 83.8 81.0 86.5 82.9
57.0 54.1 53.9 52.5 58.8 55.7 51.5 49.1
21.6 21.0 26.1 21.7 23.8 22.4 26.1 26.9
8.7 11.0 4.8 6.3 4.2 6.2 11.0 12.9
0.1 0.1 0.1 0.2 0.1 0.1 * *
0.9 1.8 0.5 0.2 2.0 1.7 0.2 0.5
11.7 12.0 14.6 19.1 11.1 13.9 11.2 10.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
10,072 10,061 10,137 10,214 10,209 10,229 10,367 10,610
171.55 172.20 168.21 176.72 179.65 185.74 179.40 164.30
1.73 1.73 1.71 1.80 1.83 1.90 1.86 1.74
</TABLE>
II-81
<PAGE> 112
STATEMENTS OF INCOME
Alabama Power Company
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31 1993* 1992* 1991*
<S> <C> <C> <C>
(Thousands of Dollars)
OPERATING REVENUES:
Revenues $ 2,825,634 $ 2,688,752 $ 2,687,419
Revenues from affiliates 181,975 158,088 159,375
Total operating revenues 3,007,609 2,846,840 2,846,794
OPERATING EXPENSES:
Operation --
Fuel 877,099 794,438 812,667
Purchased power from non-affiliates 15,230 14,242 21,080
Purchased power from affiliates 120,330 107,230 119,602
Proceeds from settlement of disputed contracts (2,568) (641) (14,819)
Other 473,383 446,477 435,908
Maintenance 252,506 237,071 229,114
Depreciation and amortization 290,310 280,881 271,433
Taxes other than income taxes 178,997 172,095 169,639
Federal and state income taxes 207,210 201,925 200,612
Total operating expenses 2,412,497 2,253,718 2,245,236
OPERATING INCOME 595,112 593,122 601,558
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 3,260 2,071 2,368
Income from subsidiary 4,127 4,635 4,576
Charitable foundation (3,000) (6,887) (6,500)
Interest income 20,775 14,804 14,356
Other, net (24,420) (11,019) (9,926)
Income taxes applicable to other income 10,239 8,947 7,523
INCOME BEFORE INTEREST CHARGES 606,093 605,673 613,955
INTEREST CHARGES:
Interest on long-term debt 184,861 206,871 214,107
Allowance for debt funds used during construction (2,992) (2,416) (6,903)
Interest on interim obligations 3,760 3,704 13,385
Amortization of debt discount, premium, and expense, net 8,937 4,392 2,634
Other interest charges 35,474 19,381 14,927
Net interest charges 230,040 231,932 238,150
NET INCOME 376,053 373,741 375,805
DIVIDENDS ON PREFERRED STOCK 29,559 35,186 36,139
NET INCOME AFTER DIVIDENDS ON PREFERRED $ 346,494 $ 338,555 $ 339,666
</TABLE>
* Includes the effect of recognizing, beginning in 1987, retail service
rendered but not yet billed to customers.
II-82
<PAGE> 113
STATEMENTS OF INCOME
Alabama Power Company
<TABLE>
<CAPTION>
1990* 1989* 1988* 1987* 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,628,951 $ 2,524,866 $ 2,399,935 $ 2,455,888 $ 2,428,663 $ 2,422,966 $ 2,127,748 $ 1,911,039
93,473 104,488 76,691 118,746 120,911 95,733 108,812 119,610
2,722,424 2,629,354 2,476,626 2,574,634 2,549,574 2,518,699 2,236,560 2,030,649
756,501 712,453 676,423 696,763 738,367 743,463 657,183 542,760
11,185 28,272 8,407 6,703 23,889 25,990 4,592 6,297
165,982 163,267 185,390 257,052 156,091 187,041 156,180 121,205
- - - - - - - -
411,559 380,536 400,879 410,575 350,671 308,437 287,647 262,354
215,304 202,633 197,225 199,617 203,972 210,143 182,957 164,391
262,817 247,973 225,123 212,072 201,803 183,779 174,514 169,231
163,567 154,398 148,681 141,422 135,248 128,648 122,928 107,445
185,954 188,507 143,614 190,575 255,400 248,774 224,726 220,245
2,172,869 2,078,039 1,985,742 2,114,779 2,065,441 2,036,275 1,810,727 1,593,928
549,555 551,315 490,884 459,855 484,133 482,424 425,833 436,721
25,487 29,515 39,047 27,663 27,455 32,985 45,704 35,103
4,182 3,750 3,302 3,440 2,967 3,417 3,181 3,088
(17,500) (25,000) - - - - - -
12,006 10,871 9,914 7,044 11,422 20,874 12,432 8,729
(8,235) (4,313) (13,694) (816) (3,738) (4,447) (666) (1,368)
11,081 13,629 8,034 849 185 (4,941) (3,088) (1,213)
576,576 579,767 537,487 498,035 522,424 530,312 483,396 481,060
221,527 230,046 225,522 205,824 226,110 248,073 245,684 246,246
(23,339) (27,627) (31,830) (24,235) (24,334) (29,048) (42,868) (38,558)
10,252 9,098 5,714 7,221 1,159 - - 1,261
3,706 4,469 4,411 4,405 3,313 1,145 996 985
13,115 13,112 13,715 14,662 8,695 4,234 4,291 4,179
225,261 229,098 217,532 207,877 214,943 224,404 208,103 214,113
351,315 350,669 319,955 290,158 307,481 305,908 275,293 266,947
38,512 39,523 36,480 32,919 34,025 41,346 42,041 37,936
$ 312,803 $ 311,146 $ 283,475 $ 257,239 $ 273,456 $ 264,562 $ 233,252 $ 229,011
</TABLE>
II-83
<PAGE> 114
STATEMENTS OF CASH FLOWS
Alabama Power Company
<TABLE>
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net income $ 376,053 $ 373,741 $ 375,805
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 356,499 338,421 337,978
Deferred income taxes, net 35,100 23,514 (5,779)
Deferred investment tax credits, net (2,106) - (1,089)
Allowance for equity funds used during construction (3,260) (2,071) (2,368)
Non-cash proceeds from settlement of disputed contracts - (641) (13,750)
Other, net 36,493 (2,657) 26,614
Changes in certain current assets and liabilities --
Receivables, net 19,215 (11,010) 9,178
Inventories 51,630 12,704 (17,374)
Payables 31,544 2,158 28,889
Taxes accrued (9,959) (21,120) 24,828
Energy cost recovery, retail (56,128) 45,509 (12,304)
Other (21,110) 10,629 (37,906)
Net cash provided from operating activities 813,971 769,177 712,722
Investing Activities:
Gross property additions (435,843) (367,463) (397,011)
Sales of property - 43,556 -
Other (741) (13,379) (36,083)
Net cash used for investing activities (436,584) (337,286) (433,094)
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock 158,000 150,000 -
First mortgage bonds 860,000 745,000 250,000
Pollution control bonds - - -
Other long-term debt 180,314 48,382 12,906
Capital contributions from parent company - - -
Prepaid capacity revenues - - 52,900
Redemptions:
Preferred stock (207,000) (145,000) (17,500)
First mortgage bonds (699,788) (931,797) (227,695)
Pollution control bonds (135,315) (335) (250)
Other long-term debt (46,014) (53,888) (48,428)
Interim obligations, net (156,917) 120,917 (13,500)
Payment of preferred stock dividends (32,099) (35,704) (36,829)
Payment of common stock dividends (252,900) (273,300) (232,900)
Miscellaneous (56,064) (53,697) (17,732)
Net cash provided from (used for) financing activities (387,783) (429,422) (279,028)
Net Change in Cash (10,396) 2,469 600
Cash at Beginning of Year 13,629 11,160 10,560
Cash at End of Year $ 3,233 $ 13,629 $ 11,160
</TABLE>
( ) Denotes use of cash.
II-84
<PAGE> 115
STATEMENTS OF CASH FLOWS
Alabama Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 351,315 $ 350,669 $ 319,955 $ 290,158 $ 307,481 $ 305,908 $ 275,293 $ 266,947
331,858 322,042 296,234 270,492 292,569 266,657 266,479 224,656
64,480 31,715 37,952 107,824 135,364 104,259 85,426 115,343
132 6,917 15,019 23,477 19,736 57,096 165,020 105,200
(25,487) (29,515) (39,047) (27,663) (27,455) (32,985) (45,704) (35,103)
- - - - - - - -
19,899 (5,297) 16,106 67,445 4,251 (18,971) (4,573) (60,712)
12,005 (10,436) 8,822 (133,468) 15,238 (13,531) (16,403) (16,534)
(40,901) 20,408 (23,182) (26,255) (2,040) 29,823 25,159 (58,678)
6,597 16,259 (12,957) 39,645 (56,720) 26,360 39,964 84,139
(6,167) 1,547 (7,754) 516 (1,487) (6,325) (8,198) 8,847
(42,535) 39,164 - - - - - -
14,144 28,701 (18,658) 4,464 (35,293) 4,358 29,836 (8,675)
685,340 772,174 592,490 616,635 651,644 722,649 812,299 625,430
(444,680) (459,199) (643,892) (600,589) (553,767) (568,073) (575,173) (522,140)
- - - - - - - -
6,935 3,768 23,161 17,010 10,115 22,028 26,175 17,334
(437,745) (455,431) (620,731) (583,579) (543,652) (546,045) (548,998) (504,806)
- - 100,000 - - - - 50,000
- - 150,000 200,000 125,000 - - -
- 53,700 - 432 26,232 115,577 161,134 10,640
54,831 55,176 62,515 69,786 95,017 12,998 25,654 139,031
- - 79,500 43,000 - 27,000 93,000 76,000
- - - - 100,000 - - -
(5,000) (5,000) (2,500) (5,000) (42,224) - (810) (4,200)
(33,122) (75,650) (42,445) (108,082) (405,765) (39,460) (21,250) (16,189)
(250) (53,950) - - (21,000) - (3,500) (500)
(56,895) (57,316) (56,748) (32,500) (43,561) (35,023) (128,060) (73,154)
59,500 30,000 (15,000) 15,000 - - - -
(38,245) (40,105) (35,362) (32,837) (36,014) (41,566) (42,061) (36,579)
(220,800) (217,300) (212,700) (201,100) (191,300) (185,700) (161,900) (145,200)
(293) (4,576) (5,581) (2,581) (38,052) (4,438) (2,727) (1,869)
(240,274) (315,021) 21,679 (53,882) (431,667) (150,612) (80,520) (2,020)
7,321 1,722 (6,562) (20,826) (323,675) 25,992 182,781 118,604
3,239 1,517 8,079 28,905 352,580 326,588 143,807 25,203
$ 10,560 $ 3,239 $ 1,517 $ 8,079 $ 28,905 $ 352,580 $ 326,588 $ 143,807
</TABLE>
II-85
<PAGE> 116
BALANCE SHEETS
Alabama Power Company
<TABLE>
<CAPTION>
AT DECEMBER 31, 1993* 1992* 1991*
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
ELECTRIC PLANT:
Production-
Fossil $ 2,987,010 $ 2,953,683 $ 2,991,876
Nuclear 1,860,842 1,860,832 1,851,317
Hydro 819,848 818,363 814,301
Total production 5,667,700 5,632,878 5,657,494
Transmission 1,051,130 1,013,464 977,239
Distribution 2,206,834 2,072,165 1,947,972
General 810,551 751,652 713,948
Construction work in progress 225,743 164,555 148,564
Nuclear fuel, at amortized cost 93,551 101,128 109,259
Total electric plant 10,055,509 9,735,842 9,554,476
STEAM HEAT PLANT:
Plant in service 20,926 20,924 20,214
Construction work in progress 43 33 181
Total steam heat plant 20,969 20,957 20,395
Total utility plant 10,076,478 9,756,799 9,574,871
ACCUMULATED PROVISION FOR DEPRECIATION:
Electric 3,374,310 3,122,332 2,913,385
Steam heat 9,846 9,211 8,492
Total accumulated provision for depreciation 3,384,156 3,131,543 2,921,877
Total 6,692,322 6,625,256 6,652,994
Less property-related accumulated deferred income taxes - 1,170,982 1,140,303
Total 6,692,322 5,454,274 5,512,691
OTHER PROPERTY AND INVESTMENTS:
Securities received from settlement of disputed contracts - - 69,550
Nuclear decommissioning trusts 49,550 32,390 15,864
Miscellaneous 49,635 49,892 48,254
Total 99,185 82,282 133,668
CURRENT ASSETS:
Cash and cash equivalents 3,233 13,629 11,160
Investment securities - 64,832 -
Receivables, net 410,422 344,934 349,599
Fossil fuel stock, at average cost 88,481 134,328 154,798
Materials and supplies, at average cost 176,728 182,511 174,745
Prepayments 79,207 108,254 95,832
Vacation pay deferred 22,680 21,879 21,691
Total current assets 780,751 870,367 807,825
DEFERRED CHARGES:
Deferred charges related to income taxes 469,010 - -
Debt expense, being amortized 7,064 6,118 5,957
Premium on reacquired debt, being amortized 102,634 74,835 40,174
Uranium enrichment decontamination and decommissioning fund 45,554 47,730 -
Miscellaneous 52,163 58,012 49,147
Total deferred charges 676,425 186,695 95,278
TOTAL ASSETS $ 8,248,683 $ 6,593,618 $ 6,549,462
</TABLE>
*Includes the effect of recognizing, beginning in 1987, retail service
rendered but not yet billed to customers.
II-86
<PAGE> 117
BALANCE SHEETS
Alabama Power Company
<TABLE>
<CAPTION>
1990* 1989* 1988* 1987* 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,462,100 $ 2,428,146 $ 1,820,966 $ 1,787,979 $ 1,748,226 $ 1,678,117 $ 1,203,447 $ 1,167,707
1,794,540 1,786,877 1,769,093 1,765,854 1,749,981 1,687,766 1,664,849 1,642,869
809,578 803,901 789,617 788,046 784,445 773,682 559,696 556,528
5,066,218 5,018,924 4,379,676 4,341,879 4,282,652 4,139,565 3,427,992 3,367,104
925,368 882,933 844,003 817,065 773,142 699,980 642,968 616,098
1,815,265 1,692,426 1,587,690 1,481,845 1,384,576 1,295,930 1,221,003 1,136,277
660,217 646,523 613,498 535,148 506,228 349,249 300,043 247,080
654,055 557,150 1,023,019 750,907 497,491 502,455 972,832 760,910
143,711 147,997 174,130 191,493 205,768 243,468 223,818 217,793
9,264,834 8,945,953 8,622,016 8,118,337 7,649,857 7,230,647 6,788,656 6,345,262
20,091 20,083 20,076 20,217 19,508 17,056 9,780 9,754
74 71 58 89 123 64 901 209
20,165 20,154 20,134 20,306 19,631 17,120 10,681 9,963
9,284,999 8,966,107 8,642,150 8,138,643 7,669,488 7,247,767 6,799,337 6,355,225
2,676,957 2,458,747 2,257,696 2,068,176 1,877,124 1,697,547 1,525,893 1,378,094
7,861 7,154 6,456 5,938 5,261 3,874 3,619 3,346
2,684,818 2,465,901 2,264,152 2,074,114 1,882,385 1,701,421 1,529,512 1,381,440
6,600,181 6,500,206 6,377,998 6,064,529 5,787,103 5,546,346 5,269,825 4,973,785
1,106,664 1,051,877 1,001,173 933,932 857,081 758,150 664,591 584,322
5,493,517 5,448,329 5,376,825 5,130,597 4,930,022 4,788,196 4,605,234 4,389,463
- - - - - - - -
- - - - - - - -
40,604 34,710 29,677 31,402 30,735 24,849 22,288 22,190
40,604 34,710 29,677 31,402 30,735 24,849 22,288 22,190
10,560 3,239 1,517 8,079 28,905 352,580 326,588 143,807
- - - - - - - -
346,473 355,107 344,671 353,493 220,025 235,263 221,732 205,329
144,960 131,942 173,858 164,671 152,640 163,899 206,232 251,440
167,209 139,326 117,818 103,823 89,599 76,300 63,790 43,741
50,364 54,613 28,412 10,595 12,320 9,741 8,801 24,333
22,845 22,021 21,871 21,317 20,002 18,859 17,599 18,123
742,411 706,248 688,147 661,978 523,491 856,642 844,742 686,773
- - - - - - - -
6,083 6,491 6,831 6,695 6,308 6,607 6,774 6,847
26,504 28,778 27,329 30,767 34,170 524 109 59
- - - - - - - -
53,174 54,875 52,136 50,561 45,927 45,445 17,050 15,275
85,761 90,144 86,296 88,023 86,405 52,576 23,933 22,181
$ 6,362,293 $ 6,279,431 $ 6,180,945 $ 5,912,000 $ 5,570,653 $ 5,722,263 $ 5,496,197 $ 5,120,607
</TABLE>
II-87
<PAGE> 118
BALANCE SHEETS
Alabama Power Company
<TABLE>
<CAPTION>
AT DECEMBER 31, 1993* 1992* 1991*
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 224,358 $ 224,358 $ 224,358
Other paid-in capital 1,304,645 1,304,645 1,304,645
Premium on preferred stock 146 342 461
Earnings retained in the business 997,199 914,148 857,734
Total common equity 2,526,348 2,443,493 2,387,198
Preferred stock 440,400 489,400 484,400
Preferred stock subject to mandatory redemption - - -
Long-term debt 2,362,852 2,202,473 2,382,635
Total Capitalization 5,329,600 5,135,366 5,254,233
(excluding amount due within one year)
CURRENT LIABILITIES:
Notes payable to banks 40,000 71,000 76,000
Commercial paper - 125,917 -
Preferred stock due within one year - - -
Long-term debt due within one year 58,998 67,379 85,077
Accounts payable 334,998 296,731 295,333
Customer deposits 31,198 31,286 30,165
Taxes accrued 40,144 24,373 45,493
Interest accrued 52,809 41,675 49,288
Vacation pay accrued 22,680 21,879 21,691
Miscellaneous 50,426 93,836 37,699
Total current liabilities 631,253 774,076 640,746
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 1,165,127 - -
Accumulated deferred investment tax credit s 329,909 344,707 362,672
Prepaid capacity revenues, net 143,762 147,658 149,534
Deferred revenues from settlement of disputed contracts 19,871 46,721 59,937
Uranium enrichment decontamination and decommissioning fund 39,644 44,548 -
Deferred credits related to income taxes 441,240 - -
Miscellaneous 148,277 100,542 82,340
Total deferred credits and other liabilities 2,287,830 684,176 654,483
TOTAL CAPITALIZATION AND LIABILITIES $ 8,248,683 $ 6,593,618 $ 6,549,462
</TABLE>
*Includes the effect of recognizing, beginning in 1987, retail service
rendered but not yet billed to customers.
II-88
<PAGE> 119
BALANCE SHEETS
Alabama Power Company
<TABLE>
<CAPTION>
1990* 1989* 1988* 1987* 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 224,358 $ 224,358 $ 224,358 $ 224,358 $ 224,358 $ 224,358 $ 224,358 $ 224,358
1,304,645 1,304,645 1,304,645 1,225,145 1,182,145 1,182,145 1,155,145 1,062,145
461 461 461 461 461 1,937 1,938 1,904
751,126 659,347 565,351 496,783 440,644 361,716 282,854 211,502
2,280,590 2,188,811 2,094,815 1,946,747 1,847,608 1,770,156 1,664,295 1,499,909
484,400 484,400 484,400 384,400 384,400 384,400 424,400 424,400
12,500 17,500 22,500 27,500 30,000 35,000 37,224 38,034
2,397,931 2,435,129 2,496,492 2,386,258 2,210,108 2,349,373 2,402,713 2,404,565
5,175,421 5,125,840 5,098,207 4,744,905 4,472,116 4,538,929 4,528,632 4,366,908
89,500 30,000 - 15,000 - - - -
- - - - - - - -
5,000 5,000 5,000 2,500 5,000 42,224 - -
83,989 81,031 96,242 95,140 142,394 224,918 120,077 85,550
271,776 267,645 259,443 273,613 238,606 295,326 268,966 229,002
29,571 28,450 25,964 32,220 30,333 29,436 28,498 26,224
20,665 26,832 25,285 72,118 50,757 27,368 36,788 47,724
49,820 49,926 50,174 49,489 47,648 66,193 66,201 65,906
22,845 22,021 21,871 21,317 20,002 18,859 17,599 18,123
64,547 91,022 28,944 24,660 25,567 42,622 38,474 26,759
637,713 601,927 512,923 586,057 560,307 746,946 576,603 499,288
- - - - - - - -
379,990 399,097 412,771 418,370 418,275 418,222 379,433 243,399
99,835 102,346 104,211 103,947 101,143 - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
69,334 50,221 52,833 58,721 18,812 18,166 11,529 11,012
549,159 551,664 569,815 581,038 538,230 436,388 390,962 254,411
$ 6,362,293 $ 6,279,431 $ 6,180,945 $ 5,912,000 $ 5,570,653 $ 5,722,263 $ 5,496,197 $ 5,120,607
</TABLE>
II-89
<PAGE> 120
ALABAMA POWER COMPANY
OUTSTANDING SECURITIES
AT DECEMBER 31, 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1993 $ 60,000 4-1/2% $ 60,000 3/1/96
1993 50,000 5-1/2% 50,000 2/1/98
1992 170,000 6-3/8% 170,000 8/1/99
1993 100,000 6% 100,000 3/1/00
1992 100,000 6.85% 100,000 8/1/02
1993 125,000 7% 125,000 1/1/03
1993 175,000 6-3/4% 175,000 2/1/03
1992 175,000 7-1/4% 175,000 8/1/07
1987 200,000 10-5/8% 15,243 11/1/17
1991 100,000 9-1/4% 100,000 5/1/21
1991 150,000 8-3/4% 150,000 12/1/21
1992 200,000 8-1/2% 200,000 5/1/22
1992 100,000 8.3% 100,000 7/1/22
1993 100,000 7-3/4% 100,000 2/1/23
1993 150,000 7.45% 150,000 7/1/23
1993 100,000 7.30% 100,000 11/1/23
$ 2,055,000 $1,870,243
POLLUTION CONTROL BONDS
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
1978 $ 5,600 7.25% $ 5,600 5/1/03
1974 19,600 6% 18,550 2/1/04
1976 3,000 7.20% 2,900 2/1/06
1989 35,000 7.20% 35,000 7/1/14
1984 100,000 10.875% 100,000 11/1/14
1985 50,000 9.375% 50,000 6/1/15
1985 81,500 9.25% 81,500 12/1/15
1989 18,700 7.20% 18,700 6/1/16
1986 21,000 7.40% 21,000 11/1/16
1993 12,100 Variable 12,100 8/1/17
1993 12,000 Variable 12,000 8/1/17
1993 12,000 Variable 12,000 8/1/17
1993 96,990 6.05% 96,990 5/1/23
1993 9,800 5.80% 9,800 6/1/22
$ 477,290 $ 476,140
PREFERRED STOCK
Shares Dividend Amount
Series Outstanding Rate Outstanding
(Thousands)
1946-1952 364,000 4.20% $ 36,400
1950 100,000 4.60% 10,000
1961 80,000 4.92% 8,000
1963 50,000 4.52% 5,000
1964 60,000 4.64% 6,000
1965 50,000 4.72% 5,000
1966 70,000 5.96% 7,000
1968 50,000 6.88% 5,000
1988 500,000 Auction 50,000
1992 4,000,000 7.60% 100,000
1992 2,000,000 7.60% 50,000
1993 1,520,000 6.80% 38,000
1993 2,000,000 6.40% 50,000
1993 200 Auction 20,000
1993 2,000,000 Adjustable 50,000
12,844,200 $ 440,400
</TABLE>
II-90
<PAGE> 121
ALABAMA POWER COMPANY
SECURITIES RETIRED
DURING 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Principal Interest
Series Amount Rate
(Thousands)
<S> <C>
1964 $ 24,105 4.625%
1965 33,284 4.875%
1966 29,374 6.25%
1967 28,000 6.50%
1968 25,000 7%
1972 25,500 7.50%
1972 65,000 7.75%
1973 75,000 8.25%
1972 98,000 7.875%
1986 125,000 9.375%
1987 21,525 10.625%
1988 150,000 10%
$ 699,788
POLLUTION CONTROL BONDS
Principal Interest
Series Amount Rate
(Thousands)
1974 $ 300 6%
1976 9,800 7.20%
1976 50 7.20%
1976 10,415 7.25%
1977 40,000 7.20%
1978 48,000 7.375%
1980 4,250 9.20%
1983 22,500 9.375%
$ 135,315
PREFERRED STOCK
Principal Dividend
Series Amount Rate
(Thousands)
1972 $ 38,000 8.28%
1972 20,000 8.04%
1973 50,000 8.16%
1977 49,000 8.72%
1988 50,000 Adjustable
$ 207,000
</TABLE>
II-91
<PAGE> 122
GEORGIA POWER COMPANY
FINANCIAL SECTION
II-92
<PAGE> 123
MANAGEMENT'S REPORT
Georgia Power Company 1993 Annual Report
The management of Georgia Power Company has prepared this annual report and is
responsible for the financial statements and related information. These
statements were prepared in accordance with generally accepted accounting
principles appropriate in the circumstances, and necessarily include amounts
that are based on the best estimates and judgments of management. Financial
information throughout this annual report is consistent with the financial
statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that the books and records
reflect only authorized transactions of the Company. Limitations exist in any
system of internal controls based upon the recognition that the cost of the
system should not exceed its benefits. The Company believes that its system of
internal accounting controls maintains an appropriate cost/benefit
relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the Company's internal audit staff. The Company's independent
public accountants also consider certain elements of the internal control
system in order to determine their auditing procedures for the purpose of
expressing an opinion on the financial statements.
The audit committee of the board of directors, which is composed of five
directors who are not employees, provides a broad overview of management's
financial reporting and control functions. At least three times a year this
committee meets with management, the internal auditors, and the independent
public accountants to ensure that these groups are fulfilling their
obligations and to discuss auditing, internal control and financial reporting
matters. The internal auditors and the independent public accountants have
access to the members of the audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted with a high standard of
business ethics.
In management's opinion, the financial statements present fairly the
financial position, results of operations and cash flows of Georgia Power
Company in conformity with generally accepted accounting principles. As
discussed in Note 4 to the financial statements, an uncertainty exists with
respect to the actions of regulators regarding recoverability of the Company's
investment in the Rocky Mountain pumped storage hydroelectric project. The
outcome of this uncertainty cannot be determined until regulatory proceedings
are concluded. Accordingly, no provision for any write-down of the costs
associated with the Rocky Mountain project resulting from the potential actions
of the Georgia Public Service Commission has been made in the accompanying
financial statements.
/s/ H. Allen Franklin /s/ Warren Y. Jobe
- --------------------- --------------------------
H. Allen Franklin Warren Y. Jobe
President and Chief Executive Vice President,
Executive Officer Treasurer and Chief
Financial Officer
II-93
<PAGE> 124
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS
OF GEORGIA POWER COMPANY:
We have audited the accompanying balance sheets and statements of
capitalization of Georgia Power Company (a Georgia corporation) as of December
31, 1993 and 1992, and the related statements of income, retained earnings,
paid-in capital, and cash flows for each of the three years in the period ended
December 31, 1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements (pages II-102 through II-122)
referred to above present fairly, in all material respects, the financial
position of Georgia Power Company as of December 31, 1993 and 1992, and the
results of its operations and its cash flows for the periods stated, in
conformity with generally accepted accounting principles.
As explained in Notes 2 and 7 to the financial statements, effective January
1, 1993, the Company changed its methods of accounting for postretirement
benefits other than pensions and for income taxes.
As more fully discussed in Note 4 to the financial statements, an uncertainty
exists with respect to the actions of the regulators regarding the
recoverability of the Company's investment in the Rocky Mountain pumped storage
hydroelectric project. The outcome of this uncertainty cannot be determined
until regulatory proceedings are concluded. Accordingly, no provision for any
write-down of the costs associated with the Rocky Mountain project resulting
from the potential actions of the Georgia Public Service Commission has been
made in the accompanying financial statements.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16, 1994
II-94
<PAGE> 125
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Georgia Power Company 1993 Annual Report
RESULTS OF OPERATIONS
EARNINGS
Georgia Power Company's 1993 earnings totaled $570 million, representing a $49
million (9.5 percent) increase over the prior year. This improvement is
primarily a result of higher retail revenues and lower financing costs. Also,
during the period, the Company had an $18 million after-tax gain on the sale of
a portion of Plant Scherer Unit 4. Higher retail revenues reflect growth in
energy sales of 6.1 percent from 1992 levels primarily due to exceptionally hot
summer weather during 1993. Interest expense and preferred stock dividends
decreased in 1993 due to the redemption and refinancing of higher-cost debt and
preferred stock. These positive events were partially offset by higher
operating expenses.
In comparing 1992 earnings to the prior year, it should be noted that 1991
earnings included two unusual items that significantly affect this comparison.
Earnings in 1991 were $89 million higher due to the completion of a settlement
agreement with Gulf States Utilities Company (Gulf States) related to power
sales contracts. This increase was partially offset by an after-tax charge of
$33 million in 1991 for a work force reduction program. A comparison of 1992
to 1991 -- excluding these unusual items -- would reflect a 1992 increase in
earnings of $102 million.
REVENUES
The following table summarizes the factors impacting operating revenues for the
1991-1993 period:
<TABLE>
Increase (Decrease)
From Prior Year
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Retail -
Change in base rates $ - $ 95 $ 27
Sales growth 45 76 67
Weather 126 (58) (16)
Fuel cost recovery 76 (26) (54)
Demand-side option
programs 15 - -
Total retail 262 87 24
Sales for resale -
Non-affiliates (106) (96) (47)
Affiliates (6) 2 (103)
Total sales for resale (112) (94) (150)
Other operating revenues 4 3 (18)
Total operating revenues $ 154 $ (4) $ (144)
Percent change 3.6% (0.1)% (3.2)%
</TABLE>
Retail revenues of $3.8 billion in 1993 increased $262 million (7.4 percent)
over the prior year, compared with an increase of $87 million (2.5 percent) in
1992. The exceptionally hot weather during the summer of 1993 was the primary
factor affecting the increase in retail revenues over 1992. The increase in
retail revenues for 1992 was a result of higher retail rates and sales growth,
partially offset by mild weather and lower fuel revenues. Fuel revenues
generally represent the direct recovery of fuel expense, including the fuel
component of purchased energy, and do not affect net income. Revenues from
demand-side options programs generally represent the direct recovery of program
costs. See Note 3 to the financial statements for further information on these
programs.
Revenues from sales to non-affiliated utilities decreased in both 1993 and
1992. Contractual unit power sales to Florida utilities for 1993 and 1992 are
down compared with prior years, primarily due to scheduled reductions that
corresponded with the sales to these utilities of portions of Plant Scherer
Unit 4 in July 1991 and June
II-95
<PAGE> 126
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1993 Annual Report
1993. Sales to municipalities and cooperatives increased slightly in 1993 due
to the hot summer weather. Generally, these sales have been decreasing as
these customers retain more of their own generation at facilities jointly owned
with the Company.
Revenues from sales to non-affiliated utilities outside the service area under
long-term contracts consist of capacity and energy components. Capacity
revenues reflect the recovery of fixed costs and a return on investment under
the contracts. Energy is generally sold at variable cost. The capacity and
energy components were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Capacity $152 $233 $274
Energy 113 168 204
Total $265 $401 $478
</TABLE>
Revenues from sales to affiliated companies within the Southern electric
system will vary from year to year depending on demand and the availability and
cost of generating resources at each company. Sales to affiliated companies do
not have a significant impact on earnings.
Changes in revenues are a function of the amount of energy sold each year.
Kilowatt-hour (KWH) sales for 1993 and the percent change by year were as
follows:
<TABLE>
<CAPTION>
Percent Change
1993
KWH 1993 1992 1991
(in billions)
<S> <C> <C> <C> <C>
Residential 16.7 11.5% 0.8% 0.3%
Commercial 18.3 5.9 2.2 1.6
Industrial 23.6 2.9 3.1 0.8
Other 0.5 5.7 1.7 0.1
Total retail 59.1 6.1 2.2 0.9
Sales for resale -
Non-affiliates 14.3 (9.8) (15.2) (7.1)
Affiliates 3.0 (8.8) (14.6) (53.0)
Total sales for
resale 17.3 (9.7) (15.1) (20.5)
Total sales 76.4 2.1 (2.9) (6.5)
</TABLE>
The hot summer weather during 1993 contributed primarily to the sales growth
in the residential and commercial classes. Continued improvement in economic
conditions positively impacted sales growth in the commercial and industrial
classes. Residential energy sales growth in 1992 reflected mild weather.
Commercial and industrial sales growth in 1992 is attributable to improved
economic conditions.
The decrease in energy sales to non-affiliated utilities reflects scheduled
reductions in contractual power sales.
EXPENSES
Fuel expense increased 2.3 percent in 1993 due to higher generation, which was
partially offset by lower nuclear fuel costs. In 1992, fuel expense decreased
6.9 percent due to lower generation and lower fuel costs. Purchased power
expense has decreased significantly since 1991, reflecting declining
contractual capacity purchases from the co-owners of plants Vogtle and Scherer.
Purchased power expense decreased $88 million in 1993 and $43 million in 1992.
The declines in Plant Vogtle contractual capacity purchases did not have a
significant impact on earnings in 1993 or 1992 as these costs are being
levelized over six years under the terms of the 1991 Georgia Public Service
Commission (GPSC) retail rate order. The levelization is reflected in the
amortization of deferred Plant Vogtle expenses in the income statements. See
Note 3 to the financial statements for additional information.
Other Operation and Maintenance (O & M) expenses increased 9.0 percent in
1993 after remaining relatively flat in 1992. The increase in 1993 is
primarily the result of environmental remediation costs at various current and
former operating sites, the one- time costs of an automotive fleet reduction
program and the recognition of higher employee benefit costs under new
accounting rules adopted in 1993. See Note 2 to the financial statements for
additional information concerning these new rules. Also, during 1993, O & M
expenses reflect costs associated with new demand-side option programs. These
costs were offset by increases in retail revenues. See Note 3 to the financial
statements for additional information on the recovery of demand-side option
program costs.
Depreciation and amortization expense increased slightly due to additional
plant investment. The 1992 decrease is due to the effects of lower
depreciation rates effective in October 1991. Taxes other than income taxes
increased 7.4 percent in 1993 and 3.8 percent in 1992.
II-96
<PAGE> 127
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1993 Annual Report
These increases reflect higher ad valorem taxes. The 1993 increase also
includes higher taxes paid to municipalities as a result of increased sales.
Income tax expense increased $62 million in 1993 due primarily to higher
earnings and the effect of a one percent increase in the federal tax rate
effective January, 1993. Also, the Company incurred $27 million of tax expense
in connection with the second in a series of four separate transactions to sell
Plant Scherer Unit 4. The sale resulted in an after-tax gain of $18 million.
Interest expense and dividends on preferred stock decreased $19 million (4.0
percent) and $49 million (9.3 percent) in 1993 and 1992, respectively. These
reductions are due to significant refinancing of long-term debt and preferred
stock. The Company refinanced $1.7 billion of securities in both 1993 and
1992. In addition, the Company has retired $544 million of long-term debt with
the proceeds from the 1991 and 1993 Plant Scherer Unit 4 sales. Other interest
charges in 1993 include interest related to the settlement of an Internal
Revenue Service audit. The settlement, in total, did not have an effect on
1993 net income.
The Company has deferred certain expenses and recorded a deferred return
related to Plant Vogtle under phase-in plans. See Note 3 to the financial
statements under "Plant Vogtle Phase-In-Plans" for information regarding the
deferral and subsequent amortization of costs related to Plant Vogtle.
EFFECTS OF INFLATION
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic
loss because the Company is recovering its costs of investments in dollars that
have less purchasing power. While the inflation rate has been relatively low
in recent years, it continues to have an adverse effect on the Company because
of the large investment in long-lived utility plant. Conventional accounting
for historical cost does not recognize either this economic loss or the
partially offsetting gain that arises through financing facilities with
fixed-money obligations such as long-term debt and preferred stock. Any
recognition of inflation by regulatory authorities is reflected in the rate of
return allowed.
FUTURE EARNINGS POTENTIAL
The results of operations for the past three years are not necessarily
indicative of future earnings. The level of future earnings depends on
numerous factors ranging from growth in energy sales to regulatory matters.
Growth in energy sales is subject to a number of factors which traditionally
have included changes in contracts with neighboring utilities, energy
conservation practiced by customers, the elasticity of demand, weather,
competition, and the rate of economic growth in the Company's service area.
Assuming normal weather, retail sales growth is projected to be approximately 2
percent annually on average during 1994 through 1996.
The scheduled addition of four combustion turbine generating units in 1994,
four units in 1995 and one unit in 1996, as well as the Rocky Mountain pumped
storage hydroelectric project in 1995, will increase related O & M and
depreciation expenses. See Note 4 to the financial statements for information
on regulatory uncertainties related to the Rocky Mountain project. The GPSC
has certified the construction of the 1994 and 1995 combustion turbine
generating units for meeting peak generating needs. In addition, the Company
has completed a demonstration competitive bidding process for its supply-side
requirements expected for 1996. The Company has filed with the GPSC for
certification of a four-year purchase power agreement beginning in 1996, and
for construction of a jointly owned combustion turbine to be completed in 1996
to meet these needs.
As part of efforts to curtail growth in operating expenses, the Company is
reducing its work force through an early-retirement program announced in
January 1994. The program resulted in a first quarter 1994 after-tax charge to
earnings of $39 million. The program has an expected payback period of
approximately two years.
Pursuant to an Integrated Resource Plan approved by the GPSC in 1992, the
Company has implemented various demand-side option programs and has been
authorized by the GPSC to recover associated program costs through rate riders.
On October 15, 1993, a superior court judge ruled that recovery of these costs
through rate riders is unlawful. The Company has ceased collection of the rate
riders and is deferring program costs as ordered by the
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MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1993 Annual Report
GPSC pending the final outcome of this matter. See Note 3 to the financial
statements for additional information.
The Company has completed two in a series of four separate transactions to
sell Unit 4 of Plant Scherer to two Florida utilities. The remaining
transactions are scheduled to take place in 1994 and 1995. If the sales take
place as planned, the Company would realize an additional after-tax gain
estimated to total approximately $20 million. See Note 5 to the financial
statements for additional information.
Compliance costs related to the Clean Air Act Amendments of 1990 (Clean Air
Act) could reduce earnings if such costs cannot be billed to customers. The
Clean Air Act is discussed later under "Environmental Issues."
The Energy Policy Act of 1992 (Energy Act) will have a profound effect on the
future of the electric utility industry. The Energy Act promotes energy
efficiency, alternative fuel use, and increased competition among electric
utilities. The law also includes provisions to streamline the licensing
process for new nuclear generating plants. The Energy Act marks the beginning
of a major change in the traditional business practices of selling electricity.
The Energy Act allows Independent Power Producers (IPPs) and other electric
suppliers access to a utility's transmission lines to sell their electricity to
other utilities. This may enhance the incentives for IPPs to build
cogeneration plants for the Company's large industrial and commercial
customers. If the Company does not remain a low cost producer and provide
quality service, the Company's sales growth could be limited and this could
significantly erode earnings.
The Company continues to compete with other electric suppliers within the
state. In Georgia, most new retail customers with more than 900 kilowatts of
connected load may choose their electricity supplier. In addition, the bulk
power market has become very competitive as utilities, IPPs and cogenerators
seek to supply future capacity needs. Competition can create new business
opportunities, but it increases risk and has the potential to adversely affect
earnings.
The Federal Energy Regulatory Commission (FERC) regulates wholesale rate
schedules and power sales contracts that the Company has with its sales for
resale customers. The FERC currently is reviewing the rate of return on common
equity included in these schedules and contracts and may require such returns
to be lowered, possibly retroactively. See Note 3 to the financial statements
under "FERC Review of Equity Returns" for additional information.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued Statement No. 112,
Employers' Accounting for Postemployment Benefits, which must be adopted by
1994. The new standard requires that all types of benefits provided to former
or inactive employees and their families prior to retirement be accounted for
on an accrual basis. These benefits include salary continuation, severance
pay, supplemental unemployment benefits, disability-related benefits, job
training, and health and life insurance coverage. In 1993, the Company adopted
Statement No. 112, with no material effect on the financial statements.
The FASB has issued Statement No. 115, Accounting for Certain Investments in
Debt and Equity Securities, which will be effective in 1994. Statement No. 115
supersedes FASB Statement No. 12, Accounting for Certain Marketable
Securities. The Company adopted the new rules in January, 1994, with no
material effect on the financial statements.
FINANCIAL CONDITION
OVERVIEW
The principal changes in the Company's financial condition in 1993 were gross
utility plant additions of $674 million and the lowering of the cost of capital
achieved through the refinancing or retirement of $1.7 billion of long-term
debt and preferred stock.
On January 1, 1993, the Company changed its methods of accounting for
postretirement benefits other than pensions and for income taxes. See Notes 2
and 7 to the financial statements regarding the impact of these changes.
The funds needed for gross property additions are currently provided from
operations. The Statements of Cash Flows provide additional details.
II-98
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MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1993 Annual Report
FINANCING ACTIVITIES
In 1993, the Company continued to lower its financing costs by issuing new
securities and other debt, and retiring or repaying high-cost issues. New
issues during 1991 through 1993 totaled $3.0 billion and retirement or
repayment of securities totaled $4.2 billion. The retirements included the
redemption of $253 million and $291 million in 1993 and 1991, respectively, of
first mortgage bonds with the proceeds from the Plant Scherer Unit 4 sales.
Composite financing rates for the years 1991 through 1993, as of year-end,
were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Composite interest rate
on long-term debt 7.86% 8.49% 9.05%
Composite preferred stock
dividend rate 6.76% 7.52% 7.99%
</TABLE>
The Company's current securities ratings are as follows:
<TABLE>
<CAPTION>
Duff & Standard
Phelps Moody's & Poor's
<S> <C> <C> <C>
First Mortgage Bonds A+ A3 A-
Preferred Stock A- baa1 BBB+
Unsecured Bonds A Baa1 BBB+
Commercial Paper * P2 A2
</TABLE>
* Not rated by Duff & Phelps
LIQUIDITY AND CAPITAL REQUIREMENTS
Cash provided from operations increased by $236 million in 1993, primarily due
to higher retail sales, lower interest costs, decreasing capacity purchases
from the co-owners of plants Vogtle and Scherer and the receipt of cash
payments from Gulf States that completed the settlement of litigation.
The Company estimates that construction expenditures for the years 1994
through 1996 will total $688 million, $555 million and $629 million,
respectively. The Company will continue to invest in transmission and
distribution facilities and enhance existing generating plants. These
expenditures also include amounts for nine combustion turbine generating units
and equipment that will be required to comply with the provisions of the Clean
Air Act.
The Company's contractual capacity purchases will decline by $113 million
over the next three years. Cash requirements for sinking fund requirements,
redemptions announced, and maturities of long-term debt are expected to total
$377 million during 1994 through 1996.
As a result of requirements by the Nuclear Regulatory Commission, the Company
has established external sinking funds for the purpose of funding nuclear
decommissioning costs. For 1994 through 1996, the amount to be funded for the
Company totals $16 million annually. For additional information concerning
nuclear decommissioning costs, see Note 1 to the financial statements under
"Nuclear Decommissioning."
SOURCES OF CAPITAL
The Company expects to meet future capital requirements primarily using funds
generated from operations and, if needed, by the issuance of new debt and
equity securities, term loans, and short-term borrowings. To meet short-term
cash needs and contingencies, the Company had approximately $540 million of
unused credit arrangements with banks at the beginning of 1994. See Note 8 to
the financial statements for additional information.
Completing the remaining two transactions for the sale of Plant Scherer Unit
4 will generate approximately $130 million in both 1994 and in 1995.
The Company is required to meet certain coverage requirements specified in
its mortgage indenture and corporate charter to issue new first mortgage bonds
and preferred stock. The Company's ability to satisfy all coverage
requirements is such that it could issue new first mortgage bonds and preferred
stock to provide sufficient funds for all anticipated requirements.
ENVIRONMENTAL ISSUES
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on The Southern Company. Specific reductions in sulfur
dioxide and nitrogen oxide emissions from fossil-fired generating plants will
be required in two phases. Phase I compliance must be implemented in 1995 and
affects eight generating plants -- some 10,000 megawatts
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<PAGE> 130
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1993 Annual Report
of capacity or 35 percent of total capacity -- in the Southern electric system.
Phase II compliance is required in 2000, and all fossil-fired generating plants
in the Southern electric system will be affected.
Beginning in 1995, the Environmental Protection Agency (EPA) will allocate
annual sulfur dioxide emission allowances through the newly established
allowance trading program. An emission allowance is the authority to emit one
ton of sulfur dioxide during a calendar year. The method for allocating
allowances is based on the fossil fuel consumed from 1985 through 1987 for each
affected generating unit. Emission allowances are transferable and can be
bought, sold, or banked and used in the future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The market for emission allowances is developing slower
than expected. However, The Southern Company's sulfur dioxide compliance
strategy is designed to take advantage of allowances as the market develops.
The Southern Company expects to achieve Phase I sulfur dioxide compliance at
the eight affected plants by switching to low-sulfur coal, and this has
required some equipment upgrades. This compliance strategy is expected to
result in unused emission allowances being banked for later use. Additional
construction expenditures are required to install equipment for the control of
nitrogen oxide emissions at these eight plants. Also, continuous emissions
monitoring equipment would be installed on all fossil-fired units. Under this
Phase I compliance approach, Georgia Power's construction expenditures are
estimated to total approximately $150 million through 1995.
Phase II compliance costs are expected to be higher because requirements are
stricter and all fossil-fired generating plants are affected. For sulfur
dioxide compliance, The Southern Company could use emission allowances banked
during Phase I, increase fuel switching, install flue gas desulfurization
equipment at selected plants, and/or purchase more allowances depending on the
price and availability of allowances. Also, in Phase II, equipment to control
nitrogen oxide emissions will be installed on additional system fossil-fired
plants as required to meet anticipated Phase II limits. Therefore, during the
period 1996 to 2000, compliance could require total Georgia Power construction
expenditures ranging from approximately $150 million to $325 million. However,
the full impact of Phase II compliance cannot now be determined with certainty,
pending the development of a market for emission allowances, the completion of
EPA regulations, and the possibility of new emission reduction technologies.
An increase of up to 2 percent in Georgia Power's annual revenue
requirements from customers could be necessary to fully recover the cost of
compliance for both Phase I and Phase II of the Clean Air Act. Compliance
costs include construction expenditures, increased costs for switching to
low-sulfur coal, and costs related to emission allowances. There can be no
assurance that all Clean Air Act costs will be recovered.
Metropolitan Atlanta is classified as a non-attainment area with regard to
the ozone ambient air quality standards. Title I of the Clean Air Act requires
the state of Georgia to conduct specific studies and establish new control
rules by November 1994 -- affecting sources of nitrogen oxides and volatile
organic compounds -- to achieve attainment by 1999. As the required first
step, the state has issued rules for the application of reasonably available
control technology to reduce nitrogen oxide emissions by May 31, 1995. The
results of these new rules require nitrogen oxide controls, above Title IV
requirements, on some Company plants. Final attainment rules, based on
modeling studies, could require installation of additional controls for
nitrogen oxide emissions as early as 1997. Compliance with any new rules could
result in significant additional costs. The impact of new rules will depend on
the development and implementation of such rules.
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The study will serve as the basis
for a decision on whether additional regulatory control of these substances is
warranted. Compliance with any new control standards could result in
significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a
II-100
<PAGE> 131
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1993 Annual Report
new standard indicate that a number of plants could be required to install
sulfur dioxide controls. These controls would be in addition to the controls
already required to meet the acid rain provision of the Clean Air Act. The EPA
is expected to take some action on this issue in 1994. In addition, the EPA is
evaluating the need to revise the ambient air quality standards for particulate
matter, nitrogen oxides, and ozone. The impact of any new standards will
depend on the level chosen for the standards and cannot be determined at this
time.
In 1994 or 1995, the EPA is expected to issue revised rules on air quality
control regulations related to stack height requirements of the Clean Air Act.
The full impact of the final rules cannot be determined at this time, pending
their development and implementation.
In 1993, the EPA issued a ruling confirming the nonhazardous status of coal
ash. However, the EPA has until 1998 to classify co-managed utility wastes --
coal ash and other utility wastes -- as either nonhazardous or hazardous. If
the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The Company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. These laws include the
Comprehensive Environmental Response Compensation and Liability Act of 1980
(CERCLA or Superfund). Under these various laws and regulations, the Company
could incur costs to clean up properties currently or previously owned. The
Company conducts studies to determine the extent of any required clean-up costs
and has recognized costs to clean-up known sites in the financial statements.
Several major pieces of environmental legislation are in the process of
being reauthorized or amended by Congress. These include: the Clean Water
Act; the Comprehensive Environmental Response, Compensation, and Liability Act;
and the Resource Conservation and Recovery Act. Changes to these laws could
affect many areas of the Company's operations. The full impact of these
requirements cannot be determined at this time, pending the development and
implementation of applicable regulations.
Compliance with possible new legislation related to global climate change,
electromagnetic fields and other environmental and health concerns could
significantly affect the Company. The impact of new legislation -- if any --
will depend on the subsequent development and implementation of applicable
regulations. In addition, the potential for lawsuits alleging damages caused
by electromagnetic fields exists.
II-101
<PAGE> 132
STATEMENTS OF INCOME
For the Years Ended December 31, 1993, 1992, and 1991
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES:
Revenues (Note 1) $ 4,389,513 $ 4,229,601 4,235,842
Revenues from affiliates 61,668 67,835 65,586
Total operating revenues 4,451,181 4,297,436 4,301,428
OPERATING EXPENSES:
Operation --
Fuel 951,507 929,780 998,701
Purchased power from non-affiliates 313,170 436,761 444,920
Purchased power from affiliates 194,024 158,306 193,114
Provision for separation benefits - 9,778 52,952
Proceeds from settlement of disputed contracts (Note 3) - (4,982) (142,183)
Other 675,284 616,116 596,565
Maintenance 284,521 264,757 295,012
Depreciation and amortization 379,425 375,460 382,549
Amortization of deferred Plant Vogtle expenses, net
(Note 3) 36,284 (30,804) 16,008
Taxes other than income taxes 192,671 179,460 172,893
Federal and state income taxes 452,122 377,542 349,284
Total operating expenses 3,479,008 3,312,174 3,359,815
OPERATING INCOME 972,173 985,262 941,613
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 3,168 5,855 9,083
Income from subsidiary (Note 5) 4,127 4,635 4,576
Deferred return on Plant Vogtle - - 34,549
Interest income 3,806 12,475 10,563
Other, net 11,902 (30,527) 13,551
Income taxes applicable to other income 37,661 25,163 (7,522)
INCOME BEFORE INTEREST CHARGES 1,032,837 1,002,863 1,006,413
INTEREST CHARGES:
Interest on long-term debt 343,634 402,541 459,184
Allowance for debt funds used during construction (8,271) (8,310) (10,385)
Interest on interim obligations 15,530 9,694 4,906
Amortization of debt discount, premium, and expense, net 14,024 8,033 6,214
Other interest charges 47,393 12,425 9,938
Net interest charges 412,310 424,383 469,857
NET INCOME 620,527 578,480 536,556
DIVIDENDS ON PREFERRED STOCK 50,674 57,942 61,701
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 569,853 $ 520,538 474,855
</TABLE>
The accompanying notes are an integral part of these statements.
II-102
<PAGE> 133
BALANCE SHEETS
At December 31, 1993 and 1992
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
ASSETS 1993 1992
(in thousands)
<S> <C> <C>
UTILITY PLANT:
Plant in service (Note 1) $ 13,743,521 $ 13,613,361
Less accumulated provision for depreciation 3,822,344 3,569,717
9,921,177 10,043,644
Nuclear fuel, at amortized cost (Note 1) 135,742 155,194
Construction work in progress (Note 4) 584,013 405,606
Total 10,640,932 10,604,444
Less property-related accumulated deferred income taxes (Note 7) - 1,589,743
Total 10,640,932 9,014,701
OTHER PROPERTY AND INVESTMENTS:
Southern Electric Generating Company, at equity (Note 5) 29,201 30,703
Nuclear decommissioning trusts (Note 1) 37,937 20,311
Miscellaneous 31,941 24,760
Total 99,079 75,774
CURRENT ASSETS:
Cash and cash equivalents 5,896 22,114
Investment securities - 108,206
Receivables-
Customer accounts receivable 486,947 357,923
Other accounts and notes receivable 117,249 96,915
Affiliated companies 14,832 22,674
Accumulated provision for uncollectible accounts (4,300) (4,121)
Fossil fuel stock, at average cost 111,620 197,332
Materials and supplies, at average cost 287,551 284,272
Prepayments 65,269 91,447
Vacation pay deferred (Note 1) 41,575 40,169
Total 1,126,639 1,216,931
DEFERRED CHARGES:
Deferred charges related to income taxes (Note 7) 992,510 -
Deferred Plant Vogtle costs (Note 3) 506,980 383,025
Debt expense, being amortized 20,730 17,719
Premium on reacquired debt, being amortized 153,146 116,940
Miscellaneous 196,094 139,352
Total 1,869,460 657,036
TOTAL ASSETS $ 13,736,110 $ 10,964,442
</TABLE>
The accompanying notes are an integral part of these statements.
II-103
<PAGE> 134
BALANCE SHEETS
At December 31, 1993 and 1992
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES 1993 1992
(in thousands)
<S> <C> <C>
CAPITALIZATION (SEE ACCOMPANYING STATEMENTS):
Common stock equity $ 4,045,458 $ 3,888,237
Preferred stock 692,787 692,792
Preferred stock subject to mandatory redemption - 6,250
Long-term debt 4,031,387 4,131,016
Total 8,769,632 8,718,295
CURRENT LIABILITIES:
Preferred stock due within one year (Note 8) - 63,750
Long-term debt due within one year (Note 8) 10,543 95,823
Notes payable to banks (Note 8) 406,700 400,200
Commercial paper (Note 8) 75,527 133,471
Accounts payable-
Affiliated companies 38,115 33,258
Other 285,929 284,093
Customer deposits 45,922 45,145
Taxes accrued-
Federal and state income 31,639 43,779
Other 121,854 94,510
Interest accrued 110,497 132,319
Vacation pay accrued 40,060 38,694
Miscellaneous 64,527 89,355
Total 1,231,313 1,454,397
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes (Note 7) 2,479,720 -
Accumulated deferred investment tax credits 478,334 515,539
Disallowed Plant Vogtle capacity buyback costs (Note 5) 63,067 72,201
Deferred credits related to income taxes (Note 7) 452,819 -
Miscellaneous 261,225 204,010
Total 3,735,165 791,750
COMMITMENTS AND CONTINGENT MATTERS (NOTES 2, 3, 4, 5, 6)
TOTAL CAPITALIZATION AND LIABILITIES $ 13,736,110 $ 10,964,442
</TABLE>
The accompanying notes are an integral part of these statements.
II-104
<PAGE> 135
STATEMENTS OF CAPITALIZATION
AT December 31, 1993 and 1992
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1993 1992
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
COMMON STOCK EQUITY:
Common stock, without par value --
Authorized -- 15,000,000 shares
Outstanding -- 7,761,500 shares $ 344,250 $ 344,250
Paid-in capital 2,384,348 2,384,140
Premium on preferred stock 413 467
Retained earnings (Note 8) 1,316,447 1,159,380
Total common stock equity 4,045,458 3,888,237 46.1 % 44.6 %
CUMULATIVE PREFERRED STOCK, WITHOUT PAR VALUE:
Authorized -- 55,000,000 shares in 1993;
52,200,000 shares in 1992
Outstanding -- 21,027,923 shares in 1993;
$100 stated value --
4.60% to 5.64% 95,787 95,792
6.48% to 7.80% 127,000 127,000
8.20% to 9.08% - 25,000
$25 stated value --
$1.90 to $2.125 295,000 295,000
Adjustable rate -- at January 1, 1994:
4.98% 100,000 -
5.42% 75,000 -
6.57% - 50,000
7.02% - 50,000
7.57% - 50,000
Total (annual dividend requirement -- $46,851,000) 692,787 692,792 7.9 7.9
CUMULATIVE PREFERRED STOCK SUBJECT TO MANDATORY
REDEMPTION, WITHOUT PAR VALUE:
Authorized and Outstanding -- 2,800,000 shares in 1992
$25 stated value --
$2.43 - 45,000
$2.50 - 25,000
Total - 70,000
Less amount due within one year - 63,750
Total excluding amount due within one year - 6,250 - 0.1
</TABLE>
II-105
<PAGE> 136
STATEMENTS OF CAPITALIZATION
At December 31, 1993 and 1992
Georgia Power Company 1993 Annual Report
<TABLE>
1993 1992 1993 1992
<S> <C> <C> <C> <C>
LONG-TERM DEBT: (in thousands) (percent of total)
First mortgage bonds --
Maturity Interest Rates
October 1, 1994 4 5/8% - 28,000
September 1, 1995 4 7/8% - 36,500
September 1, 1995 5 1/8% 130,000 130,000
March 1, 1996 4 3/4% 150,000 -
July 1, 1996 5 3/4% - 45,368
September 1, 1997 6 1/2% - 50,000
April 1, 1998 5 1/2% 100,000 -
September 1, 1998 6 5/8% - 50,000
1999 through 2003 6 % to 7 7/8% 820,000 929,500
2008 6 7/8% 50,000 -
2016 through 2018 10% to 10 3/4% 69,716 663,170
2019 through 2023 7.55% to 9.23% 760,000 300,000
2020 variable rate - 50,000
2032 variable rates 200,000 200,000
Total first mortgage bonds 2,279,716 2,482,538
Pollution control obligations (Note 8) 1,661,250 1,661,290
Other long-term debt (Note 8) 135,058 117,344
Unamortized debt premium (discount), net (34,094) (34,333)
Total long-term debt (annual interest
requirement -- $320,505,000) 4,041,930 4,226,839
Less amount due within one year (Note 8) 10,543 95,823
Long-term debt excluding amount due within one year 4,031,387 4,131,016 46.0 47.4
TOTAL CAPITALIZATION $ 8,769,632 $ 8,718,295 100.0 % 100.0%
</TABLE>
The accompanying notes are an integral part of these statements.
II-106
<PAGE> 137
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1993, 1992, and 1991
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $ 1,159,380 $ 1,038,012 $ 944,774
Net income after dividends on preferred stock 569,853 520,538 474,855
Cash dividends on common stock (402,400) (384,000) (375,200)
Preferred stock transactions, net (10,386) (15,170) (6,417)
BALANCE AT END OF PERIOD (NOTE 8) $ 1,316,447 $ 1,159,380 $ 1,038,012
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1993, 1992, and 1991
Georgia Power Company 1993 Annual Report
1993 1992 1991
(in thousands)
BALANCE AT BEGINNING OF PERIOD $ 2,384,140 $ 2,383,800 $ 2,383,800
Contributions to capital by parent company 208 340 -
BALANCE AT END OF PERIOD $ 2,384,348 $ 2,384,140 $ 2,383,800
</TABLE>
The accompanying notes are an integral part of these statements.
II-107
<PAGE> 138
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993, 1992, and 1991
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 620,527 $ 578,480 $ 536,556
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 475,152 471,014 480,318
Deferred income taxes and investment tax credits, net 150,735 189,251 43,695
Allowance for equity funds used during construction (3,168) (5,855) (9,083)
Deferred Plant Vogtle costs 36,284 (30,804) (18,541)
Non-cash proceeds from settlement of disputed contracts
(Note 3) - (4,982) (103,846)
Provision for separation benefits - - 52,952
Gain on asset sales (35,514) (12) (36,835)
Other, net (10,713) (9,756) (42,141)
Changes in certain current assets and liabilities --
Receivables, net 27,088 (31,348) 23,920
Inventories 82,433 (65,621) 24,130
Payables 17,364 25,303 (23,075)
Taxes accrued 15,377 (22,828) 76,932
Energy cost recovery, retail (74,260) (46,615) (4,594)
Other (35,691) (16,518) (17,561)
Net cash provided from operating activities 1,265,614 1,029,709 982,827
INVESTING ACTIVITIES:
Gross property additions (674,432) (508,444) (548,051)
Sales of property 261,687 46 291,075
Other (43,154) 42,892 931
Net cash used for investing activities (455,899) (465,506) (256,045)
FINANCING ACTIVITIES AND CAPITAL CONTRIBUTIONS:
Proceeds:
Preferred stock 175,000 195,000 100,000
First mortgage bonds 1,135,000 975,000 -
Pollution control bonds 145,425 161,955 80,420
Long-term notes 37,000 - -
Retirements:
Preferred stock (245,005) (165,004) (100,000)
First mortgage bonds (1,337,822) (1,381,300) (598,384)
Pollution control bonds (145,465) (160,205) (83,265)
Other long-term debt (19,451) (567) (1,130)
Interim obligations, net (51,444) 334,671 199,000
Payment of preferred stock dividends (53,123) (60,475) (60,766)
Payment of common stock dividends (402,400) (384,000) (375,200)
Miscellaneous (63,648) (70,986) (17,613)
Net cash used for financing activities (825,933) (555,911) (856,938)
NET CHANGE IN CASH AND CASH EQUIVALENTS (16,218) 8,292 (130,156)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 22,114 13,822 143,978
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,896 $ 22,114 $ 13,822
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for --
Interest (net of amount capitalized) $420,107 $435,203 $488,431
Income taxes 275,867 190,674 214,809
</TABLE>
The accompanying notes are an integral part of these statements.
II-108
<PAGE> 139
NOTES TO FINANCIAL STATEMENTS
Georgia Power Company 1993 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The Company is a wholly owned subsidiary of The Southern Company, which is the
parent company of five operating companies, Southern Company Services (SCS),
Southern Electric International (Southern Electric), and Southern Nuclear
Operating Company (Southern Nuclear), and various other subsidiaries related to
foreign utility operations and domestic non-utility operations. The operating
companies (Alabama Power Company, Georgia Power Company, Gulf Power Company,
Mississippi Power Company, and Savannah Electric and Power Company) provide
electric service in four southeastern states. Intracompany contracts dealing
with jointly owned generating facilities, transmission lines and exchange of
electric power are regulated by the Federal Energy Regulatory Commission (FERC)
or the Securities and Exchange Commission. SCS provides, at cost, specialized
services to The Southern Company and each of the subsidiary companies.
Southern Electric designs, builds, owns, and operates power production
facilities and provides a broad range of technical services to industrial
companies and utilities in the United States and a number of international
markets. Southern Nuclear provides support services for nuclear power plants
in the Southern electric system.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935. Both The Southern Company and its
subsidiaries are subject to the regulatory provisions of this act. The Company
is also subject to regulation by the FERC and the Georgia Public Service
Commission (GPSC). The Company follows generally accepted accounting
principles and complies with the accounting policies and practices prescribed
by the respective regulatory commissions.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
REVENUES AND FUEL COSTS
The Company accrues revenues for services rendered but unbilled at the end of
each fiscal period. Fuel costs are expensed as fuel is used. The Company is
authorized by state law and FERC regulations to recover fuel costs and the fuel
component of purchased energy costs through fuel cost recovery provisions,
which are periodically adjusted to reflect increases or decreases in such
costs. Revenues are adjusted for differences between recoverable fuel costs
and amounts actually recovered in current rates. Fuel costs were under
recovered by $79 million and $4 million at December 31, 1993, and 1992,
respectively. These amounts are included in customer accounts receivable on
the balance sheets. The fuel cost recovery rate was increased effective
December 6, 1993.
The cost of nuclear fuel is amortized to fuel expense based on estimated
thermal units used to generate electric energy and includes a provision for the
disposal of spent fuel. Total charges for nuclear fuel amortized to expense
were $75 million in 1993, $84 million in 1992, and $93 million in 1991. The
Company has contracted with the U.S. Department of Energy (DOE) for permanent
disposal of spent fuel beginning in 1998; however, the actual year this service
will begin is uncertain. Pending permanent disposition of the spent fuel,
sufficient storage capacity is available at Plant Hatch into 2003 and at Plant
Vogtle into 2009. Also, the Energy Policy Act of 1992 required the
establishment in 1993 of a Uranium Enrichment Decontamination and
Decommissioning Fund which is to be funded, in part, by a special assessment on
utilities with nuclear plants. This fund will be used by the DOE for the
decontamination and decommissioning of its nuclear fuel enrichment facilities.
The law provides that utilities will recover these payments in the same manner
as any other fuel expense. The Company -- based on its ownership interest --
estimates its total assessment under this law to be approximately $42 million
to be paid over a 15-year period beginning in 1993. This obligation is
recognized in the accompanying Balance Sheets and is being recovered through
the fuel cost recovery provisions. The remaining liability at December 31,
1993, is $39 million.
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NOTES (continued)
Georgia Power Company 1993 Annual Report
NUCLEAR REFUELING OUTAGE COSTS
Prior to 1992, the Company expensed nuclear refueling outage costs as incurred
during the outage period. Pursuant to the 1991 GPSC retail rate order, the
Company began accounting for these costs on a normalized basis in 1992. Under
this method of accounting, refueling outage costs are deferred and subsequently
amortized to expense over the operating cycle of each unit, which is normally
18 months. Deferred nuclear outage costs were $17 million and $6 million at
December 31, 1993 and 1992, respectively.
DEPRECIATION
Depreciation is provided on the cost of depreciable utility plant in service
and is calculated primarily on the straight-line basis over the estimated
composite service life of the property. The composite rate of depreciation was
3.1 percent in 1993 and 1992, and 3.2 percent in 1991. Effective October 1991,
the Company adopted lower depreciation rates consistent with the 1991 GPSC
retail rate order. When a property unit is retired or otherwise disposed of in
the normal course of business, its costs and the costs of removal, less
salvage, are charged to the accumulated provision for depreciation. Minor
items of property included in the cost of the plant are retired when the
related property unit is retired.
NUCLEAR DECOMMISSIONING
In 1988, the Nuclear Regulatory Commission (NRC) adopted regulations requiring
all licensees operating commercial nuclear power reactors to establish a plan
for providing, with reasonable assurance, funds for decommissioning.
Reasonable assurance may be in the form of an external sinking fund, a surety
method, or prepayment. The Company has established external trust funds to
comply with the NRC's regulations. Prior to the enactment of these
regulations, the Company had internally reserved nuclear decommissioning costs.
The NRC's minimum external funding requirements are based on a generic estimate
of the cost to decommission the radioactive portions of a nuclear unit based on
the size and type of reactor.
The estimated cost of decommissioning and the amounts being recovered through
rates at December 31, 1993, for the Company's ownership interest in plants
Hatch and Vogtle were as follows:
<TABLE>
<CAPTION>
Plant Plant
Hatch Vogtle
<S> <C> <C>
Site study basis (year) 1990 1990
Estimated completion of
decommissioning (year) 2027 2037
Cost of decommissioning: (in millions)
Radiated structures $184 $155
Non-radiated structures 35 62
Contingency 55 54
Total costs $274 $271
(in millions)
Approved for ratemaking $184 $155
Amount expensed in 1993 $ 6 $ 6
Balance in external trust fund $ 22 $ 16
Balance in internal reserve $ 33 $ 11
</TABLE>
The amounts in the internal reserve are being transferred into the external
trust fund over a period of approximately nine years as approved by the GPSC in
its 1991 retail rate order.
The estimates approved by the GPSC for ratemaking exclude costs of
non-radiated structures and site contingency costs. The actual decommissioning
cost may vary from the above estimates because of regulatory requirements,
changes in technology, and increased costs of labor, materials, and equipment.
The decommissioning cost estimates are based on prompt dismantlement and
removal of the plant from service. The Company expects the GPSC to
periodically review and adjust, if necessary, the amounts collected in rates
for the anticipated cost of decommissioning.
PLANT VOGTLE PHASE-IN PLANS
In 1987 and 1989, the GPSC ordered that the costs of Plant Vogtle Units 1 and 2
be phased into rates under plans that meet the requirements of Financial
Accounting Standards Board (FASB) Statement No. 92, Accounting for Phase-In
Plans. In 1991, the GPSC modified the phase-in plans. In addition, the
Company deferred certain Plant Vogtle operating expenses and financing costs
under accounting orders issued by the GPSC. See Note 3 for further
information.
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NOTES (continued)
Georgia Power Company 1993 Annual Report
INCOME TAXES
The Company provides deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
In years prior to 1993, income taxes were accounted for and reported under
Accounting Principles Board Opinion No. 11. Effective January 1, 1993, the
Company adopted FASB Statement No. 109, Accounting for Income Taxes. See Note
7 to the financial statements for further information.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC) AND DEFERRED RETURN
AFUDC represents the estimated debt and equity costs of capital funds that are
necessary to finance the construction of new facilities. While cash is not
realized currently from such allowance, it increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. For the years 1993, 1992 and 1991, the average AFUDC
rates were 4.87 percent, 7.16 percent and 9.90 percent, respectively. The
reduction in the average AFUDC rate since 1991 reflects the Company's greater
use of lower cost short-term debt.
The Company also imputed a return on its investment in Plant Vogtle Units 1
and 2 after they began commercial operation, under short-term cost deferrals
and phase-in plans as described in Note 3. AFUDC and the Vogtle deferred
returns, net of taxes, as a percentage of net income after dividends on
preferred stock, amounted to 1.4 percent, 2.1 percent and 9.2 percent for 1993,
1992 and 1991, respectively.
UTILITY PLANT
Utility plant is stated at original cost with the exception of Plant Vogtle,
which is stated at cost less regulatory disallowances. Original cost includes
materials; labor; appropriate administrative and general costs; payroll-related
costs such as taxes, pensions, and other benefits; and the estimated cost of
funds used during construction.
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
FINANCIAL INSTRUMENTS
All financial instruments of the Company -- for which the carrying amount does
not approximate fair value -- are shown in the table below at December 31:
<TABLE>
<CAPTION>
1993
Carrying Fair
Amount Value
(in millions)
<S> <C> <C>
Nuclear decommissioning trusts $ 38 $ 40
Long-term debt 3,954 4,197
1992
Carrying Fair
Amount Value
(in millions)
Nuclear decommissioning trusts $ 20 $ 21
Investment securities 108 121
Long-term debt 4,130 4,404
Preferred stock subject to
mandatory redemption 70 76
</TABLE>
The fair values of nuclear decommissioning trusts and investment securities
were based on listed closing market prices. The fair values for long-term debt
and preferred stock subject to mandatory redemption were based on either
closing market prices or closing prices of comparable instruments.
MATERIALS AND SUPPLIES
Generally, materials and supplies include the cost of transmission,
distribution and generating plant materials. Materials are charged to
inventory when purchased and then expensed or capitalized to plant, as
appropriate, when installed. In December 1992, the Company converted to the
inventory method of accounting for certain emergency spare parts. This
conversion resulted in a regulatory liability that is being amortized as
credits to income over
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NOTES (continued)
Georgia Power Company 1993 Annual Report
approximately four years. This conversion will not have a material effect on
income in any year.
VACATION PAY
Company employees earn vacation in one year and take it in the subsequent year.
However, for ratemaking purposes, vacation pay is recognized as an allowable
expense only when paid. Consistent with this ratemaking treatment, the Company
accrues a current liability for earned vacation pay and records a current asset
representing the future recoverability of this cost. This amount was $42
million at December 31, 1993, and $40 million at December 31, 1992. In 1994,
approximately 72 percent of the 1993 deferred vacation costs will be expensed,
and the balance will be charged to construction and other accounts.
2. RETIREMENT BENEFITS
PENSION PLAN
The Company has a defined benefit, trusteed, non-contributory pension plan
covering substantially all regular employees. Benefits are based on the
greater of amounts resulting from two different formulas: years of service and
final average pay or years of service and a flat dollar benefit. The Company
uses the "entry age normal method with a frozen initial liability" actuarial
method for funding purposes, subject to limitations under federal income tax
regulations. Amounts funded to the pension fund are primarily invested in
equity and fixed-income securities. FASB Statement No. 87, Employers'
Accounting for Pensions, requires use of the projected unit credit actuarial
method for financial reporting purposes.
POSTRETIREMENT BENEFITS
The Company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. For medical care benefits, a qualified trust has
been established for funding amounts to the extent deductible under federal
income tax regulations. Amounts funded are primarily invested in debt and
equity securities. Accrued costs of life insurance benefits, other than
current cash payments for retirees, currently are not being funded.
Effective January 1, 1993, the Company adopted FASB Statement No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service."
In October 1993, the GPSC ordered the Company to phase in the adoption of
Statement No. 106 to cost of service over a five-year period, whereby one-fifth
of the additional expense was recognized -- approximately $6 million -- in 1993
and the remaining additional expense was deferred. An additional one-fifth of
the costs will be expensed each succeeding year until the costs are fully
reflected in cost of service in 1997. The cost deferred during the five-year
period will be amortized to expense over a 15-year period beginning in 1998.
As a result of the regulatory treatment allowed by the GPSC, the adoption of
Statement No. 106 did not have a material impact on net income.
Prior to 1993, the Company recognized these cost on a cash basis as payments
were made. The total costs of such benefits recognized by the Company in 1993,
1992, and 1991 were $56 million, $13 million, and $9 million, respectively.
STATUS AND COST OF BENEFITS
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of Statement Nos. 87 and 106, respectively. Retiree medical and
life insurance information is shown only for 1993 because Statement No. 106
was adopted as
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NOTES (continued)
Georgia Power Company 1993 Annual Report
of January 1, 1993, on a prospective basis. The funded status of the plans at
December 31 was as follows:
<TABLE>
<CAPTION>
Pension
1993 1992
(in millions)
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefits $ 655 $ 557
Non-vested benefits 35 26
Accumulated benefit obligation 690 583
Additional amounts related
to projected salary increases 257 293
Projected benefit obligation 947 876
Less:
Fair value of plan assets 1,495 1,341
Unrecognized net gain (490) (413)
Unrecognized prior service cost 31 33
Unrecognized transition asset (62) (67)
Prepaid asset recognized in the Balance
Sheets $ 27 $ 18
</TABLE>
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993
(in millions)
<S> <C> <C>
Actuarial present value of
benefit obligation:
Retirees and dependents $136 $32
Employees eligible to retire 12 -
Other employees 206 40
Accumulated benefit obligation 354 72
Less:
Fair value of plan assets 30 1
Unrecognized net loss (gain) 40 (6)
Unrecognized transition
obligation 251 69
Accrued liability recognized in the
Balance Sheets $ 33 $ 8
</TABLE>
Weighted average rates used in actuarial calculations:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Discount 7.5% 8.0% 8.0%
Annual salary increase 5.0 6.0 6.0
Long-term return on plan
assets 8.5 8.5 8.5
</TABLE>
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 11.3 percent for 1993, decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate by 1.0 percent would increase the accumulated
medical benefit obligation as of December 31, 1993, by $68 million and the
aggregate of the service and interest cost components of the net retiree
medical cost by $7 million.
The components of the plans' net costs are shown below:
<TABLE>
<CAPTION>
Pension
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Benefits earned during the $ 33 $ 34 $ 32
year
Interest cost on projected
benefit obligation 69 65 61
Actual return on plan assets (194) (61) (334)
Net amortization and deferral 84 (38) 247
Net pension cost (income) $ (8) $ - $ 6
</TABLE>
Of net pension costs (income) recorded, $(6) million in 1993 and $5 million
in 1991, were recorded to operating expense, with the balance being recorded to
construction and other accounts.
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993
(in millions)
<S> <C> <C>
Benefits earned during the year $11 $ 3
Interest cost on accumulated
benefit obligation 23 6
Amortization of transition
obligation over 20 years 12 3
Actual return on plan assets (4) -
Net amortization and deferral 2 -
Net postretirement cost $44 $12
</TABLE>
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NOTES (continued)
Georgia Power Company 1993 Annual Report
Of the above net postretirement medical and life insurance costs recorded
in 1993, $21 million was charged to operating expenses, $21 million was
deferred, and the remainder was charged to construction and other accounts.
3. LITIGATION AND REGULATORY MATTERS
DEMAND-SIDE CONSERVATION PROGRAMS
In October 1993, a Superior Court of Fulton County, Georgia, judge ruled that
rate riders previously approved by the GPSC for recovery of the Company's costs
incurred in connection with demand-side conservation programs were unlawful.
The judge held that the GPSC lacked statutory authority to approve such rate
riders except through general rate case proceedings and that those procedures
had not been followed. The Company has suspended collection of the demand-side
conservation costs and appealed the court's decision to the Georgia Court of
Appeals. In December 1993, the GPSC approved the Company's request for an
accounting order allowing the Company to defer all current unrecovered and
future costs related to these programs until the court's decision is reversed
or until the next general rate case proceeding. An association of industrial
customers has filed a petition for review of such accounting order in the
Superior Court of Fulton County, Georgia. The Company's costs related to these
conservation programs through 1993 were $60 million of which $15 million has
been collected and the remainder deferred. The estimated costs, assuming no
change in the programs certified by the GPSC, are $38 million in 1994 and $40
million in 1995.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material adverse effect
on these financial statements.
RETAIL RATEPAYERS' SUIT CONCLUDED
In March 1993, several retail ratepayers of Georgia Power filed a civil
complaint in the Superior Court of Fulton County, Georgia, against Georgia
Power, The Southern Company, the system service company, and Arthur Andersen &
Co. The complaint alleged that Georgia Power obtained excessive rate increases
by improper accounting for spare parts and sought actual damages estimated by
the plaintiffs to be in excess of $60 million -- plus treble and punitive
damages -- for alleged violations of the Georgia Racketeer Influenced and
Corrupt Organizations Act and other state statutes, statutory and common law
fraud, and negligence. These state law allegations were substantially the same
as those included in a 1989 suit brought in federal district court in Georgia.
That suit and similar ones filed in Alabama, Florida, and Mississippi federal
courts were subsequently dismissed.
The defendants' motions to dismiss the current complaint were granted by the
Superior Court of Fulton County, Georgia, in July 1993. In January 1994, the
plaintiffs' appeal of the dismissal to the Supreme Court of Georgia was
rejected. This matter is now concluded.
GULF STATES SETTLEMENT
On November 7, 1991, subsidiaries of The Southern Company entered into a
settlement agreement with Gulf States that resolved litigation between the
companies that had been pending since 1986 and arose out of a dispute over
certain unit power and long-term power sales contracts. In 1993, all remaining
terms and obligations of the settlement agreement were satisfied.
Based on the value of the settlement proceeds received, the Company recorded
increases of $3 million in 1992 and $89 million in 1991 net income.
FERC REVIEW OF EQUITY RETURNS
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on common equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power, and other similar contracts.
Any changes in the rate of return on common equity that may occur as a result
of this proceeding would be effective 60 days after a proper notice of the
proceeding is published. A notice was published on May 10, 1991.
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC
staff has filed exceptions to the administrative law judge's opinion, and the
matter remains pending before the FERC.
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NOTES (continued)
Georgia Power Company 1993 Annual Report
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material adverse effect
on the Company's financial statements.
PLANT VOGTLE PHASE-IN PLANS
Pursuant to orders from the GPSC, the Company recorded a deferred return under
phase-in plans for Plant Vogtle Units 1 and 2 until October 1991 when the
allowed investment was fully reflected in rates. In addition, the GPSC issued
two separate accounting orders that required the Company to defer substantially
all operating and financing costs related to both units until rate orders
addressed these costs. These GPSC orders provide for the recovery of deferred
costs within 10 years. The GPSC modified the phase-in plans in 1991 to
accelerate the recognition of costs previously deferred under the Plant Vogtle
Unit 2 phase-in plan and to levelize the remaining Plant Vogtle declining
capacity buyback expenses.
Under these orders, the Company has deferred and begun amortizing these costs
(as recovered through rates) as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Deferred expenses:
Capacity buybacks $(38) $(100) $(30)
Other operating - - (7)
Amortization of previously
deferred return and
expenses 74 69 53
Deferred expenses, net 36 (31) 16
Deferred return - - 35
Less income taxes - 23 8
Net (deferral) amortization 36 (8) (11)
Effect of adoption of FASB
Statement No. 109 160 - -
Deferred costs
at beginning of year 383 375 364
Deferred costs
at end of year $507 $ 383 $375
</TABLE>
NUCLEAR PERFORMANCE STANDARDS
In October 1989, the GPSC adopted a nuclear performance standard for the
Company's nuclear generating units under which the performance of plants Hatch
and Vogtle will be evaluated every three years. The performance standard is
based on each unit's capacity factor as compared to the average of all U.S.
nuclear units operating at a capacity factor of 50% or higher during the
three-year period of evaluation. Depending on the performance of the units,
the Company could receive a monetary reward or penalty under the performance
standards criteria. The first evaluation was conducted in 1993 for performance
during the 1990-92 period. During this three-year period, the Company's units
performed at an average capacity factor of 81 percent compared to an industry
average of approximately 73 percent. Based on these results, the GPSC approved
a performance reward of approximately $8.5 million for the Company. This
reward is being collected through the retail fuel cost recovery provision and
recognized in income over a 36- month period beginning November, 1993.
4. COMMITMENTS AND CONTINGENCIES
CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program and currently
estimates property additions to be approximately $688 million in 1994, $555
million in 1995 and $629 million in 1996. These estimated additions include
AFUDC of $19 million in 1994, $27 million in 1995, and $18 million in 1996.
The estimates for property additions for the three-year period include $88
million committed to meeting the requirements of the Clean Air Act.
While the Company has no new baseload generating plants under construction,
the construction of nine combustion turbine peaking units is planned to be
completed by 1996. In addition, significant construction of transmission and
distribution facilities, and upgrading and extending the useful life of
generating plants will continue. The construction program is subject to
periodic review and revision, and actual construction costs may vary from
estimates because of numerous factors, including, but not limited to, changes
in business conditions, load growth estimates, environmental regulations, and
regulatory requirements.
II-115
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NOTES (continued)
Georgia Power Company 1993 Annual Report
FUEL COMMITMENTS
To supply a portion of the fuel requirements of its generating plants, the
Company has entered into various long-term commitments for the procurement of
fossil and nuclear fuel. In most cases, these contracts contain provisions for
price escalations, minimum purchase levels and other financial commitments.
Total estimated long-term obligations were approximately $4.8 billion at
December 31, 1993. Additional commitments for coal and for nuclear fuel will
be required in the future to supply the Company's fuel needs.
OPERATING LEASES
The Company has entered into coal rail car rental agreements with various terms
and expiration dates. Rental expense totaled $8 million, $7 million, and $5
million for 1993, 1992, and 1991, respectively. Minimum annual rental
commitments for noncancellable rail car leases are $9 million annually for
years 1994 through 1998, and total approximately $191 million thereafter.
ROCKY MOUNTAIN PROJECT STATUS
In its 1985 financing order, the GPSC concluded that completion of the Rocky
Mountain pumped storage hydroelectric project in 1991 as then planned was not
economically justifiable and reasonable and withheld authorization for the
Company to spend funds from approved securities issuances on that project. In
1988, the Company and Oglethorpe Power Corporation (OPC) entered into a joint
ownership agreement for OPC to assume responsibility for the construction and
operation of the project, as discussed in Note 5. The joint ownership
agreement significantly reduces the risk of the project being canceled.
However, full recovery of the Company's costs depends on the GPSC's treatment
of the project's cost and disposition of the project's capacity output. In the
event the Company cannot demonstrate to the GPSC the project's economic
viability based on current ownership, construction schedule, and costs, then
part or all of such costs may have to be written off in accordance with FASB
Statement No. 90, Accounting for Abandonments and Disallowed Plant Costs. At
December 31, 1993, the Company's investment in the project amounted to
approximately $197 million. AFUDC accrued on the Rocky Mountain project has not
been credited to income or included in the project cost since December 1985.
If accrual of AFUDC is not resumed, the Company's portion of the estimated
total plant additions at completion would be approximately $199 million. The
plant is currently scheduled to begin commercial operation in 1995.
The Company has held preliminary discussions with other parties regarding the
potential disposition of its remaining interest in the project.
The ultimate outcome of this matter cannot now be determined.
NUCLEAR INSURANCE
Under the Price-Anderson Amendments Act of 1988, the Company maintains
agreements of indemnity with the NRC that, together with private insurance,
cover third-party liability arising from any nuclear incident occurring at the
Company's nuclear power plants. The act limits to $9.4 billion public
liability claims that could arise from a single nuclear incident. Each nuclear
plant is insured against this liability to a maximum of $200 million by private
insurance, with the remaining coverage provided by a mandatory program of
deferred premiums that could be assessed, after a nuclear incident, against all
owners of nuclear reactors. A company could be assessed up to $79 million per
incident for each licensed reactor it operates but not more than an aggregate
of $10 million per incident to be paid in a calendar year for each reactor.
Such maximum assessment for the Company -- based on its ownership and buyback
interests -- is $171 million per incident but not more than an aggregate of $22
million to be paid for each incident in any one year.
The Company is a member of Nuclear Mutual Limited (NML), a mutual insurer
established to provide property damage insurance in an amount up to $500
million for members' nuclear generating facilities. The members are subject to
a retrospective premium adjustment in the event that losses exceed accumulated
reserve funds. The Company's maximum assessment per incident is limited to $18
million under current policies.
Additionally, the Company has policies that currently provide
decontamination, excess property insurance, and premature decommissioning
coverage up to $2.25 billion for losses in excess of the $500 million NML
coverage. This excess insurance is provided by Nuclear Electric
II-116
<PAGE> 147
NOTES (continued)
Georgia Power Company 1993 Annual Report
Insurance Limited (NEIL), a mutual insurance company, and American Nuclear
Insurers/Mutual Atomic Energy Liability Underwriters.
NEIL also covers the additional costs that would be incurred in obtaining
replacement power during a prolonged accidental outage at a member's nuclear
plant. Members can be insured against increased costs of replacement power in
an amount up to $3.5 million per week -- starting 21 weeks after the outage --
for one year and up to $2.3 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if losses
each year exceed the accumulated funds available to the insurer under that
policy. The maximum assessments per incident under the current policies for
the Company would be $15 million for excess property damage and $13 million for
replacement power.
For all on-site property damage insurance policies for commercial nuclear
power plants, the NRC requires that the proceeds of such policies issued or
renewed on or after April 2, 1991, shall be dedicated first for the sole
purpose of placing the reactor in a safe and stable condition after an
accident. Any remaining proceeds are to be applied next toward the costs of
decontamination and debris removal operations ordered by the NRC, and any
further remaining proceeds are to be paid either to the Company or to its bond
trustees as may be appropriate under the policies and applicable trust
indentures.
The Company participates in an insurance program for nuclear workers that
provides coverage for worker tort claims filed for bodily injury caused at
commercial nuclear power plants. In the event that claims for this insurance
exceed the accumulated reserve funds, the Company could be subject to a maximum
total assessment of $7 million.
5. FACILITY SALES AND JOINT OWNERSHIP AGREEMENTS
Since 1975, the Company has sold undivided interests in plants Hatch, Wansley,
Vogtle, and Scherer Units 1 and 2, together with transmission facilities, to
OPC, an electric membership generation and transmission corporation; the
Municipal Electric Authority of Georgia (MEAG), a public corporation and an
instrumentality of the state of Georgia; and the City of Dalton, Georgia. The
Company has sold an interest in Plant Scherer Unit 3 to Gulf Power, an
affiliate.
Additionally, the Company has completed two of four separate transactions to
sell Unit 4 of Plant Scherer to Florida Power & Light Company (FPL) and
Jacksonville Electric Authority (JEA) for a total price of approximately $806
million, including any gains on these transactions. FPL will eventually own
approximately 76.4 percent of the unit, with JEA owning the remainder. Georgia
Power will continue to operate the unit.
The completed and scheduled remaining transactions are as follows:
<TABLE>
<CAPTION>
Closing Percent After-Tax
Date Capacity Ownership Amount Gain
(in megawatts) (in millions)
<S> <C> <C> <C> <C>
July 1991 290 35.46% $291 $14
June 1993 258 31.44 253 18
June 1994 135 16.55 132 10
June 1995 135 16.55 130 10
Total 818 100.00% $806 $52
</TABLE>
Except as otherwise noted, the Company has contracted to operate and maintain
all jointly owned facilities. The Company includes its proportionate share of
plant operating expenses in the corresponding operating expenses in the
Statements of Income.
As discussed in Note 4, the Company and OPC have a joint ownership
arrangement for the Rocky Mountain pumped storage hydroelectric project under
which the Company will retain its present investment in the project and OPC
will finance and complete the remainder of the project and operate the
completed facility. Based on current cost estimates the Company's ownership
will be approximately 25% of the project (194 megawatts of capacity) at
completion.
The Company will own six of eight 80 megawatt combustion turbine generating
units and 75% of the related common facilities being jointly constructed with
Savannah Electric, an affiliate. The Company's investment in the project at
December 31, 1993, was $100 million and is expected to total approximately $182
million when the project is completed. All units are
II-117
<PAGE> 148
NOTES (continued)
Georgia Power Company 1993 Annual Report
expected to be completed by June, 1995. Savannah Electric will operate these
units.
In connection with the joint ownership arrangements for plants Vogtle and
Scherer, the Company has made commitments to purchase declining fractions of
OPC's and MEAG's capacity and energy from these units. These commitments are
in effect during periods of up to 10 years following commercial operation (and
with regard to a portion of a 5 percent interest in Plant Vogtle owned by MEAG,
until the latter of the retirement of the plant or the latest stated maturity
date of MEAG's bonds issued to finance such ownership interest). The payments
for capacity are required whether or not any capacity is available. The energy
cost is a function of each unit's variable operating costs. Except as noted
below, the cost of such capacity and energy is included in purchased power from
non-affiliates in the Company's Statements of Income. Capacity payments
totaled $183 million, $289 million and $320 million in 1993, 1992 and 1991,
respectively. The Plant Scherer buyback agreements ended in 1993. The current
projected Plant Vogtle capacity payments for the next five years are as
follows: $132 million in 1994, $77 million in 1995, $70 million in 1996, $59
million in 1997 and $59 million in 1998. Portions of the payments noted above
relate to costs in excess of Plant Vogtle's allowed investment for ratemaking
purposes. The present value of these portions was written off in 1987 and
1990. Additionally, the Plant Vogtle declining capacity buyback expense is
being levelized over a six-year period. See Note 3 for further information.
At December 31, 1993, the Company's percentage ownership and investment
(exclusive of nuclear fuel) in jointly owned facilities in commercial
operation, were as follows:
<TABLE>
<CAPTION>
Total Company
Facility (Type) Capacity Ownership
(megawatts)
<S> <C> <C>
Plant Vogtle (nuclear) 2,320 45.7%
Plant Hatch (nuclear) 1,630 50.1
Plant Wansley (coal) 1,779 53.5
Plant Scherer (coal)
Units 1 and 2 1,636 8.4
Unit 3 818 75.0
Unit 4 818 33.1
Accumulated
Facility (Type) Investment Depreciation
(in millions)
Plant Vogtle (nuclear) $3,285 (1) $540
Plant Hatch (nuclear) 840 325
Plant Wansley (coal) 286 125
Plant Scherer (coal)
Units 1 and 2 111 33
Unit 3 539 107
Unit 4 236 31
</TABLE>
(1) Investment net of write-offs.
The Company and an affiliate, Alabama Power, own equally all of the
outstanding capital stock of Southern Electric Generating Company (SEGCO),
which owns electric generating units with a total rated capacity of 1,020
megawatts, as well as associated transmission facilities. The capacity of the
units has been sold equally to the Company and Alabama Power under a contract
expiring in 1994, which, in substance, requires payments sufficient to provide
for the operating expenses, taxes, debt service and return on investment,
whether or not SEGCO has any capacity and energy available. An amended
contract has been filed with the FERC with substantially the same provisions,
but the term thereof would be extended automatically for two year periods,
subject to any party's right to cancel upon two year's notice. The Company's
share of expenses included in purchased power from affiliates in the Statements
of
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<PAGE> 149
NOTES (continued)
Georgia Power Company 1993 Annual Report
Income, is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Energy $ 81 $ 66 $ 74
Capacity 9 9 10
Total $ 90 $ 75 $ 84
Kilowatt-hours 3,352 2,664 2,911
</TABLE>
At December 31, 1993, the capitalization of SEGCO consisted of $58 million of
equity and $84 million of long-term debt on which the annual interest
requirement is $3.8 million.
6. LONG-TERM POWER SALES AGREEMENTS
The Company and the operating affiliates of The Southern Company have entered
into long-term contractual agreements for the sale of capacity and energy to
certain non-affiliated utilities located outside the system's service
territory. Certain of these agreements are non-firm and are based on the
capacity of the Southern system. Other agreements are firm and pertain to
capacity related to specific generating units. Because energy is generally
sold at cost under these agreements, it is primarily the capacity revenues that
affect the Company's profitability. The capacity revenues have been as
follows:
<TABLE>
<CAPTION>
Unit Power Other
Year Sales Long-Term
(in millions)
<S> <C> <C>
1993 $135 $17
1992 223 10
1991 263 11
</TABLE>
Long-term non-firm power of 400 megawatts was sold by the Southern electric
system in 1993 to Florida Power Corporation (FPC). This amount decreases to
200 megawatts in 1994 and the contract expires at year-end. Sales under these
long-term non-firm power sales agreements are made from available power pool
energy, and the revenues from the sales are shared by the operating affiliates.
Unit power from specific generating plants is being sold to FPL, JEA, and the
City of Tallahassee, Florida and beginning in 1994 to FPC. Under these
agreements, the Company sold approximately 830 megawatts of capacity in 1993
and is scheduled to sell approximately 403 megawatts of capacity in 1994.
Thereafter, these sales will decline to an estimated 157 megawatts by the end
of 1996 and will remain at that approximate level through 1999. After 2000,
capacity sales will decline to approximately 101 megawatts -- unless reduced by
FPL and JEA -- until the expiration of the contracts in 2010.
7. INCOME TAXES
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption of Statement No. 109 resulted in
cumulative adjustments that had no material effect on net income. The adoption
also resulted in the recording of additional deferred income taxes and related
assets and liabilities. The related assets of $993 million are revenues to be
received from customers. These assets are attributable to tax benefits
flowed-through to customers in prior years, and taxes applicable to
capitalized AFUDC. The related liabilities of $453 million are revenues to be
refunded to customers. These liabilities are attributable to deferred taxes
previously recognized at rates higher than current enacted tax law and to
unamortized investment tax credits. Additionally, deferred income taxes
related to accelerated tax depreciation previously shown as a reduction to
utility plant were reclassified.
Details of the federal and state income tax provisions are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
Total provision for income taxes: (in millions)
<S> <C> <C> <C>
Federal:
Currently payable $223 $139 $267
Deferred -
Current year 181 170 97
Reversal of prior years (40) (6) (52)
Deferred investment tax
credits (18) (6) (10)
346 297 302
State:
Currently payable 41 24 47
Deferred -
Current year 31 35 17
Reversal of prior years (3) (3) (9)
69 56 55
Total 415 353 357
Less:
Income taxes charged
(credited) to other
income (37) (25) 8
Federal and state income
taxes charged to operations $452 $378 $349
</TABLE>
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<PAGE> 150
NOTES (continued)
Georgia Power Company 1993 Annual Report
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
basis, which give rise to deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1993
(in millions)
<S> <C>
Deferred tax liabilities:
Accelerated depreciation $1,458
Property basis differences 1,163
Deferred Plant Vogtle costs 161
Premium on reacquired debt 63
Fuel clause underrecovered 32
Other 62
Total 2,939
Deferred tax assets:
Other basis differences 263
Federal effect of state deferred taxes 92
Other deferred costs 61
Disallowed plant buybacks 29
Accrued interest 24
Other 12
Total 481
Net deferred tax liabilities (assets) 2,458
Portion included in current assets (22)
Accumulated deferred income taxes
in the Balance Sheets $2,480
</TABLE>
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $19 million in 1993, $19 million in 1992, and $27 million in 1991.
At December 31, 1993, all investment tax credits available to reduce federal
income taxes payable had been utilized.
A reconciliation of the federal statutory tax rate to effective income tax
rate is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Federal statutory rate 35% 34% 34%
State income tax, net of
federal deduction 4 4 4
Non-deductible book
depreciation 3 3 4
Difference in prior years'
deferred and current tax rate (1) (1) (1)
Other (1) (2) (1)
Effective income tax rate 40% 38% 40%
</TABLE>
The Southern Company and its subsidiaries file a consolidated federal income
tax return. Under a joint consolidated income tax agreement, each company's
current and deferred tax expense is computed on a stand-alone basis, and
consolidated tax savings are allocated to each company based on its ratio of
taxable income to total consolidated taxable income.
8. CAPITALIZATION
COMMON STOCK DIVIDEND RESTRICTIONS
The Company's first mortgage bond indenture contains various common stock
dividend restrictions that remain in effect as long as the bonds are
outstanding. At December 31, 1993, $742 million of retained earnings were
restricted against the payment of cash dividends on common stock under terms of
the mortgage indenture. Supplemental indentures in connection with future
first mortgage bond issues may contain more stringent common stock dividend
restrictions than those currently in effect.
The Company's charter limits cash dividends on common stock to the lesser of
the retained earnings balance or 75 percent of net income available for such
stock during a prior period of 12 months if the ratio of common stock equity to
total capitalization, including retained earnings, adjusted to reflect the
payment of the proposed dividend, is below 25 percent, and to 50 percent of
such net income if such ratio is less than 20 percent. At December 31, 1993,
the ratio as defined was 46.1 percent.
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<PAGE> 151
NOTES (continued)
Georgia Power Company 1993 Annual Report
REMARKETED BONDS
In 1992, the Company issued two series of variable rate first mortgage bonds
each with principal amounts of $100 million due 2032. The current composite
interest rate on the bonds is 6.20 percent and is fixed for the first three
years of the issues.
POLLUTION CONTROL BONDS
The Company has incurred obligations in connection with the sale by public
authorities of tax-exempt pollution control and industrial development revenue
bonds. The Company has authenticated and delivered to trustees an aggregate of
$407.7 million of its first mortgage bonds, which are pledged as security for
its obligations under pollution control and industrial development contracts.
No interest on these first mortgage bonds is payable unless and until a default
occurs on the installment purchase or loan agreements. An aggregate of
approximately $1.3 billion of the pollution control and industrial development
bonds is secured by a subordinated interest in specific property of the
Company.
Details of pollution control bonds are as follows:
<TABLE>
<CAPTION>
Maturity Interest Rates 1993 1992
(in millions)
<S> <C> <C> <C>
2003-2007 5.70% to 6.75% $ 90 $ 103
2008-2011 6.375% & Variable 19 32
2014-2018 6.00% to 12.25% 1,237 1,283
2019-2023 5.75% to 7.25% &
Variable 315 243
Total pollution control bonds $ 1,661 $ 1,661
</TABLE>
BANK CREDIT ARRANGEMENTS
At the beginning of 1994, the Company had unused credit arrangements with banks
totaling $540 million, of which $10 million expires June 30, 1994, $130
million expires at May 1, 1996, and $400 million expires at June 30, 1996.
The $400 million expiring June 30, 1996, is under revolving credit
arrangements with several banks providing the Company, Alabama Power, and The
Southern Company up to a total credit amount of $400 million. To provide
liquidity support for commercial paper programs and for other short-term cash
needs, $165 million and $135 million of the $400 million available credit are
currently dedicated for the Company and Alabama Power, respectively. However,
the allocations can be changed among the borrowers by notifying the respective
banks.
During the term of the agreements expiring in 1996, short-term borrowings may
be converted into term loans, payable in 12 equal quarterly installments, with
the first installment due at the end of the first calendar quarter after the
applicable termination date or at an earlier date at the companies' option. In
addition, these agreements require payment of commitment fees based on the
unused portions of the commitments or the maintenance of compensating balances
with the banks.
The $10 million credit arrangement expiring in 1994 allows borrowings for up
to 90 days. Commitment fees are based on the unused portion of the commitment.
In addition, the Company borrows under uncommitted lines of credit with banks
and through a $150 million commercial paper program that has the liquidity
support of committed bank credit arrangements. Average compensating balances
held under these committed facilities were not material in 1993.
OTHER LONG-TERM DEBT
Assets acquired under capital leases are recorded in the Balance Sheets as
utility plant in service, and the related obligations are classified as
long-term debt. At December 31, 1993, the Company had a capitalized lease
obligation for its corporate headquarters building of $88 million with an
interest rate of 8.1 percent. Other capitalized lease obligations were $137
thousand with a composite interest rate of 6.8 percent.
The maturities of capital lease obligations through 1998 are approximately as
follows: $423 thousand in 1994, $309 thousand in 1995, $335 thousand in 1996,
$362 thousand in 1997, and $392 thousand in 1998.
The lease agreement for the corporate headquarters building provides for
payments that are minimal in early years and escalate through the first 21
years of the lease. For ratemaking purposes, the GPSC has treated the lease as
an operating lease and has allowed only the lease
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<PAGE> 152
NOTES (continued)
Georgia Power Company 1993 Annual Report
payments in cost of service. The difference between the accrued expense and
the lease payments allowed for ratemaking purposes is being deferred as a cost
to be recovered in the future as ordered by the GPSC. At December 31, 1993,
and 1992, the interest and lease amortization deferred on the Balance Sheets
are $47 million and $48 million, respectively.
In December 1993, the Company borrowed $37 million through a long-term note
due in 1995.
ASSETS SUBJECT TO LIEN
The Company's mortgage dated as of March 1, 1941, as amended and supplemented,
securing the first mortgage bonds issued by the Company, constitutes a direct
lien on substantially all of the Company's fixed property and franchises.
LONG-TERM DEBT DUE WITHIN ONE YEAR
The current portion of the Company's long-term debt is as follows:
<TABLE>
<CAPTION>
1993 1992
(in millions)
<S> <C> <C>
First mortgage bonds:
Redemption of 10.75% issue due 2018 $ - $3.7
Redemption of variable rate issue due
2020 - 50.0
Improvement fund requirement - 30.4
Pollution control bonds
5.95% series sinking fund requirement - 0.3
6.4% series sinking fund requirement * 0.2
6.75% series sinking fund requirement * -
6.375% series sinking fund requirement * -
Other long-term debt 10.5 11.2
Total $10.5 $95.8
</TABLE>
*Less than .1 million
The indenture's first mortgage bond improvement fund requirement amounts to 1
percent of each outstanding series of bonds authenticated under the indenture
prior to January 1 of each year, other than those issued to collateralize
pollution control obligations. The requirement may be satisfied by depositing
cash or reacquired bonds, or by pledging additional property equal to 1 2/3
times the requirement. The 1993 and 1992 requirements were met in the first
quarter of each year by depositing cash subsequently used to redeem bonds. The
1994 requirement was funded in December 1993.
REDEMPTION OF HIGH-COST SECURITIES
The Company plans to continue a program of redeeming or replacing high-cost
debt and preferred stock in cases where opportunities exist to reduce financing
costs. High-cost issues may be repurchased in the open market or called at
premiums as specified under terms of the issue. They may also be redeemed at
face value to meet improvement fund and sinking fund requirements, to meet
replacement provisions of the mortgage, or by use of proceeds from the sale of
property pledged under the mortgage. In general, for the first five years a
series is outstanding the Company is prohibited from redeeming for improvement
fund purposes more than 1 percent annually of the original issue amount.
9. QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial information for 1993 and 1992 is as follows:
<TABLE>
<CAPTION>
Net Income
After
Dividends on
Operating Operating Preferred
Quarter Ended Revenues Income Stock
(in millions)
<S> <C> <C> <C>
MARCH 1993 $1,004 $221 $108
JUNE 1993 1,096 219 141
SEPTEMBER 1993 1,376 356 245
DECEMBER 1993 975 176 76
March 1992 $ 957 $211 $ 91
June 1992 1,068 235 116
September 1992 1,280 342 227
December 1992 992 197 87
</TABLE>
The Company's business is influenced by seasonal weather conditions and the
timing of rate increases.
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<PAGE> 153
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS) $ 4,451,181 $ 4,297,436 $ 4,301,428
NET INCOME AFTER DIVIDENDS
ON PREFERRED STOCK (IN THOUSANDS) $ 569,853 $ 520,538 $ 474,855
CASH DIVIDENDS ON COMMON STOCK (IN THOUSANDS) $ 402,400 $ 384,000 $ 375,200
RETURN ON AVERAGE COMMON EQUITY (PERCENT) 14.37 13.60 12.76
TOTAL ASSETS (IN THOUSANDS) $13,736,110 $10,964,442 $10,842,538
GROSS PROPERTY ADDITIONS (IN THOUSANDS) $ 674,432 $ 508,444 $ 548,051
CAPITALIZATION (IN THOUSANDS):
Common stock equity $ 4,045,458 $ 3,888,237 $ 3,766,551
Preferred stock 692,787 692,792 607,796
Preferred stock subject to mandatory redemption - 6,250 118,750
Long-term debt 4,031,387 4,131,016 4,553,189
Total (excluding amounts due within one year) $ 8,769,632 $ 8,718,295 $ 9,046,286
CAPITALIZATION RATIOS (PERCENT):
Common stock equity 46.1 44.6 41.7
Preferred stock 7.9 8.0 8.0
Long-term debt 46.0 47.4 50.3
Total (excluding amounts due within one year) 100.0 100.0 100.0
FIRST MORTGAGE BONDS (IN THOUSANDS):
Issued 1,135,000 975,000 -
Retired 1,337,822 1,381,300 598,384
PREFERRED STOCK (IN THOUSANDS):
Issued 175,000 195,000 100,000
Retired 245,005 165,004 100,000
SECURITY RATINGS:
First Mortgage Bonds -
Moody's A3 A3 Baa1
Standard and Poor's A- A- BBB+
Duff & Phelps A+ A- BBB+
Preferred Stock -
Moody's baa1 baa1 baa1
Standard and Poor's BBB+ BBB+ BBB
Duff & Phelps A- BBB BBB-
CUSTOMERS (YEAR-END):
Residential 1,441,972 1,421,175 1,397,682
Commercial 188,820 183,784 179,933
Industrial 11,217 11,479 11,946
Other 2,322 2,269 2,190
Total 1,644,331 1,618,707 1,591,751
EMPLOYEES (YEAR-END) 12,528 12,600 13,700
</TABLE>
II-123
<PAGE> 154
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 4,445,809 $ 4,145,240 $ 3,897,479 $ 3,786,485 $ 3,561,603 $ 3,609,140 $ 3,319,699 $ 2,869,883
$ 208,066 $ 449,099 $ 479,532 $ 240,057 $ 535,003 $ 493,717 $ 421,719 $ 304,555
$ 389,600 $ 394,500 $ 386,600 $ 377,800 $ 325,500 $ 277,500 $ 225,500 $ 189,600
5.52 11.72 13.06 6.85 16.51 17.95 18.43 15.86
$11,176,619 $11,372,346 $11,130,539 $11,197,494 $10,465,063 $ 9,030,618 $ 7,880,072 $ 6,746,247
$ 558,727 $ 727,631 $ 929,019 $ 1,034,059 $ 1,598,309 $ 1,384,182 $ 1,396,846 $ 1,015,274
$ 3,673,913 $ 3,860,657 $ 3,806,070 $ 3,538,182 $ 3,469,201 $ 3,013,707 $ 2,486,172 $ 2,089,171
607,796 607,844 657,844 657,844 732,844 632,844 482,844 432,844
125,000 155,000 162,500 166,250 112,500 120,000 127,500 131,250
5,000,225 5,054,001 4,861,378 4,825,760 4,464,857 3,878,066 3,432,606 3,128,500
$ 9,406,934 $ 9,677,502 $ 9,487,792 $ 9,188,036 $ 8,779,402 $ 7,644,617 $ 6,529,122 $ 5,781,765
39.1 39.9 40.1 38.5 39.5 39.4 38.1 36.1
7.8 7.9 8.6 9.0 9.6 9.9 9.3 9.8
53.1 52.2 51.3 52.5 50.9 50.7 52.6 54.1
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
300,000 250,000 150,000 500,000 500,000 - 150,000 125,000
91,117 91,516 206,677 217,949 377,538 17,738 26,084 18,273
- - - 125,000 100,000 150,000 50,000 -
83,750 7,500 3,750 150,000 7,500 3,750 2,380 4,378
Baa1 Baa2 Baa2 Baa2 Baa1 Baa1 Baa1 Baa1
BBB+ BBB+ BBB BBB BBB+ BBB+ BBB+ BBB+
BBB BBB 9 9 9 9 8 8
baa1 baa2 baa2 baa2 baa1 baa1 baa1 baa1
BBB BBB BBB- BBB- BBB BBB BBB BBB
BBB- BBB- 10 10 10 10 9 9
1,378,888 1,355,211 1,329,173 1,303,721 1,268,983 1,231,140 1,189,670 1,154,953
178,391 177,814 174,147 169,014 162,258 155,399 148,536 142,305
12,115 12,311 12,353 12,307 12,315 12,309 12,276 12,109
2,114 2,050 1,993 1,858 1,816 1,789 1,753 1,696
1,571,508 1,547,386 1,517,666 1,486,900 1,445,372 1,400,637 1,352,235 1,311,063
13,746 13,900 15,110 14,924 14,773 14,947 14,562 14,535
</TABLE>
II-124
<PAGE> 155
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS):
Residential $ 1,291,035 $ 1,128,396 $ 1,111,358
Commercial 1,354,130 1,285,681 1,243,067
Industrial 1,113,067 1,083,856 1,057,702
Other 41,399 39,504 37,861
Total retail 3,799,631 3,537,437 3,449,988
Sales for resale - non-affiliates 534,370 640,308 736,643
Sales for resale - affiliates 61,668 67,835 65,586
Total revenues from sales of electricity 4,395,669 4,245,580 4,252,217
Other revenues 55,512 51,856 49,211
Total $ 4,451,181 $ 4,297,436 $ 4,301,428
KILOWATT-HOUR SALES (IN THOUSANDS):
Residential 16,649,859 14,939,172 14,815,089
Commercial 18,278,508 17,260,614 16,885,833
Industrial 23,635,363 22,978,312 22,298,062
Other 460,801 436,144 429,016
Total retail 59,024,531 55,614,242 54,428,000
Sales for resale - non-affiliates 14,307,030 15,870,222 18,719,924
Sales for resale - affiliates 3,027,733 3,320,060 3,885,892
Total 76,359,294 74,804,524 77,033,816
AVERAGE REVENUE PER KILOWATT-HOUR (CENTS):
Residential 7.75 7.55 7.50
Commercial 7.41 7.45 7.36
Industrial 4.71 4.72 4.74
Total retail 6.44 6.36 6.34
Sales for resale 3.44 3.69 3.55
Total sales 5.76 5.68 5.52
RESIDENTIAL AVERAGE ANNUAL KILOWATT-HOUR USE PER
CUSTOMER 11,630 10,603 10,675
RESIDENTIAL AVERAGE ANNUAL REVENUE PER CUSTOMER $ 901.79 $ 800.88 $ 800.78
PLANT NAMEPLATE CAPACITY RATINGS (YEAR-END)
(MEGAWATTS) 13,759 14,076 14,076
MAXIMUM PEAK-HOUR DEMAND (MEGAWATTS) (NOTE):
Winter 9,067 8,938 10,001
Summer 12,573 11,448 13,090
ANNUAL LOAD FACTOR (PERCENT) 58.5 60.5 55.2
PLANT AVAILABILITY (PERCENT):
Fossil-steam 85.9 86.6 93.3
Nuclear 85.5 87.7 81.6
SOURCE OF ENERGY SUPPLY (PERCENT):
Coal 62.1 61.4 63.6
Nuclear 16.2 17.0 15.3
Hydro 2.3 2.5 2.3
Oil and gas 0.2 * *
Purchased power -
From non-affiliates 10.2 12.2 10.3
From affiliates 9.0 6.9 8.5
Total 100.0 100.0 100.0
TOTAL FUEL ECONOMY DATA:
BTU per net kilowatt-hour generated 9,912 9,900 9,960
Cost of fuel per million BTU (cents) 153.62 153.08 157.97
Average cost of fuel per net kilowatt-hour
generated (cents) 1.52 1.52 1.57
</TABLE>
Note: As of 9/1/91, Georgia Power Company's sales to Oglethorpe Power Company
are not included in Peak-Hour Demand
* Less than one-tenth of one percent.
II-125
<PAGE> 156
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,109,165 $ 1,022,781 $ 979,047 $ 904,218 $ 874,231 $ 786,500 $ 754,163 $ 686,269
1,218,441 1,143,727 1,054,995 915,540 854,755 797,540 739,035 649,932
1,061,830 1,006,416 983,822 911,933 897,646 873,554 858,536 747,305
36,773 34,775 31,743 29,350 27,948 26,766 24,388 20,972
3,426,209 3,207,699 3,049,607 2,761,041 2,654,580 2,484,360 2,376,122 2,104,478
784,086 760,809 707,076 822,696 780,049 941,743 779,028 666,739
168,251 150,394 86,751 159,998 91,753 149,463 136,047 70,784
4,378,546 4,118,902 3,843,434 3,743,735 3,526,382 3,575,566 3,291,197 2,842,001
67,263 26,338 54,045 42,750 35,221 33,574 28,502 27,882
$ 4,445,809 $ 4,145,240 $ 3,897,479 $ 3,786,485 $ 3,561,603 $3,609,140 $3,319,699 $2,869,883
14,771,648 14,134,195 13,800,038 13,675,730 13,234,248 12,006,462 11,548,787 11,443,257
16,627,128 15,843,181 14,790,561 13,799,379 12,945,926 11,945,938 10,902,163 10,181,953
22,126,604 21,801,404 21,412,845 20,884,454 20,339,235 19,517,543 18,862,531 17,415,441
428,459 414,107 397,669 385,514 381,917 382,238 342,047 331,804
53,953,839 52,192,887 50,401,113 48,745,077 46,901,326 43,852,181 41,655,528 39,372,455
20,158,681 20,479,412 18,544,705 20,910,185 18,198,186 21,526,865 19,138,575 16,197,259
8,272,528 7,489,948 3,327,814 6,032,889 3,160,242 5,999,834 4,970,928 2,938,120
82,385,048 80,162,247 72,273,632 75,688,151 68,259,754 71,378,880 65,765,031 58,507,834
7.51 7.24 7.09 6.61 6.61 6.55 6.53 6.00
7.33 7.22 7.13 6.63 6.60 6.68 6.78 6.38
4.80 4.62 4.59 4.37 4.41 4.48 4.55 4.29
6.35 6.15 6.05 5.66 5.66 5.67 5.70 5.35
3.35 3.26 3.63 3.65 4.08 3.96 3.80 3.85
5.31 5.14 5.32 4.95 5.17 5.01 5.00 4.86
10,795 10,530 10,484 10,623 10,577 9,923 9,855 10,049
$ 810.56 $ 761.96 $ 743.82 $ 702.36 $ 698.72 $ 650.01 $ 643.53 $ 602.66
14,366 14,366 13,018 13,018 11,875 11,875 11,767 11,698
8,977 10,101 9,866 9,446 10,551 10,049 8,462 7,556
13,196 12,735 12,295 12,390 11,910 11,079 10,443 10,933
55.5 56.3 59.1 56.1 57.5 56.3 56.9 51.9
92.5 93.0 94.5 92.7 91.2 91.2 91.0 91.7
81.3 89.2 69.4 85.4 64.7 79.5 47.3 68.6
65.1 64.0 72.0 70.9 74.6 72.7 74.4 72.2
13.7 14.1 9.6 9.1 5.0 6.7 4.0 6.3
2.2 2.1 1.2 1.7 1.2 1.5 2.7 3.1
0.1 0.1 0.1 0.1 0.6 * * 0.1
11.0 10.2 8.2 8.5 8.9 9.4 9.2 8.4
7.9 9.5 8.9 9.7 9.7 9.7 9.7 9.9
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
9,939 10,020 9,969 9,932 10,016 10,089 10,002 10,100
166.22 164.27 166.28 168.81 175.81 178.11 184.63 179.92
1.65 1.65 1.66 1.68 1.76 1.80 1.85 1.82
</TABLE>
II-126
<PAGE> 157
STATEMENTS OF INCOME
Georgia Power Company
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
OPERATING REVENUES:
Revenues $ 4,389,513 $4,229,601 $4,235,842
Revenues from affiliates 61,668 67,835 65,586
Total operating revenues 4,451,181 4,297,436 4,301,428
OPERATING EXPENSES:
Operation --
Fuel 951,507 929,780 998,701
Purchased power from non-affiliates 313,170 436,761 444,920
Purchased power from affiliates 194,024 158,306 193,114
Provision for separation benefits - 9,778 52,952
Proceeds from settlement of disputed contracts - (4,982) (142,183)
Other 675,284 616,116 596,565
Maintenance 284,521 264,757 295,012
Depreciation and amortization 379,425 375,460 382,549
Deferred Plant Vogtle expenses, net 36,284 (30,804) 16,008
Taxes other than income taxes 192,671 179,460 172,893
Federal and state income taxes 452,122 377,542 349,284
Total operating expenses 3,479,008 3,312,174 3,359,815
OPERATING INCOME 972,173 985,262 941,613
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 3,168 5,855 9,083
Income from subsidiary 4,127 4,635 4,576
Deferred return on Plant Vogtle - - 34,549
Write-off of Plant Vogtle costs - - -
Income tax reduction for write-off of Plant Vogtle costs - - -
Interest income 3,806 12,475 10,563
Other, net (See note) 11,902 (30,527) 13,551
Income taxes applicable to other income 37,661 25,163 (7,522)
INCOME BEFORE INTEREST CHARGES 1,032,837 1,002,863 1,006,413
INTEREST CHARGES:
Interest on long-term debt 343,634 402,541 459,184
Allowance for debt funds used during construction (8,271) (8,310) (10,385)
Interest on interim obligations 15,530 9,694 4,906
Amortization of debt discount, premium, and expense, net 14,024 8,033 6,214
Other interest charges 47,393 12,425 9,938
Net interest charges 412,310 424,383 469,857
NET INCOME 620,527 578,480 536,556
DIVIDENDS ON PREFERRED STOCK 50,674 57,942 61,701
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 569,853 $ 520,538 $ 474,855
</TABLE>
Note: Reflects major sales of facilities to Jacksonville Electric Authority,
Florida Power & Light Company, OPC, MEAG, and Dalton. Increases in
net income, after total taxes, from these sales were $18,391,000 in
1993, $14,542,000 in 1991, $6,336,000 in 1990, $3,851,000 in 1987,
and $21,250,000 in 1984.
II-127
<PAGE> 158
STATEMENTS OF INCOME
Georgia Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 4,277,558 $ 3,994,846 $3,810,728 $ 3,626,487 $3,469,850 $ 3,459,677 $ 3,183,652 $ 2,799,099
168,251 150,394 86,751 159,998 91,753 149,463 136,047 70,784
4,445,809 4,145,240 3,897,479 3,786,485 3,561,603 3,609,140 3,319,699 2,869,883
1,120,933 1,078,586 1,023,173 1,064,552 1,012,949 1,077,092 1,000,434 884,037
626,989 543,448 546,511 530,051 344,708 415,406 427,403 274,643
173,716 195,355 164,873 199,831 192,297 204,848 188,938 204,624
- - - - - - - -
- - - - - - - -
524,665 504,743 541,975 575,182 513,974 482,468 412,803 361,642
280,304 233,680 246,877 274,672 275,533 254,510 228,377 190,266
380,394 346,091 306,492 254,929 215,763 201,524 191,205 176,735
31,146 (39,211) (8,333) (141,977) - - - -
151,124 128,518 146,759 143,289 119,768 120,320 106,908 95,797
270,561 273,287 204,222 250,093 319,374 311,151 268,654 231,565
3,559,832 3,264,497 3,172,549 3,150,622 2,994,366 3,067,319 2,824,722 2,419,309
885,977 880,743 724,930 635,863 567,237 541,821 494,977 450,574
6,985 40,525 96,530 159,414 275,183 227,950 162,057 107,682
4,182 3,750 3,302 3,440 2,967 3,417 3,181 3,088
82,721 48,096 107,310 115,028 - - - -
(281,254) - - (357,821) - - - -
63,231 - - 128,923 - - - -
7,552 10,333 28,445 55,388 44,615 41,546 34,074 37,234
(21,199) (20,603) (3,746) (55,081) (28,464) (6,815) 45,132 (3,983)
20,859 15,573 6,583 17,344 5,154 (9,114) (37,678) (14,928)
769,054 978,417 963,354 702,498 866,692 798,805 701,743 579,667
480,174 475,991 471,897 480,519 472,744 421,764 351,855 315,443
(9,325) (34,244) (95,818) (130,756) (225,897) (216,233) (150,931) (99,845)
8,512 1,059 15,084 16,362 1,954 20,516 13,387 -
6,100 5,865 5,466 3,573 2,681 2,335 1,680 1,485
9,404 8,868 14,556 12,239 4,610 10,593 8,416 2,461
494,865 457,539 411,185 381,937 256,092 238,975 224,407 219,544
274,189 520,878 552,169 320,561 610,600 559,830 477,336 360,123
66,123 71,779 72,637 80,504 75,597 66,113 55,617 55,568
$ 208,066 $ 449,099 $ 479,532 $ 240,057 $ 535,003 $ 493,717 $ 421,719 $ 304,555
</TABLE>
II-128
<PAGE> 159
STATEMENTS OF CASH FLOWS
Georgia Power Company
<TABLE>
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 620,527 $ 578,480 $ 536,556
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 475,152 471,014 480,318
Deferred income taxes, net 169,009 194,955 53,219
Deferred investment tax credits, net (18,274) (5,704) (9,524)
Allowance for equity funds used during construction (3,168) (5,855) (9,083)
Deferred Plant Vogtle costs 36,284 (30,804) (18,541)
Write-off of Plant Vogtle costs - - -
Non-cash proceeds from settlement of disputed contracts - (4,982) (103,846)
Other, net (46,227) (9,768) (26,024)
Changes in certain current assets and liabilities:
Receivables, net 27,088 (31,348) 23,920
Inventories 82,433 (65,621) 24,130
Payables 17,364 25,303 (23,075)
Other (94,574) (85,961) 54,777
Net cash provided from operating activities 1,265,614 1,029,709 982,827
INVESTING ACTIVITIES:
Gross property additions (674,432) (508,444) (548,051)
Sales of property 261,687 46 291,075
Other (43,154) 42,892 931
Net cash used for investing activities (455,899) (465,506) (256,045)
FINANCING ACTIVITIES AND CAPITAL CONTRIBUTIONS:
Proceeds:
Preferred stock 175,000 195,000 100,000
First mortgage bonds 1,135,000 975,000 -
Pollution control bonds 145,425 161,955 80,420
Other long-term debt 37,000 - -
Capital contributions from parent company - - -
Retirements:
Preferred stock (245,005) (165,004) (100,000)
First mortgage bonds (1,337,822) (1,381,300) (598,384)
Pollution control bonds (145,465) (160,205) (83,265)
Other long-term debt (19,451) (567) (1,130)
Interim obligations, net (51,444) 334,671 199,000
Payment of preferred stock dividends (53,123) (60,475) (60,766)
Payment of common stock dividends (402,400) (384,000) (375,200)
Miscellaneous (63,648) (70,986) (17,613)
Net cash provided from (used for) financing activities (825,933) (555,911) (856,938)
NET CHANGE IN CASH AND CASH EQUIVALENTS (16,218) 8,292 (130,156)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 22,114 13,822 143,978
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,896 $ 22,114 $ 13,822
</TABLE>
( ) Denotes use of cash.
II-129
<PAGE> 160
STATEMENTS OF CASH FLOWS
Georgia Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<C> <C> <C> <C> <C> <C> <C> <C>
$ 274,189 $ 520,878 $ 552,169 $ 320,561 $ 610,600 $ 559,830 $ 477,336 $ 360,123
502,098 484,870 400,665 336,647 260,945 248,256 219,301 209,733
88,667 184,490 160,774 76,445 236,822 104,102 145,266 143,511
(52) (8,017) 11,605 (5,075) 106,407 115,144 61,252 83,266
(6,985) (40,525) (96,530) (159,414) (275,183) (227,950) (162,057) (107,682)
(51,575) (87,307) (115,643) (257,005) - - - -
281,254 - - 357,821 - - - -
- - - - - - - -
(50,804) (38,046) 6,983 (759) 5,554 34,311 (81,166) (2,543)
1,444 (59,035) 11,225 (6,880) (7,474) (27,928) (68,325) (51,925)
(23,498) (33,123) (10,044) (72,540) (26,863) 77,667 (65,772) 12,275
(43,470) (38,976) (2,065) 74,341 133,044 (9,182) 161,479 (28,993)
(9,991) 36,015 1,161 2,751 19,682 21,289 99,191 9,674
961,277 921,224 920,300 666,893 1,063,534 895,539 786,505 627,439
(558,727) (727,631) (929,019) (1,034,059) (1,598,309) (1,384,182) (1,396,846) (1,015,274)
34,573 - - 12,276 - - 320,708 -
1,937 47,260 35,328 45,801 168,518 92,826 82,741 53,148
(522,217) (680,371) (893,691) (975,982) (1,429,791) (1,291,356) (993,397) (962,126)
- - - 125,000 100,000 150,000 50,000 -
300,000 250,000 150,000 500,000 500,000 - 150,000 125,000
- 50,000 69,526 191,736 350,001 500,962 190,577 28,827
- - - - 113,000 - - -
- - 175,000 228,000 250,000 315,000 202,000 223,000
(83,750) (7,500) (3,750) (150,000) (7,500) (3,750) (2,380) (4,378)
(91,117) (91,516) (206,677) (217,949) (377,538) (17,738) (26,084) (18,273)
(535) (505) (475) (90,000) - - - -
(114,452) (3,806) (2,878) (2,824) (108) (843) (276) 3,617
- - (302,261) 302,261 (36,715) (72,956) 109,356 -
(67,757) (72,259) (72,931) (80,420) (73,665) (62,337) (55,433) (55,946)
(389,600) (394,500) (386,600) (377,800) (325,500) (277,500) (225,500) (189,600)
(7,663) (4,742) (13,440) (51,745) (33,773) (17,503) (17,975) (1,874)
(454,874) (274,828) (594,486) 376,259 458,202 513,335 374,285 110,373
(15,814) (33,975) (567,877) 67,170 91,945 117,518 167,393 (224,314)
159,792 193,767 761,644 694,474 602,529 485,011 317,618 541,932
$ 143,978 $ 159,792 $ 193,767 $ 761,644 $ 694,474 $ 602,529 $ 485,011 $ 317,618
</TABLE>
II-130
<PAGE> 161
BALANCE SHEETS
Georgia Power Company
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
ELECTRIC PLANT:
Production-
Fossil $ 2,976,806 $ 3,144,405 $ 3,128,594
Nuclear 4,069,299 4,051,020 4,051,043
Hydro 442,888 434,341 432,674
Total production 7,488,993 7,629,766 7,612,311
Transmission 1,713,122 1,646,904 1,566,173
Distribution 3,600,115 3,413,681 3,252,111
General 941,291 923,010 896,477
Construction work in progress 584,013 405,606 390,437
Nuclear fuel, at amortized cost 135,742 155,194 191,726
Total electric plant 14,463,276 14,174,161 13,909,235
STEAM HEAT PLANT - - -
Total utility plant 14,463,276 14,174,161 13,909,235
ACCUMULATED PROVISION FOR DEPRECIATION:
Electric 3,822,344 3,569,717 3,315,247
Steam heat - - -
Total accumulated provision for depreciation 3,822,344 3,569,717 3,315,247
Total 10,640,932 10,604,444 10,593,988
Less property-related accumulated deferred income taxes - 1,589,743 1,465,408
Total 10,640,932 9,014,701 9,128,580
OTHER PROPERTY AND INVESTMENTS:
Securities received from settlement of disputed contracts - - 107,993
Nuclear decommissioning trusts 37,937 20,311 10,007
Miscellaneous 61,142 55,463 71,880
Total 99,079 75,774 189,880
CURRENT ASSETS:
Cash and cash equivalents 5,896 22,114 13,822
Investment securities - 108,206 -
Receivables, net 515,178 385,227 330,411
Accrued utility revenues 99,550 88,164 79,099
Fossil fuel stock, at average cost 111,620 197,332 200,248
Materials and supplies, at average cost 287,551 284,272 215,735
Prepayments 65,269 91,447 96,750
Vacation pay deferred 41,575 40,169 39,769
Total current assets 1,126,639 1,216,931 975,834
DEFERRED CHARGES:
Deferred charges related to income taxes 992,510 - -
Deferred Plant Vogtle costs 506,980 383,025 375,028
Debt expense, being amortized 20,730 17,719 12,368
Premium on reacquired debt, being amortized 153,146 116,940 70,855
Miscellaneous 196,094 139,352 89,993
Total deferred charges 1,869,460 657,036 548,244
Total Assets $ 13,736,110 $ 10,964,442 $ 10,842,538
</TABLE>
II-131
<PAGE> 162
BALANCE SHEETS
Georgia Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<C> <C> <C> <C> <C> <C> <C> <C>
$ 3,350,018 $ 3,319,876 $ 2,638,725 $ 2,616,741 $ 2,138,511 $ 2,118,863 $ 2,105,551 $ 2,039,200
4,025,862 4,189,723 3,225,945 3,220,632 739,835 652,756 647,020 585,646
412,157 411,235 407,771 404,291 399,120 388,832 303,334 297,622
7,788,037 7,920,834 6,272,441 6,241,664 3,277,466 3,160,451 3,055,905 2,922,468
1,522,157 1,431,485 1,322,034 1,248,976 1,176,479 1,004,329 949,802 859,656
3,056,825 2,863,011 2,598,714 2,318,185 2,096,498 1,892,127 1,722,546 1,589,387
876,989 859,013 737,621 657,258 578,236 501,477 452,119 425,947
370,243 403,365 1,963,283 1,710,769 4,430,152 3,581,065 2,694,628 2,038,763
210,320 254,101 307,109 287,492 314,225 253,418 231,456 204,162
13,824,571 13,731,809 13,201,202 12,464,344 11,873,056 10,392,867 9,106,456 8,040,383
- - - 7 15,266 14,709 15,419 15,617
13,824,571 13,731,809 13,201,202 12,464,351 11,888,322 10,407,576 9,121,875 8,056,000
3,040,298 2,762,937 2,445,404 2,193,395 2,001,605 1,851,649 1,693,788 1,536,342
- - - (5) 7,841 7,517 7,696 7,347
3,040,298 2,762,937 2,445,404 2,193,390 2,009,446 1,859,166 1,701,484 1,543,689
10,784,273 10,968,872 10,755,798 10,270,961 9,878,876 8,548,410 7,420,391 6,512,311
1,397,647 1,313,626 1,178,291 1,077,747 1,020,271 920,047 873,024 771,671
9,386,626 9,655,246 9,577,507 9,193,214 8,858,605 7,628,363 6,547,367 5,740,640
- - - - - - - -
- - - - - - - -
78,895 69,839 66,677 54,148 50,749 39,357 38,143 22,523
78,895 69,839 66,677 54,148 50,749 39,357 38,143 22,523
143,978 159,792 193,767 761,644 694,474 602,529 485,011 317,618
- - - - - - - -
356,236 347,899 320,018 342,315 374,590 367,226 350,197 270,512
78,067 93,786 66,265 68,370 55,513 55,403 44,504 55,864
225,966 214,487 225,274 262,752 220,206 210,604 289,807 230,758
220,103 208,084 164,174 116,652 86,658 69,397 67,861 61,138
121,646 116,342 121,840 113,381 44,800 8,506 6,697 8,093
33,677 35,238 34,418 30,100 29,800 28,700 26,600 24,800
1,179,673 1,175,628 1,125,756 1,695,214 1,506,041 1,342,365 1,270,677 968,783
- - - - - - - -
364,446 322,116 269,958 172,990 - - - -
12,708 13,032 12,476 12,985 12,860 12,450 11,218 8,837
60,653 61,889 62,352 51,509 26,914 - - -
93,618 74,596 15,813 17,434 9,894 8,083 12,667 5,464
531,425 471,633 360,599 254,918 49,668 20,533 23,885 14,301
$ 11,176,619 $ 11,372,346 $ 11,130,539 $11,197,494 $ 10,465,063 $ 9,030,618 $ 7,880,072 $ 6,746,247
</TABLE>
II-132
<PAGE> 163
BALANCE SHEETS
Georgia Power Company
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 344,250 $ 344,250 $ 344,250
Other paid-in capital 2,384,348 2,384,140 2,383,800
Premium on preferred stock 413 467 489
Earnings retained in the business 1,316,447 1,159,380 1,038,012
Total common equity 4,045,458 3,888,237 3,766,551
Preferred stock 692,787 692,792 607,796
Preferred stock subject to mandatory redemption - 6,250 118,750
Long-term debt 4,031,387 4,131,016 4,553,189
Total capitalization 8,769,632 8,718,295 9,046,286
(excluding amount due within one year)
CURRENT LIABILITIES:
Notes payable to banks 406,700 400,200 199,000
Commercial paper 75,527 133,471 -
Preferred stock due within one year - 63,750 6,250
Long-term debt due within one year 10,543 95,823 54,976
Accounts payable 324,044 317,351 275,932
Customer deposits 45,922 45,145 41,623
Taxes accrued 153,493 138,289 161,117
Interest accrued 110,497 132,319 151,171
Vacation pay accrued 40,060 38,694 38,531
Miscellaneous 64,527 89,355 106,810
Total current liabilities 1,231,313 1,454,397 1,035,410
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 2,479,720 - -
Accumulated deferred investment tax credits 478,334 515,539 540,134
Disallowed Plant Vogtle capacity buyback costs 63,067 72,201 109,537
Deferred credits related to income taxes 452,819 - -
Miscellaneous 261,225 204,010 111,171
Total deferred credits and other liabilities 3,735,165 791,750 760,842
TOTAL CAPITALIZATION AND LIABILITIES $ 13,736,110 $ 10,964,442 $ 10,842,538
</TABLE>
II-133
<PAGE> 164
BALANCE SHEETS
Georgia Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 344,250 $ 344,250 $ 344,250 $ 344,250 $ 344,250 $ 344,250 $ 344,250 $ 344,250
2,383,800 2,383,800 2,383,800 2,208,800 1,980,800 1,730,800 1,415,800 1,213,800
1,089 1,089 1,089 1,089 3,074 3,074 3,058 2,898
944,774 1,131,518 1,076,931 984,043 1,141,077 935,583 723,064 528,223
3,673,913 3,860,657 3,806,070 3,538,182 3,469,201 3,013,707 2,486,172 2,089,171
607,796 607,844 657,844 657,844 732,844 632,844 482,844 432,844
125,000 155,000 162,500 166,250 112,500 120,000 127,500 131,250
5,000,225 5,054,001 4,861,378 4,825,760 4,464,857 3,878,066 3,432,606 3,128,500
9,406,934 9,677,502 9,487,792 9,188,036 8,779,402 7,644,617 6,529,122 5,781,765
- - - 302,261 - 36,400 109,356 -
- - - - - - - -
- 53,750 3,750 3,750 7,500 7,500 3,750 2,380
204,906 54,712 42,001 65,774 47,683 48,229 21,324 24,100
310,676 372,968 429,807 446,004 488,910 355,866 365,048 203,569
38,144 36,255 34,221 31,106 29,520 29,752 34,838 31,851
84,185 91,424 130,686 114,947 140,968 92,028 151,438 107,753
175,959 162,513 170,090 162,439 150,145 136,279 117,759 89,626
33,677 35,238 34,418 30,100 29,800 28,700 26,600 24,800
135,392 130,546 51,289 62,364 70,595 60,965 37,874 30,204
982,939 937,406 896,262 1,218,745 965,121 795,719 867,987 514,283
- - - - - - - -
576,837 601,248 632,111 640,694 665,447 572,509 471,640 421,821
135,926 73,111 80,585 79,376 - - - -
- - - - - - - -
73,983 83,079 33,789 70,643 55,093 17,773 11,323 28,378
786,746 757,438 746,485 790,713 720,540 590,282 482,963 450,199
$ 11,176,619 $ 11,372,346 $ 11,130,539 $11,197,494 $ 10,465,063 $ 9,030,618 $ 7,880,072 $ 6,746,247
</TABLE>
II-134
<PAGE> 165
GEORGIA POWER COMPANY
OUTSTANDING SECURITIES
AT DECEMBER 31, 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1992 $ 130,000 5-1/8% $ 130,000 9/1/95
1993 150,000 4.75% 150,000 3/1/96
1993 100,000 5.50% 100,000 4/1/98
1992 195,000 6-1/8% 195,000 9/1/99
1993 100,000 6% 100,000 3/1/00
1992 100,000 7% 100,000 10/1/00
1992 150,000 6-7/8% 150,000 9/1/02
1993 200,000 6.625% 200,000 4/1/03
1993 75,000 6.35% 75,000 8/1/03
1993 50,000 6.875% 50,000 4/1/08
1986 250,000 10% 69,716 7/1/16
1989 250,000 9.23% 100,000 12/1/19
1992 100,000 8-3/4% 100,000 4/1/22
1992 100,000 8-5/8% 100,000 6/1/22
1993 160,000 7.95% 160,000 2/1/23
1993 100,000 7.625% 100,000 3/1/23
1993 75,000 7.75% 75,000 4/1/23
1993 125,000 7.55% 125,000 8/1/23
1992 100,000 Variable 100,000 4/1/32
1992 100,000 Variable 100,000 7/1/32
$2,610,000 $2,279,716
POLLUTION CONTROL BONDS
<CAPTION>
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1992 $ 38,800 5.70% $ 38,800 9/1/04
1993 46,790 5.375% 46,790 3/1/05
1976 40,800 6.75% 1,960 11/1/06
1977 24,100 6.40% 1,980 6/1/07
1978 21,600 6.375% 8,200 4/1/08
1991 10,450 Variable 10,450 7/1/11
1984 40,000 11.625% 28,065 3/1/14
1984 125,000 12.25% 113,745 8/1/14
1984 125,000 11.625% 123,175 9/1/14
1984 150,000 12% 126,735 10/1/14
1984 100,000 11.75% 75,070 11/1/14
1985 150,000 10.125% 148,535 6/1/15
1985 200,000 10.50% 200,000 9/1/15
1985 100,000 10.60% 100,000 10/1/15
1985 100,000 10.50% 99,585 11/1/15
1986 56,400 8% 56,400 10/1/16
1987 90,000 8.375% 90,000 7/1/17
1987 50,000 9.375% 50,000 12/1/17
1993 26,700 6% 26,700 3/1/18
1989 50,000 Variable 50,000 5/1/19
1991 8,500 Variable 8,500 7/1/19
1991 51,345 7.25% 51,345 7/1/21
1991 10,125 Variable 10,125 7/1/21
1992 13,155 Variable 13,155 5/1/22
1992 75,000 6.20% 75,000 8/1/22
1992 35,000 6.20% 35,000 9/1/22
1993 11,935 5.75% 11,935 9/1/23
1993 60,000 5.75% 60,000 9/1/23
$1,810,700 $1,661,250
</TABLE>
II-135
<PAGE> 166
GEORGIA POWER COMPANY
OUTSTANDING SECURITIES (Continued)
AT DECEMBER 31, 1993
<TABLE>
<CAPTION>
PREFERRED STOCK
---------------
Shares Dividend Amount
Series Outstanding Rate Outstanding
(Thousands)
<S> <C> <C> <C>
(1) 14,090 $5.00 $ 1,409
1953 100,000 $4.92 10,000
1954 411,564 $4.60 41,157
1954 22,214 $4.60 2,221
1961 70,000 $4.96 7,000
1962 70,000 $4.60 7,000
1963 70,000 $4.60 7,000
1964 50,000 $4.60 5,000
1965 60,000 $4.72 6,000
1966 90,000 $5.64 9,000
1967 120,000 $6.48 12,000
1968 100,000 $6.60 10,000
1971 300,000 $7.72 30,000
1972 750,000 $7.80 75,000
1991 4,000,000 $2.125 100,000
1992 2,000,000 $1.90 50,000
1992 2,200,000 $1.9875 55,000
1992 2,400,000 $1.9375 60,000
1992 1,200,000 $1.925 30,000
1993 3,000,000 Adjustable 75,000
1993 4,000,000 Adjustable 100,000
21,027,868 $ 692,787
</TABLE>
(1) Issued in exchange for $5.00 preferred outstanding at the time of company
formation.
II-136
<PAGE> 167
GEORGIA POWER COMPANY
SECURITIES RETIRED
DURING 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Principal Interest
Series Amount Rate
(Thousands)
<S> <C> <C>
1964 $ 28,000 4.625%
1965 36,500 4.875%
1966 45,368 5.75%
1967 50,000 6.50%
1968 50,000 6.625%
1971 49,500 7.375%
1971 95,000 7.625%
1972 75,000 7.50%
1972 150,000 7.50%
1973 115,000 7.875%
1986 172,284 10.00%
1986 200,000 10.00%
1987 176,235 10.75%
1988 44,935 10.75%
1990 50,000 Variable
$1,337,822
POLLUTION CONTROL BONDS
<CAPTION>
Principal Interest
Series Amount Rate
(Thousands)
<S> <C> <C>
1973 $ 37,990 5.95%
1976 20 6.75%
1977 22,120 6.40%
1978 13,400 6.375%
1984 11,050 12.25%
1984 11,935 11.625%
1984 1,500 11.625%
1984 22,550 12.00%
1984 24,900 11.75%
$ 145,465
PREFERRED STOCK
<CAPTION>
Principal Dividend
Series Amount Rate
(Thousands)
<S> <C> <C>
(1) $ * $5.00
1954 5 $4.60
1969 15,000 $8.20
1970 10,000 $8.76
1984 50,000 Adjustable
1985 50,000 Adjustable
1985 50,000 Adjustable
1987 25,000 $2.50
1987 45,000 $2.43
$ 245,005
</TABLE>
(1) Issued in exchange for $5.00 preferred outstanding at the time of company
formation.
* Less than $500.
II-137
<PAGE> 168
GULF POWER COMPANY
FINANCIAL SECTION
II-138
<PAGE> 169
MANAGEMENT'S REPORT
Gulf Power Company 1993 Annual Report
The management of Gulf Power Company has prepared and is responsible for the
financial statements and related information included in this report. These
statements were prepared in accordance with generally accepted accounting
principles appropriate in the circumstances and necessarily include amounts
that are based on the best estimates and judgments of management. Financial
information throughout this annual report is consistent with the financial
statements.
The Company maintains a system of internal accounting controls to
provide reasonable assurance that assets are safeguarded and that books and
records reflect only authorized transactions of the Company. Limitations exist
in any system of internal controls, however, based on a recognition that the
cost of the system should not exceed its benefits. The Company believes its
system of internal accounting controls maintains an appropriate cost/benefit
relationship.
The Company's system of internal accounting controls is evaluated on
an ongoing basis by the Company's internal audit staff. The Company's
independent public accountants also consider certain elements of the internal
control system in order to determine their auditing procedures for the purpose
of expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of the
directors who are not employees, provides a broad overview of management's
financial reporting and control functions. Periodically, this committee meets
with management, the internal auditors, and the independent public accountants
to ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls, and financial reporting matters. The internal
auditors and independent public accountants have access to the members of the
audit committee at any time.
Management believes that its policies and procedures provide
reasonable assurance that the Company's operations are conducted according to a
high standard of business ethics.
In management's opinion, the financial statements present fairly, in
all material respects, the financial position, results of operations, and cash
flows of Gulf Power Company in conformity with generally accepted accounting
principles.
/s/ D. L. McCrary /s/ A. E. Scarbrough
- -------------------------- ------------------------
Douglas L. McCrary Arlan E. Scarbrough
Chairman of the Board Vice President - Finance
and Chief Executive Officer
II-139
<PAGE> 170
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS
OF GULF POWER COMPANY:
We have audited the accompanying balance sheets and statements of
capitalization of Gulf Power Company (a Maine corporation and a wholly owned
subsidiary of The Southern Company) as of December 31, 1993 and 1992, and the
related statements of income, retained earnings, paid-in capital, and cash
flows for each of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements (pages II-148 through II-165)
referred to above present fairly, in all material respects, the financial
position of Gulf Power Company as of December 31, 1993 and 1992, and the
results of its operations and its cash flows for the periods stated, in
conformity with generally accepted accounting principles.
As explained in Notes 2 and 8 to the financial statements, effective
January 1, 1993, Gulf Power Company changed its methods of accounting for
postretirement benefits other than pensions and for income taxes.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16, 1994
II-140
<PAGE> 171
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION Gulf Power Company 1993 Annual Report
RESULTS OF OPERATIONS
EARNINGS
Gulf Power Company's net income after preferred stock dividends was $54.3
million for 1993, a $0.2 million increase over 1992 net income. Earnings
reflect a $2.3 million gain on the sale of Gulf States Utilities Company (Gulf
States) stock and the reversal of a $1.7 million wholesale rate refund as the
result of a court order which is further discussed in Note 3 to the financial
statements under "Recovery of Contract Buyout Costs". The company also
experienced growth in residential and commercial sales and a decrease in
interest expense on long-term debt as a result of security refinancings, offset
by higher operation and maintenance expense, and decreased industrial sales
reflecting the loss of the Company's largest industrial customer, Monsanto,
which began cogeneration in August of 1993.
The Company's 1992 net income after dividends on preferred stock
decreased $3.7 million compared to the prior year. The 1991 earnings included
an after-tax gain of $12.7 million representing the settlement of litigation
with Gulf States. See Note 7 to the financial statements under "Gulf States
Settlement Completed" for further details. Excluding this settlement from
1991, earnings for 1992 increased $8.4 million -- or approximately -- 18.7
percent over 1991. This improvement was due to increased energy sales; lower
interest expense and preferred dividends as a result of security refinancings;
and continued emphasis on cost controls.
The Company's return on average common equity was 13.29 percent for
1993, a slight decrease from the 13.62 percent return earned in 1992, which was
up from the 12.03 percent earned in 1991 (excluding the Gulf States
settlement).
REVENUES
Changes in operating revenues over the last three years are the result of the
following factors:
<TABLE>
<CAPTION>
Increase (Decrease)
From Prior Year
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Retail --
Change in base rates $ 1,571 $ 722 $ 3,137
Sales growth 7,671 12,965 2,387
Weather 4,049 (6,448) 1,845
Regulatory cost
recovery and other (3,079) (1,839) 13,947
Total retail 10,212 5,400 21,316
Sales for resale--
Non-affiliates 2,131* 442 (4,219)
Affiliates (909) (5,268) (9,220)
Total Sales for resale 1,222 (4,826) (13,439)
Other operating
revenues 806 5,121 (10,495)
Total operating
revenues $12,240 $ 5,695 $ (2,618)
Percent change 2.1% 1.0% (0.5)%
</TABLE>
* Includes the non-interest portion of the wholesale rate refund
reversal discussed in "Earnings."
Retail revenues of $471.7 million in 1993 increased $10.2 million or
2.2 percent from last year, compared with an increase of 1.2 percent in 1992
and 4.9 percent in 1991. Revenues increased in the residential and commercial
classes primarily due to customer growth, and favorable weather and economic
conditions. Revenues in the industrial class declined due to the loss of the
Company's largest industrial customer, Monsanto, which began operating its
cogeneration facility in August 1993. See "Future Earnings Potential" for
further details. The change in base rates for 1993 and 1992 reflects the
expiration of a retail rate penalty in September 1992.
Sales for resale were $95.4 million in 1993, increasing $1.2 million or
1.3 percent over 1992. Sales to affiliated companies vary from year to year
depending on demand and the availability and cost of generating resources at
each company. The majority of non-affiliated energy sales arise from long-term
contractual agreements. Non-affiliated long-term contracts include capacity
and energy components. Capacity revenues reflect the recovery of
II-141
<PAGE> 172
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1993 Annual Report
fixed costs and return on investment. Energy is sold at its variable cost.
The capacity and energy components under these long-term contracts were
as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Capacity $33,805 $34,180 $32,651
Energy 21,202 22,933 23,311
Total $55,007 $57,113 $55,962
</TABLE>
Beginning in June 1992, all the capacity from the Company's ownership
portion of Plant Scherer Unit No. 3 was sold through unit power sales,
resulting in increased capacity revenues.
In 1993, changes in other operating revenues are primarily due to the
recognition of $2.6 million under the Environmental Cost Recovery (ECR) clause
which is fully discussed in Note 3 to the financial statements under
"Environmental Cost Recovery", which is offset by true-ups of other regulatory
cost recovery clauses. The increase in other operating revenues in 1992 was
primarily due to true-ups of regulatory cost recovery clauses and the changes
in franchise fee collections and Florida gross receipts taxes (discussed under
"Expenses") which had no effect on earnings.
Energy sales for 1993 and percent changes in sales since 1991 are
reported below.
<TABLE>
<CAPTION>
Amount Percent Change
(millions of
kilowatt-hours) 1993 1993 1992 1991
<S> <C> <C> <C> <C>
Residential 3,713 3.2% 4.1% 2.8%
Commercial 2,433 2.7 4.2 2.5
Industrial 2,030 (6.9) 2.9 (2.8)
Other 17 - (2.7) (9.3)
Total retail 8,193 0.4 3.8 1.1
Sales for resale
Non-affiliates 1,460 2.0 (7.7) (12.7)
Affiliates 1,030 (14.8) (2.2) (13.9)
Total 10,683 (1.1) 1.4 (3.1)
</TABLE>
Overall retail sales remained relatively flat in 1993. Increases in
residential and commercial sales -- reflecting customer growth, favorable
weather and an improving economy -- were offset by the decreased sales in the
industrial class reflecting the loss of Monsanto. Retail sales increased 3.8
percent in 1992 primarily due to an increase in the number of customers served
and a moderately improving economy.
Energy sales for resale to non-affiliates increased 2.0 percent and are
predominantly unit power sales under long-term contracts to Florida utilities
which are discussed above. Energy sales to affiliated companies vary from year
to year as mentioned above.
EXPENSES
Total operating expenses for 1993 increased $16.6 million or 3.5 percent over
1992 primarily due to increased operation and maintenance expenses and higher
taxes. Other operation expenses increased $10.9 million or 11.1 percent from
the 1992 level. The increase is attributable to additional costs of $7.4
million related to increases in the buyout of coal supply contracts and $1.4
million of environmental clean-up costs. Also, higher employee benefit costs
and the costs of an automotive fleet reduction program increased expenses by
$2.1 million. Operating expenses for 1992 increased by approximately $16
million over 1991. Excluding the Gulf States settlement, an after-tax
reduction of $0.6 million in 1992 and $12.7 million in 1991, 1992 total
operating expenses increased $4.3 million or 0.9 percent over 1991.
Fuel and purchased power expenses decreased $3.8 million or 1.8 percent
from 1992 reflecting the lower cost of fuel. Total 1992 fuel and purchased
power increased $1.4 million or 0.7 percent from 1991.
Maintenance expense increased $4.1 million or 9.7 percent over 1992 due
to scheduled maintenance of production facilities. The 1992 maintenance
expense was down $3.5 million or 7.7 percent from 1991 due to a decrease in
scheduled maintenance.
Federal income taxes increased $0.7 million primarily due to a
corporate federal income tax rate increase from 34 percent to 35 percent
effective January 1993. Taxes other than income taxes increased $2.3 million
in 1993, an increase of 6.1 percent over the 1992 expense
II-142
<PAGE> 173
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1993 Annual Report
primarily due to increases in property taxes and gross receipt taxes. Taxes
other than income taxes decreased $4.5 million, or 10.5 percent in 1992
compared to 1991 due primarily to the Company discontinuing the collection of
franchise fees for two Florida counties which was partially offset by an
increase in gross receipt taxes. Changes in franchise fee collections and
gross receipt taxes had no impact on earnings.
Interest expense decreased $3.2 million or 8.1 percent from the 1992
level and 1992 interest expense decreased $5.6 million or 12.5 percent from
1991. The decrease in both years is primarily attributable to refinancing some
of the Company's higher cost securities.
EFFECTS OF INFLATION
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic
loss because the Company is recovering its cost of investments in dollars that
have less purchasing power. While the inflation rate has been relatively low
in recent years, it continues to have an adverse effect on the Company because
of the large investment in long-lived utility plant. Conventional accounting
for historical cost does not recognize this economic loss nor the partially
offsetting gain that arises through financing facilities with fixed-money
obligations, such as long-term debt and preferred stock. Any recognition of
inflation by regulatory authorities is reflected in the rate of return allowed.
FUTURE EARNINGS POTENTIAL
The results of operations for the past three years are not necessarily
indicative of future earnings potential. The level of future earnings depends
on a number of factors. It is expected that higher operating costs and
carrying charges on increased investment in plant, if not offset by
proportionate increases in operating revenues (either by periodic rate
increases or increases in sales), will adversely affect future earnings. Growth
in energy sales will be subject to a number of factors, including the volume of
sales to neighboring utilities, energy conservation practiced by customers, the
elasticity of demand, customer growth, weather, competition, and the rate of
economic growth in the service area.
In addition to the traditional factors discussed above, the Energy
Policy Act of 1992 (Energy Act) will have a profound effect on the future of
the electric utility industry. The Energy Act promotes energy efficiency,
alternative fuel use, and increased competition for electric utilities. The
Company is preparing to meet the challenges of a major change in the
traditional business practices of selling electricity. The Energy Act allows
independent power producers (IPPs) to access the Company's transmission network
in order to sell electricity to other utilities, and this may enhance the
incentive for IPPs to build cogeneration plants for the Company's large
industrial and commercial customers and sell excess energy generation to the
Company or other utilities. Although the Energy Act does not require
transmission access to retail customers, pressure for legislation to allow
retail wheeling will continue. If the Company does not remain a low-cost
producer and provide quality service, the Company's retail energy sales growth,
its ability to retain large industrial and commercial customers, and obtain new
long-term contracts for energy sales outside the Company's service area, could
be limited, and this could significantly erode earnings.
The future effect of cogeneration and small-power production facilities
cannot be fully determined at this time, but may be adverse. One effect of
cogeneration which the Company has experienced is the loss of its largest
industrial customer, Monsanto, in August of 1993. The loss of the Monsanto
load reduced revenues, and will result in a reduction in net income of
approximately $3 million in the first twelve months.
The Federal Energy Regulatory Commission (FERC) regulates wholesale
rate schedules and power sales contracts that the Company has with its sales
for resale customers. The FERC is currently reviewing the rate of return on
common equity included in these schedules and contracts that have a return on
common equity of 13.75 percent or greater, and may require such returns to be
lowered, possibly retroactively. See Note 3 to the financial statements under
"FERC Reviews Equity Returns" for additional information.
Compliance costs related to the Clean Air Act Amendments of 1990 (Clean
Air Act) could reduce earnings if such costs are not fully recovered. The
Clean Air Act is discussed later under "Environmental Matters".
II-143
<PAGE> 174
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1993 Annual Report
Also, recently enacted legislation that provides for recovery of prudent
environmental compliance costs is discussed in Note 3 to the financial
statements under "Environmental Cost Recovery."
The Company filed a notice with the Florida Public Service Commission
(FPSC) of its intent to obtain rate relief in February 1993. On May 4, 1993,
the FPSC approved a stipulation between the Company, the Office of Public
Counsel, and the Florida Industrial Power Users Group to cancel the filing of
the rate case. The stipulation also allowed the Company to retain, for the
next four years, its existing method for calculating accruals for future power
plant dismantlement costs. The existing method provides a more even allocation
of expenses over the life of the plants and results in an avoided increase in
expenses of about $6 million annually over the next four years when compared to
the FPSC method. The stipulation also provided for the reduction of the
Company's allowed return on equity midpoint from 12.55 percent to 12.0 percent.
After the February 1993 filing date, interest rates continued to remain low,
resulting in lower cost of capital. Also, the Florida legislature adopted
legislation which allows utilities to petition the FPSC for recovery of
environmental costs through an adjustment clause if these costs are not being
recovered in base rates. See Note 3 to the financial statements under
"Environmental Cost Recovery" for further details. The combination of the
circumstances discussed above, placed the Company in a better position to
manage its finances without an increase in base rates while still providing a
fair return for the Company's investors. Consequently, the Company agreed, as
a part of this stipulation, to cancel the filing of the rate case.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued Statement No. 112,
Employers' Accounting for Postemployment Benefits, which must be effective by
1994. The new standard requires that all types of benefits provided to former
or inactive employees and their families prior to retirement be accounted for
on an accrual basis. These benefits include salary continuation, severance
pay, supplemental benefits, disability-related benefits, job training, and
health and life insurance coverage. In 1993, the Company adopted Statement No.
112, which resulted in a decrease in earnings of $0.3 million.
The FASB has issued Statement No. 115, Accounting for Certain
Investments in Debt and Equity Securities, which is effective in 1994.
Statement No. 115 supersedes FASB Statement No. 12, Accounting for Certain
Marketable Securities. The Company does not have any investments that qualify
for FASB Statement No. 115 treatment.
FINANCIAL CONDITION
OVERVIEW
The principal changes in the Company's financial condition during 1993 were
gross property additions of $79 million. Funds for these additions were
provided by internal sources. The Company continued to refinance higher cost
securities to lower the Company's cost of capital. See "Financing Activities"
below and the Statements of Cash Flows for further details.
On January 1, 1993, the Company changed its method of calculating the
accruals for postretirement benefits other than pensions and its method of
accounting for income taxes. See Notes 2 and 8 to the financial statements,
regarding the impact of these changes.
FINANCING ACTIVITIES
As mentioned above, the Company continued to lower its financing costs by
issuing new securities and other debt, and retiring higher-cost issues in 1993.
The Company sold $75 million of first mortgage bonds and, through public
authorities, $53.4 million of pollution control revenue bonds, issued $35
million of preferred stock, and obtained $25 million with a long-term bank
note. Retirements, including maturities during 1993, totaled $88.8 million of
first mortgage bonds, $40.7 million of pollution control revenue bonds, and
$21.1 million of preferred stock. (See the Statements of Cash Flows for
further details.)
II-144
<PAGE> 175
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1993 Annual Report
Composite financing rates for the years 1991 through 1993 as of year
end were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Composite interest rate on 7.1% 8.0% 8.4%
long-term debt
Composite preferred stock 6.5% 7.3% 8.0%
dividend rate
</TABLE>
CAPITAL REQUIREMENTS FOR CONSTRUCTION
The Company's gross property additions, including those amounts related to
environmental compliance, are budgeted at $200 million for the three years
beginning 1994 ($77 million in 1994, $55 million in 1995, and $68 million in
1996). The estimates of property additions for the three-year period include
$25 million committed to meeting the requirements of the Clean Air Act, the
cost of which is expected to be recovered through the ECR clause which is
discussed in Note 3 to the financial statements under "Environmental Cost
Recovery". Actual construction costs may vary from this estimate because of
factors such as the granting of timely and adequate rate increases; changes in
environmental regulations; revised load projections; the cost and efficiency of
construction labor, equipment, and materials; and the cost of capital.
The Company does not have any baseload generating plants under
construction. However, the Company plans to construct two 80 megawatt
combustion turbine peaking units. The first is scheduled to be completed in
1998, and the second in 1999. Significant construction of transmission and
distribution facilities and upgrading of generating plants will be continuing.
OTHER CAPITAL REQUIREMENTS
In addition to the funds needed for the construction program, approximately $86
million will be required by the end of 1996 in connection with maturities of
long-term debt and preferred stock subject to mandatory redemption. Also, the
Company plans to continue a program to retire higher-cost debt and preferred
stock and replace these obligations with lower-cost capital.
ENVIRONMENTAL MATTERS
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the law -- will have a
significant impact on the Company. Specific reductions in sulfur dioxide and
nitrogen oxide emissions from fossil-fired generating plants will be required
in two phases. Phase I compliance must be implemented in 1995 and affects
eight generating plants -- some 10,000 megawatts of capacity or 35 percent of
total capacity -- in the Southern electric system. Phase II compliance is
required in 2000, and all fossil-fired generating plants in the Southern
electric system will be affected.
Beginning in 1995, the Environmental Protection Agency (EPA) will
allocate annual sulfur dioxide emission allowances through the newly
established allowance trading program. An emission allowance is the authority
to emit one ton of sulfur dioxide during a calendar year. The method for
allocating allowances is based on the fossil fuel consumed from 1985 through
1987 for each affected generating unit. Emission allowances are transferable
and can be bought, sold, or banked and used in the future.
The sulfur dioxide emission allowance program is expected to minimize
the cost of compliance. The market for emission allowances is developing
slower than expected. However, The Southern Company's sulfur dioxide
compliance strategy is designed to take advantage of allowances as the market
develops.
The Southern Company expects to achieve Phase I sulfur dioxide
compliance at the eight affected plants by switching to low-sulfur coal, and
this has required some equipment upgrades. This compliance strategy is
expected to result in unused emission allowances being banked for later use.
Additional construction expenditures are required to install equipment for the
control of nitrogen oxide emissions at these eight plants. Also, continuous
emissions monitoring equipment would be installed on all fossil-fired units.
Under this Phase I compliance approach, additional construction expenditures
are estimated to total approximately $275 million for The Southern Company
including $34 million for Gulf Power Company through 1995.
II-145
<PAGE> 176
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1993 Annual Report
Phase II compliance costs are expected to be higher because
requirements are stricter and all fossil-fired generating plants are affected.
For sulfur dioxide compliance, The Southern Company could use emission
allowances banked during Phase I, increase fuel switching, install flue gas
desulfurization equipment at selected plants, and/or purchase more allowances
depending on the price and availability of allowances. Also, in Phase II,
equipment to control nitrogen oxide emissions will be installed on additional
system fossil-fired plants as required to meet anticipated Phase II limits.
Therefore, during the period 1996 to 2000, compliance could require total
construction expenditures ranging from approximately $450 million to $800
million for The Southern Company including approximately $30 million to $40
million for Gulf Power Company. However, the full impact of Phase II
compliance cannot now be determined with certainty, pending the development of
a market for emission allowances, the completion of EPA regulations, and the
possibility of new emission reduction technologies.
Following adoption of legislation in April of 1992, allowing electric
utilities in Florida to seek FPSC approval of their Clean Air Act Compliance
Plans, the Company filed its petition for approval. The Commission approved
the Company's plan for Phase I compliance, deferring until a later date
approval of its Phase II Plan.
An average increase of up to 4 percent in annual revenue requirements
from Gulf Power Company customers could be necessary to fully recover the cost
of compliance for both Phase I and Phase II of the Clean Air Act. Compliance
costs include construction expenditures, increased costs for switching to
low-sulfur coal, and costs related to emission allowances.
The Florida Legislature recently adopted legislation that allows a
utility to petition the FPSC for recovery of prudent environmental compliance
costs through an ECR clause without lengthy regulatory full revenue
requirements rate proceedings. The legislation is discussed in Note 3 to the
financial statements under "Environmental Cost Recovery".
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The study will serve as the basis
for a decision on whether additional regulatory control of these substances is
warranted. Compliance with any new control standards could result in
significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA is expected to take some action on this issue in 1994. The impact of
any new standard will depend on the level chosen for the standard and cannot be
determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air
quality standards for particulate matter, nitrogen oxides, and ozone. The
impact of any new standard will depend on the level chosen for the standard and
cannot be determined at this time.
In 1994 or 1995, the EPA is expected to issue revised rules on air
quality control regulations related to stack height requirements of the Clean
Air Act. The full impact of the final rules cannot be determined at this time,
pending their development and implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of
coal ash. However, the EPA has until 1998 to classify co-managed utility
wastes -- coal ash and other utility wastes -- as either non-hazardous or
hazardous. If the EPA classifies the co-managed wastes as hazardous, then
substantial additional costs for the management of such wastes may be required.
The full impact of any change in the regulatory status will depend on the
subsequent development of co-managed waste requirements.
Gulf Power Company must comply with other environmental laws and
regulations that cover the handling and disposal of hazardous waste. Under
these various laws and regulations, the Company could incur costs to clean up
properties currently or previously owned. The Company conducts studies to
determine the extent of any required clean-up costs and has recognized in the
financial statements costs to clean up known sites.
II-146
<PAGE> 177
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1993 Annual Report
Several major pieces of environmental legislation are in the process of
being reauthorized or amended by Congress. These include: the Clean Water
Act; the Comprehensive Environmental Response, Compensation, and Liability Act;
and the Resource Conservation and Recovery Act. Changes to these laws could
affect many areas of Gulf Power Company's operations. The full impact of these
requirements cannot be determined at this time, pending the development and
implementation of applicable regulations.
Compliance with possible new legislation related to global climate
change, electromagnetic fields, and other environmental and health concerns
could significantly affect Gulf Power Company. The impact of new legislation
- -- if any -- will depend on the subsequent development and implementation of
applicable regulations. In addition, the potential for lawsuits alleging
damages caused by electromagnetic fields exists.
COAL STOCKPILE DECREASES
To reduce the working capital invested in the coal stockpile inventory, the
Company implemented a coal stockpile reduction program in 1992. The Company's
actual year end inventory at December 31, 1993 was $20.7 million which is
considerably lower than the desired level of $31.4 million. This situation
exists because a limited supply of coal was available at competitive prices
primarily due to the United Mine Workers strike from July to December 1993. In
addition, barge transportation was stranded due to floods in the Midwest. As a
result of these circumstances, management chose to allow the existing coal
inventory to decline until coal prices stabilized. Current market conditions
indicate that substantial coal supplies at competitive prices are now
available. Therefore, the Company plans to increase purchases and return the
coal stockpile inventory to the desired level by the end of the third quarter,
1994.
SOURCES OF CAPITAL
At December 31, 1993, the Company had $5.6 million of cash and cash equivalents
to meet its short-term cash needs.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulations, will be derived
from operations; the sale of additional first mortgage bonds, pollution control
bonds, and preferred stock; and capital contributions from The Southern
Company. The Company is required to meet certain coverage requirements
specified in its mortgage indenture and corporate charter to issue new first
mortgage bonds and preferred stock. The Company's coverage ratios are
sufficient to permit, at present interest and preferred dividend levels, any
foreseeable security sales. The amount of securities which the Company will be
permitted to issue in the future will depend upon market conditions and other
factors prevailing at that time.
II-147
<PAGE> 178
STATEMENTS OF INCOME
For the Years Ended December 31, 1993, 1992, and 1991
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES:
Revenues $ 559,976 $ 546,827 $ 535,864
Revenues from affiliates 23,166 24,075 29,343
Total operating revenues 583,142 570,902 565,207
OPERATING EXPENSES:
Operation-
Fuel 170,485 182,754 176,038
Purchased power from non-affiliates 4,386 1,394 896
Purchased power from affiliates 32,273 26,788 32,579
Proceeds from settlement of disputed contracts (Note 7) - (920) (20,385)
Other 109,164 98,230 94,411
Maintenance 46,004 41,947 45,468
Depreciation and amortization 55,309 53,758 52,195
Taxes other than income taxes 40,204 37,898 42,359
Federal and state income taxes (Note 8) 32,730 32,078 33,893
Total operating expenses 490,555 473,927 457,454
OPERATING INCOME 92,587 96,975 107,753
OTHER INCOME (EXPENSE):
Allowance for equity funds used during
construction (Note 1) 512 14 54
Interest income 1,328 2,733 2,427
Other, net (1,238) (1,487) (3,484)
Gain on sale of investment securities 3,820 - -
Income taxes applicable to other income (921) 187 1,104
INCOME BEFORE INTEREST CHARGES 96,088 98,422 107,854
INTEREST CHARGES:
Interest on long-term debt 31,344 35,792 41,665
Allowance for debt funds used during
construction (Note 1) (454) (46) (95)
Interest on notes payable 870 1,041 280
Amortization of debt discount, premium, and expense, net 1,412 1,032 699
Other interest charges 2,877 1,410 2,272
Net interest charges 36,049 39,229 44,821
NET INCOME 60,039 59,193 63,033
DIVIDENDS ON PREFERRED STOCK 5,728 5,103 5,237
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 54,311 $ 54,090 $ 57,796
</TABLE>
The accompanying notes are an integral part of these statements.
II-148
<PAGE> 179
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993, 1992, and 1991
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 60,039 $ 59,193 $ 63,033
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 72,111 68,021 65,584
Deferred income taxes and investment tax credits 5,347 3,322 (3,392)
Allowance for equity funds used during construction (512) (14) (54)
Non-cash proceeds from settlement of disputed contracts (Note 7) - (920) (19,734)
Other, net (864) 185 3,079
Changes in certain current assets and liabilities --
Receivables, net 12,867 (11,041) 12,421
Inventories 5,574 23,560 (2,397)
Payables 5,386 1,580 (2,003)
Other (9,504) (13,637) 8,012
Net cash provided from operating activities 150,444 130,249 124,549
INVESTING ACTIVITIES:
Gross property additions (78,562) (64,671) (64,323)
Other (5,328) 3,970 (8,097)
Net cash used for investing activities (83,890) (60,701) (72,420)
FINANCING ACTIVITIES AND CAPITAL CONTRIBUTIONS:
Proceeds:
Preferred stock 35,000 29,500 -
First mortgage bonds 75,000 25,000 50,000
Pollution control bonds 53,425 8,930 21,200
Capital contributions from parent 11 121 -
Other long-term debt 25,000 - -
Retirements:
Preferred stock (21,060) (15,500) (2,500)
First mortgage bonds (88,809) (117,693) (32,807)
Pollution control bonds (40,650) (9,205) (21,250)
Other long-term debt (7,736) (5,783) (7,981)
Notes payable, net (37,947) 44,000 -
Payment of preferred stock dividends (5,728) (5,103) (5,237)
Payment of common stock dividends (41,800) (39,900) (38,000)
Miscellaneous (6,888) (8,760) (3,715)
Net cash used for financing activities (62,182) (94,393) (40,290)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,372 (24,845) 11,839
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,204 26,049 14,210
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,576 $ 1,204 $ 26,049
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for --
Interest (net of amount capitalized) $28,470 $38,164 $39,814
Income taxes $27,865 $37,569 $26,915
</TABLE>
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
II-149
<PAGE> 180
BALANCE SHEETS
At December 31, 1993 and 1992
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
ASSETS 1993 1992
(in thousands)
<S> <C> <C>
UTILITY PLANT:
Plant in service (Notes 1 and 6) $ 1,611,704 $ 1,561,491
Less accumulated provision for depreciation 610,542 578,851
1,001,162 982,640
Construction work in progress 34,591 29,564
Total 1,035,753 1,012,204
Less property-related accumulated deferred income taxes (Note 8) - 200,904
Total 1,035,753 811,300
OTHER PROPERTY AND INVESTMENTS 13,242 7,074
CURRENT ASSETS:
Cash and cash equivalents 5,576 1,204
Investment securities (Notes 1 and 7) - 22,322
Receivables-
Customer accounts receivable 57,226 55,103
Other accounts and notes receivable 5,904 3,237
Affiliated companies 1,241 2,063
Accumulated provision for uncollectible accounts (447) (356)
Fossil fuel stock, at average cost 20,652 29,492
Materials and supplies, at average cost 36,390 33,124
Current portion of deferred coal contract costs (Note 5) 12,535 3,071
Regulatory clauses under recovery (Note 1) 3,244 1,680
Prepayments 2,160 1,395
Vacation pay deferred (Note 1) 4,022 3,779
Total 148,503 156,114
DEFERRED CHARGES:
Deferred charges related to income taxes (Note 8) 31,334 -
Debt expense, being amortized 3,693 3,253
Premium on reacquired debt, being amortized 17,554 15,319
Deferred coal contract costs (Note 5) 52,884 63,723
Miscellaneous 4,846 5,916
Total 110,311 88,211
TOTAL ASSETS $ 1,307,809 $ 1,062,699
</TABLE>
The accompanying notes are an integral part of these statements.
II-150
<PAGE> 181
BALANCE SHEETS (continued)
At December 31, 1993 and 1992
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES 1993 1992
(in thousands)
<S> <C> <C>
CAPITALIZATION (SEE ACCOMPANYING STATEMENTS):
Common stock equity (Note 11) $ 414,196 $ 403,190
Preferred stock 89,602 74,662
Preferred stock subject to mandatory redemption 1,000 2,000
Long-term debt 369,259 382,047
Total 874,057 861,899
CURRENT LIABILITIES:
Preferred stock due within one year 1,000 1,000
Long-term debt due within one year (Note 10) 41,552 13,820
Notes payable 6,053 44,000
Accounts payable-
Affiliated companies 18,560 5,323
Other 20,139 28,138
Customer deposits 15,082 15,532
Taxes accrued-
Federal and state income 10,330 3,326
Other 2,685 8,093
Interest accrued 5,420 6,370
Regulatory clauses over recovery (Note 1) 840 -
Vacation pay accrued (Note 1) 4,022 3,779
Miscellaneous 8,527 3,950
Total 134,210 133,331
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes (Note 8) 151,743 -
Deferred credits related to income taxes (Note 8) 76,876 -
Accumulated deferred investment tax credits 40,770 43,117
Accumulated provision for property damage (Note 1) 10,509 9,692
Accumulated provision for postretirement benefits (Note 2) 10,749 7,662
Miscellaneous 8,895 6,998
Total 299,542 67,469
COMMITMENTS AND CONTINGENT MATTERS (NOTES 1, 2, 3, 4, 5, AND 7)
TOTAL CAPITALIZATION AND LIABILITIES $ 1,307,809 $ 1,062,699
</TABLE>
The accompanying notes are an integral part of these statements.
II-151
<PAGE> 182
STATEMENTS OF CAPITALIZATION
At December 31, 1993 and 1992
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1993 1992
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
COMMON STOCK EQUITY:
Common stock, without par value --
Authorized and outstanding --
992,717 shares in 1993 and 1992 $ 38,060 $ 38,060
Paid-in capital 218,282 218,271
Premium on preferred stock 81 88
Retained earnings (Note 11) 157,773 146,771
Total common stock equity 414,196 403,190 47.4 % 46.8 %
CUMULATIVE PREFERRED STOCK:
$10 par value, authorized 10,000,000 shares,
Outstanding 2,580,000 shares at December 31, 1993
$25 stated capital --
7.00% 14,500 14,500
7.30% 15,000 15,000
6.72% 20,000 -
Adjustable Rate -- at January 1, 1994: 4.80% 15,000 -
$100 par value --
Authorized -- 781,626 shares
Outstanding -- 251,026 shares at December 31, 1993
4.64% 5,102 5,102
5.16% 5,000 5,000
5.44% 5,000 5,000
7.52% 5,000 5,000
7.88% 5,000 5,000
8.28% - 15,000
8.52% - 5,060
Total (annual dividend requirement -- $5,711,000) 89,602 74,662 10.3 8.7
CUMULATIVE PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION:
$100 par value --
Authorized -- 20,000 shares
Outstanding -- 20,000 shares at December 31, 1993
11.36% Series 2,000 3,000
Total (annual dividend requirement -- $227,000) 2,000 3,000
Less amount due within one year 1,000 1,000
Total excluding amount due within one year 1,000 2,000 0.1 0.2
</TABLE>
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<PAGE> 183
STATEMENTS OF CAPITALIZATION (CONTINUED)
At December 31, 1993 and 1992
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1993 1992
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
First mortgage bonds --
Maturity Interest Rates
October 1, 1994 4 5/8% 12,000 12,000
June 1, 1996 6% 15,000 15,000
August 1, 1997 5 7/8% 25,000 25,000
April 1, 1998 9.20% 19,486 22,845
April 1, 1998 5.55% 15,000 -
July 1, 1998 5.00% 30,000 -
1999 through 2003 6.125% to 8.875% 30,000 83,000
September 1, 2008 9% 5,050 7,500
December 1, 2021 8 3/4% 50,000 50,000
Total first mortgage bonds 201,536 215,345
Pollution control obligations (Note 9) 169,855 157,080
Other long-term debt (Note 9) 42,520 25,256
Unamortized debt premium (discount), net (3,100) (1,814)
Total long-term debt (annual interest
requirement -- $29,378,000) 410,811 395,867
Less amount due within one year (Note 10) 41,552 13,820
Long-term debt excluding amount due within one year 369,259 382,047 42.2 44.3
TOTAL CAPITALIZATION $ 874,057 $ 861,899 100.0 % 100.0 %
</TABLE>
The accompanying notes are an integral part of these statements.
II-153
<PAGE> 184
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1993, 1992, and 1991
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $ 146,771 $ 134,372 $ 114,576
Net income after dividends on preferred stock 54,311 54,090 57,796
Cash dividends on common stock (41,800) (39,900) (38,000)
Preferred stock transactions, net (1,509) (1,791) -
BALANCE AT END OF YEAR (NOTE 11) $ 157,773 $ 146,771 $ 134,372
</TABLE>
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1993, 1992, and 1991
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $ 218,271 $ 218,150 $ 218,150
Contributions to capital by parent company 11 121 -
BALANCE AT END OF YEAR $ 218,282 $ 218,271 $ 218,150
</TABLE>
The accompanying notes are an integral part of these statements.
II-154
<PAGE> 185
NOTES TO FINANCIAL STATEMENTS
At December 31, 1993, 1992 and 1991
Gulf Power Company 1993 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL
Gulf Power Company is a wholly owned subsidiary of The Southern Company, which
is the parent company of five operating companies, Southern Company Services,
Inc. (SCS), Southern Electric International (Southern Electric), Southern
Nuclear Operating Company (Southern Nuclear) and various other subsidiaries
related to foreign utility operations and domestic non-utility operations. At
this time, the operations of the other subsidiaries are not material. The
operating companies (Alabama Power Company, Georgia Power Company, Gulf Power
Company, Mississippi Power Company, and Savannah Electric and Power Company)
provide electric service in four Southeastern states. Contracts among the
companies -- dealing with jointly owned generating facilities, interconnecting
transmission lines, and the exchange of electric power -- are regulated by the
Federal Energy Regulatory Commission (FERC) or the Securities and Exchange
Commission. SCS provides, at cost, specialized services to The Southern
Company and to the subsidiary companies. Southern Electric designs, builds,
owns and operates power production facilities and provides a broad range of
technical services to industrial companies and utilities in the United States
and a number of international markets. Southern Nuclear provides services to
The Southern Company's nuclear power plants.
The Southern Company is registered as a holding company under the
Public Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company
and its subsidiaries are subject to the regulatory provisions of the PUHCA.
The Company is also subject to regulation by the FERC and the Florida Public
Service Commission (FPSC). The Company follows generally accepted accounting
principles and complies with the accounting policies and practices prescribed
by these commissions.
Certain prior years' data presented in the financial statements have
been reclassified to conform with current year presentation.
REVENUES AND FUEL COSTS
The Company accrues revenues for service rendered but unbilled at the end of
each fiscal period. Fuel costs are expensed as fuel is used. The Company's
electric rates include provisions to periodically adjust billings for
fluctuations in fuel and the energy component of purchased power costs.
Revenues are adjusted for differences between recoverable fuel costs and
amounts actually recovered in current rates. The FPSC has also approved the
recovery of purchased power capacity costs, energy conservation costs, and
environmental compliance costs in cost recovery clauses that are similar to the
method used to recover fuel costs.
DEPRECIATION AND AMORTIZATION
Depreciation of the original cost of depreciable utility plant in service is
provided primarily using composite straight-line rates which approximated 3.8
percent in 1993, 1992, and 1991. When property subject to depreciation is
retired or otherwise disposed of in the normal course of business, its cost --
together with the cost of removal, less salvage -- is charged to the
accumulated provision for depreciation. Minor items of property included in
the original cost of the plant are retired when the related property unit is
retired.
INCOME TAXES
The Company provides deferred income taxes for all significant income tax
temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
In years prior to 1993, income taxes were accounted for and reported
under Accounting Principles Board Opinion No. 11. Effective January 1, 1993,
the Company adopted FASB Statement No. 109, Accounting for Income Taxes.
Statement No. 109 required, among other things, conversion to the liability
method of accounting for accumulated deferred income taxes. See Note 8 for
additional information about Statement No. 109. The Company is included in the
consolidated federal income tax return of The Southern Company.
II-155
<PAGE> 186
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are
necessary to finance the construction of certain new facilities. While cash is
not realized currently from such allowance, it increases the revenue
requirement over the service life of plant through a higher rate base and
higher depreciation expense. The FPSC-approved composite rate used to
calculate AFUDC was 7.27 percent effective on July 1, 1993 and 8.03 percent for
the first half of 1993, and for 1992, and 1991. AFUDC amounts for 1993, 1992,
and 1991 were $966 thousand, $60 thousand, and $149 thousand, respectively.
The increase in 1993 is due to an increase in construction projects at Plant
Daniel.
UTILITY PLANT
Utility plant is stated at original cost. Original cost includes: materials;
labor; minor items of property; appropriate administrative and general costs;
payroll-related costs such as taxes, pensions, and other benefits; and the
estimated cost of funds used during construction. The cost of maintenance,
repairs, and replacement of minor items of property is charged to maintenance
expense. The cost of replacements of property (exclusive of minor items of
property) is charged to utility plant.
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
FINANCIAL INSTRUMENTS
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, all financial instruments of the Company -- for which
the carrying amount does not approximate fair value -- are shown in the table
below as of December 31:
<TABLE>
<CAPTION>
1993
Carrying Fair
Amount Value
(in thousands)
<S> <C> <C>
Long-term debt $410,811 $431,251
Preferred stock subject to
mandatory redemption 2,000 2,040
</TABLE>
<TABLE>
<CAPTION>
1992
Carrying Fair
Amount Value
(in thousands)
<S> <C> <C>
Investment securities $ 22,322 $ 26,387
Long-term debt 395,867 410,724
Preferred stock subject to
mandatory redemption 3,000 3,060
</TABLE>
The fair values of investment securities were based on listed closing
market prices. The fair values for long-term debt and preferred stock subject
to mandatory redemption were based on either closing market prices or closing
prices of comparable instruments.
MATERIALS AND SUPPLIES
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to
inventory when purchased and then expensed or capitalized to plant, as
appropriate, when installed.
VACATION PAY
The Company's employees earn their vacation in one year and take it in the
subsequent year. However, for ratemaking purposes, vacation pay is recognized
as an allowable expense only when paid. Consistent with this ratemaking
treatment, the Company accrues a current liability for earned vacation pay and
records a current asset representing the future recoverability of this cost.
The amount was $4.0 million and $3.8 million at December 31, 1993 and 1992,
respectively. In 1994, an estimated 84 percent of the 1993 deferred vacation
cost
II-156
<PAGE> 187
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
will be expensed and the balance will be charged to construction.
PROVISION FOR INJURIES AND DAMAGES
The Company is subject to claims and suits arising in the ordinary course of
business. As permitted by regulatory authorities, the Company is providing for
the uninsured costs of injuries and damages by charges to income amounting to
$1.2 million annually. The expense of settling claims is charged to the
provision to the extent available. The accumulated provision of $2.2 million
and $2.5 million at December 31, 1993 and 1992, respectively, is included in
miscellaneous current liabilities in the accompanying Balance Sheets.
PROVISION FOR PROPERTY DAMAGE
Due to a significant increase in the cost of traditional insurance, effective
in 1993, the Company became self-insured for the full cost of storm and other
damage to its transmission and distribution property. As permitted by
regulatory authorities, the Company provides for the estimated cost of
uninsured property damage by charges to income amounting to $1.2 million
annually. At December 31, 1993 and 1992, the accumulated provision for
property damage amounted to $10.5 million and $9.7 million, respectively. The
expense of repairing such damage as occurs from time to time is charged to the
provision to the extent it is available.
2. RETIREMENT BENEFITS:
PENSION PLAN
The Company has a defined benefit, trusteed, non-contributory pension plan that
covers substantially all regular employees. Benefits are based on the greater
of amounts resulting from two different formulas: years of service and final
average pay or years of service and a flat-dollar benefit. The Company uses
the "entry age normal method with a frozen initial liability" actuarial method
for funding purposes, subject to limitations under federal income tax
regulations. Amounts funded to the pension trust fund are primarily invested
in equity and fixed-income securities. FASB Statement No. 87, Employers'
Accounting for Pensions, requires use of the "projected unit credit" actuarial
method for financial reporting purposes.
POSTRETIREMENT BENEFITS
The Company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. A qualified trust for medical benefits has been
established for funding amounts to the extent deductible under federal income
tax regulations. Amounts funded are primarily invested in debt and equity
securities. Accrued costs of life insurance benefits, other than current cash
payments for retirees, currently are not being funded.
Effective January 1, 1993, the Company adopted FASB Statement No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service." Prior to the
adoption of Statement No. 106, Gulf Power Company recognized these benefit
costs on an accrual basis using the "aggregate cost" actuarial method, which
spreads the expected cost of such benefits over the remaining periods of
employees' service as a level percentage of payroll costs. The costs of such
benefits recognized by the Company in 1993, 1992, and 1991 were $3.9 million,
$3.1 million, and $2.7 million, respectively.
STATUS AND COST OF BENEFITS
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of Statement Nos. 87 and 106, respectively. Retiree medical and
life insurance information is shown only for 1993 because Statement No. 106 was
adopted as of January 1, 1993, on a prospective basis.
II-157
<PAGE> 188
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
The funded status of the plans at December 31 was as follows:
<TABLE>
<CAPTION>
Pension
1993 1992
(in thousands)
<S> <C> <C>
Actuarial present value of
benefit obligation:
Vested benefits $ 73,925 $ 63,459
Non-vested benefits 3,217 2,900
Accumulated benefit obligation 77,142 66,359
Additional amounts related to
projected salary increases 25,648 28,719
Projected benefit obligation 102,790 95,078
Less:
Fair value of plan assets 159,192 142,614
Unrecognized net gain (49,376) (40,764)
Unrecognized prior service cost 3,152 3,346
Unrecognized transition asset (8,765) (9,495)
Prepaid asset recognized in
the Balance Sheets $ 1,413 $ 623
</TABLE>
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
(in thousands)
<S> <C> <C>
Actuarial present value of
benefit obligation:
Retirees and dependents $ 7,857 $ 2,929
Employees eligible to retire 4,054 -
Other employees 14,927 5,058
Accumulated benefit obligation 26,838 7,987
Less:
Fair value of plan assets 5,638 52
Unrecognized net loss (gain) 2,653 (641)
Unrecognized transition
obligation 13,420 2,954
Accrued liability recognized
in the Balance Sheets $ 5,127 $ 5,622
</TABLE>
The weighted average rates assumed in the actuarial calculations were:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Discount 7.5% 8.0% 8.0%
Annual salary increase 5.0% 6.0% 6.0%
Long-term return on plan
assets 8.5% 8.5% 8.5%
</TABLE>
An additional assumption used in measuring the accumulated
postretirement medical benefit obligation was a weighted average medical care
cost trend rate of 11.3 percent for 1993, decreasing to 6.0 percent through the
year 2000 and remaining at that level thereafter. An annual increase in the
assumed medical care cost trend rate by 1.0 percent would increase the
accumulated medical benefit obligation as of December 31, 1993, by $4.8 million
and the aggregate of the service and interest cost components of the net
retiree medical cost by $543 thousand.
Components of the plans' net cost are shown below:
<TABLE>
<CAPTION>
Pension
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Benefits earned during
the year $ 3,710 $ 3,550 $ 3,396
Interest cost on projected
benefit obligation 7,319 6,939 6,516
Actual return on plan
assets (20,672) (6,431) (35,560)
Net amortization and
deferral 8,853 (4,054) 26,322
Net pension cost (income) $ (790) $ 4 $ 674
</TABLE>
Of the above net pension amounts, $(601) thousand in 1993, $3 thousand
in 1992, and $518 thousand in 1991, were recorded in operating expenses, and
the remainder was recorded in construction and other accounts.
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
(in thousands)
<S> <C> <C>
Benefits earned during the year $ 874 $ 292
Interest cost on accumulated
benefit obligation 1,714 625
Amortization of transition
obligation over 20 years 706 148
Actual return on plan assets (726) (5)
Net amortization and deferral 309 1
Net postretirement cost $2,877 $1,061
</TABLE>
Of the above net postretirement medical and life insurance amounts
recorded in 1993, $3.0 million was recorded in operating expenses, and the
remainder was recorded in construction and other accounts.
II-158
<PAGE> 189
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
3. LITIGATION AND REGULATORY MATTERS:
COAL BARGE TRANSPORTATION SUIT
On August 19, 1993, a complaint against the Company and Southern Company
Services, an affiliate, was filed in federal district court in Ohio by two
companies with which the Company had contracted for the transportation by barge
for certain of the Company's coal supplies. The complaint alleges breach of
the contract by the Company and seeks damages estimated by the plaintiffs to be
in excess of $85 million.
The final outcome of this matter cannot now be determined; however, in
management's opinion the final outcome will not have a material adverse effect
on the Company's financial statements.
FPSC APPROVES STIPULATION
In February 1993, the Company filed a notice with the FPSC of its intent to
obtain rate relief. On May 4, 1993, the FPSC approved a stipulation between
the Company, the Office of Public Counsel, and the Florida Industrial Power
Users Group to cancel the filing of the rate case and to allow the Company to
retain for the next four years its existing method for calculating accruals for
future power plant dismantlement costs. The stipulation also required the
reduction of the Company's allowed return on equity midpoint from 12.55 percent
to 12.0 percent. See Management's Discussion and Analysis under "Future
Earnings Potential" for further details of circumstances that contributed to
the company canceling the rate case.
FERC REVIEWS EQUITY RETURNS
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules and
contracts that have a return on common equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all of
the transmission, unit power, long-term power and other similar contracts. Any
changes in the rate of return on common equity that may occur as a result of
this proceeding would be effective 60 days after a proper notice of the
proceeding is published. A notice was published on May 10, 1991.
In August 1992, a FERC administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC
staff has filed exceptions to the administrative law judge's opinion, and the
matter remains pending before the FERC.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material adverse effect
on the Company's financial statements.
RECOVERY OF CONTRACT BUYOUT COSTS
In July 1990, the Company filed a request for waiver of FERC's fuel adjustment
charge regulation to permit recovery of coal contract buyout costs from
wholesale customers. On April 4, 1991, the FERC issued an order granting
recovery of the buyout costs from wholesale customers from July 19, 1990,
forward, but denying retroactive recovery of the buyout costs from January 1,
1987 through July 18, 1990. The Company's request for rehearing was denied by
the FERC. The Company refunded $2.7 million (including interest) in June 1991
to its wholesale customers. On July 31, 1991, the Company filed a petition for
review of the FERC's decision to the U.S. Court of Appeals for the District of
Columbia Circuit. On January 22, 1993, the Court vacated the Commission's
order, finding FERC's denial of the Company's request for a retroactive waiver
to be arbitrary and capricious. The Court remanded the matter to FERC for
consideration consistent with its opinion. Management expects that the
commission will ultimately allow the Company to recover the amount refunded
plus interest. Accordingly, the Company recorded the reversal of the $2.7
million refund to income in 1993.
ENVIRONMENTAL COST RECOVERY
In April 1993, the Florida Legislature adopted legislation for an Environmental
Cost Recovery (ECR) clause, which allows a utility to petition the FPSC for
recovery of all prudent environmental compliance costs that are not being
recovered through base rates or any other rate-adjustment clause. Such
environmental costs include operation and maintenance expense, depreciation,
and a return on invested capital.
II-159
<PAGE> 190
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
On January 12, 1994, the FPSC approved the Company's petition under
the ECR clause for recovery of environmental costs that were projected to be
incurred from July 1993 through September 1994. The order allows the recovery
from customers of such costs amounting to $7.8 million during the period,
February through September 1994. Thereafter, recovery under ECR will be
determined semi-annually and will include a true-up of the prior period and a
projection of the ensuing six-month period. In December 1993, the Company
recorded $2.6 million as additional revenue for the portion of costs incurred
during 1993.
4. CONSTRUCTION PROGRAM:
The Company is engaged in a continuous construction program, the cost of which
is currently estimated to total $77 million in 1994, $55 million in 1995, and
$68 million in 1996. These estimates include AFUDC of approximately $0.7
million, $0.3 million, and $0.2 million, in 1994, 1995, and 1996, respectively.
The construction program is subject to periodic review and revision, and actual
construction costs may vary from the above estimates because of numerous
factors. These factors include changes in business conditions; revised load
growth estimates; changes in environmental regulations; increasing costs of
labor, equipment and materials; and cost of capital. The Company does not have
any new baseload generating plants under construction. However, the Company
plans to construct two 80 megawatt combustion turbine peaking units. The first
is scheduled to be completed in 1998, and the second in 1999. In addition,
significant construction will continue related to transmission and distribution
facilities and the upgrading and extension of the useful lives of generating
plants.
See Management's Discussion and Analysis under "Environmental Matters"
for information on the impact of the Clean Air Act Amendments of 1990 and other
environmental matters.
5. FINANCING AND COMMITMENTS:
GENERAL
Current projections indicate that funds required for construction and other
purposes, including compliance with environmental regulations will be derived
primarily from internal sources. Requirements not met from internal sources
will be financed from the sale of additional first mortgage bonds, preferred
stock, and capital contributions from The Southern Company. In addition, the
Company may issue additional long-term debt and preferred stock primarily for
the purposes of debt maturities and redemptions of higher-cost securities.
Because of the attractiveness of current short term interest rates, the Company
may maintain a higher level of short term indebtedness than has historically
been true.
At December 31, 1993, the Company had $49 million of lines of credit
with banks of which $6.1 million was committed to cover checks presented for
payment. These credit arrangements are subject to renewal June 1 of each year.
In connection with these committed lines of credit, the Company has agreed to
pay certain fees and/or maintain compensating balances with the banks. The
compensating balances, which represent substantially all the cash of the
Company except for daily working funds and like items, are not legally
restricted from withdrawal. In addition, the Company has bid-loan facilities
with eight major money center banks that total $180 million, of which, none was
committed at December 31, 1993.
ASSETS SUBJECT TO LIEN
The Company's mortgage, which secures the first mortgage bonds issued by the
Company, constitutes a direct first lien on substantially all of the Company's
fixed property and franchises.
FUEL COMMITMENTS
To supply a portion of the fuel requirements of its generating plants, the
Company has entered into long-term commitments for the procurement of fuel. In
most cases, these contracts contain provisions for price escalations, minimum
purchase levels and other financial commitments. Total estimated long-term
obligations were approximately $1.4 billion at December 31, 1993. Additional
commitments will be required in the future to supply the Company's fuel needs.
To take advantage of lower-cost coal supplies, agreements were reached
in 1986 to terminate two long-term contracts for the supply of coal to Plant
Daniel, which is jointly owned by the Company and Mississippi Power, an
operating affiliate. The Company's portion of
II-160
<PAGE> 191
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
this payment was some $60 million. This amount is being amortized to expense
on a per ton basis over a nine-year period. The remaining unamortized amount
included in deferred charges, including the current portion, was $18 million at
December 31, 1993.
In 1988, the Company made an advance payment of $60 million to another
coal supplier under an arrangement to lower the cost of future coal purchased
under an existing contract. This amount is being amortized to expense on a per
ton basis over a ten-year period. The remaining unamortized amount included in
deferred charges, including the current portion, was $36 million at December
31, 1993.
Also, in 1993 the Company made a payment of $16.4 million to a coal
supplier under an arrangement to suspend the purchase of coal under an existing
contract for one year. This amount is being amortized to expense on a per ton
basis over a one year period. The remaining unamortized amount, which is
included in current assets, was $11 million at December 31, 1993.
The amortization of these payments is being recovered through the fuel
cost recovery clause discussed under "Revenues and Fuel Costs" in Note 1.
LEASE AGREEMENT
In 1989, the Company entered into a twenty-two year operating lease agreement
for the use of 495 aluminum railcars to transport coal to Plant Daniel.
Mississippi Power, as joint owner of Plant Daniel, is responsible for one half
of the lease costs. The Company's share of the lease is charged to fuel
inventory and allocated to fuel expense as the fuel is used. The lease costs
charged to inventory were $1.2 million in 1993, $1.2 million in 1992 and $1.3
million in 1991. For the year 1994, the Company's annual lease payment will be
$1.2 million. The Company's annual lease payment for 1995 will be $2.4 million
and for 1996, 1997, and 1998 the payment will be $1.2 million. Lease payments
after 1998 total approximately $17.4 million. The Company has the option,
after three years from the date of the original contract, to purchase the
railcars at the greater of termination value or fair market value.
Additionally, at the end of the lease term, the Company has the option to renew
the lease.
6. JOINT OWNERSHIP AGREEMENTS:
The Company and Mississippi Power jointly own Plant Daniel, a steam-electric
generating plant, located in Jackson County, Mississippi. In accordance with
an operating agreement, Mississippi Power acts as the Company's agent with
respect to the construction, operation, and maintenance of the plant.
The Company and Georgia Power jointly own Plant Scherer Unit No. 3, a
steam-electric generating plant, located near Forsyth, Georgia. In accordance
with an operating agreement, Georgia Power acts as the Company's agent with
respect to the construction, operation, and maintenance of the unit.
The Company's pro rata share of expenses related to both plants is
included in the corresponding operating expense accounts in the Statements of
Income.
At December 31, 1993, the Company's percentage ownership and its
amount of investment in these jointly owned facilities were as follows:
<TABLE>
<CAPTION>
Plant Plant
Scherer Unit Daniel
No. 3 (coal-
(coal-fired) fired)
(in thousands)
<S> <C> <C>
Plant-In-Service $185,725(1) $208,956
Accumulated Depreciation $ 41,970 $ 91,730
Construction Work in Progress $ 643 $ 10,356
Nameplate Capacity (2)
(in megawatts) 205 500
Ownership 25% 50%
</TABLE>
(1) Includes net plant acquisition adjustment.
(2) Total megawatt nameplate capacity:
Plant Scherer Unit No. 3: 818
Plant Daniel: 1,000
II-161
<PAGE> 192
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
7. LONG-TERM POWER SALES AGREEMENTS:
GENERAL
The Company and the other operating affiliates of The Southern Company have
contractual agreements for the sale of capacity and energy to certain
non-affiliated utilities located outside of the system's service area. Certain
of these agreements are non-firm and are based on the capacity of the system in
general. Other agreements are firm and pertain to capacity related to specific
generating units. Because the energy is generally sold at cost under these
agreements, the capacity revenues from these sales primarily affect
profitability. The Company's capacity revenues have been as follows:
<TABLE>
<CAPTION>
Unit Other
Year Power Long-Term Total
(in thousands)
<S> <C> <C> <C>
1993 $31,162 $2,643 $33,805
1992 32,679 1,501 34,180
1991 31,288 1,363 32,651
</TABLE>
Long-term non-firm power of 400 megawatts was sold in 1993 to Florida
Power Corporation (FPC) by the Southern electric system. In 1994, this amount
decreased to 200 megawatts, and the contract will expire at year-end 1994.
Capacity and energy sales under these long-term non-firm power sales agreements
are made from available power pool capacity, and the revenues from the sales
are shared by the operating affiliates.
Unit power from specific generating plants is currently being sold to
FPC, Florida Power & Light Company (FP&L), Jacksonville Electric Authority
(JEA), and the City of Tallahassee, Florida. Under these agreements, 209
megawatts of net dependable capacity were sold by the Company during 1993, and
sales will remain at that approximate level until the expiration of the
contracts in 2010, unless reduced by FPC, FP&L and JEA after 1999.
Capacity and energy sales to FP&L, the Company's largest single
customer, provided revenues of $39.5 million in 1993, $46.2 million in 1992,
and $42.1 million in 1991, or 6.8 percent, 8.1 percent, and 7.5 percent of
operating revenues, respectively.
GULF STATES SETTLEMENT COMPLETED
On November 7, 1991, the subsidiaries of The Southern Company entered into a
settlement agreement with Gulf States Utilities Company (Gulf States) that
resolved litigation between the companies that had been pending since 1986 and
arose out of a dispute over certain unit power and other long-term power sales
contracts. In 1993, all remaining terms and obligations of the settlement
agreement were satisfied.
Based on the value of the settlement proceeds received - less the
amounts previously included in income - the Company recorded increases in net
income of approximately $0.6 million in 1992 and $12.7 million in 1991. In
1993, the Company sold all of its remaining Gulf States common stock received
in the settlement, resulting in a gain of $2.3 million after tax.
8. INCOME TAXES:
Effective January 1, 1993, Gulf Power Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption of Statement No. 109 resulted in
cumulative adjustments that had no effect on net income. The adoption also
resulted in the recording of additional deferred income taxes and related
assets and liabilities. The related assets of $31.3 million are revenues to be
received from customers. These assets are attributable to tax benefits flowed
through to customers in prior years and to taxes applicable to capitalized
AFUDC. The related liabilities of $76.9 million are revenues to be refunded to
customers. These liabilities are attributable to deferred taxes previously
recognized at rates higher than current enacted tax law and to unamortized
investment tax credits. Additionally, deferred income taxes related to
accelerated tax depreciation previously shown as a reduction to utility plant
were reclassified.
II-162
<PAGE> 193
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
Details of the federal and state income tax provisions are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Total provision for income taxes:
Federal --
Currently payable $24,354 $24,287 $30,721
Deferred:
Current year 26,396 18,173 18,141
Reversal of prior years (22,102) (15,506) (21,404)
28,648 26,954 27,458
State
Currently payable 3,950 4,282 5,460
Deferred:
Current year 3,838 2,662 2,688
Reversal of prior years (2,785) (2,007) (2,817)
5,003 4,937 5,331
Total 33,651 31,891 32,789
Less income taxes charged
(credited) to other
income 921 (187) (1,104)
Federal and state income
taxes charged to
operations $32,730 $32,078 $33,893
</TABLE>
The tax effects of temporary differences between the carrying amounts
of assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1993
(in thousands)
<S> <C>
Deferred tax liabilities:
Accelerated depreciation $146,657
Property basis differences 15,140
Coal contract buyout 15,427
Other 6,724
Total 183,948
Deferred tax assets:
Federal effect of state deferred taxes 10,136
Pension and other benefits 3,406
Property insurance 4,730
Other 6,500
Total 24,772
Net deferred tax liabilities 159,176
Portion included in current liabilities, net 7,433
Accumulated deferred income
taxes in the Balance Sheets $151,743
</TABLE>
Deferred investment tax credits are amortized over the life of the
related property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $2.3 million in 1993, 1992 and 1991. At December 31, 1993, all
investment tax credits available to reduce federal income taxes payable had
been utilized.
A reconciliation of the federal statutory income tax rate to the
effective income tax rate is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Federal statutory rate 35% 34% 34%
State income tax,
net of federal deduction 3 4 4
Non-deductible book
depreciation 1 1 1
Differences in prior years'
deferred and current tax rate (2) (2) (3)
Other (1) (2) (2)
Effective income tax rate 36% 35% 34%
</TABLE>
Gulf Power Company and the other subsidiaries of The Southern Company
file a consolidated federal tax return. Under a joint consolidated income tax
agreement, each company's current and deferred tax expense is computed on a
stand-alone basis, and consolidated tax savings are allocated to each company
based on its ratio of taxable income to total consolidated taxable income.
II-163
<PAGE> 194
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
9. LONG-TERM DEBT:
POLLUTION CONTROL OBLIGATIONS
Obligations incurred in connection with the sale by public
authorities of tax-exempt pollution control revenue bonds are as follows:
<TABLE>
<CAPTION>
December 31
1993 1992
(in thousands)
<S> <C> <C>
Collateralized -
6 3/4% due 2006 $ - $ 12,675
6% due 2006* 12,300 12,400
10% due 2013 - 20,000
8 1/4% due 2017 32,000 32,000
7 1/8% due 2021 21,200 21,200
6 3/4% due 2022 8,930 8,930
5.70% due 2023 7,875 -
5.80% due 2023 32,550 -
6.20% due 2023 13,000 -
Non-collateralized
5.9% due 1992-2003 - 7,875
10 1/2% due 2014 42,000 42,000
Total $169,855 $157,080
</TABLE>
* Sinking fund requirement applicable to the 6 percent pollution
control bonds is $100 thousand for 1994 with increasing increments thereafter
through 2005, with the remaining balance due in 2006.
With respect to the collateralized pollution control revenue bonds,
the Company has authenticated and delivered to trustees a like principal amount
of first mortgage bonds as security for obligations under collateralized
installment agreements. The principal and interest on the first mortgage bonds
will be payable only in the event of default under the agreements.
OTHER LONG-TERM DEBT
Long-term debt also includes $17.5 million for the Company's portion of notes
payable issued in connection with the termination of Plant Daniel coal
contracts (see Note 5 for information on fuel commitments). The notes bear
interest at 8.25 percent with the principal being amortized through 1995. Also
included in long-term debt is a 30-month note payable for $25 million which was
obtained to refinance higher cost securities. The principal is due in June
1996 and bears interest at 4.69 percent which is payable quarterly beginning
March 1994. The estimated annual maturities of the notes payable through 1996
are as follows: $8.4 million in 1994, $9.1 million in 1995, and $25 million in
1996.
10. LONG-TERM DEBT DUE WITHIN ONE YEAR:
A summary of the improvement fund requirement and scheduled maturities and
redemptions of long-term debt due within one year is as follows:
<TABLE>
<CAPTION>
December 31
1993 1992
(in thousands)
<S> <C> <C>
Bond improvement fund requirement $ 2,370 $ 2,450
Less: Portion to be satisfied by
bonding property additions - -
Cash improvement fund requirement 2,370 2,450
Maturities of first mortgage bonds 3,676 3,359
Redemptions of first mortgage bonds 27,000 -
Current portion of notes payable 8,406 7,736
(Note 9)
Pollution control bond maturity 100 275
(Note 9)
Total $41,552 $13,820
</TABLE>
The first mortgage bond improvement (sinking) fund requirement amounts
to 1 percent of each outstanding series of bonds authenticated under the
indenture prior to January 1 of each year, other than those issued to
collateralize pollution control obligations. The requirement may be satisfied
by depositing cash, reacquiring bonds, or by pledging additional property equal
to 1 and 2/3 times the requirement. In 1994, $12 million of 4 5/8 percent
First Mortgage Bonds due October 1, 1994 and $15 million of 6 percent First
Mortgage Bonds due June 1, 1996 are scheduled to be redeemed.
II-164
<PAGE> 195
NOTES (CONTINUED)
Gulf Power Company 1993 Annual Report
11. COMMON STOCK DIVIDEND RESTRICTIONS:
The Company's first mortgage bond indenture contains various common stock
dividend restrictions which remain in effect as long as the bonds are
outstanding. At December 31, 1993, $101 million of retained earnings was
restricted against the payment of cash dividends on common stock under the
terms of the mortgage indenture.
The Company's charter limits cash dividends on common stock to 50
percent of net income available for such stock during a prior period if the
capitalization ratio is below 20 percent and to 75 percent of such net income
if such ratio is 20 percent or more but less than 25 percent. The
capitalization ratio is defined as the ratio of common stock equity to total
capitalization, including retained earnings, adjusted to reflect the payment of
the proposed dividend. At December 31, 1993, the ratio was 44.4 percent.
12. QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Net Income
After
Dividends
Operating Operating on Preferred
Quarter Ended Revenues Income Stock
(in thousands)
<S> <C> <C> <C>
MARCH 31, 1993 $127,036 $17,646 $10,426
JUNE 30, 1993 138,863 19,562 7,312
SEPT. 30, 1993 175,964 32,783 22,366
DEC. 31, 1993 141,279 22,596 14,207
March 31, 1992 $126,536 $20,684 $ 9,576
June 30, 1992 137,123 22,914 12,120
Sept. 30, 1992 162,785 32,446 21,442
Dec. 31, 1992 144,458 20,931 10,952
</TABLE>
The Company's business is influenced by seasonal weather conditions
and the timing of rate changes, among other factors.
II-165
<PAGE> 196
SELECTED FINANCIAL AND OPERATING DATA
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS) $ 583,142 $ 570,902 $ 565,207
NET INCOME AFTER DIVIDENDS
ON PREFERRED STOCK (IN THOUSANDS) $ 54,311 $ 54,090 $ 57,796
CASH DIVIDENDS ON COMMON STOCK (IN THOUSANDS) $ 41,800 $ 39,900 $ 38,000
RETURN ON AVERAGE COMMON EQUITY (PERCENT) 13.29 13.62 15.17
TOTAL ASSETS (IN THOUSANDS) $1,307,809 $1,062,699 $1,095,736
GROSS PROPERTY ADDITIONS (IN THOUSANDS) $ 78,562 $ 64,671 $ 64,323
CAPITALIZATION (IN THOUSANDS):
Common stock equity $ 414,196 $ 403,190 $ 390,981
Preferred stock 89,602 74,662 55,162
Preferred stock subject to mandatory redemption 1,000 2,000 7,500
Long-term debt 369,259 382,047 434,648
Total (excluding amounts due within one year) $ 874,057 $ 861,899 $ 888,291
CAPITALIZATION RATIOS (PERCENT):
Common stock equity 47.4 46.8 44.0
Preferred stock 10.4 8.9 7.1
Long-term debt 42.2 44.3 48.9
Total (excluding amounts due within one year) 100.0 100.0 100.0
FIRST MORTGAGE BONDS (IN THOUSANDS):
Issued 75,000 25,000 50,000
Retired 88,809 117,693 32,807
PREFERRED STOCK (IN THOUSANDS):
Issued 35,000 29,500 -
Retired 21,060 15,500 2,500
SECURITY RATINGS:
First Mortgage Bonds -
Moody's A2 A2 A2
Standard and Poor's A A A
Duff & Phelps A+ A A
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps A A- A-
CUSTOMERS (YEAR-END):
Residential 274,194 267,591 261,210
Commercial 39,253 37,105 34,685
Industrial 274 270 264
Other 86 74 72
Total 313,807 305,040 296,231
EMPLOYEES (YEAR-END) 1,565 1,613 1,598
</TABLE>
II-166
<PAGE> 197
SELECTED FINANCIAL AND OPERATING DATA (CONTINUED)
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 567,825 $ 527,821 $ 550,827 $ 587,860 $ 542,919 $ 562,068 $ 505,812 $ 469,696
$ 38,714 $ 37,361 $ 45,698 $ 42,217 $ 46,421 $ 45,484 $ 40,336 $ 35,511
$ 37,000 $ 37,200 $ 35,400 $ 34,200 $ 33,100 $ 30,800 $ 27,200 $ 24,900
10.51 10.32 13.41 13.23 15.06 15.61 15.11 14.70
$ 1,084,579 $1,093,430 $1,097,225 $1,051,182 $1,028,864 $ 921,635 $ 892,924 $ 841,628
$ 62,462 $ 70,726 $ 67,042 $ 97,511 $ 90,160 $ 92,541 $ 156,443 $ 51,131
$ 371,185 $ 365,471 $ 358,310 $ 323,012 $ 314,995 $ 301,674 $ 280,990 $ 252,831
55,162 55,162 55,162 55,162 55,162 55,162 55,162 55,162
9,250 11,000 12,750 14,000 16,500 18,250 19,000 21,250
475,284 484,608 497,069 474,640 482,869 410,917 394,859 382,293
$ 910,881 $ 916,241 $ 923,291 $ 866,814 $ 869,526 $ 786,003 $ 750,011 $ 711,536
40.8 39.9 38.8 37.2 36.2 38.4 37.5 35.5
7.1 7.2 7.4 8.0 8.3 9.3 9.9 10.8
52.1 52.9 53.8 54.8 55.5 52.3 52.6 53.7
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
- - 35,000 - 50,000 - - -
6,455 9,344 9,369 - 46,640 2,860 10,415 -
- - - - - - - -
1,750 1,250 1,750 2,500 750 750 1,500 858
A2 A1 A1 A1 A1 A1 A1 A2
A A A A A+ A+ A+ A+
A AA- 4 4 4 4 4 4
a2 a1 a1 a1 a1 a1 a1 a2
A- A- A- A- A A A A-
A- A+ 5 5 5 5 5 5
256,111 251,341 246,450 241,138 235,329 227,845 217,138 205,292
34,019 33,678 33,030 32,139 31,142 29,603 27,939 26,217
252 240 206 206 197 183 177 179
67 67 61 61 62 62 63 62
290,449 285,326 279,747 273,544 266,730 257,693 245,317 231,750
1,615 1,614 1,601 1,603 1,544 1,509 1,460 1,463
</TABLE>
II-167
<PAGE> 198
SELECTED FINANCIAL AND OPERATING DATA (CONTINUED)
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS):
Residential $ 244,967 $ 235,296 $ 231,220
Commercial 137,308 133,071 130,691
Industrial 87,526 91,320 92,300
Other 1,882 1,784 1,860
Total retail 471,683 461,471 456,071
Sales for resale - non-affiliates 72,209 70,078 69,636
Sales for resale - affiliates 23,166 24,075 29,343
Total revenues from sales of electricity 567,058 555,624 555,050
Other revenues 16,084 15,278 10,157
Total $ 583,142 $ 570,902 $ 565,207
KILOWATT-HOUR SALES (IN THOUSANDS):
Residential 3,712,980 3,596,515 3,455,100
Commercial 2,433,382 2,369,236 2,272,690
Industrial 2,029,936 2,179,435 2,117,408
Other 16,944 16,649 17,118
Total retail 8,193,242 8,161,835 7,862,316
Sales for resale - non-affiliates 1,460,105 1,430,908 1,550,018
Sales for resale - affiliates 1,029,787 1,208,771 1,236,223
Total 10,683,134 10,801,514 10,648,557
AVERAGE REVENUE PER KILOWATT-HOUR (CENTS):
Residential 6.60 6.54 6.69
Commercial 5.64 5.62 5.75
Industrial 4.31 4.19 4.36
Total retail 5.76 5.65 5.80
Sales for resale 3.83 3.57 3.55
Total sales 5.31 5.14 5.21
AVERAGE ANNUAL KILOWATT-HOUR USE PER RESIDENTIAL CUSTOMER 13,671 13,553 13,320
AVERAGE ANNUAL REVENUE PER RESIDENTIAL CUSTOMER $ 901.96 $ 886.66 $ 891.38
PLANT NAMEPLATE CAPACITY RATINGS (YEAR-END) (MEGAWATTS) 2,174 2,174 2,174
MAXIMUM PEAK-HOUR DEMAND (MEGAWATTS):
Winter 1,571 1,533 1,418
Summer 1,898 1,828 1,740
ANNUAL LOAD FACTOR (PERCENT) 54.5 55.0 57.0
PLANT AVAILABILITY - FOSSIL-STEAM (PERCENT) 88.9 91.2 92.2
SOURCE OF ENERGY SUPPLY (PERCENT):
Coal 84.5 87.7 82.0
Oil and gas 0.5 0.1 0.1
Purchased power -
From non-affiliates 1.5 0.8 0.5
From affiliates 13.5 11.4 17.4
Total 100.0 100.0 100.0
TOTAL FUEL ECONOMY DATA:
BTU per net kilowatt-hour generated 10,390 10,347 10,636
Cost of fuel per million BTU (cents) 197.37 200.30 203.60
Average cost of fuel per net kilowatt-hour generated (cents) 2.05 2.07 2.17
</TABLE>
II-168
<PAGE> 199
SELECTED FINANCIAL AND OPERATING DATA (CONTINUED)
Gulf Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 217,843 $ 203,781 $ 184,036 $ 199,701 $ 200,725 $ 186,415 $ 174,302 $ 169,127
124,066 118,897 107,615 116,057 116,253 109,631 98,408 95,426
91,041 84,671 72,634 80,295 79,873 81,621 83,538 77,035
1,805 1,586 1,402 1,357 1,343 1,346 1,334 1,334
434,755 408,935 365,687 397,410 398,194 379,013 357,582 342,922
73,855 67,554 117,466 134,456 106,892 126,789 106,802 84,334
38,563 39,244 48,277 55,955 27,113 43,844 35,712 36,286
547,173 515,733 531,430 587,821 532,199 549,646 500,096 463,542
20,652 12,088 19,397 39 10,720 12,422 5,716 6,154
$ 567,825 $ 527,821 $ 550,827 $ 587,860 $ 542,919 $ 562,068 $ 505,812 $ 469,696
3,360,838 3,293,750 3,154,541 3,055,041 2,963,502 2,736,432 2,560,648 2,471,714
2,217,568 2,169,497 2,088,598 1,986,332 1,913,139 1,777,418 1,559,344 1,498,762
2,177,872 2,094,670 1,968,091 1,839,931 1,745,074 1,770,587 1,771,100 1,612,393
18,866 17,209 16,257 15,241 14,903 14,702 14,555 14,637
7,775,144 7,575,126 7,227,487 6,896,545 6,636,618 6,299,139 5,905,647 5,597,506
1,775,703 1,640,355 1,911,759 2,138,390 1,609,146 2,388,591 2,183,631 1,570,598
1,435,558 1,461,036 2,326,238 2,689,487 1,078,500 1,562,452 1,308,410 1,272,906
10,986,405 10,676,517 11,465,484 11,724,422 9,324,264 10,250,182 9,397,688 8,441,010
6.48 6.19 5.83 6.54 6.77 6.81 6.81 6.84
5.59 5.48 5.15 5.84 6.08 6.17 6.31 6.37
4.18 4.04 3.69 4.36 4.58 4.61 4.72 4.78
5.59 5.40 5.06 5.76 6.00 6.02 6.05 6.13
3.50 3.44 3.91 3.94 4.99 4.32 4.08 4.24
4.98 4.83 4.64 5.01 5.71 5.36 5.32 5.49
13,173 13,173 12,883 12,763 12,729 12,221 12,057 12,254
$ 853.86 $ 815.00 $ 751.60 $ 834.31 $ 862.16 $ 832.55 $ 820.71 $ 838.45
2,174 2,174 2,174 2,174 1,969 1,969 1,969 1,969
1,310 1,814 1,395 1,354 1,406 1,517 1,209 1,292
1,778 1,691 1,613 1,617 1,678 1,448 1,381 1,341
55.2 52.6 56.5 54.4 50.5 53.4 54.9 53.2
89.2 89.1 88.2 92.8 90.5 84.8 87.7 85.8
69.8 78.3 93.2 93.5 85.8 79.7 83.9 87.1
0.5 0.2 0.4 0.4 0.5 0.2 0.2 0.6
0.6 0.4 0.4 0.4 1.9 0.4 (1.4) (2.2)
29.1 21.1 6.0 5.7 11.8 19.7 17.3 14.5
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
10,765 10,621 10,461 10,512 10,639 10,609 10,639 10,721
206.06 193.70 178.00 197.53 239.26 254.53 240.40 240.14
2.22 2.06 1.86 2.08 2.55 2.70 2.60 2.57
</TABLE>
II-169
<PAGE> 200
STATEMENTS OF INCOME
Gulf Power Company
<TABLE>
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
(Thousands of Dollars)
OPERATING REVENUES:
<S> <C> <C> <C>
Revenues $ 559,976 $ 546,827 $ 535,864
Revenues from affiliates 23,166 24,075 29,343
Total operating revenues 583,142 570,902 565,207
OPERATING EXPENSES:
Operation --
Fuel 170,485 182,754 176,038
Purchased power from non-affiliates 4,386 1,394 896
Purchased power from affiliates 32,273 26,788 32,579
Proceeds from settlement of disputed contracts - (920) (20,385)
Other 109,164 98,230 94,411
Maintenance 46,004 41,947 45,468
Depreciation and amortization 55,309 53,758 52,195
Taxes other than income taxes 40,204 37,898 42,359
Federal and state income taxes 32,730 32,078 33,893
Total operating expenses 490,555 473,927 457,454
OPERATING INCOME 92,587 96,975 107,753
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 512 14 54
Interest income 1,328 2,733 2,427
Other, net (1,238) (1,487) (3,484)
Gain on sale of investment securities 3,820 - -
Income taxes applicable to other income (921) 187 1,104
INCOME BEFORE INTEREST CHARGES 96,088 98,422 107,854
INTEREST CHARGES:
Interest on long-term debt 31,344 35,792 41,665
Allowance for debt funds used during construction (454) (46) (95)
Interest on notes payable 870 1,041 280
Amortization of debt discount, premium, and expense, net 1,412 1,032 699
Other interest charges 2,877 1,410 2,272
Net interest charges 36,049 39,229 44,821
NET INCOME 60,039 59,193 63,033
DIVIDENDS ON PREFERRED STOCK 5,728 5,103 5,237
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 54,311 $ 54,090 $ 57,796
</TABLE>
II-170
<PAGE> 201
STATEMENTS OF INCOME
Gulf Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 529,262 $ 488,577 $ 502,550 $ 531,905 $ 515,806 $ 518,224 $ 470,100 $ 433,410
38,563 39,244 48,277 55,955 27,113 43,844 35,712 36,286
567,825 527,821 550,827 587,860 542,919 562,068 505,812 469,696
156,712 158,858 191,687 227,233 215,262 230,944 214,885 198,554
1,427 1,251 1,468 1,792 4,533 1,638 (3,698) (6,051)
67,729 48,972 27,267 28,326 37,172 55,119 42,967 32,476
- - - - - - - -
90,045 82,231 93,028 100,032 70,117 59,851 56,352 54,967
45,491 44,295 41,919 38,748 35,251 35,654 28,773 28,378
50,899 48,760 47,530 44,619 39,386 37,775 33,061 31,479
39,110 30,718 27,087 26,246 24,854 22,886 21,696 21,370
24,780 23,621 26,239 31,703 39,948 40,061 35,831 34,434
476,193 438,706 456,225 498,699 466,523 483,928 429,867 395,607
91,632 89,115 94,602 89,161 76,396 78,140 75,945 74,089
- (446) 457 1,013 7,809 6,893 2,877 679
4,508 3,271 2,858 4,507 2,445 3,235 8,777 7,250
(6,360) (3,800) (3,491) (1,207) (1,077) (1,131) (704) (1,191)
- - - - - - - -
1,303 779 1,001 (642) (648) (862) (3,524) (2,694)
91,083 88,919 95,427 92,832 84,925 86,275 83,371 78,133
43,215 43,265 42,538 43,689 39,479 40,769 36,952 35,719
1 242 (808) (1,004) (8,651) (7,676) (3,261) (543)
693 180 182 - 106 - 1,628 -
603 613 600 555 488 287 265 237
2,422 1,636 1,456 1,350 869 1,120 1,111 674
46,934 45,936 43,968 44,590 32,291 34,500 36,695 36,087
44,149 42,983 51,459 48,242 52,634 51,775 46,676 42,046
5,435 5,622 5,761 6,025 6,213 6,291 6,340 6,535
$ 38,714 $ 37,361 $ 45,698 $ 42,217 $ 46,421 $ 45,484 $ 40,336 $ 35,511
</TABLE>
II-171
<PAGE> 202
STATEMENTS OF CASH FLOWS
Gulf Power Company
<TABLE>
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
(Thousands of Dollars)
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 60,039 $ 59,193 $ 63,033
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 72,111 68,021 65,584
Deferred income taxes, net 5,347 3,322 (3,392)
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (512) (14) (54)
Non-cash proceeds from settlement of disputed contracts - (920) (19,734)
Other, net (864) 185 3,079
Changes in certain current assets and liabilities --
Receivables, net 12,867 (11,041) 12,421
Inventories 5,574 23,560 (2,397)
Payables 5,386 1,580 (2,003)
Other (9,504) (13,637) 8,012
Net cash provided from operating activities 150,444 130,249 124,549
INVESTING ACTIVITIES:
Gross property additions (78,562) (64,671) (64,323)
Other (5,328) 3,970 (8,097)
Net cash used for investing activities (83,890) (60,701) (72,420)
FINANCING ACTIVITIES AND CAPITAL CONTRIBUTIONS:
Proceeds:
Preferred stock 35,000 29,500 -
First mortgage bonds 75,000 25,000 50,000
Pollution control bonds 53,425 8,930 21,200
Capital contributions from parent company 11 121 -
Other long-term debt 25,000 - -
Retirements:
Preferred stock (21,060) (15,500) (2,500)
First mortgage bonds (88,809) (117,693) (32,807)
Pollution control bonds (40,650) (9,205) (21,250)
Other long-term debt (7,736) (5,783) (7,981)
Notes payable, net (37,947) 44,000 -
Payment of preferred stock dividends (5,728) (5,103) (5,237)
Payment of common stock dividends (41,800) (39,900) (38,000)
Miscellaneous (6,888) (8,760) (3,715)
Net cash provided from (used for) financing activities (62,182) (94,393) (40,290)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,372 (24,845) 11,839
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,204 26,049 14,210
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,576 $ 1,204 $ 26,049
( ) Denotes use of cash.
</TABLE>
II-172
<PAGE> 203
STATEMENTS OF CASH FLOWS
Gulf Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 44,149 $ 42,983 $ 51,459 $ 48,242 $ 52,634 $ 51,775 $ 46,676 $ 42,046
63,650 59,955 56,260 51,672 41,619 39,595 34,784 32,975
1,837 5,319 10,138 2,377 45,213 18,467 3,877 11,996
- - - 868 1,634 5,716 10,667 2,292
- 446 (457) (1,013) (7,809) (6,893) (2,877) (679)
- - - - - - - -
1,544 3,827 11,449 12,913 5,860 (2,535) 243 7,362
(2,468) 492 8,984 (8,849) (6,012) (5,401) 19,173 (32,356)
(11,807) 16,306 (16,160) 23,691 (1,342) 1,870 2,053 5,170
(3,440) 6,142 (5,340) 10,173 449 1,756 601 4,839
5,781 4,466 (18,432) 6,208 (113) (13,331) 11,169 4,432
99,246 139,936 97,901 146,282 132,133 91,019 126,366 78,077
(62,462) (70,726) (67,042) (97,511) (90,160) (92,541) (156,443) (51,131)
(1,597) 419 (62,782) (692) (55,652) 7,693 2,086 1,601
(64,059) (70,307) (129,824) (98,203) (145,812) (84,848) (154,357) (49,530)
- - - - - - - -
- - 35,000 - 50,000 - - -
- - 3,677 35,996 9,900 18,776 16,424 14,840
4,000 7,000 25,000 - - 6,000 15,000 12,000
- - - - 60,663 - - -
(1,750) (1,250) (1,750) (2,500) (750) (750) (1,500) (858)
(6,455) (9,344) (9,369) - (46,640) (2,860) (10,415) -
(50) (50) (50) (32,050) (50) (50) (50) (50)
(6,083) (5,611) (5,175) (4,774) - - - -
- - - - - - - -
(5,435) (5,622) (5,761) (6,025) (6,213) (6,291) (6,340) (6,535)
(37,000) (37,200) (35,400) (34,200) (33,100) (30,800) (27,200) (24,900)
5 (3) (233) (1,632) (6,064) (227) (680) (613)
(52,768) (52,080) 5,939 (45,185) 27,746 (16,202) (14,761) (6,116)
(17,581) 17,549 (25,984) 2,894 14,067 (10,031) (42,752) 22,431
31,791 14,242 40,226 37,332 23,265 33,296 76,048 53,617
$ 14,210 $ 31,791 $ 14,242 $ 40,226 $ 37,332 $ 23,265 $ 33,296 $ 76,048
</TABLE>
II-173
<PAGE> 204
BALANCE SHEETS
Gulf Power Company
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Thousands of Dollars)
ASSETS
<S> <C> <C> <C>
UTILITY PLANT:
Production-fossil $ 863,223 $ 841,489 $ 837,712
Transmission 154,304 148,824 143,275
Distribution 464,182 443,352 419,228
General 129,995 127,826 125,330
Construction work in progress 34,591 29,564 13,684
Total utility plant 1,646,295 1,591,055 1,539,229
Accumulated provision for depreciation 610,542 578,851 535,408
Total 1,035,753 1,012,204 1,003,821
Less property-related accumulated deferred income taxes - 200,904 197,138
Total 1,035,753 811,300 806,683
OTHER PROPERTY AND INVESTMENTS:
Securities received from settlement of disputed contracts - - 19,938
Miscellaneous 13,242 7,074 6,410
Total 13,242 7,074 26,348
CURRENT ASSETS:
Cash and cash equivalents 5,576 1,204 26,049
Investment securities - 22,322 -
Receivables, net 63,924 60,047 49,006
Fossil fuel stock, at average cost 20,652 29,492 52,106
Materials and supplies, at average cost 36,390 33,124 34,070
Current portion of deferred coal contract costs 12,535 3,071 4,626
Regulatory clauses under recovery 3,244 1,680 -
Prepayments 2,160 1,395 1,410
Vacation pay deferred 4,022 3,779 3,776
Total current assets 148,503 156,114 171,043
DEFERRED CHARGES:
Deferred charges related to income taxes 31,334 - -
Debt expense, being amortized 3,693 3,253 3,232
Premium on reacquired debt, being amortized 17,554 15,319 8,855
Deferred coal contract costs 52,884 63,723 74,502
Miscellaneous 4,846 5,916 5,073
Total deferred charges 110,311 88,211 91,662
TOTAL ASSETS $ 1,307,809 $ 1,062,699 $ 1,095,736
</TABLE>
II-174
<PAGE> 205
BALANCE SHEETS
Gulf Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 817,490 $ 807,546 $ 796,052 $ 801,600 $ 608,340 $ 599,613 $ 582,139 $ 563,381
136,813 133,926 113,177 106,352 99,507 98,683 96,686 96,356
400,016 375,521 343,421 325,037 295,052 274,656 241,557 213,403
123,059 119,779 115,273 102,664 66,092 56,427 43,539 39,480
16,868 10,166 29,572 10,113 188,966 148,969 130,027 31,711
1,494,246 1,446,938 1,397,495 1,345,766 1,257,957 1,178,348 1,093,948 944,331
501,739 464,944 425,520 388,248 350,117 318,308 287,349 259,250
992,507 981,994 971,975 957,518 907,840 860,040 806,599 685,081
192,749 186,084 178,657 166,707 152,589 135,388 112,684 103,355
799,758 795,910 793,318 790,811 755,251 724,652 693,915 581,726
- - - - - - - -
5,439 6,933 6,756 2,932 2,619 601 2,216 1,955
5,439 6,933 6,756 2,932 2,619 601 2,216 1,955
14,210 31,791 14,242 40,226 37,332 23,265 33,296 76,048
- - - - - - - -
61,427 58,959 59,451 68,435 59,586 53,574 48,173 67,346
50,469 37,526 55,286 43,290 69,785 73,890 76,039 82,389
33,310 34,446 32,992 28,828 26,024 20,577 20,298 16,001
6,212 5,534 6,194 2,642 - - - -
7,008 4,503 1,218 - - - - -
2,168 2,490 3,577 677 788 633 474 588
3,631 3,425 3,340 3,200 3,000 2,775 2,517 2,200
178,435 178,674 176,300 187,298 196,515 174,714 180,797 244,572
- - - - - - - -
2,954 3,117 3,281 3,203 2,736 2,768 2,636 2,669
6,256 6,574 6,892 7,210 - - - -
87,102 97,833 106,263 55,889 60,663 - - -
4,635 4,389 4,415 3,839 11,080 18,900 13,360 10,706
100,947 111,913 120,851 70,141 74,479 21,668 15,996 13,375
$ 1,084,579 $ 1,093,430 $ 1,097,225 $ 1,051,182 $ 1,028,864 $ 921,635 $ 892,924 $ 841,628
</TABLE>
II-175
<PAGE> 206
BALANCE SHEETS
Gulf Power Company
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
CAPITALIZATION:
Common stock $ 38,060 $ 38,060 $ 38,060
Other paid-in capital 218,282 218,271 218,150
Premium on preferred stock 81 88 399
Earnings retained in the business 157,773 146,771 134,372
Total common equity 414,196 403,190 390,981
Preferred stock 89,602 74,662 55,162
Preferred stock subject to mandatory redemption 1,000 2,000 7,500
Long-term debt 369,259 382,047 434,648
Total capitalization 874,057 861,899 888,291
(excluding amount due within one year)
CURRENT LIABILITIES:
Notes payable to banks 6,053 44,000 -
Preferred stock due within one year 1,000 1,000 1,000
Long-term debt due within one year 41,552 13,820 59,111
Accounts payable 38,699 33,461 25,315
Customer deposits 15,082 15,532 15,513
Taxes accrued 13,015 11,419 19,274
Interest accrued 5,420 6,370 9,720
Regulatory clauses over recovery 840 - 1,114
Vacation pay accrued 4,022 3,779 3,776
Miscellaneous 8,527 3,950 3,545
Total current liabilities 134,210 133,331 138,368
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 151,743 - 1,775
Deferred credits related to income taxes 76,876 - -
Accumulated deferred investment tax credits 40,770 43,117 45,446
Miscellaneous 30,153 24,352 21,856
Total deferred credits and other liabilities 299,542 67,469 69,077
TOTAL CAPITALIZATION AND LIABILITIES $ 1,307,809 $ 1,062,699 $ 1,095,736
</TABLE>
II-176
<PAGE> 207
BALANCE SHEETS
Gulf Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 38,060 $ 38,060 $ 38,060 $ 38,060 $ 38,060 $ 38,060 $ 38,060 $ 38,060
218,150 214,150 207,150 182,150 182,150 182,150 176,150 161,150
399 399 399 399 399 399 399 376
114,576 112,862 112,701 102,403 94,386 81,065 66,381 53,245
371,185 365,471 358,310 323,012 314,995 301,674 280,990 252,831
55,162 55,162 55,162 55,162 55,162 55,162 55,162 55,162
9,250 11,000 12,750 14,000 16,500 18,250 19,000 21,250
475,284 484,608 497,069 474,640 482,869 410,917 394,859 382,293
910,881 916,241 923,291 866,814 869,526 786,003 750,011 711,536
- - - - - - - -
1,750 1,750 1,250 1,750 1,750 750 750 -
9,452 12,588 15,005 13,225 4,823 2,910 2,910 9,965
27,447 34,764 29,595 34,500 24,014 23,565 21,809 21,208
15,551 15,752 15,316 15,565 14,715 13,753 12,624 11,078
19,610 12,388 10,683 7,850 10,986 13,240 22,038 19,462
10,820 10,105 10,247 9,584 11,024 11,783 11,707 11,566
- - - 9,330 - - - -
3,631 3,425 3,340 3,200 3,000 2,775 2,517 2,200
12,177 7,759 2,748 2,144 3,869 4,966 4,474 4,130
100,438 98,531 88,184 97,148 74,181 73,742 78,829 79,609
6,736 13,381 17,678 22,992 23,550 - - -
- - - - - - - -
47,776 50,109 52,451 54,597 55,843 55,846 53,242 43,752
18,748 15,168 15,621 9,631 5,764 6,044 10,842 6,731
73,260 78,658 85,750 87,220 85,157 61,890 64,084 50,483
$ 1,084,579 $ 1,093,430 $ 1,097,225 $ 1,051,182 $ 1,028,864 $ 921,635 $ 892,924 $ 841,628
</TABLE>
II-177
<PAGE> 208
GULF POWER COMPANY
OUTSTANDING SECURITIES
AT DECEMBER 31, 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1964 $ 12,000 4-5/8% $ 12,000 10/1/94
1966 15,000 6% 15,000 6/1/96
1992 25,000 5-7/8% 25,000 8/1/97
1988 35,000 9.20% 19,486 4/1/98
1993 15,000 5.55% 15,000 4/1/98
1993 30,000 5.00% 30,000 7/1/98
1993 30,000 6.125% 30,000 7/1/03
1978 25,000 9% 5,050 9/1/08
1991 50,000 8-3/4% 50,000 12/1/21
$ 237,000 $ 201,536
</TABLE>
POLLUTION CONTROL BONDS
<TABLE>
<CAPTION>
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1976 $ 12,500 6% $ 12,300 10/1/06
1984 42,000 10.50% 42,000 12/1/14
1987 32,000 8.25% 32,000 6/1/17
1991 21,200 7.125% 21,200 4/1/21
1992 8,930 6.75% 8,930 3/1/22
1993 13,000 6.20% 13,000 4/1/23
1993 32,550 5.80% 32,550 6/1/23
1993 7,875 5.70% 7,875 11/1/23
$ 170,055 $ 169,855
</TABLE>
PREFERRED STOCK
<TABLE>
<CAPTION>
Shares Dividend Amount
Series Outstanding Rate Outstanding
(Thousands)
<S> <C> <C> <C>
1950 51,026 4.64% $ 5,102
1960 50,000 5.16% 5,000
1966 50,000 5.44% 5,000
1969 50,000 7.52% 5,000
1972 50,000 7.88% 5,000
1980 (1) 20,000 11.36% 2,000
1992 580,000 7.00% 14,500
1992 600,000 7.30% 15,000
1993 800,000 6.72% 20,000
1993 600,000 Adjustable 15,000
2,851,026 $ 91,602
</TABLE>
(1) Subject to mandatory redemption of 5% annually on or before February 1.
II-178
<PAGE> 209
GULF POWER COMPANY
SECURITIES RETIRED
DURING 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Principal Interest
Series Amount Rate
(Thousands)
<S> <C> <C>
1969 $ 15,000 7.75%
1971 21,000 7.50%
1972 22,000 7.50%
1973 25,000 7.50%
1978 2,450 9%
1988 3,359 9.20%
$ 88,809
</TABLE>
POLLUTION CONTROL BONDS
<TABLE>
<CAPTION>
Principal Interest
Series Amount Rate
(Thousands)
<S> <C> <C>
1973 $ 7,875 5.90%
1976 12,675 6.75%
1976 100 6.00%
1983 20,000 10%
$ 40,650
</TABLE>
PREFERRED STOCK
<TABLE>
<CAPTION>
Principal Dividend
Series Amount Rate
(Thousands)
<S> <C> <C>
1971 $ 5,060 8.52%
1977 15,000 8.28%
1980 1,000 11.36%
$ 21,060
</TABLE>
II-179
<PAGE> 210
MISSISSIPPI POWER COMPANY
FINANCIAL SECTION
II-180
<PAGE> 211
MANAGEMENT'S REPORT
Mississippi Power Company 1993 Annual Report
The management of Mississippi Power Company has prepared--and is responsible
for--the financial statements and related information included in this
report. These statements were prepared in accordance with generally
accepted accounting principles appropriate in the circumstances and
necessarily include amounts that are based on best estimates and judgments
of management. Financial information throughout this annual report is
consistent with the financial statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the Company. Limitations exist,
however, in any system of internal control, based upon a recognition that
the cost of the system should not exceed its benefits. The Company believes
its system of internal accounting control maintains an appropriate
cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the internal audit staff. The Company's independent public
accountants also consider certain elements of the internal control system in
order to determine their auditing procedures for the purpose of expressing
an opinion on the financial statements.
The audit committee of the board of directors, composed of four directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors, and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls, and financial reporting matters. The internal
auditors and independent public accountants have access to the members of
the audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted according to a high
standard of business ethics.
In management's opinion, the financial statements present fairly, in all
material respects, the financial position, results of operations, and cash
flows of Mississippi Power Company in conformity with generally accepted
accounting principles.
/s/ David M. Ratcliffe
--------------------------------------------------
David M. Ratcliffe
President and Chief Executive Officer
/s/ Thomas A. Fanning
--------------------------------------------------
Thomas A. Fanning
Vice President and Chief Financial Officer
II-181
<PAGE> 212
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF
MISSISSIPPI POWER COMPANY:
We have audited the accompanying balance sheets and statements of
capitalization of Mississippi Power Company (a Mississippi corporation and a
wholly owned subsidiary of The Southern Company) as of December 31, 1993 and
1992, and the related statements of income, retained earnings, paid-in
capital, and cash flows for each of the three years in the period ended
December 31, 1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements (pages II-190 through II-206)
referred to above present fairly, in all material respects, the financial
position of Mississippi Power Company as of December 31, 1993 and 1992, and
the results of its operations and its cash flows for the periods stated, in
conformity with generally accepted accounting principles.
As explained in Notes 2 and 9 to the financial statements, effective
January 1, 1993, Mississippi Power Company changed its methods of accounting
for postretirement benefits other than pensions and for income taxes.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16 , 1994
II-182
<PAGE> 213
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION Mississippi Power Company 1993 Annual Report
RESULTS OF OPERATIONS
EARNINGS
Mississippi Power Company's net income after dividends on preferred stock
for 1993 totaled $42.4 million, an increase of $5.6 million over the prior
year. This improvement is attributable primarily to increased energy sales
and retail rate increases. A retail rate increase under the Company's
Performance Evaluation Plan (PEP-1A) of $6.4 million annually became
effective in July 1993. Under the Environmental Compliance Overview Plan
(ECO Plan) retail rates increased by $2.6 million annually effective April
1993.
A comparison of 1992 to 1991 - excluding the events occurring in 1991
discussed below - would reflect a 1992 increase in earnings of $4.9 million
or 15.5 percent. The Company's financial performance in 1991 reflected the
after-tax operating and disposal losses of $11.9 million recorded by the
Company's former merchandise subsidiary. These losses were partially offset
by a $2.6 million positive impact on earnings from the settlement of the
contract dispute with Gulf States Utilities Company (Gulf States).
REVENUES
The following table summarizes the factors impacting operating revenues for
the past three years:
<TABLE>
<CAPTION>
Increase (Decrease)
from Prior Year
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Retail -
Change in
base rates $ 5,079* $ 6,605 $ 4,627
Sales growth 5,606 7,181 1,304
Weather 4,735 (3,915) 178
Fuel cost
recovery
and other 15,028 (2,743) (11,209)
Total retail 30,448 7,128 (5,100)
Sales for resale --
Non-affiliates 3,298 1,387 (7,368)
Affiliates 5,464 (7,989) (2,113)
Total sales for
resale 8,762 (6,602) (9,481)
Other operating
revenues 1,226 1,535 96
Total operating
revenues $ 40,436 $ 2,061 $(14,485)
Percent change 9.3% 0.5% (3.2)%
</TABLE>
*Includes the effect of the retail rate increase approved under the ECO Plan.
Retail revenues of $368 million in 1993 increased 9.0 percent over the
prior year, compared with an increase of 2.2 percent for 1992 and a decrease
of 1.5 percent in 1991. The increase in retail revenues for 1993 was a
result of growth in energy sales and customers, the favorable impact of
weather, and retail rate increases. Changes in base rates reflect rate
changes made under the PEP plans and the ECO Plan as approved by the
Mississippi Public Service Commission (MPSC).
The increase in revenues for the recovery of fuel costs for 1993 reversed
two years of decline. Under the fuel cost recovery provision, recorded fuel
revenues are equal to recorded fuel expenses, including the fuel component
and the operation and maintenance component of purchased energy. Therefore,
changes in recoverable fuel expenses are offset with corresponding changes
in fuel revenues and have no effect on net income.
II-183
<PAGE> 214
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1993 Annual Report
Included in sales for resale to non-affiliates are revenues from rural
electric cooperative associations and municipalities located in southeastern
Mississippi. Energy sales to these customers in 1993 increased 9.0 percent
over the prior year with the related revenues rising 14.1 percent. The
customer demand experienced by these utilities is determined by factors very
similar to Mississippi Power's.
Sales for resale to non-affiliated non-territorial utilities are
primarily under long-term contracts consisting of capacity and energy
components. Capacity revenues reflect the recovery of fixed costs and a
return on investment under the contracts. Energy is generally sold at
variable cost. The capacity and energy components were:
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Capacity $ 4,191 $ 3,573 $2,714
Energy 12,120 19,538 19,856
Total $16,311 $23,111 $22,570
</TABLE>
Capacity revenues for Mississippi Power increased in 1993 and 1992 due to
a change in the allocation of transmission capacity revenues throughout the
Southern electric system. Most of the Company's capacity revenues are
derived from transmission charges.
Sales to affiliated companies within the Southern electric system will
vary from year to year depending on demand and the availability and cost of
generating resources at each company. These sales have no material impact
on earnings.
The increase in other operating revenues for 1993 was due to increased
rents collected from microwave equipment use and the transmission of
non-associated companies' electricity.
Below is a breakdown of kilowatt-hour sales for 1993 and the percent
change for the last three years:
<TABLE>
<CAPTION>
(millions of Amount Percent Change
kilowatt-hours) 1993 1993 1992 1991
<S> <C> <C> <C> <C>
Residential 1,930 6.9% (1.5)% 1.5%
Commercial 1,934 6.8 2.4 2.9
Industrial 3,623 2.5 7.3 (0.4)
Other 38 0.3 (57.2) 4.0
Total retail 7,525 4.7 2.9 1.0
Sales for
resale --
Non-affiliates 2,545 (5.3) (0.7) (6.1)
Affiliates 427 52.2 (54.6) (13.5)
Total 10,497 3.3% (1.5)% (2.0)%
</TABLE>
Total retail energy sales in 1993 increased compared to the previous
year, due primarily to weather influences and the improvement in the
economy. The increase in commercial energy sales also reflects the impact
of recently established casinos within the Company's service area.
Industrial sales increased in 1992 as a result of new contracts with two
large industrial customers.
The decrease in energy sales for resale to non-affiliates is
predominantly due to reductions in unit power sales under long-term
contracts to Florida utilities. Economy sales and amounts sold under
short-term contracts are also sold for resale to non-affiliates. Sales for
resale to non-affiliates are influenced by those utilities' own customer
demand, plant availability, and the cost of their predominant fuels -- oil
and natural gas.
EXPENSES
Total operating expenses for 1993 were higher than the previous year because
of higher production expenses, which reflects increased demand, an increase
in the federal income tax rate, and higher employee-related costs. (See
Note 2 to the financial statements for information regarding employee and
retiree benefits.) Additionally, included in other operation expenses are
increased costs associated with environmental remediation of a Southern
electric system research facility. Expenses in 1992 were lower than 1991,
excluding the Gulf States settlement, primarily because of lower production
expenses stemming from decreased demand.
II-184
<PAGE> 215
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1993 Annual Report
Fuel costs constitute the single largest expense for Mississippi Power.
These costs increased in 1993 due to an 11.0 percent increase in generation,
which reflects higher demand. Fuel expenses in 1992, compared to 1991, were
lower because of less generation and the negotiation of new coal contracts.
Generation decreased primarily because of the availability of lower cost
generation elsewhere within the Southern electric system.
Purchased power consists primarily of energy purchases from the
affiliates of the Southern electric system. Purchased power transactions
(both sales and purchases) among Mississippi Power and its affiliates will
vary from period to period depending on demand and the availability and
variable production cost at each generating unit in the Southern electric
system.
Taxes other than income taxes increased in 1993 because of higher ad
valorem taxes, which are property based, and municipal franchise taxes,
which are revenue based. The decline in 1992 was attributable to lower
franchise taxes.
Income tax expense in 1993 increased because of the enactment of a higher
corporate income tax rate retroactive to January 1, 1993, coupled with
higher earnings. The change in income taxes for 1992 and 1991 reflected the
change in operating income.
EFFECTS OF INFLATION
Mississippi Power is subject to rate regulation and income tax laws that are
based on the recovery of historical costs. Therefore, inflation creates an
economic loss because the Company is recovering its costs of investments in
dollars that have less purchasing power. While the inflation rate has been
relatively low in recent years, it continues to have an adverse effect on
the Company because of the large investment in long-lived utility plant.
Conventional accounting for historical costs does not recognize this
economic loss nor the partially offsetting gain that arises through
financing facilities with fixed-money obligations, such as long-term debt
and preferred stock. Any recognition of inflation by regulatory authorities
is reflected in the rate of return allowed.
FUTURE EARNINGS POTENTIAL
The results of operations for the past three years are not necessarily
indicative of future earnings potential. The level of future earnings
depends on numerous factors ranging from regulatory matters to growth in
energy sales. Expenses are subject to constant review and cost control
programs. Among the efforts to control costs are utilizing employees more
effectively through a functionalization program for the Southern electric
system, redesigning compensation and benefit packages, and re- engineering
work processes. Mississippi Power is also maximizing the utility of
invested capital and minimizing the need for capital by refinancing,
decreasing the average fuel stockpile, raising generating plant availability
and efficiency, and curbing the construction budget. Operating revenues
will be affected by any changes in rates under the PEP-2, the Company's
revised performance based ratemaking plan. The PEP plans have proved to be
a stabilizing force on electric rates, with only moderate changes in rates
taking place.
The ECO Plan, approved by the MPSC in 1992, provides for recovery of
costs associated with environmental projects approved by the MPSC, most of
which are required to comply with Clean Air Act Amendments of 1990
regulations. The ECO Plan is operated independently of PEP-2.
The FERC regulates wholesale rate schedules and power sales contracts
that Mississippi Power has with its sales for resale customers. The FERC is
currently reviewing the rate of return on common equity included in these
schedules and contracts and may require such returns to be lowered, possibly
retroactively. Also, pending before the FERC is the Company's request for a
$3.6 million wholesale rate increase.
Further discussion of the PEP plans, the ECO Plan, and proceedings before
the FERC is made in Note 3 to the financial statements herein.
Future earnings in the near term will depend upon growth in energy sales,
which are subject to a number of factors. Traditionally, these factors have
included changes in contracts with neighboring utilities, energy
conservation practiced by customers, the elasticity of demand, weather,
competition, and the rate of economic growth in Mississippi Power's service
area. However, the Energy
II-185
<PAGE> 216
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1993 Annual Report
Policy Act of 1992 (Energy Act) will have a profound effect on the future of
the electric utility industry. The Energy Act promotes energy efficiency,
alternative fuel use, and increased competition for electric utilities. The
Energy Act allows Independent Power Producers (IPPs) to access a utility's
transmission network in order to sell electricity to other utilities, and
this may enhance the incentive of IPPs to build cogeneration plants for a
utility's large industrial and commercial customers. Although the Energy
Act does not require transmission access to retail customers, pressure for
legislation to allow retail wheeling will continue. Mississippi Power is
preparing to meet the challenge of this major change in the traditional
business practices of selling electricity. If Mississippi Power does not
remain a low-cost producer and provider of quality service, the Company's
retail energy sales growth, as well as new long-term contracts for energy
sales outside the service area, could be limited, which could significantly
reduce earnings.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued Statement No. 112,
Employers' Accounting for Postemployment Benefits, which must be effective
by 1994. The new standard requires that all types of benefits provided to
former or inactive employees and their families prior to retirement be
accounted for on an accrual basis. These benefits include salary
continuation, severance pay, supplemental unemployment benefits,
disability-related benefits, job training, and health and life insurance
coverage. In 1993, Mississippi Power adopted Statement No. 112, with no
material effect on the financial statements.
The FASB has issued Statement No. 115, Accounting for Certain Investments
in Debt and Equity Securities, which is effective in 1994. Statement No.
115 supersedes FASB Statement No. 12, Accounting for Certain Marketable
Securities. In January 1994, Mississippi Power adopted the new rules, with
no material effect on the financial statements.
On January 1, 1993, Mississippi Power changed its methods of accounting
for postretirement benefits other than pensions and income taxes. See Notes
2 and 9 to the financial statements regarding the impact of these changes.
FINANCIAL CONDITION
OVERVIEW
The principal changes in Mississippi Power's financial condition during 1993
were gross property additions of $140 million to utility plant, a
significant lowering of cost of capital through refinancings, and the
resolution of PEP and ratepayer litigation. Funding for gross property
additions came primarily from capital contributions from The Southern
Company, earnings and other operating cash flows. The Statements of Cash
Flows provide additional details.
FINANCING ACTIVITY
Mississippi Power continued to lower its financing costs in 1993 by issuing
new debt and equity securities and retiring high- cost issues. The Company
sold $132 million of first mortgage bonds, preferred stock and, through
public authorities, pollution control revenue bonds. Retirements, including
maturities during 1993, totaled some $101 million of such securities. (See
the Statements of Cash Flows for further details.) Composite financing
rates for the years 1991 through 1993 as of year-end were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Composite interest rate on
long-term debt 6.57% 6.91% 7.90%
Composite preferred stock
dividend rate 6.58% 7.29% 7.32%
</TABLE>
II-186
<PAGE> 217
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1993 Annual Report
CAPITAL STRUCTURE
At year-end 1993, the Company's ratio of common equity to total
capitalization was 49.8 percent, compared to 47.3 percent in 1992 and 44.4
percent in 1991. The increase in the ratio in 1993 can be attributed
primarily to the receipt of $30 million of capital contributions from The
Southern Company.
CAPITAL REQUIREMENTS FOR CONSTRUCTION
The Company's projected construction expenditures for the next three years
total $256 million ($96 million in 1994, $62 million in 1995, and $98
million in 1996). The major emphasis within the construction program will
be on complying with Clean Air Act regulations, completion of a 78-megawatt
combustion turbine, and upgrading existing facilities. The estimates for
property additions for the three-year period include $39 million committed
to meeting the requirements of Clean Air Act regulations. Revisions may be
necessary because of factors such as revised load projections, the
availability and cost of capital, and changes in environmental regulations.
OTHER CAPITAL REQUIREMENTS
In addition to the funds required for the Company's construction program,
approximately $51 million will be required by the end of 1996 for present
sinking fund requirements and maturities of long-term debt. Mississippi
Power plans to continue, when economically feasible, to retire high-cost
debt and preferred stock and replace these obligations with lower-cost
capital.
ENVIRONMENTAL MATTERS
In November 1990, the Clean Air Act Amendments of 1990 (Clean Air Act)
were signed into law. Title IV of the Clean Air Act -- the acid rain
compliance provision of the law -- will have a significant impact on
Mississippi Power and the other operating companies of The Southern Company.
Specific reductions in sulfur dioxide and nitrogen oxide emissions from
fossil-fired generating plants will be required in two phases. Phase I
compliance must be implemented in 1995, and affects eight generating plants
-- some 10 thousand megawatts of capacity or 35 percent of total capacity --
in the Southern electric system. Phase II compliance is required in 2000,
and all fossil-fired generating plants in the Southern electric system will
be affected.
Beginning in 1995, the Environmental Protection Agency (EPA) will
allocate annual sulfur dioxide emission allowances through the newly
established allowance trading program. An emission allowance is the
authority to emit one ton of sulfur dioxide during a calendar year. The
method for allocating allowances is based on the fossil fuel consumed from
1985 through 1987 for each affected generating unit. Emission allowances
are transferable and can be bought, sold, or banked and used in the future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The market for emission allowances is developing more
slowly than expected. However, The Southern Company's sulfur dioxide
compliance strategy is designed to take advantage of allowances as the
market develops.
The Southern Company expects to achieve Phase I sulfur dioxide compliance
at the eight affected plants by switching to low-sulfur coal, and this has
required some equipment upgrades. This compliance strategy is expected to
result in unused emission allowances being banked for later use. Additional
construction expenditures are required to install equipment for the control
of nitrogen oxide emissions at these eight plants. Also, continuous
emissions monitoring equipment would be installed on all fossil-fired units.
Under this Phase I compliance approach, additional construction expenditures
are estimated to total approximately $275 million through 1995 for The
Southern Company, of which Mississippi Power's portion is approximately $60
million.
Phase II compliance costs are expected to be higher because requirements
are stricter and all fossil-fired generating plants are affected. For
sulfur dioxide compliance, The Southern Company could use emission
allowances banked during Phase I, increase fuel switching, install flue gas
desulfurization equipment at selected plants, and/or purchase more
allowances depending on the price and availability of allowances. Also, in
Phase II, equipment to control nitrogen oxide emissions will be installed on
additional system fossil-fired plants as required to meet anticipated Phase
II limits. Therefore, during the period 1996 to 2000, compliance for The
Southern Company could require total construction expenditures ranging from
approximately $450 million to $800 million,
II-187
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MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1993 Annual Report
of which Mississippi Power's portion is approximately $25 million. However,
the full impact of Phase II compliance cannot now be determined with
certainty, pending the development of a market for emission allowances, the
completion of EPA regulations, and the possibility of new emission reduction
technologies.
An average increase of up to 3 percent in revenue requirements from
customers could be necessary to fully recover The Southern Company's costs
of compliance for both Phase I and II of the Clean Air Act. Compliance
costs include construction expenditures, increased costs for switching to
low-sulfur coal, and costs related to emission allowances.
Mississippi Power's ECO Plan is designed to allow recovery of costs of
compliance with the Clean Air Act, as well as other environmental statutes
and regulations. The MPSC reviews environmental projects and the Company's
environmental policy through the ECO Plan. Under the ECO Plan, any increase
in the annual revenue requirement is limited to 2 percent of retail
revenues. However, the plan also provides for carryover of any amount over
the 2 percent limit into the next year's revenue requirement. Mississippi
Power's management believes that the ECO Plan will provide for recovery of
the Clean Air Act costs.
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The study will serve as the
basis for a decision on whether additional regulatory control of these
substances is warranted. Compliance with any new control standard could
result in significant additional costs. The impact of new standards -- if
any -- will depend on the development and implementation of applicable
regulations.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study
on the impact of a new standard indicate that a number of plants could be
required to install sulfur dioxide controls. These controls would be in
addition to the controls already required to meet the acid rain provisions
of the Clean Air Act. The EPA is expected to take some action on this issue
in 1994. The impact of any new standard will depend on the level chosen for
the standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air
quality standards for particulate matter, nitrogen oxides, and ozone. The
impact of any new standard will depend on the level chosen for the standard
and cannot be determined at this time.
In 1994 or 1995, the EPA is expected to issue revised rules on air
quality control regulations related to stack height requirements of the
Clean Air Act. The full impact of the final rules cannot be determined at
this time, pending their development and implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of
coal ash. However, the EPA has until 1998 to classify co-managed utility
wastes -- coal ash and other utility wastes -- as either non-hazardous or
hazardous. If the EPA classifies the co-managed wastes as hazardous, then
substantial additional costs for the management of such wastes may be
required. The full impact of any change in the regulatory status will
depend on the subsequent development of co-managed waste requirements.
The Company must comply with other environmental laws and regulations
that cover the handling and disposal of hazardous waste. Under these
various laws and regulations, the Company could incur costs to clean up
properties currently or previously owned. The Company conducts studies to
determine the extent of any required clean-up costs and has recognized in
the financial statements costs to clean up known sites.
Several major pieces of environmental legislation are in the process of
being reauthorized or amended by Congress. These include: the Clean Water
Act; the Resource Conservation and Recovery Act; and the Comprehensive
Environmental Response, Compensation, and Liability Act. Changes to these
laws could affect many areas of the Company's operations. The full impact
of these requirements cannot be determined at this time, pending the
development and implementation of applicable regulations.
Compliance with possible new legislation related to global climate
change, electromagnetic fields, and other environmental and health concerns
could significantly affect the Company. The impact of new legislation -- if
any -- will depend on the subsequent development and implementation of
applicable regulations. In addition, the
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<PAGE> 219
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1993 Annual Report
potential for lawsuits alleging damages caused by electromagnetic fields
exists.
SOURCES OF CAPITAL
At December 31, 1993, the Company had $70 million of committed credit in
revolving credit agreements and also had $21 million of committed short-term
credit lines. The $40 million of notes payable outstanding at year end 1993
were apart from the committed credit facilities.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulations will be
derived from operations, the sale of additional first mortgage bonds,
pollution control obligations, and preferred stock, and the receipt of
additional capital contributions from The Southern Company. Mississippi
Power is required to meet certain coverage requirements specified in its
mortgage indenture and corporate charter to issue new first mortgage bonds
and preferred stock. The Company's coverage ratios are sufficiently high
enough to permit, at present interest rate levels, any foreseeable security
sales. The amount of securities which the Company will be permitted to
issue in the future will depend upon market conditions and other factors
prevailing at that time.
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<PAGE> 220
STATEMENTS OF INCOME
For the Years Ended December 31, 1993, 1992, and 1991
Mississippi Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES (NOTES 1, 3, AND 7):
Revenues $ 459,364 $ 424,392 $ 414,342
Revenues from affiliates 15,519 10,055 18,044
Total operating revenues 474,883 434,447 432,386
OPERATING EXPENSES:
Operation --
Fuel 113,986 96,743 120,485
Purchased power from non-affiliates 2,198 1,337 851
Purchased power from affiliates 58,019 60,689 45,506
Proceeds from settlement of disputed contracts (Note 7) - (189) (4,205)
Other 100,381 90,581 86,932
Maintenance 44,001 43,165 44,166
Depreciation and amortization 33,099 32,789 32,147
Taxes other than income taxes 37,145 34,664 35,414
Federal and state income taxes (Note 9) 22,668 16,378 13,976
Total operating expenses 411,497 376,157 375,272
OPERATING INCOME 63,386 58,290 57,114
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 1,010 642 728
Interest income 517 766 1,093
Other, net 3,971 5,501 3,845
Income taxes applicable to other income (1,158) (1,427) (863)
INCOME BEFORE INTEREST CHARGES 67,726 63,772 61,917
INTEREST CHARGES:
Interest on long-term debt 17,688 22,357 23,656
Allowance for debt funds used during construction (788) (563) (584)
Interest on notes payable 1,000 362 603
Amortization of debt discount, premium, and expense, net 1,262 630 377
Other interest charges 728 339 285
Net interest charges 19,890 23,125 24,337
NET INCOME FROM CONTINUING OPERATIONS 47,836 40,647 37,580
DISCONTINUED OPERATIONS (NOTE 1):
Loss from operations of discontinued
subsidiary, net of taxes - - (6,404)
Loss on disposal of subsidiary, net of taxes - - (5,455)
Net loss from discontinued subsidiary - - (11,859)
NET INCOME 47,836 40,647 25,721
DIVIDENDS ON PREFERRED STOCK 5,400 3,857 3,094
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 42,436 $ 36,790 $ 22,627
</TABLE>
The accompanying notes are an integral part of these statements.
II-190
<PAGE> 221
STATEMENTS OF CASH FLOWS
For the Years ended December 31, 1993, 1992, and 1991
Mississippi Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 47,836 $ 40,647 $ 25,721
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 45,660 41,472 41,773
Deferred income taxes and investment tax credits 5,039 (5,473) (11,871)
Allowance for equity funds used during construction (1,010) (642) (728)
Non-cash proceeds from settlement of disputed contracts (Note 7) - (189) (4,071)
Other, net 3,005 8,093 (4,982)
Changes in certain current assets and liabilities --
Receivables, net (4,347) 1,002 35,343
Inventories 11,119 975 10,518
Payables 4,133 460 (4,949)
Other (8,033) 6,095 11,433
Net cash provided from operating activities 103,402 92,440 98,187
INVESTING ACTIVITIES:
Gross property additions (139,976) (68,189) (53,675)
Other 7,562 4,235 2,148
Net cash used for investing activities (132,414) (63,954) (51,527)
FINANCING ACTIVITIES:
Proceeds:
Capital contributions 30,036 26 -
Preferred stock 23,404 35,000 -
First mortgage bonds 70,000 40,000 50,000
Pollution control bonds 38,875 23,300 -
Other long-term debt - - 844
Retirements:
Preferred stock (23,404) - (4,118)
First mortgage bonds (51,300) (104,703) -
Pollution control bonds (25,885) (23,650) (300)
Other long-term debt (8,170) (6,212) (8,958)
Notes payable, net 9,000 26,500 (25,603)
Payment of preferred stock dividends (5,400) (3,857) (3,094)
Payment of common stock dividends (29,000) (28,000) (28,500)
Miscellaneous (5,683) (7,821) (839)
Net cash provided from (used for) financing activities 22,473 (49,417) (20,568)
NET CHANGE IN CASH AND CASH EQUIVALENTS (6,539) (20,931) 26,092
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7,417 28,348 2,256
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 878 $ 7,417 $ 28,348
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for --
Interest (net of amount capitalized) $15,697 $22,941 $24,802
Income taxes 29,009 19,514 17,980
</TABLE>
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
II-191
<PAGE> 222
BALANCE SHEETS
At December 31, 1993 and 1992
Mississippi Power Company 1993 Annual Report
<TABLE>
<CAPTION>
ASSETS 1993 1992
(in thousands)
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost (Notes 1 and 6) $ 1,238,847 $ 1,180,505
Less accumulated provision for depreciation 462,725 440,777
776,122 739,728
Construction work in progress 108,063 41,692
Total 884,185 781,420
Less property-related accumulated deferred income taxes (Note 9) - 142,338
Total 884,185 639,082
OTHER PROPERTY AND INVESTMENTS (NOTE 10) 11,289 4,539
CURRENT ASSETS:
Cash and cash equivalents 878 7,417
Investment securities - 3,622
Receivables-
Customer accounts receivable 31,376 26,336
Other accounts and notes receivable 5,581 5,757
Affiliated companies 6,698 3,532
Accumulated provision for uncollectible accounts (737) (508)
Fossil fuel stock, at average cost 11,185 21,341
Materials and supplies, at average cost 21,145 22,108
Current portion of deferred fuel charges (Note 5) 440 1,861
Prepayments 7,843 5,869
Vacation pay deferred (Note 1) 4,797 4,651
Total 89,206 101,986
DEFERRED CHARGES:
Debt expense and loss, being amortized 11,666 10,906
Deferred fuel charges (Note 5) 17,520 25,255
Deferred charges related to income taxes (Note 9) 25,267 -
Miscellaneous 10,073 9,515
Total 64,526 45,676
TOTAL ASSETS $ 1,049,206 $ 791,283
</TABLE>
The accompanying notes are an integral part of these statements.
II-192
<PAGE> 223
BALANCE SHEETS
At December 31, 1993 and 1992
Mississippi Power Company 1993 Annual Report
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES 1993 1992
(in thousands)
<S> <C> <C>
CAPITALIZATION (SEE ACCOMPANYING STATEMENTS):
Common stock equity $ 321,768 $ 280,640
Preferred stock 74,414 74,414
Long-term debt 250,391 238,650
Total 646,573 593,704
CURRENT LIABILITIES:
Long-term debt due within one year (Note 11) 19,345 8,878
Notes payable (Note 5) 40,000 31,000
Accounts payable-
Affiliated companies 10,197 6,202
Other 50,731 37,348
Customer deposits 2,786 2,976
Taxes accrued-
Federal and state income (Note 9) 186 6,364
Other 26,952 25,671
Interest accrued 4,237 3,961
Miscellaneous 14,120 15,614
Total 168,554 138,014
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes (Note 9) 123,206 169
Accumulated deferred investment tax credits 32,710 34,242
Deferred credits related to income taxes (Note 9) 48,228 -
Accumulated provision for property damage (Note 1) 10,538 9,294
Miscellaneous 19,397 15,860
Total 234,079 59,565
COMMITMENTS AND CONTINGENT MATTERS (NOTES 2, 3, 4, 5, AND 8)
TOTAL CAPITALIZATION AND LIABILITIES $ 1,049,206 $ 791,283
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE> 224
STATEMENTS OF CAPITALIZATION
At December 31, 1993 and 1992
Mississippi Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1993 1992
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
COMMON STOCK EQUITY:
Common stock, without par value --
Authorized -- 1,130,000 shares
Outstanding -- 1,121,000 shares in
1993 and 1992 $ 37,691 $ 37,691
Paid-in capital 154,362 124,326
Premium on preferred stock 372 194
Retained earnings (Note 12) 129,343 118,429
Total common stock equity 321,768 280,640 49.8 % 47.3 %
CUMULATIVE PREFERRED STOCK:
$100 par value --
Authorized -- 1,244,139 shares
Outstanding -- 744,139 shares in 1993
and 1992
4.40% 4,000 4,000
4.60% 2,010 2,010
4.72% 5,000 5,000
6.32% 15,000 -
6.65% 8,404 -
7.00% 5,000 5,000
7.25% 35,000 35,000
8.44% - 8,404
8.80% - 15,000
Total (annual dividend requirement -- $4,899,000) 74,414 74,414 11.5 12.5
LONG-TERM DEBT:
First mortgage bonds --
Maturity Interest Rates
June 1, 1994 4 5/8% 10,000 10,000
July 1, 1995 4 3/4% 11,000 11,000
August 1, 1996 6% 10,000 10,000
November 1, 1997 7 1/8% - 10,000
March 1, 1998 5 3/8% 35,000 -
2000 to 2003 6 5/8% to 7 5/8% 40,000 80,000
May 1, 2021 9 1/4% 48,700 50,000
June 1, 2023 7.45% 35,000 -
Total first mortgage bonds 189,700 171,000
Pollution control obligations (Note 10) 63,165 50,175
Other long-term debt (Note 10) 19,678 27,848
Unamortized debt premium (discount), net (2,807) (1,495)
Total long-term debt (annual interest
requirement--$17,913,000) 269,736 247,528
Less amount due within one year (Note 11) 19,345 8,878
Long-term debt excluding amount due within
one year 250,391 238,650 38.7 40.2
TOTAL CAPITALIZATION $ 646,573 $ 593,704 100.0 % 100.0 %
</TABLE>
The accompanying notes are an integral part of these statements.
II-194
<PAGE> 225
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1993, 1992, and 1991
Mississippi Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $ 118,429 $ 111,670 $ 117,543
Net income after dividends on preferred stock 42,436 36,790 22,627
Cash dividends on common stock (29,000) (28,000) (28,500)
Preferred stock transactions and other, net (2,522) (2,031) -
BALANCE AT END OF PERIOD (NOTE 12) $ 129,343 $ 118,429 $ 111,670
</TABLE>
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $ 124,326 $ 124,300 $ 124,300
Contributions to capital by parent company 30,036 26 -
BALANCE AT END OF PERIOD $ 154,362 $ 124,326 $ 124,300
</TABLE>
The accompanying notes are an integral part of these statements.
II-195
<PAGE> 226
NOTES TO FINANCIAL STATEMENTS
Mississippi Power Company 1993 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
GENERAL
Mississippi Power Company is a wholly owned subsidiary of The Southern
Company, which is the parent company of five operating companies, Southern
Company Services (SCS), Southern Electric International (Southern Electric),
Southern Nuclear Operating Company (Southern Nuclear), and various other
subsidiaries related to foreign utility operations and domestic non-utility
operations. The operating companies (Alabama Power Company, Georgia Power
Company, Gulf Power Company, Mississippi Power Company, and Savannah
Electric and Power Company) provide electric service in four southeastern
states. Contracts among the companies--dealing with jointly owned
generating facilities, interconnecting transmission lines, and the exchange
of electric power--are regulated by the Federal Energy Regulatory Commission
(FERC) or the Securities and Exchange Commission. SCS provides, at cost,
specialized services to The Southern Company and to the subsidiary
companies. Southern Electric designs, builds, owns, and operates power
production facilities and provides a broad range of technical services to
industrial companies and utilities in the United States and a number of
international markets. Southern Nuclear provides services to The Southern
Company's nuclear power plants.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company and
its subsidiaries are subject to the regulatory provisions of the PUHCA.
Mississippi Power is also subject to regulation by the FERC and the
Mississippi Public Service Commission (MPSC). The Company follows generally
accepted accounting principles and complies with the accounting policies and
practices prescribed by the respective commissions.
The 1991 financial statements of the Company included the accounts of
Electric City Merchandise Company, Inc. (Electric City), which discontinued
operations in 1991. All significant intercompany transactions were
eliminated in consolidation.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
REVENUES
Mississippi Power accrues revenues for service rendered but unbilled at the
end of each fiscal period. The Company's retail and wholesale rates include
provisions to adjust billings for fluctuations in fuel and the energy
component of purchased power. Retail rates also include provisions to
adjust billings for fluctuations in costs for ad valorem taxes. Revenues
are adjusted for differences between the recoverable fuel and ad valorem
expenses and the amounts actually recovered in current rates.
DEPRECIATION
Depreciation of the original cost of depreciable utility plant in service is
provided by using composite straight-line rates which approximated 3.1
percent in 1993 and 3.3 percent in 1992 and 1991. When property subject to
depreciation is retired or otherwise disposed of in the normal course of
business, its cost -- together with the cost of removal, less salvage -- is
charged to the accumulated provision for depreciation. Minor items of
property included in the original cost of the plant are retired when the
related property unit is retired.
INCOME TAXES
Mississippi Power provides deferred income taxes for all significant income
tax temporary differences. Investment tax credits utilized are deferred and
amortized to income over the average lives of the related property.
In years prior to 1993, income taxes were accounted for and reported
under Accounting Principles Board Opinion No. 11. Effective January 1,
1993, Mississippi Power adopted FASB Statement No. 109, Accounting for
Income Taxes. Statement No. 109 required, among other things, conversion to
the liability method of accounting for accumulated deferred income taxes.
See Note 9 to the financial statements for additional information about
Statement No. 109.
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<PAGE> 227
NOTES (continued)
Mississippi Power Company 1993 Annual Report
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that
are necessary to finance the construction of new facilities. While cash is
not realized currently from such allowance, it increases the revenue
requirement over the service life of the plant through a higher rate base
and higher depreciation expense. The composite rates used to capitalize the
cost of funds devoted to construction were 6.8 percent in 1993, 8.2 percent
in 1992, and 9.8 percent in 1991. AFUDC (net of income taxes), as a percent
of net income after dividends on preferred stock, was 3.5 percent in 1993,
2.7 percent in 1992, and 4.8 percent in 1991.
UTILITY PLANT
Utility plant is stated at original cost. This cost includes: materials;
labor; minor items of property; appropriate administrative and general
costs; payroll-related costs such as taxes, pensions, and other benefits;
and the estimated cost of funds used during construction. The cost of
maintenance, repair, and replacement of minor items of property is charged
to maintenance expense except for the maintenance of coal cars and a portion
of the railway track maintenance, which are charged to fuel stock. The cost
of replacements of property (exclusive of minor items of property) is
charged to utility plant.
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
FINANCIAL INSTRUMENTS
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, all financial instruments of the Company -- for which
the carrying amount does not approximate fair value -- are shown in the
table below as of December 31:
<TABLE>
<CAPTION>
1993 1992
Carrying Fair Carrying Fair
Amount Value Amount Value
(in thousands)
<S> <C> <C> <C> <C>
Investment
securities - - $ 3,622 $ 3,745
Long-term
debt $269,736 $278,025 247,529 249,489
</TABLE>
The fair value of investment securities was based on listed closing
market prices. The fair value for long-term debt was based on either
closing market prices or closing prices of comparable instruments.
MATERIALS AND SUPPLIES
Generally, materials and supplies include the cost of transmission,
distribution and generating plant materials. Materials are charged to
inventory when purchased and then expensed or capitalized to plant, as
appropriate, when used or installed.
VACATION PAY
Mississippi Power's employees earn their vacation in one year and take it in
the subsequent year. However, for ratemaking purposes, vacation pay is
recognized as an allowable expense only when paid. Consistent with this
ratemaking treatment, the Company accrues a current liability for earned
vacation pay and records a current asset representing the future
recoverability of this cost. Such amounts were $4.8 million and $4.7
million at December 31, 1993 and 1992, respectively. In 1994, an estimated
80 percent of the 1993 deferred vacation cost will be expensed, and the
balance will be charged to construction and other accounts.
II-197
<PAGE> 228
NOTES (continued)
Mississippi Power Company 1993 Annual Report
PROVISION FOR PROPERTY DAMAGE
Due to the significant increase in the cost of traditional insurance,
effective in 1993, Mississippi Power became self-insured for the full cost
of storm and other damage to its transmission and distribution property. As
permitted by regulatory authorities, the Company provided for the cost of
storm, fire and other uninsured casualty damage by charges to income of $1.5
million in 1993, 1992, and 1991. The cost of repairing damage resulting
from such events that individually exceed $50 thousand is charged to the
accumulated provision to the extent it is available. As of December 31,
1993, the accumulated provision amounted to $10.5 million. Regulatory
treatment by the MPSC allows a maximum accumulated provision of $10.9
million.
DISCONTINUED OPERATIONS
Electric City began operating as a subsidiary of Mississippi Power in
October 1987 and was formally dissolved as of December 31, 1991. Under an
agreement reached in October 1991, a portion of Electric City's assets,
including inventory and fixed assets, was sold to a concern independent of
Mississippi Power. The remaining assets and liabilities, which were not
material, were transferred to the Company.
The impact of Electric City on Mississippi Power's consolidated earnings
in 1991 consisted of (a) a pretax operating loss of $10.2 million ($6.4
million after income taxes) and (b) the pretax loss of $8.7 million ($5.5
million after income taxes) resulting from the disposal of Electric City.
2. RETIREMENT BENEFITS:
PENSION PLAN
Mississippi Power has a defined benefit, trusteed, non-contributory pension
plan that covers substantially all regular employees. Benefits are based on
the greater of amounts resulting from two different formulas: years of
service and final average pay or years of service and a flat-dollar benefit.
The Company uses the "entry age normal method with a frozen initial
liability" actuarial method for funding purposes, subject to limitations
under federal income tax regulations. Amounts funded to the pension fund
are primarily invested in equity and fixed-income securities. FASB
Statement No. 87, Employers' Accounting for Pensions, requires use of the
"projected unit credit" actuarial method for financial reporting purposes.
POSTRETIREMENT BENEFITS
Mississippi Power also provides certain medical care and life insurance
benefits for retired employees. Substantially all employees may become
eligible for these benefits when they retire. A qualified trust for medical
benefits has been established for funding amounts to the extent deductible
under federal income tax regulations. Amounts funded are primarily invested
in debt and equity securities. Accrued costs of life insurance benefits,
other than current cash payments for retirees, currently are not being
funded.
Effective January 1, 1993, Mississippi Power adopted FASB Statement No.
106, Employers' Accounting for Postretirement Benefits Other Than Pensions,
on a prospective basis. Statement No. 106 requires that medical care and
life insurance benefits for retired employees be accounted for on an accrual
basis using a specified actuarial method, "benefit/years-of-service."
Because the adoption of Statement No. 106 was reflected in rates, it did not
have a material impact on net income.
Prior to 1993, Mississippi Power recognized these benefit costs on an
accrual basis using the "aggregate cost" actuarial method, which spreads the
expected cost of such benefits over the remaining periods of employees'
service as a level percentage of payroll costs. The total costs of such
benefits recognized by the Company in 1992 and 1991 were $3.6 million and
$3.0 million, respectively.
II-198
<PAGE> 229
NOTES (continued)
Mississippi Power Company 1993 Annual Report
STATUS AND COST OF BENEFITS
Shown in the following tables are actuarial results and assumptions for
pension and postretirement medical and life insurance benefits as computed
under the requirements of FASB Statement Nos. 87 and 106, respectively.
Retiree medical and life insurance information is shown only for 1993
because Statement No. 106 was adopted as of January 1, 1993, on a
prospective basis. The funded status of the plans at December 31 was as
follows:
<TABLE>
<CAPTION>
Pension
1993 1992
(in thousands)
<S> <C> <C>
Actuarial present value of
benefit obligation:
Vested benefits $ 73,735 $62,840
Non-vested benefits 3,245 2,773
Accumulated benefit obligation 76,980 65,613
Additional amounts related to
projected salary increases 24,434 28,721
Projected benefit obligation 101,414 94,334
Less:
Fair value of plan assets 154,224 138,507
Unrecognized net gain (49,239) (40,456)
Unrecognized prior service cost 3,590 3,809
Unrecognized transition asset (7,188) (7,741)
Prepaid asset (accrued liability)
recognized in the
Balance Sheets $ (27) $ (215)
</TABLE>
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
<S> <C> <C>
Actuarial present value of
benefit obligation:
Retirees and dependents $10,408 $3,315
Employees eligible to retire 3,752 -
Other employees 19,389 4,596
Accumulated benefit
obligation 33,549 7,911
Less:
Fair value of plan assets 6,271 84
Unrecognized net loss 3,500 (632)
Unrecognized transition
obligation 16,540 3,606
Accrued liability recognized in
the Balance Sheets $ 7,238 $4,853
</TABLE>
The weighted average rates assumed in the above actuarial calculations
were:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Discount 7.5% 8.0% 8.0%
Annual salary increase 5.0 6.0 6.0
Long-term return on
plan assets 8.5 8.5 8.5
</TABLE>
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend
rate of 11.3 percent for 1993, decreasing gradually to 6.0 percent through
the year 2000 and remaining at that level thereafter. An annual increase in
the assumed medical care cost trend rate by 1.0 percent would increase the
accumulated medical benefit obligation as of December 31, 1993, by $6.4
million and the aggregate of the service and interest cost components of the
net retiree medical cost by $722 thousand.
Components of the plans' net cost are shown below:
<TABLE>
<CAPTION>
Pension
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Benefits earned during
the year $ 3,792 $ 3,595 $ 3,361
Interest cost on
projected benefit
obligation 7,296 6,886 6,345
Actual return on plan
assets (20,017) (5,812) (34,773)
Net amortization and
deferral 8,741 (4,265) 25,833
Net pension cost (income) $ (188) $ 404 $ 766
</TABLE>
II-199
<PAGE> 230
NOTES (continued)
Mississippi Power Company 1993 Annual Report
Of the above net pension amounts recorded,
($170 thousand) in 1993, $269 thousand in 1992, and $576 thousand in 1991
were recorded in operating expenses, and the remainder was recorded in
construction and other accounts.
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
(in thousands)
<S> <C> <C>
Benefits earned during the
year $1,149 $299
Interest cost on accumulated
benefit obligation 2,187 624
Amortization of transition
obligation over 20 years 871 180
Actual return on plan assets (808) (6)
Net amortization and deferral 343 -
Net postretirement cost $3,742 $1,097
</TABLE>
Of the above net postretirement medical and life insurance costs recorded
in 1993, $3.9 million was charged to operating expense and the remainder was
charged to construction and other accounts.
3. LITIGATION AND REGULATORY MATTERS:
RETAIL RATE ADJUSTMENT PLANS
Mississippi Power's retail base rates have been set under a Performance
Evaluation Plan (PEP) since 1986. During 1993, all matters related to the
original PEP case were finally resolved when the Supreme Court of
Mississippi granted a joint motion to dismiss pending appeals. Also in
1993, the MPSC ordered Mississippi Power to review and propose changes to
the plan that would reduce the impact of rate changes on the customer and
provide incentives for Mississippi Power to keep customer prices low. In
response, Mississippi Power filed a revised plan and, on January 4, 1994,
the MPSC approved PEP-2. The revised plan includes a mechanism for sharing
rate adjustments based on the Company's ability to maintain low rates for
customers and on the Company's performance as measured by three performance
indicators that emphasize those factors which most directly impact the
customers. PEP-2 provides for semiannual evaluations of Mississippi's
performance-based return on investment, rather than on common equity as
previously calculated. As in previous plans, any change in rates is limited
to 2 percent of retail revenues per evaluation period before a public
hearing is required. PEP-2 will remain in effect until the MPSC modifies or
terminates the plan.
ENVIRONMENTAL COMPLIANCE OVERVIEW PLAN
The MPSC approved Mississippi Power's ECO Plan in 1992. The plan
establishes procedures to facilitate the MPSC's overview of the Company's
environmental strategy and provides for recovery of costs associated with
environmental projects approved by the MPSC. Under the ECO Plan any
increase in the annual revenue requirement is limited to 2 percent of retail
revenues. However, the plan also provides for carryover of any amount over
the 2 percent limit into the next year's revenue requirement. The ECO Plan
resulted in an annual retail rate increase of $2.6 million effective April
1993.
FERC REVIEWS EQUITY RETURNS AND OTHER REGULATORY MATTERS
In May 1991, the FERC ordered that hearings be conducted concerning the
reasonableness of the Southern electric system's wholesale rate schedules
and contracts that have a return on equity of 13.75 percent or greater. The
contracts that could be affected by the hearings include substantially all
of the transmission, unit power, long-term power and other similar
contracts, including the Company's Transmission Facilities Agreement (TFA)
discussed in Note 8 under "Lease Agreements." Any changes in rate of return
on common equity that may occur as a result of this proceeding would be
effective 60 days after a proper notice of the proceeding is published. A
notice was published on May 10, 1991.
In August 1992, an administrative law judge issued an opinion that
changes in rate schedules and contracts were not necessary and that the FERC
staff failed to show how any changes were in the public interest. The FERC
staff has filed exceptions to the administrative law judge's opinion, and
the matter remains pending before the FERC.
The final outcome of this matter cannot now be determined; however, in
management's opinion, the final outcome will not have a material adverse
effect on Mississippi Power's financial statements.
In 1988, the Company and its operating affiliates filed with the FERC a
contract governing the pricing and other aspects of power transactions among
the companies. In 1989, the FERC ordered hearings on the contract and made
revenues collected under the contract subject to refund. In 1992, the
II-200
<PAGE> 231
NOTES (continued)
Mississippi Power Company 1993 Annual Report
FERC ruled that certain production costs under the contract had not been
properly classified and ordered that the contract be revised and that
refunds be made. Under reconsideration, the FERC determined that refunds
were not necessary and ordered that its mandated changes in computing
certain expenses under the system interchange contract become effective in
August 1993. The changes mandated by the FERC will not materially affect
the Company's net income.
WHOLESALE RATE FILING
On September 1, 1993, Mississippi Power filed a $3.6 million wholesale rate
increase request with the FERC. Prior to this filing, the Company conferred
and negotiated a settlement with all of its wholesale all requirements
customers, who have executed a Settlement Agreement and Certificates of
Concurrence to be included in this filing with the FERC. The Company is
awaiting a response from the FERC.
RETAIL RATEPAYERS' SUITS CONCLUDED
In 1989, three retail ratepayers of the Company filed a civil complaint in
the U.S. District Court for the Southern District of Mississippi against
Mississippi Power and other parties. The complaint alleged that Mississippi
Power obtained excessive rate increases by improper accounting for spare
parts and sought actual damages estimated to be at least $10 million, plus
treble and punitive damages, on behalf of all retail ratepayers of the
Company for alleged violations of the federal Racketeer Influenced and
Corrupt Organizations Act, federal and state antitrust laws, other federal
and state statutes, and common law fraud. Mississippi Power also was named
as a defendant, together with other parties in a similar civil action filed
in the U.S. District Court for the Northern District of Florida. The
defendants' motions for dismissal were granted by the courts, resolving
these suits.
4. CONSTRUCTION PROGRAM:
Mississippi Power is engaged in continuous construction programs, the costs
of which are currently estimated to total some $96 million in 1994, $62
million in 1995, and $98 million in 1996. These estimates include AFUDC of
$1.6 million in 1994, $1.6 million in 1995, and $2.7 million in 1996.
The construction program is subject to periodic review and revision, and
actual construction costs may vary from the above estimates because of
numerous factors. These factors include changes in business conditions;
revised load growth estimates; changes in environmental regulations;
increasing costs of labor, equipment and materials; and cost of capital.
The Company does not have any new baseload generating plants under
construction. However, the construction of a combustion turbine generation
unit of 78 megawatts was completed in February 1994. In addition,
significant construction will continue related to transmission and
distribution facilities and the upgrading and extension of the useful lives
of generating plants.
See Management's Discussion and Analysis under "Environmental Matters"
for information on the impact of the Clean Air Act and other environmental
matters.
5. FINANCING AND COMMITMENTS:
FINANCING
Mississippi Power's construction program is expected to be financed from
internal and other sources, such as the issuance of additional long-term
debt and preferred stock and the receipt of capital contributions from The
Southern Company.
The amounts of first mortgage bonds and preferred stock which can be
issued in the future will be contingent upon market conditions, adequate
earnings levels, regulatory authorizations and other factors. See
Management's Discussion and Analysis under "Sources of Capital" for
information regarding the Company's coverage requirements.
At December 31, 1993, Mississippi Power had committed credit agreements
(360 day committed lines) with banks for $21 million. Additionally,
Mississippi Power had $70 million of unused committed credit agreements in
the form of revolving credit agreements expiring December 1, 1996. These
agreements allow short-term borrowings to be converted into term loans,
payable in 12 equal quarterly installments, with the first installment due
at the end of the first calendar quarter after the applicable termination
date or at an earlier date at the Company's option. In connection with
these credit arrangements, the Company agrees to pay commitment fees based
on the unused portions of the commitments or to maintain compensating
balances with the banks.
As of December 31, 1993, Mississippi Power had $40 million in short-term
bank borrowings all of which were made apart from committed credit
arrangements.
II-201
<PAGE> 232
NOTES (continued)
Mississippi Power Company 1993 Annual Report
ASSETS SUBJECT TO LIEN
Mississippi Power's mortgage indenture dated as of September 1, 1941, as
amended and supplemented, which secures the first mortgage bonds issued by
the Company, constitutes a direct first lien on substantially all the
Company's fixed property and franchises.
FUEL COMMITMENTS
To supply a portion of the fuel requirements of its generating plants,
Mississippi Power has entered into various long-term commitments for the
procurement of fuel. In most cases, these contracts contain provisions for
price escalations, minimum production levels, and other financial
commitments. Total estimated obligations were approximately $243 million at
December 31, 1993. Additional commitments for fuel will be required in the
future to supply the Company's fuel needs.
In order to take advantage of lower cost coal supplies, agreements were
reached in December 1986 to terminate two contracts for the supply of coal
to Plant Daniel, which is jointly owned by Mississippi Power and Gulf Power,
an operating affiliate. The Company's portion of this payment was about $60
million. In accordance with the ratemaking treatment, the cost to terminate
the contracts is being amortized through 1995 to match costs with savings
achieved. The remaining unamortized amount of Mississippi Power's share of
principal payments to the suppliers including the current portion totaled
$18 million at December 31, 1993.
6. JOINT OWNERSHIP AGREEMENTS:
Mississippi Power and Alabama Power own as tenants in common Greene County
Electric Generating Plant (coal) located in Alabama; and Mississippi Power
and Gulf Power own as tenants in common Daniel Electric Generating Plant
(coal) located in Mississippi. At December 31, 1993, Mississippi Power's
percentage ownership and investment in these jointly owned facilities were
as follows:
<TABLE>
<CAPTION>
Total Company's
Generating Megawatts Percent Gross Accumulated
Plant Capacity Ownership Investment Depreciation
(in thousands)
<S> <C> <C> <C> <C>
Greene
County 500 40% $59,897 $28,365
Daniel 1,000 50% 218,462 82,778
</TABLE>
Mississippi Power's share of plant operating expenses is included in the
corresponding operating expenses in the Statements of Income.
7. LONG-TERM POWER SALES AGREEMENTS:
GENERAL
Mississippi Power and the other operating affiliates of The Southern Company
have entered into long-term contractual agreements for the sale of capacity
and energy to certain non-affiliated utilities located outside of the
system's service area. Some of these agreements (unit power sales) are firm
commitments and pertain to capacity related to specific generating units.
Mississippi Power's participation in firm production capacity unit power
sales ended in January 1989. However, the Company continues to participate
in transmission and energy sales under the unit power sales agreements. The
other agreements (other long-term sales) are non-firm commitments and are
based on capacity of the system in general. Because the energy is generally
sold at variable costs under these agreements, only revenues from capacity
sales affect profitability. Off-system capacity revenues for the Company
have been as follows:
<TABLE>
<CAPTION>
Other
Year Unit Power Long-Term Total
(in thousands)
<S> <C> <C> <C>
1993 $1,571 $2,620 $4,191
1992 2,168 1,405 3,573
1991 1,510 1,204 2,714
</TABLE>
Long-term non-firm power of 400 megawatts was sold in 1993 by the
Southern electric system to Florida Power Corporation. In January 1994,
this amount decreased to 200 megawatts, and the contract will expire at
year-end.
II-202
<PAGE> 233
NOTES (continued)
Mississippi Power Company 1993 Annual Report
GULF STATES SETTLEMENT COMPLETED
On November 7, 1991, subsidiaries of The Southern Company entered into a
settlement agreement with Gulf States that resolved litigation between the
companies that had been pending since 1986 and arose out of a dispute over
certain unit power and other long-term power sales contracts. In 1993, all
remaining terms and obligations of the settlement agreement were satisfied.
Based on the value of the settlement proceeds received -- less the
amounts previously included in income -- Mississippi Power recorded an
increase in net income of approximately $2.6 million in 1991.
8. LEASE AGREEMENTS:
In 1984, Mississippi Power and Gulf States entered into a forty-year
transmission facilities agreement whereby Gulf States began paying a use fee
to the Company covering all expenses relative to ownership and operation and
maintenance of a 500 kV line, including amortization of its original $57
million cost. In 1993, 1992, and 1991 the use fees collected under the
agreement, net of related expenses, amounted to $3.9 million, $3.9 million
and $4.0 million, respectively, and are included with other income, net, in
the Statements of Income. For other information see Note 3 under "FERC
Reviews Equity Returns and Other Regulatory Matters."
In 1989, Mississippi Power entered into a twenty-two year operating lease
agreement for the use of 495 aluminum railcars to transport coal to Plant
Daniel. Gulf Power, as joint owner of Plant Daniel, is responsible for one
half of the lease costs. The Company's share of the lease is charged to
fuel inventory and allocated to fuel expense as the fuel is used. The lease
costs charged to inventory were $1.2 million in 1993, $1.2 million for 1992
and $1.3 million for 1991. For the year 1994, the Company's annual lease
payment will be $1.2 million. The Company's annual lease payment for 1995
will be $2.4 million and for 1996, 1997, and in 1998 the payment will be
$1.2 million. Lease payments after 1998 total approximately $17.4 million.
The Company has the option after three years to purchase the railcars at the
greater of termination value or fair market value. Additionally, at the end
of the lease term, Mississippi Power has the option to renew the lease.
9. INCOME TAXES:
Effective January 1, 1993, Mississippi Power adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption of Statement No. 109 resulted in
cumulative adjustments that had no effect on net income. The adoption also
resulted in the recording of additional deferred income taxes and related
assets and liabilities. The related assets of $25 million are revenues to
be received from customers. These assets are attributable to tax benefits
flowed through to customers in prior years and to taxes applicable to
capitalized AFUDC. The related liabilities of $48 million are revenues to
be refunded to customers. These liabilities are attributable to deferred
taxes previously recognized at rates higher than current enacted tax law and
unamortized investment tax credits. Additionally, deferred income taxes
related to accelerated tax depreciation previously shown as a reduction to
utility plant were reclassified.
II-203
<PAGE> 234
NOTES (continued)
Mississippi Power Company 1993 Annual Report
Details of the federal and state income tax provisions are shown below:
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Total provision for
income taxes
Federal --
Currently payable $15,842 $20,286 $16,984
Deferred --current year 5,158 (1,578) (2,404)
--reversal of
prior years (820) (3,931) (8,446)
Deferred investment tax
credits - - (2)
20,180 14,777 6,132
State --
Currently payable 2,945 2,992 2,709
Deferred --current 1,339 218 (223)
--reversal of
prior years (638) (182) (796)
3,646 3,028 1,690
Total 23,826 17,805 7,822
Less income taxes
charged (credited) to: -
Disposal of subsidiary - (3,245)
Other income 1,158 1,427 (2,909)
Federal and state
income taxes charged
to operations $22,668 $16,378 $13,976
</TABLE>
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
1993
(in thousands)
<S> <C>
Deferred tax liabilities:
Accelerated depreciation $130,299
Basis differences 11,332
Coal contract buyouts 6,870
Other 18,719
Total 167,220
Deferred tax assets:
Other property basis differences 28,779
Pension and other benefits 4,625
Property insurance 4,031
Unbilled fuel 4,205
Other 5,562
Total 47,202
Net deferred tax liabilities
(assets) 120,018
Portion included in current assets,
net 3,188
Accumulated deferred income taxes
in the Balance Sheets $123,206
</TABLE>
In 1989, under order of the MPSC, Mississippi Power began amortizing
deferred income taxes not covered by the Internal Revenue Service
normalization requirements, that had been recorded at rates higher than
those specified by the current statutory income tax rules. This
amortization occurred over a 60-month period, the effect of which was a
reduction of income tax expense of approximately $2.7 million per year. At
December 31, 1993, this tax rate differential was fully amortized.
Deferred investment tax credits are amortized over the life of the
related property with such amortization normally applied as a credit to
reduce depreciation in the Statements of Income. Credits amortized in this
manner amounted to $1.5 million in 1993, $1.4 million in 1992 and $1.5
million in 1991. At December 31, 1993, all investment tax credits available
to reduce federal income taxes payable had been utilized.
II-204
<PAGE> 235
NOTES (continued)
Mississippi Power Company 1993 Annual Report
The total provision for income taxes as a percentage of pre-tax income
and the differences between those effective rates and the statutory federal
tax rates were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Total effective tax rate 33% 30% 23%
State income tax, net of
federal income tax benefit (3) (3) (3)
Tax rate differential 4 6 11
Other 1 1 3
Statutory federal tax rate 35% 34% 34%
</TABLE>
Mississippi Power and its affiliates file a consolidated federal income
tax return. Under a joint consolidated income tax agreement, each company's
current and deferred tax expense is computed on a stand-alone basis, and
consolidated tax savings are allocated to each company based on its ratio of
taxable income to total consolidated taxable income.
10. OTHER LONG-TERM DEBT:
Details of other long-term debt are as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(in thousands)
<S> <C> <C>
Obligations incurred in
connection with the sale by
public authorities of
tax-exempt pollution control
revenue bonds:
Collateralized --
5.80% due 2007 $ 990 $19,000
Variable rate due 2020 6,550 6,550
Variable rate due 2022 16,750 16,750
6.20% due 2023 13,000 -
5.65% due 2023 25,875 -
Non-collateralized --
5.90% due 2003 - 7,875
63,165 50,175
Notes payable:
8.25% due 1993-1995 17,520 25,255
7.50% due 1993-1995 2,158 2,593
19,678 27,848
Total $82,843 $78,023
</TABLE>
Pollution control obligations represent installment or lease purchases of
pollution control facilities financed by application of funds derived from
sales by public authorities of tax-exempt revenue bonds. Mississippi Power
has authenticated and delivered to the Trustee a like principal amount of
first mortgage bonds as security for obligations under collateralized
installment agreements. The principal and interest on the first mortgage
bonds will be payable only in the event of default under these agreements.
The 5.8% Series of pollution control obligations has a cash sinking fund
requirement of $10 thousand annually through 1997 and $20 thousand in 1998.
At December 31, 1993, under "Other Property and Investments"
approximately $6 million related to the 6.20% Series of Pollution Control
Obligations remains available for completion of certain solid waste disposal
facilities.
The 8.25 percent notes payable relate to the termination of two coal
contracts. See Note 5 under "Fuel Commitments" for information on these
coal contracts.
The annual estimated maturities of total notes payable are $8.8 million
in 1994 and $10.8 million in 1995.
II-205
<PAGE> 236
NOTES (continued)
Mississippi Power Company 1993 Annual Report
11. LONG-TERM DEBT DUE WITHIN ONE YEAR:
A summary of the improvement fund requirements and scheduled maturities and
redemptions of long-term debt due within one year is as follows:
<TABLE>
<CAPTION>
1993 1992
(in thousands)
<S> <C> <C>
Bond improvement
fund requirements $1,902 $1,710
Less:
Portion to be
satisfied by certifying
property additions 1,402 1,210
Cash improvement fund
requirements 500 500
First mortgage bond
maturities and
redemptions 10,000 -
Pollution control bond
cash sinking fund
requirements (Note 10) 10 245
Current portion of notes
payable (Note 10) 8,835 8,133
Total $19,345 $8,878
</TABLE>
The first mortgage bond improvement fund requirement is one percent of
each outstanding series authenticated under the indenture of Mississippi
Power prior to January 1 of each year, other than first mortgage bonds
issued as collateral security for certain pollution control obligations.
The requirement must be satisfied by June 1 of each year by depositing cash
or reacquiring bonds, or by pledging additional property equal to 166-2/3
percent of such requirement.
12. COMMON STOCK DIVIDEND RESTRICTIONS:
Mississippi Power's first mortgage bond indenture and the Articles of
Incorporation contain various common stock dividend restrictions. At
December 31, 1993, $86 million of retained earnings was restricted against
the payment of cash dividends on common stock under the most restrictive
terms of the mortgage indenture or Articles of Incorporation.
13. QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Net Income
After Dividends
Quarter Operating Operating On
Ended Revenues Income Preferred Stock
<S> <C> <C> <C>
March 1993 $101,552 $ 9,529 $ 4,424
June 1993 117,764 18,147 11,852
September 1993 148,102 22,377 16,560
December 1993 107,465 13,333 9,600
March 1992 $ 94,931 $11,400 $ 6,001
June 1992 109,199 17,011 11,422
September 1992 129,018 18,911 13,008
December 1992 101,299 10,968 6,359
</TABLE>
Mississippi Power's business is influenced by seasonal weather conditions
and the timing of rate changes.
II-206
<PAGE> 237
SELECTED FINANCIAL AND OPERATING DATA
Mississippi Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS) $ 474,883 $ 434,447 $432,386
NET INCOME AFTER DIVIDENDS
ON PREFERRED STOCK (IN THOUSANDS) $ 42,436 $ 36,790 $ 22,627
CASH DIVIDENDS ON COMMON STOCK (IN THOUSANDS) $ 29,000 $ 28,000 $ 28,500
RETURN ON AVERAGE COMMON EQUITY (PERCENT) 14.09 13.27 8.17
TOTAL ASSETS (IN THOUSANDS) $1,049,206 $ 791,283 $790,641
GROSS PROPERTY ADDITIONS (IN THOUSANDS) $ 139,976 $ 68,189 $ 53,675
CAPITALIZATION (IN THOUSANDS):
Common stock equity $ 321,768 $ 280,640 $273,855
Preferred stock 74,414 74,414 39,414
Preferred stock subject to mandatory redemption - - -
Long-term debt 250,391 238,650 304,150
Total (excluding amounts due within one year) $ 646,573 $ 593,704 $617,419
CAPITALIZATION RATIOS (PERCENT):
Common stock equity 49.8 47.3 44.4
Preferred stock 11.5 12.5 6.4
Long-term debt 38.7 40.2 49.2
Total (excluding amounts due within one year) 100.0 100.0 100.0
FIRST MORTGAGE BONDS (IN THOUSANDS):
Issued 70,000 40,000 50,000
Retired 51,300 104,703 -
PREFERRED STOCK (IN THOUSANDS):
Issued 23,404 35,000 -
Retired 23,404 - 4,118
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A+ A+ A+
Duff & Phelps A+ A+ A+
Preferred Stock -
Moody's a1 a1 a1
Standard and Poor's A A A
Duff & Phelps A A A
CUSTOMERS (YEAR-END):
Residential 151,692 150,248 148,978
Commercial 28,648 28,056 27,441
Industrial 570 573 562
Other 190 189 400
Total 181,100 179,066 177,381
EMPLOYEES (YEAR-END) 1,586 1,619 1,630
</TABLE>
II-207
<PAGE> 238
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Mississippi Power Company 1993 Annual Report
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$446,871 $442,650 $437,939 $455,843 $476,265 $475,610 $442,507 $414,595
$ 34,176 $ 38,576 $ 36,081 $ 35,200 $ 33,814 $ 33,330 $ 31,380 $ 35,404
$ 27,500 $ 27,000 $ 27,600 $ 24,700 $ 23,700 $ 22,600 $ 21,000 $ 18,900
12.36 14.43 14.03 14.68 15.28 15.83 15.74 19.74
$800,026 $786,570 $779,319 $764,068 $767,110 $679,577 $660,530 $649,373
$ 49,009 $ 43,916 $ 54,550 $ 53,288 $ 62,488 $ 57,791 $ 37,290 $ 72,277
$279,833 $273,157 $261,473 $252,992 $226,601 $216,087 $205,018 $193,609
39,414 39,414 39,414 39,414 39,414 39,414 39,414 39,414
3,750 4,500 5,250 6,750 8,250 9,750 10,500 11,250
270,724 277,693 287,525 294,811 299,684 261,594 267,051 267,271
$593,721 $594,764 $593,662 $593,967 $573,949 $526,845 $521,983 $511,544
47.1 45.9 44.1 42.6 39.5 41.0 39.3 37.9
7.3 7.4 7.5 7.8 8.3 9.3 9.5 9.9
45.6 46.7 48.4 49.6 52.2 49.7 51.2 52.2
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
- - - - 35,000 - - -
4,000 3,823 - 29,701 29,250 250 250 3,246
- - - - - - - -
750 750 1,500 1,500 1,500 1,111 639 750
A1 A1 A1 A1 A1 A1 A1 A3
A+ A+ A+ A+ A+ A A A
A+ A+ 5 5 5 5 5 6
a1 a1 a1 a1 a1 a1 a1 a3
A A A A A A A A
A A 6 6 6 6 6 6
147,738 147,308 146,750 146,273 145,809 145,071 142,846 140,730
27,134 26,867 26,751 26,342 26,217 25,629 25,404 24,467
574 525 478 438 393 371 348 344
411 404 399 389 363 356 356 366
175,857 175,104 174,378 173,442 172,782 171,427 168,954 165,907
1,842 1,750 1,831 1,898 1,882 1,801 1,669 1,653
</TABLE>
II-208
<PAGE> 239
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1993 Annual Report
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS):
Residential $ 118,793 $ 109,781 $ 103,820
Commercial 115,152 107,131 103,666
Industrial 130,198 117,010 116,972
Other 3,760 3,533 5,869
Total retail 367,903 337,455 330,327
Sales for resale - non-affiliates 83,511 80,213 78,826
Sales for resale - affiliates 15,519 10,055 18,044
Total revenues from sales of electricity 466,933 427,723 427,197
Other revenues 7,950 6,724 5,189
Total $ 474,883 $ 434,447 $ 432,386
KILOWATT-HOUR SALES (IN THOUSANDS):
Residential 1,929,835 1,804,858 1,832,266
Commercial 1,933,685 1,811,042 1,768,441
Industrial 3,623,543 3,536,634 3,297,247
Other 38,357 38,261 89,375
Total retail 7,525,420 7,190,795 6,987,329
Sales for resale - non-affiliates 2,544,982 2,687,917 2,706,320
Sales for resale - affiliates 426,919 280,443 617,696
Total 10,497,321 10,159,155 10,311,345
AVERAGE REVENUE PER KILOWATT-HOUR (CENTS):
Residential 6.16 6.08 5.67
Commercial 5.96 5.92 5.86
Industrial 3.59 3.31 3.55
Total retail 4.89 4.69 4.73
Total sales 4.45 4.21 4.14
RESIDENTIAL AVERAGE ANNUAL KILOWATT-HOUR USE PER CUSTOMER 12,780 12,066 12,338
RESIDENTIAL AVERAGE ANNUAL REVENUE PER CUSTOMER $ 786.71 $ 733.90 $ 699.11
PLANT NAMEPLATE CAPACITY RATINGS (YEAR-END) (MEGAWATTS) 2,011 2,011 2,011
MAXIMUM PEAK-HOUR DEMAND (MEGAWATTS):
Winter 1,401 1,386 1,267
Summer 1,872 1,755 1,682
Annual Load Factor (percent) 60.0 60.8 61.5
Plant Availability - Fossil-Steam (percent) 88.0 92.0 89.8
SOURCE OF ENERGY SUPPLY (PERCENT):
Coal 63.5 60.4 64.1
Oil and gas 7.6 5.8 8.1
Purchased power -
From non-affiliates 1.3 1.2 0.7
From affiliates 27.6 32.6 27.1
Total 100.0 100.0 100.0
TOTAL FUEL ECONOMY DATA:
BTU per net kilowatt-hour generated 10,075 9,888 10,142
Cost of fuel per million BTU (cents) 170.13 162.27 177.52
Average cost of fuel per net kilowatt-hour generated (cents) 1.71 1.60 1.80
</TABLE>
II-209
<PAGE> 240
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1993 Annual Report
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 102,243 $ 100,068 $ 96,711 $ 98,338 $ 101,984 $ 96,878 $ 92,955 $ 92,868
103,352 103,403 98,772 98,669 100,521 96,883 91,500 91,822
123,754 128,983 123,038 129,004 134,501 129,495 128,951 117,336
6,078 5,992 5,874 5,723 5,882 5,884 5,704 5,784
335,427 338,446 324,395 331,734 342,888 329,140 319,110 307,810
86,194 82,111 75,525 88,060 107,270 115,757 106,691 81,511
20,157 16,938 33,747 31,278 21,669 27,277 13,226 20,425
441,778 437,495 433,667 451,072 471,827 472,174 439,027 409,746
5,093 5,155 4,272 4,771 4,438 3,436 3,480 4,849
$ 446,871 $ 442,650 $ 437,939 $ 455,843 $ 476,265 $ 475,610 $ 442,507 $ 414,595
1,804,838 1,741,855 1,686,722 1,658,327 1,674,407 1,603,539 1,535,329 1,488,945
1,718,074 1,686,302 1,607,988 1,555,044 1,544,899 1,500,972 1,415,153 1,384,385
3,311,460 3,204,208 2,879,457 2,862,632 2,877,026 2,786,883 2,768,877 2,405,915
85,938 87,611 86,049 81,153 81,352 83,142 78,198 79,605
6,920,310 6,719,976 6,260,216 6,157,156 6,177,684 5,974,536 5,797,557 5,358,850
2,883,581 2,798,086 2,280,341 2,615,058 2,382,443 2,819,439 2,656,738 2,097,287
714,365 527,970 1,100,808 955,303 704,461 733,142 285,562 303,487
10,518,256 10,046,032 9,641,365 9,727,517 9,264,588 9,527,117 8,739,857 7,759,624
5.66 5.74 5.73 5.93 6.09 6.04 6.05 6.24
6.02 6.13 6.14 6.35 6.51 6.45 6.47 6.63
3.74 4.03 4.27 4.51 4.68 4.65 4.66 4.88
4.85 5.04 5.18 5.39 5.55 5.51 5.50 5.74
4.20 4.35 4.50 4.64 5.09 4.96 5.02 5.28
12,228 11,842 11,499 11,356 11,498 11,135 10,814 10,650
$ 692.70 $ 680.32 $ 659.30 $ 673.41 $ 700.32 $ 672.71 $ 654.74 $ 664.27
1,998 1,998 1,966 1,966 1,966 1,966 1,966 1,966
1,201 1,556 1,284 1,224 1,208 1,310 1,210 1,156
1,724 1,682 1,621 1,548 1,612 1,444 1,421 1,445
59.0 58.8 57.6 59.0 56.8 61.0 59.8 54.8
93.3 94.0 93.0 93.5 93.2 92.4 93.1 93.7
62.6 63.4 86.3 79.4 74.1 74.1 67.5 69.9
14.0 13.5 4.8 5.3 5.1 2.8 2.5 4.3
0.8 0.5 0.4 0.3 2.0 0.4 0.2 0.5
22.6 22.6 8.5 15.0 18.8 22.7 29.8 25.3
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
10,319 10,159 10,220 10,525 10,569 10,396 10,385 10,491
183.27 178.38 185.13 194.46 224.63 235.24 236.45 240.47
1.89 1.81 1.89 2.05 2.37 2.45 2.46 2.52
</TABLE>
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<PAGE> 241
STATEMENTS OF INCOME
Mississippi Power Company
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 1991
(Thousands of Dollars)
OPERATING REVENUES:
<S> <C> <C> <C>
Revenues $ 459,364 $ 424,392 $ 414,342
Revenues from affiliates 15,519 10,055 18,044
Total operating revenues 474,883 434,447 432,386
OPERATING EXPENSES:
Operation --
Fuel 113,986 96,743 120,485
Purchased power from non-affiliates 2,198 1,337 851
Purchased power from affiliates 58,019 60,689 45,506
Proceeds from settlement of disputed contracts - (189) (4,205)
Other 100,381 90,581 86,932
Maintenance 44,001 43,165 44,166
Depreciation and amortization 33,099 32,789 32,147
Taxes other than income taxes 37,145 34,664 35,414
Federal and state income taxes 22,668 16,378 13,976
Total operating expenses 411,497 376,157 375,272
OPERATING INCOME: 63,386 58,290 57,114
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 1,010 642 728
Interest income 517 766 1,093
Other, net 3,971 5,501 3,845
Income taxes applicable to other income (1,158) (1,427) (863)
INCOME BEFORE INTEREST CHARGES 67,726 63,772 61,917
INTEREST CHARGES:
Interest on long-term debt 17,688 22,357 23,656
Allowance for debt funds used during construction (788) (563) (584)
Interest on notes payable 1,000 362 603
Amortization of debt discount, premium, and expense, net 1,262 630 377
Other interest charges 728 339 285
Net interest charges 19,890 23,125 24,337
NET INCOME FROM CONTINUING OPERATIONS 47,836 40,647 37,580
DISCONTINUED OPERATIONS:
Loss from operations of discontinued subsidiary, net of taxes - - (6,404)
Loss on disposal of discontinued subsidiary, net of taxes - - (5,455)
NET LOSS FROM DISCONTINUED OPERATIONS - - (11,859)
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN METHOD
OF RECORDING REVENUES 47,836 40,647 25,721
Cumulative effect as of January 1, 1983, of accruing
unbilled revenues--less income taxes of $6,326(000) - - -
NET INCOME 47,836 40,647 25,721
DIVIDENDS ON PREFERRED STOCK 5,400 3,857 3,094
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 42,436 $ 36,790 $ 22,627
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 42,436 $ 36,790 $ 22,627
</TABLE>
II-211
<PAGE> 242
STATEMENTS OF INCOME
Mississippi Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 426,714 $ 425,712 $ 404,192 $ 424,565 $ 454,596 $ 448,333 $ 429,281 $ 394,170
20,157 16,938 33,747 31,278 21,669 27,277 13,226 20,425
446,871 442,650 437,939 455,843 476,265 475,610 442,507 414,595
138,303 133,671 165,912 167,165 183,515 188,477 158,793 153,816
1,406 1,266 1,257 1,108 4,671 1,807 836 834
49,547 47,066 19,270 36,114 46,322 56,522 70,202 49,637
- - - - - - - -
83,730 84,820 83,542 81,331 70,009 58,528 53,447 53,922
33,368 35,658 33,412 33,974 31,368 39,509 31,826 24,921
30,770 28,001 26,610 26,210 30,293 25,412 24,170 23,322
32,709 32,435 29,638 27,882 26,145 23,930 24,495 24,426
17,144 18,387 20,313 23,888 30,881 29,142 26,525 29,067
386,977 381,304 379,954 397,672 423,204 423,327 390,294 359,945
59,894 61,346 57,985 58,171 53,061 52,283 52,213 54,650
307 903 850 608 1,030 693 820 1,845
829 1,096 1,030 1,121 864 1,326 1,325 3,120
6,297 6,013 6,399 7,065 8,983 9,867 6,482 (369)
(1,666) (1,392) (1,148) (2,507) (3,517) (3,880) (2,555) (1,233)
65,661 67,966 65,116 64,458 60,421 60,289 58,285 58,013
22,221 21,685 22,271 24,139 22,707 22,684 22,678 22,816
(600) (821) (595) (652) (770) (434) (1,800) (1,858)
1,142 689 341 558 252 - 1,082 -
359 362 363 388 245 146 148 148
333 566 522 601 283 562 754 4,152
23,455 22,481 22,902 25,034 22,717 22,958 22,862 25,258
42,206 45,485 42,214 39,424 37,704 37,331 35,423 32,755
(4,669) (3,459) (2,549) (487) - - - -
- - - - - - - -
(4,669) (3,459) (2,549) (487) - - - -
37,537 42,026 39,665 38,937 37,704 37,331 35,423 32,755
- - - - - - - 6,799
37,537 42,026 39,665 38,937 37,704 37,331 35,423 39,554
3,361 3,450 3,584 3,737 3,890 4,001 4,043 4,150
$ 34,176 $ 38,576 $ 36,081 $ 35,200 $ 33,814 $ 33,330 $ 31,380 $ 35,404
$ 34,176 $ 38,576 $ 36,081 $ 35,200 $ 33,814 $ 33,330 $ 31,380 $ 28,605
</TABLE>
II-212
<PAGE> 243
STATEMENTS OF CASH FLOWS
Mississippi Power Company
<TABLE>
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
(Thousands of Dollars)
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 47,836 $ 40,647 $ 25,721
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 45,660 41,472 41,773
Deferred income taxes, net 5,039 (5,473) (11,869)
Deferred investment tax credits, net - - (2)
Allowance for equity funds used during construction (1,010) (642) (728)
Non-cash proceeds from settlement of disputed contracts - (189) (4,071)
Other, net 3,005 8,093 (4,982)
Changes in certain current assets and liabilities --
Receivables, net (4,347) 1,002 35,343
Inventories 11,119 975 10,518
Payables 4,133 460 (4,949)
Other (8,033) 6,095 11,433
Net cash provided from operating activities 103,402 92,440 98,187
INVESTING ACTIVITIES:
Gross property additions (139,976) (68,189) (53,675)
Other 7,562 4,235 2,148
Net cash used for investing activities (132,414) (63,954) (51,527)
FINANCING ACTIVITIES AND CAPITAL CONTRIBUTIONS:
Proceeds:
Preferred stock 23,404 35,000 -
First mortgage bonds 70,000 40,000 50,000
Pollution control bonds 38,875 23,300 -
Other long-term debt - - 844
Capital contributions 30,036 26 -
Redemptions:
Preferred stock (23,404) - (4,118)
First mortgage bonds (51,300) (104,703) -
Pollution control bonds (25,885) (23,650) (300)
Other long-term debt (8,170) (6,212) (8,958)
Notes payable, net 9,000 26,500 (25,603)
Payment of preferred stock dividends (5,400) (3,857) (3,094)
Payment of common stock dividends (29,000) (28,000) (28,500)
Miscellaneous (5,683) (7,821) (839)
Net cash provided from (used for) financing activities 22,473 (49,417) (20,568)
NET CHANGE IN CASH AND CAHS EQUIVALENTS (6,539) (20,931) 26,092
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7,417 28,348 2,256
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 878 $ 7,417 $ 28,348
( ) Denotes use of cash.
</TABLE>
II-213
<PAGE> 244
STATEMENTS OF CASH FLOWS
Mississippi Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 37,537 $ 42,026 $ 39,665 $ 38,937 $ 37,704 $ 37,331 $ 35,423 $ 39,554
41,079 35,878 34,440 33,971 33,432 28,229 26,487 24,918
2,756 (294) (3,053) 10,035 41,059 11,246 10,156 6,161
(26) (38) 571 896 2,442 1,749 6,336 3,223
(307) (903) (850) (608) (1,030) (693) (820) (1,845)
- - - - - - - -
7,257 4,306 3,503 1,965 (14,162) (2,709) 3,802 10,325
(6,252) (18,506) 816 12,000 (1,708) (5,050) 8,734 (26,866)
(8,922) 3,687 283 13,708 (8,499) 12,281 (23,307) 10,092
(5,552) 1,307 (5,241) 7,487 (14,502) 4,656 (5,506) (14,378)
(1,461) 2,172 (2,294) (9,342) 11,546 (3,725) (3,651) 14,230
66,109 69,635 67,840 109,049 86,282 83,315 57,654 65,414
(49,009) (43,916) (54,550) (53,288) (62,488) (57,791) (37,290) (72,277)
4,481 1,860 8,368 (1,461) (61,162) 3,825 388 1,647
(44,528) (42,056) (46,182) (54,749) (123,650) (53,966) (36,902) (70,630)
- - - - - - - -
- - - - 35,000 - - -
- - - - - - - -
- 844 - 130 60,663 1,000 - -
- - - 16,000 400 400 1,000 12,000
(750) (750) (1,500) (1,500) (1,500) (1,111) (639) (750)
(4,000) (3,823) - (29,701) (29,250) (250) (250) (3,246)
(288) (62) (50) (50) (50) (50) (50) (50)
(6,416) (5,919) (5,401) (4,974) (200) - - -
17,146 6,457 6,500 - - - - -
(3,361) (3,450) (3,584) (3,737) (3,890) (4,001) (4,043) (4,150)
(27,500) (27,000) (27,600) (24,700) (23,700) (22,600) (21,000) (18,900)
2 - - (2,696) (2,929) (18) - -
(25,167) (33,703) (31,635) (51,228) 34,544 (26,630) (24,982) (15,096)
(3,586) (6,124) (9,977) 3,072 (2,824) 2,719 (4,230) (20,312)
5,842 11,966 21,943 18,871 21,695 18,976 23,206 43,518
$ 2,256 $ 5,842 $ 11,966 $ 21,943 $ 18,871 $ 21,695 $ 18,976 $ 23,206
</TABLE>
II-214
<PAGE> 245
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Thousands of Dollars)
ASSETS
<S> <C> <C> <C>
UTILITY PLANT:
Production-fossil $ 597,425 $ 576,848 $ 567,588
Transmission 188,375 173,278 162,379
Distribution 295,799 279,335 259,929
General 157,248 151,044 141,564
Construction work in progress 108,063 41,692 33,078
Total utility plant 1,346,910 1,222,197 1,164,538
Accumulated provision for depreciation 462,725 440,777 415,135
Total 884,185 781,420 749,403
Less property-related accumulated deferred income taxes - 142,338 138,616
Total 884,185 639,082 610,787
OTHER PROPERTY AND INVESTMENTS:
Securities received from settlement of disputed contracts - - 4,113
Miscellaneous 11,289 4,539 3,954
Total 11,289 4,539 8,067
CURRENT ASSETS:
Cash and cash equivalents 878 7,417 28,348
Investment securities - 3,622 -
Receivables, net 28,021 20,219 27,152
Accrued utility revenues 14,897 14,898 12,420
Fossil fuel stock, at average cost 11,185 21,341 22,373
Materials and supplies, at average cost 21,145 22,108 22,051
Current portion of deferred fuel commitments 440 1,861 933
Prepayments 7,843 5,869 6,137
Vacation pay deferred 4,797 4,651 4,406
Total current assets 89,206 101,986 123,820
DEFERRED CHARGES:
Debt expense, being amortized 1,103 804 981
Premium on reacquired debt, being amortized 10,563 10,102 4,676
Deferred fuel commitments 17,520 25,255 31,039
Deferred charges related to income taxes 25,267 - -
Miscellaneous 10,073 9,515 11,271
Total deferred charges 64,526 45,676 47,967
TOTAL ASSETS $1,049,206 $ 791,283 $ 790,641
</TABLE>
II-215
<PAGE> 246
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 560,537 $ 547,946 $ 529,742 $ 524,198 $ 509,128 $ 485,665 $ 477,618 $ 468,536
151,949 147,288 134,674 130,963 125,304 121,405 118,552 111,266
247,705 229,238 221,327 207,810 195,042 183,003 169,545 160,062
136,815 133,361 137,333 127,690 114,042 99,788 90,626 31,765
26,816 27,057 35,204 27,755 33,544 34,862 17,054 70,463
1,123,822 1,084,890 1,058,280 1,018,416 977,060 924,723 873,395 842,092
392,440 366,193 348,085 328,761 312,571 293,167 266,844 245,171
731,382 718,697 710,195 689,655 664,489 631,556 606,551 596,921
139,970 138,071 134,220 127,912 120,990 107,633 98,494 88,940
591,412 580,626 575,975 561,743 543,499 523,923 508,057 507,981
- - - - - - - -
8,631 7,792 8,153 4,122 1,738 641 630 354
8,631 7,792 8,153 4,122 1,738 641 630 354
2,256 5,842 11,966 21,943 18,871 21,695 18,976 23,206
- - - - - - - -
67,734 58,425 43,246 42,218 48,158 42,407 39,137 44,627
10,797 13,854 10,527 12,371 18,431 22,474 20,694 23,938
29,812 24,788 26,587 29,989 46,067 40,638 57,225 36,550
25,130 21,232 23,120 20,001 17,631 14,561 10,255 7,623
1,430 3,017 - - - - - -
11,392 12,512 12,341 830 973 805 497 679
3,955 3,910 3,815 3,956 3,559 3,337 2,910 2,587
152,506 143,580 131,602 131,308 153,690 145,917 149,694 139,210
824 886 949 1,012 1,212 1,208 1,260 1,329
4,919 5,161 5,404 5,647 2,800 - - -
39,020 45,103 50,714 55,889 60,663 - - -
- - - - - - - -
2,714 3,422 6,522 4,347 3,508 7,888 889 499
47,477 54,572 63,589 66,895 68,183 9,096 2,149 1,828
$ 800,026 $ 786,570 $ 779,319 $ 764,068 $ 767,110 $ 679,577 $ 660,530 $ 649,373
</TABLE>
II-216
<PAGE> 247
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
<S> <C> <C> <C>
Common stock $ 37,691 $ 37,691 $ 37,691
Other paid-in capital 154,362 124,326 124,300
Premium on preferred stock 372 194 194
Earnings retained in the business 129,343 118,429 111,670
Total common equity 321,768 280,640 273,855
Preferred stock 74,414 74,414 39,414
Preferred stock subject to mandatory redemption - - -
Long-term debt 250,391 238,650 304,150
Total capitalization 646,573 593,704 617,419
(excluding amount due within one year)
CURRENT LIABILITIES:
Notes payable to banks 40,000 31,000 4,500
Preferred stock due within one year - - -
Long-term debt due within one year 19,345 8,878 14,650
Accounts payable 60,928 43,550 38,213
Customer deposits 2,786 2,976 3,109
Taxes accrued 27,138 32,035 29,609
Interest accrued 4,237 3,961 4,602
Vacation pay accrued 4,797 4,651 4,406
Miscellaneous 9,323 10,963 10,236
Total current liabilities 168,554 138,014 109,325
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 123,206 169 4,117
Accumulated deferred investment tax credits 32,710 34,242 35,657
Deferred tax related to income taxes 48,228 - -
Miscellaneous 29,935 25,154 24,123
Total deferred credits and other liabilities 234,079 59,565 63,897
TOTAL CAPITALIZATION AND LIABILITIES $1,049,206 $ 791,283 $ 790,641
</TABLE>
II-217
<PAGE> 248
BALANCE SHEETS
Mississippi Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 37,691 $ 37,691 $ 37,691 $ 37,691 $ 37,691 $ 37,691 $ 37,691 $ 37,691
124,300 124,300 124,300 124,300 108,300 107,900 107,500 106,500
299 299 299 299 299 299 360 331
117,543 110,867 99,183 90,702 80,311 70,197 59,467 49,087
279,833 273,157 261,473 252,992 226,601 216,087 205,018 193,609
39,414 39,414 39,414 39,414 39,414 39,414 39,414 39,414
3,750 4,500 5,250 6,750 8,250 9,750 10,500 11,250
270,724 277,693 287,525 294,811 299,684 261,594 267,051 267,271
593,721 594,764 593,662 593,967 573,949 526,845 521,983 511,544
30,103 12,957 6,500 - - - - -
368 368 368 368 368 368 729 618
7,039 10,717 9,789 5,451 34,724 6,532 300 300
45,763 47,019 46,937 45,659 36,490 50,992 46,336 51,842
3,430 3,906 3,904 3,857 3,720 3,521 4,240 4,167
24,935 23,843 21,130 21,351 29,029 32,015 24,850 21,631
4,315 4,280 4,016 4,474 5,064 5,502 5,577 6,928
3,955 3,910 3,815 3,956 3,559 3,337 2,910 2,587
6,833 7,746 9,347 6,005 5,746 5,464 6,453 7,786
126,741 114,746 105,806 91,121 118,700 107,731 91,395 95,859
18,992 22,085 24,556 27,411 25,922 - - -
37,187 38,752 40,435 41,427 42,183 41,311 41,063 36,135
- - - - - - - -
23,385 16,223 14,860 10,142 6,356 3,690 6,089 5,835
79,564 77,060 79,851 78,980 74,461 45,001 47,152 41,970
$ 800,026 $ 786,570 $ 779,319 $ 764,068 $ 767,110 $ 679,577 $ 660,530 $ 649,373
</TABLE>
II-218
<PAGE> 249
MISSISSIPPI POWER COMPANY
OUTSTANDING SECURITIES
AT DECEMBER 31, 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1964 $ 10,000 4-5/8% $ 10,000 6/1/94
1965 11,000 4-3/4% 11,000 7/1/95
1966 10,000 6% 10,000 8/1/96
1993 35,000 5-3/8% 35,000 3/1/98
1992 40,000 6-5/8% 40,000 8/1/00
1991 50,000 9-1/4% 48,700 5/1/21
1993 35,000 7.45% 35,000 6/1/23
$ 191,000 $ 189,700
</TABLE>
POLLUTION CONTROL BONDS
<TABLE>
<CAPTION>
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1977 $ 1,000 5.80% $ 990 10/1/07
1992 6,550 Variable 6,550 12/1/20
1992 16,750 Variable 16,750 12/1/22
1993 13,000 6.20% 13,000 4/1/23
1993 25,875 5.65% 25,875 11/1/23
$ 63,175 $ 63,165
</TABLE>
PREFERRED STOCK
<TABLE>
<CAPTION>
Shares Dividend Amount
Series Outstanding Rate Outstanding
(Thousands)
<S> <C> <C> <C>
1947 20,099 4.60% $ 2,010
1956 40,000 4.40% 4,000
1965 50,000 4.72% 5,000
1968 50,000 7.00% 5,000
1992 350,000 7.25% 35,000
1993 150,000 6.32% 15,000
1993 84,040 6.65% 8,404
744,139 $ 74,414
</TABLE>
II-219
<PAGE> 250
MISSISSIPPI POWER COMPANY
SECURITIES RETIRED
DURING 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Principal Interest
Series Amount Rate
(Thousands)
<S> <C> <C>
1967 $ 10,000 7.125%
1972 25,000 7.625%
1973 15,000 7.625%
1991 1,300 9.25%
$ 51,300
</TABLE>
POLLUTION CONTROL BONDS
<TABLE>
<CAPTION>
Principal Interest
Series Amount Rate
(Thousands)
<S> <C> <C>
1973 $ 7,875 5.90%
1977 18,000 5.80%
1977 10 5.80%
$ 25,885
</TABLE>
PREFERRED STOCK
<TABLE>
<CAPTION>
Principal Dividend
Series Amount Rate
(Thousands)
<S> <C> <C>
1971 $ 8,404 8.44%
1974 15,000 8.80%
$ 23,404
</TABLE>
II-220
<PAGE> 251
SAVANNAH ELECTRIC AND
POWER COMPANY
FINANCIAL SECTION
II-221
<PAGE> 252
MANAGEMENT'S REPORT
Savannah Electric and Power Company 1993 Annual Report
The management of Savannah Electric and Power Company has prepared -- and is
responsible for -- the financial statements and related information included in
this report. These statements were prepared in accordance with generally
accepted accounting principles appropriate in the circumstances and necessarily
include amounts that are based on the best estimates and judgments of
management. Financial information throughout this annual report is consistent
with the financial statements.
The Company maintains a system of internal accounting controls to
provide reasonable assurance that assets are safeguarded and that books and
records reflect only authorized transactions of the Company. Limitations exist
in any system of internal controls, however, based on a recognition that the
cost of the system should not exceed its benefits. The Company believes its
system of internal accounting controls maintains an appropriate cost/benefit
relationship.
The Company's system of internal accounting controls is evaluated on
an ongoing basis by the Company's internal audit staff. The Company's
independent public accountants also consider certain elements of the internal
control system in order to determine their auditing procedures for the purpose
of expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of four
directors who are not employees, provides a broad overview of management's
financial reporting and control functions. Periodically, this committee meets
with management, the internal auditors and the independent public accountants
to ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls and financial reporting matters. The internal
auditors and the independent public accountants have access to the members of
the audit committee at any time.
Management believes that its policies and procedures provide
reasonable assurance that the Company's operations are conducted according to a
high standard of business ethics. In management's opinion, the financial
statements present fairly, in all material respects, the financial position,
results of operations and cash flows of Savannah Electric and Power Company in
conformity with generally accepted accounting principles.
/s/ Arthur M. Gignilliat, Jr. /s/ K. R. Willis
- -------------------------------- -------------------------------------
Arthur M. Gignilliat, Jr. K. R. Willis
President Vice-President
and Chief Executive Officer Treasurer and Chief Financial Officer
II-222
<PAGE> 253
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS
OF SAVANNAH ELECTRIC AND POWER COMPANY:
We have audited the accompanying balance sheets and statements of
capitalization of Savannah Electric and Power Company (a Georgia corporation)
as of December 31, 1993 and 1992, and the related statements of income,
retained earnings, paid-in capital, and cash flows for each of the three years
in the period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements (pages II-231 through
II-244) referred to above present fairly, in all material respects, the
financial position of Savannah Electric and Power Company as of December 31,
1993 and 1992, and the results of its operations and its cash flows for the
periods stated, in conformity with generally accepted accounting principles.
As explained in Notes 2 and 7 to the financial statements, effective
January 1, 1993, the Company changed its methods of accounting for
postretirement benefits other than pensions and for income taxes.
/s/ Arthur Andersen & Co.
Atlanta, Georgia,
February 16, 1994
II-223
<PAGE> 254
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Savannah Electric and Power Company 1993 Annual Report
RESULTS OF OPERATIONS
Earnings
Savannah Electric and Power Company's net income after dividends on preferred
stock for 1993 totaled $21.5 million, representing a $1.0 million (4.6 percent)
increase from the prior year. The revenue impact of an increase in retail
energy sales due to exceptionally hot summer weather was partially offset by
the implementation of a work force reduction program which resulted in a
one-time charge to operating expenses of approximately $4.5 million.
In 1992, earnings were $20.5 million, representing a $3.5 million
(14.6 percent) decrease from the prior year. This decrease resulted primarily
from increases in maintenance and administrative and general expenses,
partially offset by a 4.6 percent increase in retail operating revenues.
Operating revenues increased despite the negative impact of a $2.8 million
annual reduction in retail base rates effective in June 1992, and mild weather.
REVENUES
Total revenues for 1993 were $218.4 million, reflecting a 10.5 percent increase
over 1992, primarily due to an increase in retail energy sales.
The following table summarizes the factors impacting operating
revenues compared to the prior year for the 1991-1993 period:
<TABLE>
<CAPTION>
Increase (Decrease)
From Prior Years
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Retail --
Change in base
rates $(1,450) $(1,350) $(5,232)
Sales growth 5,980 5,467 5,057
Weather 4,567 (3,116) (1,014)
Fuel cost
recovery and
other 12,404 7,270 (8,934)
Total retail 21,501 8,271 (10,123)
Sales for resale--
Non-affiliates (1,800) 8 (1,669)
Affiliates 928 75 (4,136)
Total sales for
resale (872) 83 (5,805)
Other operating
revenues 52 (239) (61)
Total operating
revenues $20,681 $8,115 $(15,989)
Percent change 10.5% 4.3% (7.8)%
</TABLE>
Total retail revenues increased 11.5 percent in 1993, compared to a
4.6 percent increase in 1992. The increase in 1993 retail revenues
attributable to growth in both retail customers and average use per customer
was enhanced by exceptionally hot weather during the summer. The substantial
increase in fuel cost recovery and other revenues reflects increases in net
generation and the unit cost of purchased power. The increase in 1992 retail
revenues resulted from growth in both retail customers and average use per
customer, but was substantially offset by mild weather and the June 1992 base
rate reduction.
II-224
<PAGE> 255
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1993 Annual Report
Under the Company's fuel cost recovery provisions, fuel revenues equal
fuel expense, including the fuel and capacity components of purchased energy,
and have no effect on earnings. Revenues from sales to non-affiliated
utilities under long-term contracts consist of capacity and energy components.
Capacity revenues reflect the recovery of fixed costs and a return on
investment under the contracts. Energy is generally sold at variable cost.
The capacity and energy components were:
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Capacity $ 978 $ 537 $ 516
Energy 4,262 7,040 6,729
Total $5,240 $7,577 $7,245
</TABLE>
Sales to affiliated companies within the Southern electric system
vary from year to year depending on demand and the availability and cost of
generating resources at each company. These sales have little impact on
earnings.
Kilowatt-hour sales for 1993 and the percent change by year were
as follows:
<TABLE>
<CAPTION>
(millions of Amount Percent Change
kilowatt-hours) 1993 1993 1992 1991
<S> <C> <C> <C> <C>
Residential 1,329 9.2% 1.8% 1.0%
Commercial 1,016 6.5 3.0 3.7
Industrial 854 (0.8) 4.3 28.1
Other 117 5.2 3.4 3.0
Total retail 3,316 5.5 2.9 8.1
Sales to non-affiliates 247 (32.7) (1.3) (15.6)
Sales to affiliates 75 100.3 15.5 (88.9)
Total 3,638 2.6% 2.6% (2.9)%
</TABLE>
The increases in energy sales in 1993 and 1992 continue to reflect
a growing customer base, an increase in average energy sales per customer, and
improved economic conditions in the Company's service area. Sales were
enhanced in 1993 by temperature extremes in the summer months and in December.
EXPENSES
Total operating expenses for 1993 increased $20.3 million (12.4 percent) over
the prior year. This increase includes a $10.8 million increase in fuel
expense, and an $8.7 million increase in other operation expenses. Fuel
expenses increased primarily because of higher generation due to extremely hot
weather and higher cost fuel sources. In 1992 an increase in purchased power
reflected a 15.4 percent decrease in generation compared to 1991. Despite the
decrease in generation, total 1992 fuel expenses were substantially unchanged
from the prior year reflecting generation from higher cost fuel sources.
The increase in other operation expenses reflects a $4.5 million
cost associated with a one-time charge related to a work force reduction
program. The Company also recognized higher employee benefits costs under new
accounting rules adopted in 1993. See Note 2 to the financial statements for
additional information on these new rules. In 1992, the increase in other
operation expenses was primarily a result of increases in outside services and
administrative and general expenses, which reflected higher employee training
and benefits expenses. Total interest expense on long-term debt was reduced by
5.4 percent in 1992, as the Company refinanced higher-cost debt.
II-225
<PAGE> 256
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1993 Annual Report
The mix of energy supply is determined primarily by system load,
the unit cost of fuel consumed and the availability of units.
The amount and sources of energy supply and the average cost of
fuel per net kilowatt-hour generated and purchased power were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Total energy supply
(millions of kilowatt-hours) 3,863 3,764 3,677
Sources of energy supply
(percent)
Coal 21 12 16
Oil 2 1 -
Gas 3 2 2
Purchased Power 74 85 82
Average cost of fuel per net
kilowatt-hour generated
(cents)
Coal 2.02 2.28 2.05
Oil 4.11 2.40 3.97
Gas 4.87 4.28 3.32
Total average cost of
energy supply 2.12 1.78 1.64
</TABLE>
EFFECTS OF INFLATION
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic
loss because the Company is recovering its costs of investments in dollars that
have less purchasing power. While the inflation rate has been relatively low
in recent years, it continues to have an adverse effect on the Company because
of the large investment in long-lived utility plant. Conventional accounting
for historical cost does not recognize this economic loss nor the partially
offsetting gain that arises through financing facilities with fixed-money
obligations such as long-term debt and preferred stock. Any recognition of
inflation by regulatory authorities is reflected in the rate of return allowed.
FUTURE EARNINGS POTENTIAL
The results of operations for the past three years are not necessarily
indicative of future earnings potential. The level of future earnings depends
on numerous factors ranging from growth in energy sales to regulatory matters.
Future earnings in the near term will depend upon growth in energy
sales, which is subject to a number of factors. Traditionally, these factors
included changes in contracts with neighboring utilities, energy conservation
practiced by customers, the elasticity of demand, weather, competition, and the
rate of economic growth in the Company's service area. However, the Energy
Policy Act of 1992 (Energy Act) will have a profound effect on the future of
the electric utility industry. The Energy Act promotes energy efficiency,
alternative fuel use, and increased competition for electric utilities. The
Energy Act allows Independent Power Producers (IPPs) to access a utility's
transmission network to sell electricity to other utilities. This may enhance
the incentives for IPPs to build cogeneration plants for the Company's large
industrial and commercial customers. Although the Energy Act does not require
transmission access to retail customers, pressure for legislation to allow
retail wheeling will continue. The Company is preparing now to meet the
challenge of these major changes in the traditional business practices of
selling electricity. If the Company does not remain a low-cost producer and
provide quality service, the Company's retail energy sales growth, as well as
new long-term contracts for energy sales outside the service area, could be
limited, and this could significantly erode earnings.
Demand-side options -- programs that enable customers to lower or
alter their peak energy requirements -- have been initiated by the Company and
are a significant part of integrated resource planning. Customers can receive
cash incentives for participating in these programs in addition to reducing
their energy requirements. Expansion and increased utilization of these
programs will be contingent upon sharing of cost savings between the customers
and the Company. Besides promoting energy efficiency, another benefit of these
programs could be the ability to defer the need to construct baseload
generating facilities further into the future. The ability to defer major
construction projects, in conjunction with the precertification approval
process for such projects by the Georgia Public Service Commission (GPSC), will
II-226
<PAGE> 257
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1993 Annual Report
diminish the possible exposure to prudency disallowances and the resulting
impact on earnings.
Compliance costs related to the Clean Air Act Amendments of 1990
(Clean Air Act) could reduce earnings if such costs are not fully recovered.
The Clean Air Act is discussed later under "Environmental Matters."
Rates to retail customers served by the Company are regulated by
the GPSC. In May 1992, the Company requested, and subsequently received,
approval by the GPSC to reduce annual base revenues by $2.8 million, effective
June 1992. The reduction includes a base rate reduction of approximately $2.5
million spread among all classes of retail customers. An additional $0.3
million reduction resulted from the implementation of an experimental,
time-of-use rate for certain commercial customers. As part of this rate
settlement, it was informally agreed that the Company's earned rate of return
on common equity should be 12.95 percent.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued Statement No. 112,
Employers' Accounting for Postemployment Benefits, which must be implemented by
1994. The new standard requires that all types of benefits provided to former
or inactive employees and their families prior to retirement be accounted for
on an accrual basis. These benefits include salary continuation, severance
pay, supplemental unemployment benefits, disability-related benefits, job
training, and health and life insurance coverage.
The FASB has issued Statement No. 115, Accounting for Certain
Investments in Debt and Equity Securities, which is effective in 1994.
Statement No. 115, supersedes FASB Statement No. 12, Accounting for Certain
Marketable Securities. The Company adopted the new rules January 1, 1994, with
no material effect on the financial statements.
On January 1, 1993, the Company changed its methods of accounting
for postretirement benefits other than pensions and for income taxes. See
notes 2 and 7 to the financial statements regarding the impact of these
changes.
FINANCIAL CONDITION
OVERVIEW
The principal change in the Company's financial condition in 1993 was additions
of $73 million to utility plant. The majority of funds needed for gross
property additions since 1990 have been provided from operating activities,
principally from earnings and non-cash charges to income such as depreciation
and deferred income taxes. See Statements of Cash Flows for additional
information.
CAPITAL STRUCTURE
As of December 31, 1993, the Company's capital structure consisted of 45.3
percent common equity, 10.3 percent preferred stock and 44.4 percent long-term
debt, excluding amounts due within one year. The Company's long-term financial
objective for capitalization ratios is to maintain a capital structure of
common equity at 45 percent, preferred stock at 10 percent and debt at 45
percent.
Maturities and retirements of long-term debt were $4 million in
1993, $53 million in 1992 and $23 million in 1991.
In November 1993, the Company issued 1,400,000 shares of 6.64
percent series preferred stock. In December 1993, the Company redeemed all
800,000 shares outstanding of its 9.5 percent series preferred stock at the
prescribed redemption price of $26.57 plus accrued dividends.
The composite interest rates for the years 1991 through 1993 as of
year-end were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Composite interest rates
on long-term debt 8.0% 8.5% 9.7%
Composite preferred stock
dividend rate 6.6% 9.5% 9.5%
</TABLE>
II-227
<PAGE> 258
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1993 Annual Report
The Company's current securities ratings are as follows:
<TABLE>
<CAPTION>
Standard
Moody's & Poor's
<S> <C> <C>
First Mortgage Bonds A1 A
Preferred Stock "a2" A-
</TABLE>
CAPITAL REQUIREMENTS FOR CONSTRUCTION
The Company's projected construction expenditures for the next three years
total $98 million ($33 million in 1994, $32 million in 1995, and $33 million in
1996). Actual construction costs may vary from this estimate because of such
factors as changes in environmental regulations; revised load projections; the
cost and efficiency of construction labor, equipment and materials; and the
cost of capital. The largest project during this period is the addition of two
80 megawatt combustion turbine units, to be placed into service in 1994. The
estimated cost of this project is $61 million. The Company is also
constructing six combustion turbine units for Georgia Power Company.
OTHER CAPITAL REQUIREMENTS
In addition to the funds needed for the construction program, approximately
$5.9 million will be needed by the end of 1996 for present sinking fund
requirements and maturities.
ENVIRONMENTAL MATTERS
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the new law -- will have a
significant impact on the Company and other subsidiaries of the Southern
electric system. Specific reductions in sulfur dioxide and nitrogen oxide
emissions from fossil-fired generating plants will be required in two phases.
Phase I compliance must be implemented in 1995, and affects eight generating
plants -- some 10,000 megawatts of capacity or 35 percent of total capacity --
in the Southern electric system. Phase II compliance is required in 2000, and
all fossil-fired generating plants in the Southern electric system will be
affected.
Beginning in 1995, the Environmental Protection Agency (EPA) will
allocate annual sulfur dioxide emission allowances through the newly
established allowance trading program. An emission allowance is the authority
to emit one ton of sulfur dioxide during a calendar year. The method for
allocating allowances is based on the fossil fuel consumed from 1985 through
1987 for each affected generating unit. Emission allowances are transferable
and can be bought, sold, or banked and used in the future.
The sulfur dioxide emission allowance program is expected to
minimize the cost of compliance. The market for emission allowances is
developing slower than expected. However, The Southern Company's sulfur
dioxide compliance strategy is designed to take advantage of allowances as the
market develops.
The Southern Company expects to achieve Phase I sulfur dioxide
compliance at the eight affected plants by switching to low-sulfur
coal, and this would require some equipment upgrades. This compliance strategy
is expected to result in unused emission allowances being banked for later use.
Additional construction expenditures are required to install equipment for the
control of nitrogen oxide emissions at these eight plants. Also, continuous
emissions monitoring equipment would be installed on all fossil-fired units.
Under this Phase I compliance approach, additional construction expenditures
are estimated to total approximately $275 million through 1995 for The Southern
Company, of which the Company's portion is approximately $2 million.
Phase II compliance costs are expected to be higher because
requirements are stricter and all fossil-fired generating plants are affected.
For sulfur dioxide compliance, The Southern Company could use emission
allowances banked during Phase I and increase fuel switching, install flue gas
desulfurization equipment at selected plants, and/or purchase more allowances
depending on the price and availability of allowances. Also, in Phase II,
equipment to control nitrogen oxide emissions will be installed on additional
system fossil-fired plants as required to meet anticipated Phase II limits.
Therefore, during the period 1996 through 2000, compliance could require total
construction expenditures ranging from approximately $450 million to $800
million of which the Company's portion is expected to be approximately $25
million. However, the full impact of
II-228
<PAGE> 259
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1993 Annual Report
Phase II compliance cannot now be determined with certainty, pending the
development of a market for emission allowances, the completion of EPA
regulations, and the possibility of new emission reduction technologies.
An increase of up to 5 percent in annual revenue requirements from
customers could be necessary to fully recover the Company's costs of compliance
for both Phase I and II of the Clean Air Act. Compliance costs include
construction expenditures, increased costs for switching to low-sulfur coal,
and costs related to emission allowances.
There can be no assurance that all Clean Air Act costs will be
recovered.
Title III of the Clean Air Act requires a multi-year EPA study of
power plant emissions of hazardous air pollutants. The study will serve as the
basis for a decision on whether additional regulatory control of these
substances is warranted. Compliance with any new control standards could
result in significant additional costs. The impact of new standards -- if any
- -- will depend on the development and implementation of applicable regulations.
The EPA continues to evaluate the need for a new short-term ambient
air quality standard for sulfur dioxide. Preliminary results from an EPA study
on the impact of a new standard indicate that a number of plants could be
required to install sulfur dioxide controls. These controls would be in
addition to the controls already required to meet the acid rain provision of
the Clean Air Act. The EPA is expected to take some action on this issue in
1994. The impact of any new standard will depend on the level chosen for the
standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient
air quality standards for particulate matters, nitrogen oxides, and ozone. The
impact of any new standard will depend on the level chosen for the standard and
cannot be determined at this time.
In 1994 or 1995, the EPA is expected to issue revised rules on air
quality control regulations related to stack height requirements of the Clean
Air Act. The full impact of the final rules cannot be determined at this time,
pending their development and implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous
status of coal ash. However, the EPA has until 1998 to classify co-managed
utility wastes--coal ash and other utility wastes--as either non-hazardous or
hazardous. If the EPA classifies the co-managed wastes as hazardous, then
substantial additional costs for the management of such wastes may be required.
The full impact of any change in the regulatory status will depend on the
subsequent development of co-managed waste requirements.
Savannah Electric and Power Company must comply with other
environmental laws and regulations that cover the handling and disposal of
hazardous waste. Under these various laws and regulations, the Company could
incur costs to clean up properties currently or previously owned. The Company
conducts studies to determine the extent of any required clean-up costs and
will recognize in the financial statements any costs to clean up known sites.
Several major pieces of environmental legislation are in the
process of being reauthorized or amended by Congress. These include: the
Clean Water Act, the Comprehensive Environmental Response, Compensation, and
Liability Act, and the Resource Conservation and Recovery Act. Changes to
these laws could affect many areas of the Company's operations. The full
impact of these requirements cannot be determined at this time, pending the
development and implementation of applicable regulations.
Compliance with possible new legislation related to global climate
change, electromagnetic fields, and other environmental and health concerns
could significantly affect The Southern Company. The impact of new legislation
- -- if any -- will depend on the subsequent development and implementation of
applicable regulations. In addition, the potential for lawsuits alleging
damages caused by electromagnetic fields exists.
SOURCES OF CAPITAL
At December 31, 1993, the Company had $3.9 million of cash and $14.5 million of
unused credit arrangements with banks to meet its short-term cash needs. The
Company had $3 million of short-term bank borrowings at December 31, 1993. In
January 1994, the Company renegotiated a two-year revolving credit arrangement
with four of its
II-229
<PAGE> 260
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1993 Annual Report
existing banks for a total credit line of $20 million. The primary purpose of
this additional credit is to provide interim funding for the Company's
combustion turbine construction program.
It is anticipated that the funds required for construction and
other purposes, including compliance with environmental regulations, will be
derived from operations and the sale of additional first mortgage bonds and
preferred stock and capital contributions from The Southern Company. The
Company is required to meet certain coverage requirements specified in its
mortgage indenture and corporate charter to issue new first mortgage bonds and
preferred stock. The Company's coverage ratios are sufficiently high enough to
permit, at present interest levels, any foreseeable security sales. The amount
of securities which the Company will be permitted to issue in the future will
depend upon market conditions and other factors prevailing at that time.
II-230
<PAGE> 261
STATEMENTS OF INCOME
For the Years Ended December 31, 1993, 1992, and 1991
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES (NOTES 1, 3, AND 6):
Revenues $ 216,009 $ 196,256 $ 188,216
Revenues from affiliates 2,433 1,505 1,430
Total operating revenues 218,442 197,761 189,646
OPERATING EXPENSES:
Operation --
Fuel 24,976 14,162 14,415
Purchased power from non-affiliates 793 494 297
Purchased power from affiliates 56,274 56,492 49,007
Other (Notes 2 and 5) 45,610 36,884 32,945
Maintenance 13,516 14,232 12,475
Depreciation and amortization (Notes 1 and 7) 16,467 16,829 16,549
Taxes other than income taxes 11,136 10,231 10,122
Federal and state income taxes (Note 7) 15,436 14,566 16,195
Total operating expenses 184,208 163,890 152,005
OPERATING INCOME 34,234 33,871 37,641
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction (Note 1) 958 446 170
Interest income 209 276 589
Other, net (Note 2) (1,841) (1,450) (879)
Income taxes applicable to other income 1,117 758 722
INCOME BEFORE INTEREST CHARGES 34,677 33,901 38,243
INTEREST CHARGES:
Interest on long-term debt 10,696 10,870 11,486
Allowance for debt funds used during construction (Note 1) (699) (289) (103)
Interest on notes payable 240 15 25
Amortization of debt discount, premium, and expense, net 535 427 380
Other interest charges 340 466 525
Net interest charges 11,112 11,489 12,313
NET INCOME 23,565 22,412 25,930
DIVIDENDS ON PREFERRED STOCK 2,106 1,900 1,900
NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 21,459 $ 20,512 $ 24,030
</TABLE>
The accompanying notes are an integral part of these statements.
II-231
<PAGE> 262
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993, 1992, and 1991
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 23,565 $ 22,412 $ 25,930
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 17,482 17,757 17,501
Deferred income taxes and investment tax credits 607 5,947 1,601
Allowance for equity funds used during construction (958) (446) (170)
Other, net 2,853 (1,312) (1,876)
Changes in certain current assets and liabilities --
Receivables, net (16,839) (4,107) 5,291
Special deposits - 350 1,348
Inventories (3,947) 4,435 (1,082)
Payables 18,742 351 568
Other 3,282 2,083 3,710
Net cash provided from operating activities 44,787 47,470 52,821
INVESTING ACTIVITIES:
Gross property additions (72,858) (30,132) (19,478)
Other 1,676 (1,073) 407
Net cash provided (used) for investing activities (71,182) (31,205) (19,071)
FINANCING ACTIVITIES AND CAPITAL CONTRIBUTIONS:
Proceeds:
First mortgage bonds 45,000 30,000 30,000
Preferred stock 35,000 - -
Pollution control bonds 4,085 13,870 -
Other long-term debt 10,000 - -
Retirements:
Preferred stock (20,000) - -
First mortgage bonds - (38,750) (22,500)
Pollution control bonds (4,085) (14,550) (515)
Other long-term debt (10,356) (217) (275)
Notes payable, net (4,500) 7,500 (1,500)
Payment of preferred stock dividends (2,222) (1,900) (1,900)
Payment of common stock dividends (21,000) (22,000) (22,000)
Miscellaneous (3,400) (3,985) (477)
Net cash provided (used) for financing activities 28,522 (30,032) (19,167)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,127 (13,767) 14,583
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,788 15,555 972
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,915 $ 1,788 $ 15,555
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for-
Interest (net of amount capitalized) $ 10,712 $ 9,932 $ 10,506
Income taxes 13,947 6,646 15,095
</TABLE>
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
II-232
<PAGE> 263
BALANCE SHEETS
At December 31, 1993 and 1992
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
ASSETS 1993 1992
(in thousands)
<S> <C> <C>
UTILITY PLANT:
Plant in service, at original cost (Notes 1, 4, 5, 7, and 9) $ 622,521 $ 599,596
Less accumulated provision for depreciation 251,565 240,094
370,956 359,502
Construction work in progress 49,797 5,966
Total 420,753 365,468
Less property-related accumulated deferred income taxes - 65,725
Total 420,753 299,743
OTHER PROPERTY AND INVESTMENTS 1,793 1,795
CURRENT ASSETS:
Cash and cash equivalents 3,915 1,788
Receivables-
Customer accounts receivable 18,551 16,795
Other accounts and notes receivable 790 1,359
Affiliated companies 12,924 263
Accumulated provision for uncollectible accounts (762) (536)
Fuel cost under recovery 7,112 3,895
Fossil fuel stock, at average cost 8,419 4,895
Materials and supplies, at average cost (Note 1) 9,358 8,935
Prepayments 4,849 1,599
Total 65,156 38,993
DEFERRED CHARGES:
Deferred charges related to income taxes (Note 7) 24,890 -
Premium on reacquired debt, being amortized 3,792 4,236
Miscellaneous 10,803 7,408
Total 39,485 11,644
TOTAL ASSETS $ 527,187 $ 352,175
</TABLE>
The accompanying notes are an integral part of these statements.
II-233
<PAGE> 264
BALANCE SHEETS
At December 31, 1993 and 1992
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES 1993 1992
(in thousands)
<S> <C> <C>
CAPITALIZATION (SEE ACCOMPANYING STATEMENTS):
Common stock equity $ 154,269 $ 158,376
Preferred stock 35,000 20,000
Long-term debt 151,338 110,767
Total 340,607 289,143
CURRENT LIABILITIES:
Long-term debt due within one year (Note 10) 4,499 1,319
Notes payable (Note 5) 3,000 7,500
Accounts payable-
Affiliated companies 6,041 5,136
Other 24,401 6,043
Customer deposits 4,714 4,541
Taxes accrued-
Federal and state income 342 567
Other 1,187 2,449
Interest accrued 6,730 5,733
Vacation pay accrued 1,638 1,790
Pensions accrued 1,792 1,643
Work Force Reduction Costs Accrued (Note 2) 3,926 -
Miscellaneous 2,985 3,382
Total 61,255 40,103
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes (Note 7) 66,947 -
Accumulated deferred investment tax credits 15,301 15,964
Deferred credits related to income taxes (Note 7) 26,173 -
Deferred compensation plans 6,117 4,671
Deferred under-funded accrued benefit obligation (Note 2) 5,855 -
Miscellaneous 4,932 2,294
Total 125,325 22,929
COMMITMENTS AND CONTINGENT MATTERS (NOTES 2, 4, 5, AND 9)
TOTAL CAPITALIZATION AND LIABILITIES $ 527,187 $ 352,175
</TABLE>
The accompanying notes are an integral part of these statements.
II-234
<PAGE> 265
STATEMENTS OF CAPITALIZATION
At December 31, 1993 and 1992
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1993 1992
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
COMMON STOCK EQUITY (NOTES 2 AND 11):
Common stock, par value $5 per share --
Authorized -- 16,000,000 shares
Outstanding -- 10,844,635 shares in
1993 and 1992 $ 54,223 $ 54,223
Paid-in capital 23 23
Paid-in for common stock in excess of par value 8,665 8,665
Additional minimum liability
for under-funded pension obligations (2,121) -
Retained Earnings 93,479 95,465
Total common stock equity 154,269 158,376 45.3 % 54.8 %
CUMULATIVE PREFERRED STOCK (NOTE 8):
$25 par value --
Authorized -- 2,200,000 shares
6.64% Series -- Outstanding -- 1,400,000 shares 35,000 -
9.50% Series -- Outstanding -- 800,000 shares - 20,000
Total (annual dividend requirement -- $2,324,000) 35,000 20,000 10.3 6.9
LONG-TERM DEBT (NOTE 9):
First mortgage bonds --
Maturity Interest Rates
April 1, 1994 4 5/8% 3,715 3,715
July 1, 2003 6 3/8% 20,000 -
October 1, 2019 9 1/4% 30,000 30,000
July 1, 2021 9 3/8% 30,000 30,000
July 1, 2022 8.30% 30,000 30,000
July 1, 2023 7.40% 25,000 -
Total first mortgage bonds 138,715 93,715
Pollution control obligations 17,955 17,955
Other long-term debt (Note 9) 2,311 2,667
Unamortized debt premium (discount), net (3,144) (2,251)
Total long-term debt (annual interest
requirement -- $12,700,800) 155,837 112,086
Less amount due within one year (Note 10) 4,499 1,319
Long-term debt excluding amount due within one year 151,338 110,767 44.4 38.3
TOTAL CAPITALIZATION $ 340,607 $ 289,143 100.0 % 100.0 %
</TABLE>
The accompanying notes are an integral part of these statements.
II-235
<PAGE> 266
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1993, 1992, and 1991
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $ 95,155 $ 96,643 $ 94,613
Net income after dividends on preferred stock 21,459 20,512 24,030
Cash dividends on common stock (21,000) (22,000) (22,000)
Preferred stock transactions, net (2,135) - -
BALANCE AT END OF PERIOD (NOTE 11) $ 93,479 $ 95,155 $ 96,643
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1993, 1992, and 1991
1993 1992 1991
(in thousands)
BALANCE AT BEGINNING OF PERIOD $ 23 $ - $ -
Contributions to capital by parent company - 23 -
BALANCE AT END OF PERIOD $ 23 $ 23 $ -
</TABLE>
The accompanying notes are an integral part of these statements.
II-236
<PAGE> 267
NOTES TO FINANCIAL STATEMENTS
Savannah Electric and Power Company 1993 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Savannah Electric and Power Company is a wholly owned subsidiary of The
Southern Company, which is the parent company of five operating companies, a
system service company, Southern Electric International (Southern Electric),
Southern Nuclear Operating Company (Southern Nuclear), and various other
subsidiaries related to foreign utility operations and domestic non-utility
operations. At this time, the operations of the other subsidiaries are not
material. The operating companies (Alabama Power Company, Georgia Power
Company, Gulf Power Company, Mississippi Power Company, and Savannah Electric
and Power Company) provide electric service in four Southeastern states.
Contracts among the companies -- dealing with jointly owned generating
facilities, interconnecting transmission lines and the exchange of electric
power -- are regulated by the Federal Energy Regulatory Commission (FERC) or
the Securities and Exchange Commission (SEC). The system service company
provides, at cost, specialized services to The Southern Company and to the
subsidiary companies. Southern Electric designs, builds, owns and operates
power production facilities and provides a broad range of technical services to
industrial companies and utilities in the United States and a number of
international markets. Southern Nuclear provides services to The Southern
Company's nuclear power plants.
The Southern Company is registered as a holding company under the
Public Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company
and its subsidiaries are subject to the regulatory provisions of the PUHCA.
The Company also is subject to regulation by the FERC and the Georgia Public
Service Commission (GPSC). The Company follows generally accepted accounting
principles and complies with the accounting policies and practices prescribed
by the GPSC.
Certain prior years' data presented in the financial statements
have been reclassified to conform with current year presentation.
REVENUES AND FUEL COSTS
The Company accrues revenues for services rendered but unbilled at the end of
each fiscal period. Fuel costs are expensed as the fuel is used. The
Company's electric rates include provisions to adjust billings for fluctuations
in capacity and the energy components of purchased power costs. Revenues
include the actual cost of fuel and purchased power incurred.
DEPRECIATION AND AMORTIZATION
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates, which approximated
2.9 percent in 1993 and 3.2 percent in 1992, and 1991. The decrease in 1993
reflects the Company's implementation of new depreciation rates approved by the
GPSC. These new rates provide for a timely recovery of the investments in the
Company's depreciable properties.
When property subject to depreciation is retired or otherwise
disposed of in the normal course of business, its cost -- together with the
cost of removal, less salvage -- is charged to the accumulated provision for
depreciation. Minor items of property included in the original cost of the
plant are retired when the related property unit is retired.
INCOME TAXES
The Company, which is included in the consolidated federal income tax return
filed by The Southern Company, provides deferred income taxes for all
significant income tax temporary differences. Investment tax credits utilized
are deferred and amortized to income over the average lives of the related
property.
In years prior to 1993, income taxes were accounted for and
reported under Accounting Principles Board Opinion No. 11. Effective January
1, 1993, the Company adopted FASB Statement No. 109, Accounting for Income
Taxes. Statement No. 109 required, among other things, conversion to the
liability method of accounting for accumulated deferred income taxes. See Note
7 for additional information about Statement No. 109.
II-237
<PAGE> 268
NOTES (continued)
Savannah Electric and Power Company 1993 Annual Report
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
(AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are
necessary to finance the construction of new facilities. While cash is not
realized currently from such allowance, it increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The composite rates used by the Company to calculate
AFUDC were 8.77 percent in 1993, 11.27 percent in 1992, and 11.38 percent in
1991.
UTILITY PLANT
Utility plant is stated at original cost, which includes materials, labor,
minor items of property, appropriate administrative and general costs,
payroll-related costs such as taxes, pensions and other benefits and the
estimated cost of funds used during construction. The cost of maintenance,
repairs, and replacement of minor items of property is charged to maintenance
expense. The cost of replacements of property (exclusive of minor items of
property) is charged to utility plant.
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
FINANCIAL INSTRUMENTS
In accordance with FASB Statement No. 107, Disclosure About Fair Value
of Financial Instruments, items for which the carrying amount does not
approximate fair value must be disclosed. At December 31, 1993, the fair value
of long-term debt was $164 million and the carrying amount was $154 million.
The fair value of long-term debt was $117 million and the carrying amount was
$109 million at December 31, 1992. The fair value for long-term debt was based
on either closing market prices or closing prices of comparable instruments.
MATERIALS AND SUPPLIES
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to
inventory when purchased and then expensed or capitalized to plant, as
appropriate, when installed.
2. RETIREMENT BENEFITS
PENSION PLANS
The Company has a defined benefit, trusteed, non-contributory pension plan that
covers substantially all regular employees. Benefits under this plan reflect
the employee's years of service, age at retirement and average compensation for
the three years immediately preceding retirement. The Company uses the
projected unit credit actuarial method for funding purposes, subject to
limitations under federal income tax regulations. Amounts funded to the
pension fund are primarily invested in equity and debt securities. FASB
Statement No. 87, Employers' Accounting for Pensions, requires use of the
"projected unit credit" actuarial method for financial reporting purposes.
POSTRETIREMENT BENEFITS
The Company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. A qualified trust for medical benefits has been
established for funding amounts to the extent deductible under federal income
tax regulations. Accrued costs of life insurance benefits, other than current
cash payments for retirees, currently are not being funded.
Effective January 1, 1993, the Company adopted FASB Statement No.
106, Employers' Accounting for Postretirement Benefits Other Than Pensions, on
a prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service."
II-238
<PAGE> 269
NOTES (continued)
Savannah Electric and Power Company 1993 Annual Report
Consistent with regulatory treatment, the Company recognized these
costs on a cash basis as payments were made in 1992 and 1991. The total costs
of such benefits recognized by the Company amounted to $375 thousand in 1992
and $487 thousand in 1991.
STATUS AND COST OF BENEFITS
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of FASB Statements Nos. 87 and 106, respectively. Retiree medical
and life insurance information is shown for 1993 only because Statement No. 106
was adopted as of January 1, 1993, on a prospective basis. The funded status
of the plans at December 31 was as follows:
<TABLE>
<CAPTION>
Pension
1993 1992
(in thousands)
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefits $35,818 $24,902
Non-vested benefits 1,992 1,772
Accumulated benefit obligation 37,810 26,674
Additional amounts related to
projected salary increases 5,974 6,495
Projected benefit obligation 43,784 33,169
Less:
Fair value of plan assets 26,446 23,494
Unrecognized net loss 9,449 5,546
Unrecognized prior service cost 1,685 1,823
Unrecognized net transition asset 710 799
Adjustment required to
recognize additional
minimum liability 5,871 -
Accrued pension cost recognized
in the Balance Sheets $11,365 $1,507
</TABLE>
The weighted average rates assumed in the actuarial calculations
were:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Discount 7.50% 8.00% 8.00%
Annual salary increase 4.75 5.00 5.00
Long-term return on plan
assets 9.25 9.25 9.50
</TABLE>
In accordance with Statement No. 87, an additional liability
related to under-funded accumulated benefit obligations was recognized at
December 31, 1993. A corresponding net-of-tax charge of $2.1 million was
recognized as a separate component of Common Stock Equity in the Statements of
Capitalization.
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
(in thousands)
<S> <C> <C>
Actuarial present value of
benefit obligation:
Retirees and dependents $8,632 $2,536
Employees eligible to retire 898 -
Other employees 6,489 1,577
Accumulated benefit
obligation 16,019 4,113
Less
Fair value of plan assets - -
Unrecognized net loss 4,124 262
Unrecognized transition obligation 10,362 3,382
Accrued liability recognized in the
Balance Sheets $1,533 $469
</TABLE>
The assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 11.3 percent for 1993, decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate by 1.0 percent would increase the accumulated
medical benefit obligation as of December 31, 1993, by $1.7 million and the
aggregate of the service and interest cost components of the net retiree
medical cost by $0.2 million.
II-239
<PAGE> 270
NOTES (continued)
Savannah Electric and Power Company 1993 Annual Report
Components of the plans' net costs are shown below:
<TABLE>
<CAPTION>
Pension
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Benefits earned
during the year $1,188 $1,053 $ 941
Interest cost on projected
benefit obligation 2,741 2,429 2,149
Actual return on
plan assets (2,199) (1,266) (3,027)
Net amortization
and deferral 716 (227) 1,736
Net pension cost $2,446 $1,989 $1,799
</TABLE>
Of the above net pension amounts, $2.0 million in 1993, $1.7
million in 1992 and $1.5 million in 1991 were recorded in operating expenses,
and the remainder was recorded in construction and other accounts.
<TABLE>
<CAPTION>
Postretirement
Medical Life
1993 1993
(in thousands)
<S> <C> <C>
Benefits earned during the year $ 346 $ 97
Interest cost on accumulated
benefit obligation 855 279
Amortization of transition
obligation over 20 years 545 178
Net postretirement cost $1,746 $554
</TABLE>
Net postretirement medical and life insurance costs of $1.8
million in 1993 were charged to operating expenses.
The Company has a supplemental retirement plan for certain
executive employees. The plan is unfunded and payable from the general funds
of the Company. The Company has purchased life insurance on participating
executives, and plans to use these policies to satisfy this obligation.
Benefit costs associated with this plan for 1993, 1992 and 1991 were $980
thousand, $316 thousand and $338 thousand, respectively. The 1993 benefit
costs reflect a one-time expense related to employees who were part of the work
force reduction program.
WORK FORCE REDUCTION PROGRAM
The Company has incurred additional costs for a one-time charge related to the
implementation of a work force reduction program. In 1993, $4.5 million was
charged to operating expenses and $0.6 million was charged to other income
(expense).
3. REGULATORY MATTERS
RATE MATTERS
In May 1992, the Company filed for, and subsequently received, GPSC approval to
implement new base rates designed to decrease base operating revenues by $2.8
million annually. The reduction included a base rate reduction of
approximately $2.5 million spread among all classes of customers, effective
June 1992. An additional $0.3 million reduction resulted from the
implementation of an experimental, time-of-use rate for certain commercial
customers in August 1992.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, currently
estimated to total $33 million in 1994, $32 million in 1995 and $33 million in
1996. The estimates include AFUDC of $1.6 million in 1994, $0.6 million in
1995 and $0.7 million in 1996. The construction program is subject to periodic
review and revision, and actual construction costs may vary from the above
estimates because of numerous factors. These factors include: changes in
business conditions; revised load growth estimates; changes in environmental
regulations; increasing cost of labor, equipment and materials; and cost of
capital. The construction of two combustion turbine peaking units totaling 160
megawatts is planned to be completed in mid 1994. The Company is also
constructing six combustion turbine peaking units owned by Georgia Power
Company. The construction is to be completed in 1996.
See Management's Discussion and Analysis under
"Environmental Matters" for information on the impact of the Clean Air Act
Amendments of 1990 and other environmental matters.
II-240
<PAGE> 271
NOTES (continued)
Savannah Electric and Power Company 1993 Annual Report
5. FINANCING AND COMMITMENTS
GENERAL
To the extent possible, the Company's construction program is expected to be
financed from internal sources and from the issuance of additional long-term
debt and preferred stock and capital contributions from The Southern Company.
Should the Company be unable to obtain funds from these sources, the Company
would have to use short-term indebtedness or other alternative, and possibly
costlier, means of financing.
The amounts of long-term debt and preferred stock that can
be issued in the future will be contingent on market conditions, the
maintenance of adequate earnings levels, regulatory authorizations and other
factors. See Management's Discussion and Analysis for information regarding
the Company's earnings coverage requirements.
BANK CREDIT ARRANGEMENTS
At the beginning of 1994, unused credit arrangements with four banks totaled
$14.5 million, and expire at various times during 1994.
The Company has $20 million of revolving credit arrangements
expiring December 31, 1995. These agreements allow short-term borrowings to be
converted into term loans, payable in 12 equal quarterly installments, with the
first installment due at the end of the first calendar quarter after the
applicable termination date or at an earlier date at the Company's option. In
connection with these credit arrangements, the Company agrees to pay
commitments fees based on the unused portions of the commitments.
In connection with all other lines of credit, the Company
has the option of paying fees or maintaining compensating balances, which are
substantially all the cash of the Company except for daily working funds and
similar items. These balances are not legally restricted from withdrawal.
ASSETS SUBJECT TO LIEN
As amended and supplemented, the Company's Indenture of Mortgage, which
secures the first mortgage bonds issued by the Company, constitutes a direct
first lien on substantially all of the Company's fixed property and franchises.
OPERATING LEASES
The Company has rental agreements with various terms and expiration dates.
Rental expenses totaled $1.5 million, $1.5 million, and $1.4 million for 1993,
1992, and 1991, respectively. At December 31, 1993, estimated future minimum
lease payments for non-cancelable operating leases were as follows:
<TABLE>
<CAPTION>
Amounts
(in millions)
<S> <C>
1994 $1.3
1995 0.3
1996 0.1
1997 and thereafter -
</TABLE>
6. LONG-TERM POWER SALES AGREEMENTS
The operating subsidiaries of The Southern Company, including the Company, have
entered into long-term contractual agreements for the sale of capacity and
energy to certain non-affiliated utilities located outside the system's service
area. Certain of these agreements are non-firm and are based on capacity of
the system in general. Other agreements are firm and pertain to the capacity
related to specific generating units. Because the energy is generally sold at
cost under these agreements, revenues from capacity sales primarily affect
profitability. The Company's portion of capacity revenues has been as follows:
<TABLE>
<CAPTION>
Unit Other
Year Power Long-Term Total
(in thousands)
<S> <C> <C> <C>
1993 $ 2 $976 $978
1992 3 534 537
1991 25 491 516
</TABLE>
Long-term non-firm power of 400 megawatts was sold by the
Southern electric system in 1993 to Florida Power Corporation (FPC). In
January 1994, this amount decreased to 200 megawatts, and the contract will
expire at year-end.
II-241
<PAGE> 272
NOTES (continued)
Savannah Electric and Power Company 1993 Annual Report
7. INCOME TAXES
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption of Statement No. 109 resulted in
cumulative adjustments that had no material effect on net income. The adoption
also resulted in the recording of additional deferred income taxes and related
assets and liabilities. The related assets of $25 million are revenues to be
received from customers. These assets are attributable to tax benefits flowed
through to customers in prior years and to taxes applicable to capitalized
AFUDC. The related liabilities of $26 million are revenues to be refunded to
customers. These liabilities are attributable to deferred taxes previously
recognized at rates higher than current enacted tax law and unamortized
investment tax credits. Additionally, deferred income taxes related to
accelerated tax depreciation previously shown as a reduction to utility plant
were reclassified.
Details of the federal and state income tax provisions are
as follows:
<TABLE>
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Total provision for
income taxes
Federal --
Current payable $11,663 $6,630 $11,739
Deferred - current year 1,906 7,407 4,595
- reversal of
prior years (1,383) (2,347) (3,155)
12,186 11,690 13,179
State --
Current payable 2,049 1,231 2,133
Deferred - current year 119 1,079 662
- reversal of
prior years (35) (192) (501)
2,133 2,118 2,294
Total 14,319 13,808 15,473
Less income taxes charged
(credited) to
other income (1,117) (758) (722)
Federal and state
income taxes
charged to operations $15,436 $14,566 $16,195
</TABLE>
The tax effects of temporary differences between the
carrying amounts of assets and liabilities in the financial statements and
their respective tax bases, which give rise to deferred tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
1993
(IN THOUSANDS)
<S> <C>
Deferred tax liabilities:
Accelerated depreciation $53,585
Property basis differences 13,871
Other 3,922
Total 71,378
Deferred tax assets:
Pension and other benefits 4,237
Other 4,616
Total 8,853
Net deferred tax liabilities 62,525
Portions included in current assets, net 4,422
Accumulated deferred income taxes
in the Balance Sheets $66,947
</TABLE>
Deferred investment tax credits are amortized over the life
of the related property with such amortization normally applied as a credit to
reduce depreciation in the Statements of Income. Credits amortized in this
manner amounted to $0.7 million in 1993, 1992 and 1991. At December 31, 1993,
all investment tax credits available to reduce federal income taxes payable had
been utilized.
A reconciliation of the effective income tax rate to the
statutory tax rate is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Total effective tax rate 38% 38% 37%
State income tax, net of federal
income tax benefit (4%) (4%) (4%)
Other 1% - 1%
Statutory federal tax rate 35% 34% 34%
</TABLE>
The Southern Company and its subsidiaries file a
consolidated federal income tax return. Under a joint consolidated income tax
agreement, each company's current and deferred tax expense is computed on a
stand-alone basis, and consolidated tax savings are allocated to each company
based on its ratio of taxable income to total consolidated taxable income.
II-242
<PAGE> 273
NOTES (continued)
Savannah Electric and Power Company 1993 Annual Report
8. CUMULATIVE PREFERRED STOCK
In November 1993, the Company issued 1,400,000 shares of 6.64 percent Series
Preferred stock which has redemption provisions of $26.66 per share plus
accrued dividends if on or prior to November 1, 1998, and at $25 per share plus
accrued dividends thereafter.
In December 1993, the Company redeemed all 800,000 shares outstanding
of its 9.5 percent Series Preferred stock at the prescribed redemption price of
$26.57 plus accrued dividends. Cumulative preferred stock dividends are
preferential to the payment of dividends on common stock.
9. LONG-TERM DEBT
The Company's Indenture related to its First Mortgage Bonds is
unlimited as to the authorized amount of bonds which may be issued, provided
that required property additions, earnings and other provisions of such
Indenture are met.
On February 19, 1993, the Company refunded its $4.1 million,
6.25 percent Series Pollution Control Bonds, due 1998 with $4.1 million of
variable rate Series Pollution Control Bonds due 2016.
In 1994, there is a first mortgage bond maturity of $3.7
million. The sinking fund requirements of first mortgage bonds are being
satisfied by certification of property additions. See Note 10 "Long-Term Debt
Due Within One Year" for details.
Details of other long-term debt are as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
(in thousands)
<S> <C> <C>
Collateralized obligations incurred
in connection with the sale by public
authorities of tax-exempt pollution
control revenue bonds --
6 1/4% due 1998 $ - $ 4,085
Variable rate (3.2% at 1/1/94)
due 2016 4,085 -
6 3/4% due 2022 13,870 13,870
Total pollution control obligations $17,955 $17,955
Capital lease obligations --
Combustion turbine equipment $ 1,403 $ 1,786
Transportation fleet 908 881
Total other long-term debt $ 2,311 $ 2,667
</TABLE>
Sinking fund requirements and /or maturities through 1998
applicable to long-term debt are as follows: $4.5 million in 1994; $0.7
million in 1995; $0.7 million in 1996; $0.1 million in 1997 and no requirement
is needed for 1998.
Assets acquired under capital leases are recorded as utility plant
in service and the related obligation is classified as other long-term debt.
Leases are capitalized at the net present value of the future lease payments.
However, for ratemaking purposes, these obligations are treated as operating
leases, and as such, lease payments are charged to expense as incurred.
The Company leases combustion turbine generating equipment under a
non-cancelable lease expiring in 1995, with renewal options extending until
2010. The Company also leases a portion of its transportation fleet. Under
the terms of these leases, the Company is responsible for taxes, insurance and
other expenses.
II-243
<PAGE> 274
NOTES (continued)
Savannah Electric and Power Company 1993 Annual Report
10. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund/sinking fund requirements and scheduled
maturities and redemptions of long-term debt due within one year is as follows:
<TABLE>
<CAPTION>
1993 1992
(in thousands)
<S> <C> <C>
Bond sinking fund requirements $1,350 $980
Less:
Portion to be satisfied by
certifying property additions 1,350 980
Cash sinking fund requirements - -
Other long-term debt maturities 4,499 1,319
Total $4,499 $1,319
</TABLE>
The first mortgage bond improvement (sinking) fund requirements
amount to 1 percent of each outstanding series of bonds authenticated under the
indentures prior to January 1 of each year, other than those issued to
collateralize pollution control and other obligations. The requirements may be
satisfied by depositing cash or reacquiring bonds, or by pledging additional
property equal to 1 2/3 times the requirements.
11. COMMON STOCK DIVIDEND RESTRICTIONS
The Company's Charter and Indentures contain certain limitations on the payment
of cash dividends on the preferred and common stocks. At December 31, 1993,
approximately $55 million of retained earnings was restricted against the
payment of cash dividends on common stock under the terms of the Mortgage
Indenture.
12. QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
Summarized quarterly financial data for 1993 and 1992 are as follows (in
thousands):
<TABLE>
<CAPTION>
Net Income After
Operating Operating Dividends on
Quarter Ended Revenue Income Preferred Stock
<S> <C> <C> <C>
March 1993 $42,873 $6,123 $3,019
June 1993 52,875 9,301 6,211
September 1993 74,420 13,326 10,214
December 1993 48,274 5,484 2,015
March 1992 $41,965 $6,738 $3,200
June 1992 49,918 8,133 4,837
September 1992 63,814 14,794 11,378
December 1992 42,064 4,206 1,097
</TABLE>
The Company's business is influenced by seasonal weather
conditions, a seasonal rate structure and the timing of rate changes, among
other factors.
II-244
<PAGE> 275
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS) $218,442 $197,761 $189,646
NET INCOME AFTER DIVIDENDS
ON PREFERRED AND PREFERENCE STOCKS (IN THOUSANDS) $ 21,459 $ 20,512 $ 24,030
CASH DIVIDENDS ON COMMON STOCK (IN THOUSANDS) $ 21,000 $ 22,000 $ 22,000
RETURN ON AVERAGE COMMON EQUITY (PERCENT) 13.73 12.89 15.13
TOTAL ASSETS (IN THOUSANDS) $527,187 $352,175 $352,505
GROSS PROPERTY ADDITIONS (IN THOUSANDS) $ 72,858 $ 30,132 $ 19,478
CAPITALIZATION (IN THOUSANDS):
Common stock equity $154,269 $158,376 $159,841
Preferred stock 35,000 20,000 20,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 151,338 110,767 119,280
Total (excluding amounts due within one year) $340,607 $289,143 $299,121
CAPITALIZATION RATIOS (PERCENT):
Common stock equity 45.3 54.8 53.4
Preferred and preference stock 10.3 6.9 6.7
Long-term debt 44.4 38.3 39.9
Total (excluding amounts due within one year) 100.0 100.0 100.0
FIRST MORTGAGE BONDS (IN THOUSANDS):
Issued 45,000 30,000 30,000
Retired - 38,750 22,500
PREFERRED AND PREFERENCE STOCK (IN THOUSANDS):
Issued 35,000 - -
Retired 20,000 - -
SECURITY RATINGS:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's "a2" "a2" "a2"
Standard and Poor's A- A- A-
CUSTOMERS (YEAR-END):
Residential 101,032 99,164 97,446
Commercial 12,702 12,416 12,153
Industrial 69 73 73
Other 957 940 897
Total 114,760 112,593 110,569
EMPLOYEES (YEAR-END) 655 670 672
</TABLE>
Note:
NR = Not Rated
II-245
<PAGE> 276
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$205,635 $201,799 $182,440 $174,707 $174,847 $158,643 $148,721 $143,562
$ 26,254 $ 25,535 $ 24,272 $ 22,086 $ 20,452 $ 15,279 $ 14,907 $ 13,967
$ 22,000 $ 20,000 $ 11,700 $ 10,741 $ 9,353 $ 8,387 $ 8,010 $ 6,607
16.85 16.88 17.03 17.03 17.52 14.41 15.31 16.80
$340,050 $349,887 $347,051 $340,109 $341,826 $323,686 $323,318 $314,773
$ 20,086 $ 18,831 $ 23,254 $ 32,276 $ 26,800 $ 30,700 $ 29,724 $ 15,786
$157,811 $153,737 $148,883 $136,207 $123,133 $110,385 $101,664 $ 93,076
20,000 22,300 22,300 2,300 2,300 2,300 2,300 2,300
- 2,884 3,075 9,665 10,256 10,848 11,446 12,043
112,377 117,522 98,285 129,329 137,821 128,850 136,709 145,900
$290,188 $296,443 $272,543 $277,501 $273,510 $252,383 $252,119 $253,319
54.4 51.9 54.6 49.1 45.0 43.7 40.3 36.7
6.9 8.5 9.3 4.3 4.6 5.2 5.5 5.7
38.7 39.6 36.1 46.6 50.4 51.1 54.2 57.6
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
- 30,000 - - 25,000 20,000 - 4,000
9,135 18,275 12,231 10,239 10,160 5,592 10,532 12,071
- - 20,000 - - - - -
5,374 6,591 553 588 610 588 525 558
A1 A1 A1 A3 A3 A3 A3 Baa2
A A A- A- A- A- BBB+ BBB-
"a2" "a2" "a2" NR NR NR NR NR
A- A- BBB+ BBB+ BBB+ BBB+ BBB+ BB+
96,452 94,766 93,486 92,094 89,951 88,101 86,366 83,456
12,045 12,298 12,135 11,812 11,405 10,985 10,659 10,293
76 69 69 67 67 66 76 72
867 856 828 762 731 699 637 620
109,440 107,989 106,518 104,735 102,154 99,851 97,738 94,441
648 643 655 655 658 653 632 624
</TABLE>
II-246
<PAGE> 277
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES (IN THOUSANDS):
Residential $ 93,883 $ 82,670 $ 80,541
Commercial 71,320 64,756 61,827
Industrial 36,180 33,171 30,492
Other 7,810 7,095 6,561
Total retail 209,193 187,692 179,421
Sales for resale - non-affiliates 6,021 7,821 7,813
Sales for resale - affiliates 2,433 1,505 1,430
Total revenues from sales of electricity 217,647 197,018 188,664
Other revenues 795 743 982
Total $ 218,442 $ 197,761 $ 189,646
KILOWATT-HOUR SALES (IN THOUSANDS):
Residential 1,329,362 1,216,993 1,195,005
Commercial 1,015,935 953,840 925,757
Industrial 854,324 861,121 825,862
Other 115,969 110,270 106,683
Total retail 3,315,590 3,142,224 3,053,307
Sales for resale - non-affiliates 247,203 367,066 372,085
Sales for resale - affiliates 75,384 37,632 32,581
Total 3,638,177 3,546,922 3,457,973
AVERAGE REVENUE PER KILOWATT-HOUR (CENTS):
Residential 7.06 6.79 6.74
Commercial 7.02 6.79 6.68
Industrial 4.23 3.85 3.69
Total retail 6.31 5.97 5.88
Sale for resale 2.62 2.30 2.28
Total sales 5.98 5.55 5.46
RESIDENTIAL AVERAGE ANNUAL KILOWATT-HOUR USE PER
CUSTOMER 13,269 12,369 12,323
RESIDENTIAL AVERAGE ANNUAL REVENUE PER CUSTOMER $ 937.07 $ 840.23 $ 830.54
PLANT NAMEPLATE CAPACITY RATINGS (YEAR-END) (MEGAWATTS) 628 628 605
MAXIMUM PEAK-HOUR DEMAND (MEGAWATTS):
Winter 524 533 526
Summer 747 695 691
ANNUAL LOAD FACTOR (PERCENT) 54.1 55.0 54.1
PLANT AVAILABILITY - FOSSIL-STEAM (PERCENT) 90.2 89.1 78.9
SOURCE OF ENERGY SUPPLY (PERCENT):
Coal 21.5 12.0 16.3
Oil and gas 4.5 2.9 1.7
Purchased power -
From non-affiliates 0.9 1.0 0.4
From affiliates 73.1 84.1 81.6
Total 100.0 100.0 100.0
TOTAL FUEL ECONOMY DATA:
BTU per net kilowatt-hour generated 11,515 12,547 10,917
Cost of fuel per million BTU (cents) 215.97 201.50 199.42
Average cost of fuel per net kilowatt-hour generated
(cents) 2.49 2.53 2.18
</TABLE>
II-247
<PAGE> 278
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1993 Annual Report
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 87,063 $ 85,113 $ 81,098 $ 79,785 $ 80,348 $ 70,377 $ 65,059 $ 62,815
65,462 65,474 62,640 60,285 59,547 53,696 50,538 47,861
30,237 28,304 26,865 27,422 27,694 28,335 27,233 27,111
6,782 6,892 6,557 6,315 6,300 5,823 5,505 5,297
189,544 185,783 177,160 173,807 173,889 158,231 148,335 143,084
9,482 8,814 808 - - - - -
5,566 6,025 3,567 - - - - -
204,592 200,622 181,535 173,807 173,889 158,231 148,335 143,084
1,043 1,177 905 900 958 412 386 478
$ 205,635 $ 201,799 $ 182,440 $ 174,707 $ 174,847 $ 158,643 148,721 143,562
1,183,486 1,109,976 1,067,411 1,044,554 1,021,905 926,988 883,498 844,353
892,931 839,756 806,687 775,643 746,133 694,168 668,309 630,160
644,704 561,063 533,604 557,281 515,544 513,270 518,118 495,914
103,539 101,164 97,072 94,949 92,471 87,238 84,798 80,454
2,824,660 2,611,959 2,504,774 2,472,427 2,376,053 2,221,664 2,154,723 2,050,881
441,090 437,943 24,168 - - - - -
294,042 303,142 156,106 - - - - -
3,559,792 3,353,044 2,685,048 2,472,427 2,376,053 2,221,664 2,154,723 2,050,881
7.36 7.67 7.60 7.64 7.86 7.59 7.36 7.44
7.33 7.80 7.77 7.77 7.98 7.74 7.56 7.60
4.69 5.04 5.03 4.92 5.37 5.52 5.26 5.47
6.71 7.11 7.07 7.03 7.32 7.12 6.88 6.98
2.05 2.00 2.43 - - - - -
5.75 5.98 6.76 7.03 7.32 7.12 6.88 6.98
12,339 11,781 11,489 11,481 11,514 10,536 10,357 10,148
$ 907.68 $ 903.37 $ 872.87 $ 876.95 $ 905.27 $ 799.90 $ 762.67 $ 754.97
605 605 605 605 605 605 605 605
428 548 471 414 464 440 360 374
648 613 574 562 565 498 481 496
53.2 52.4 53.4 53.6 51.1 54.7 54.1 50.7
89.6 94.7 77.1 81.2 86.9 92.0 86.1 86.6
52.8 63.5 79.8 74.3 81.9 87.5 91.8 87.6
3.4 1.4 5.4 4.4 6.8 2.6 2.2 5.6
0.8 1.5 5.9 19.9 11.3 9.9 6.0 6.8
43.0 33.6 8.9 1.4 - - - -
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
10,741 10,611 10,683 10,551 10,607 10,581 10,498 10,642
188.18 180.48 178.31 176.10 186.30 198.80 196.20 201.01
2.02 1.92 1.90 1.86 1.98 2.10 2.06 2.14
</TABLE>
II-248
<PAGE> 279
STATEMENTS OF INCOME
Savannah Electric and Power Company
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
OPERATING REVENUES:
Revenues $ 216,009 $ 196,256 $ 188,216
Revenues from affiliates 2,433 1,505 1,430
Total operating revenues 218,442 197,761 189,646
OPERATING EXPENSES:
Operation --
Fuel 24,976 14,162 14,415
Purchased power from non-affiliates 793 494 297
Purchased power from affiliates 56,274 56,492 49,007
Other 45,610 36,884 32,945
Maintenance 13,516 14,232 12,475
Depreciation and amortization 16,467 16,829 16,549
Taxes other than income taxes 11,136 10,231 10,122
Federal and state income taxes 15,436 14,566 16,195
Total operating expenses 184,208 163,890 152,005
OPERATING INCOME 34,234 33,871 37,641
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction 958 446 170
Interest income 209 276 589
Other, net (1,841) (1,450) (879)
Income taxes applicable to other income 1,117 758 722
INCOME BEFORE INTEREST CHARGES 34,677 33,901 38,243
INTEREST CHARGES:
Interest on long-term debt 10,696 10,870 11,486
Allowance for debt funds used during construction (699) (289) (103)
Interest on notes payable 240 15 25
Amortization of debt discount, premium, and expense, net 535 427 380
Other interest charges 340 466 525
Net interest charges 11,112 11,489 12,313
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
EFFECT OF A CHANGE IN METHOD OF RECORDING REVENUES 23,565 22,412 25,930
Extraordinary item* - - -
Cumulative effect as of January 1, 1988, of accruing unbilled
revenues--less income taxes of $1,164(000) - - -
NET INCOME 23,565 22,412 25,930
DIVIDENDS ON PREFERRED AND PREFERENCE STOCK 2,106 1,900 1,900
NET INCOME AFTER DIVIDENDS ON PREFERRED AND PREFERENCE STOCK $ 21,459 $ 20,512 $ 24,030
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 21,459 $ 20,512 $ 24,030
</TABLE>
* Tax-free common stock/bond exchange
II-249
<PAGE> 280
STATEMENTS OF INCOME
Savannah Electric and Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,069 $ 195,774 $ 178,873 $ 174,707 $ 174,847 $ 158,643 $ 148,721 $ 143,562
5,566 6,025 3,567 - - - - 4
205,635 201,799 182,440 174,707 174,847 158,643 148,721 143,566
42,630 44,224 46,578 38,597 44,393 45,232 44,183 44,152
611 616 3,593 11,453 6,069 7,577 3,810 -
34,648 26,361 6,586 1,186 2,071 1,526 2,255 5,675
30,630 29,371 28,271 25,642 24,114 20,292 18,424 18,028
12,754 12,281 14,261 13,629 12,591 12,029 11,195 10,711
16,118 20,343 19,771 18,152 16,443 15,798 14,104 12,721
9,798 9,152 9,209 9,088 7,863 6,724 6,098 5,441
17,611 17,571 14,017 16,969 21,405 15,495 15,026 13,862
164,800 159,919 142,286 134,716 134,949 124,673 115,095 110,590
40,835 41,880 40,154 39,991 39,898 33,970 33,626 32,976
193 - 273 512 27 646 624 229
741 719 355 925 924 943 1,200 1,013
(803) (672) (1,423) (464) (553) (107) (173) (133)
187 192 459 (317) (217) (389) (548) (461)
41,153 42,119 39,818 40,647 40,079 35,063 34,729 33,624
12,052 12,287 15,603 17,127 17,415 18,089 18,237 19,484
(194) (112) (330) (459) (73) (725) (551) (328)
116 402 230 70 315 437 172 367
241 274 196 237 234 302 241 255
665 1,313 336 251 335 213 188 220
12,880 14,164 16,035 17,226 18,226 18,316 18,287 19,998
28,273 27,955 23,783 23,421 21,853 16,747 16,442 13,626
- - - - - - - 1,935
- - 1,920 - - - - -
28,273 27,955 25,703 23,421 21,853 16,747 16,442 15,561
2,019 2,420 1,431 1,335 1,401 1,468 1,535 1,594
$ 26,254 $ 25,535 $ 24,272 $ 22,086 $ 20,452 $ 15,279 $ 14,907 $ 13,967
$ 26,254 $ 25,535 $ 22,352 $ 21,865 $ 20,606 $ 15,744 $ 14,665 $ 14,103
</TABLE>
II-250
<PAGE> 281
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 23,565 $ 22,412 $ 25,930
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 17,482 17,757 17,501
Deferred income taxes, net 607 5,947 1,601
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (958) (446) (170)
Other, net 2,853 (1,312) (1,876)
Changes in certain current assets and liabilities --
Receivables, net (16,839) (4,107) 5,291
Special deposits - 350 1,348
Inventories (3,947) 4,435 (1,082)
Payables 18,742 351 568
Other 3,282 2,083 3,710
Net cash provided from operating activities 44,787 47,470 52,821
INVESTING ACTIVITIES:
Gross property additions (72,858) (30,132) (19,478)
Sales of property - - -
Other 1,676 (1,073) 407
Net cash provided (used) for investing activities (71,182) (31,205) (19,071)
FINANCIING ACTIVITIES:
Proceeds:
Preferred stock 35,000 - -
First mortgage bonds 45,000 30,000 30,000
Pollution control bonds 4,085 13,870 -
Other long-term debt 10,000 - -
Common Stock - - -
Redemptions:
Preferred and preference stock (20,000) - -
First mortgage bonds - (38,750) (22,500)
Pollution control bonds (4,085) (14,550) (515)
Other long-term debt (10,356) (217) (275)
Notes payable, net (4,500) 7,500 (1,500)
Payment of preferred and preference stock dividends (2,222) (1,900) (1,900)
Payment of common and class A stock dividends (21,000) (22,000) (22,000)
Miscellaneous (3,400) (3,985) (477)
Net cash provided from (used for) financing activities 28,522 (30,032) (19,167)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,127 (13,767) 14,583
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,788 15,555 972
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,915 $ 1,788 $ 15,555
() Denotes use of cash
</TABLE>
II-251
<PAGE> 282
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 28,273 $ 27,955 $ 25,703 $ 23,421 $ 21,853 $ 16,747 $ 16,442 $ 15,561
16,995 21,310 20,592 19,126 16,855 16,484 14,216 12,147
2,782 3,476 3,568 925 4,443 3,034 3,104 5,000
- - - (5) 489 3,084 2,043 6,900
(193) - (273) (512) (27) (646) (624) (229)
511 (775) 718 (1,016) 474 (1,730) 35 (1,165)
1,541 (6,949) (7,062) 1,360 1,456 (1,122) 180 (2,714)
185 2,708 (558) (587) (53) (916) (27) 966
1,246 (1,503) 3,063 (503) 663 5,563 (7,006) (172)
(228) 1,086 (1,151) (78) (1,750) 2,135 1,637 342
(319) 1,544 (1,684) (757) 1,916 2 521 1,666
50,793 48,852 42,916 41,374 46,319 42,635 30,521 38,302
(20,086) (18,831) (23,254) (32,276) (26,800) (30,700) (29,724) (15,786)
- - - - - 1,145 193 -
(120) 381 (4,042) 1,296 (824) 2,682 1,561 420
(20,206) (18,450) (27,296) (30,980) (27,624) (26,873) (27,970) (15,366)
- - 20,000 - - - - -
- 30,000 - - 25,000 20,000 - 4,000
- - - - - - - -
- - - - - - - 23,500
- - 403 1,693 1,691 1,777 1,639 12,396
(5,374) (6,591) (553) (588) (610) (588) (525) (558)
(9,135) (18,275) (12,231) (10,239) (10,160) (5,592) (10,532) (12,071)
(485) (455) (430) (405) (380) (360) (335) -
(364) (7,656) (4,401) (3,954) (3,075) (17,721) (2,965) (30,635)
1,500 - - - (4,500) (4,500) 9,000 (2,000)
(2,113) (2,318) (1,284) (1,351) (1,418) (1,485) (1,552) (1,611)
(22,000) (20,000) (14,407) (10,383) (9,114) (8,347) (7,763) (6,103)
47 (1,071) (269) - (436) (383) - (376)
(37,924) (26,366) (13,172) (25,227) (3,002) (17,199) (13,033) (13,458)
(7,337) 4,036 2,448 (14,833) 15,693 (1,437) (10,482) 9,478
8,309 4,273 1,825 16,658 965 2,402 12,884 3,406
$ 972 $ 8,309 $ 4,273 $ 1,825 $ 16,658 $ 965 $ 2,402 $ 12,884
</TABLE>
II-252
<PAGE> 283
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
UTILITY PLANT:
Production-fossil $ 257,708 $ 258,539 $ 247,017
Transmission 99,791 93,182 90,198
Distribution 237,012 222,024 212,576
General 28,010 25,851 24,283
Construction work in progress 49,797 5,966 4,211
Total utility plant 672,318 605,562 578,285
Accumulated provision for depreciation 251,565 240,094 225,605
Total 420,753 365,468 352,680
Less property-related accumulated deferred income taxes - 65,725 62,737
Total 420,753 299,743 289,943
OTHER PROPERTY AND INVESTMENTS 1,793 1,795 39
CURRENT ASSETS:
Cash and cash equivalents 3,915 1,788 15,555
Receivables, net 27,714 14,480 14,549
Accrued unbilled revenues 3,789 3,401 3,252
Fuel cost under recovery 7,112 3,895 -
Fossil fuel stock, at average cost 8,419 4,895 9,196
Materials and supplies, at average cost 9,358 8,935 9,069
Prepayments 4,849 1,599 4,544
Total current assets 65,156 38,993 56,165
DEFERRED CHARGES:
Deferred charges related to income taxes 24,890 - -
Miscellaneous 14,595 11,644 6,358
Total deferred charges 39,485 11,644 6,358
TOTAL ASSETS $ 527,187 $ 352,175 $ 352,505
</TABLE>
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<PAGE> 284
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 246,278 $ 242,988 $ 241,833 $ 236,587 $ 232,316 $ 229,765 $ 215,908 $ 212,917
73,358 72,299 71,601 69,822 65,215 61,843 55,047 49,554
217,913 204,611 192,335 177,163 160,346 147,563 136,807 126,293
22,990 22,482 21,686 17,513 14,838 13,153 10,585 9,414
1,354 2,880 1,684 7,214 5,270 1,915 10,609 2,341
561,893 545,260 529,139 508,299 477,985 454,239 428,956 400,519
211,725 198,228 178,888 161,531 144,232 130,279 116,576 102,967
350,168 347,032 350,251 346,768 333,753 323,960 312,380 297,552
58,106 54,418 51,487 49,255 46,496 41,026 32,859 30,503
292,062 292,614 298,764 297,513 287,257 282,934 279,521 267,049
39 49 49 49 39 39 52 -
972 8,309 4,273 1,825 16,658 965 2,402 12,884
14,450 14,300 15,714 14,419 13,806 14,472 12,350 11,910
3,831 4,501 3,889 - - - - -
5,662 6,881 1,838 - 787 1,524 1,609 2,249
8,071 9,706 8,455 12,359 12,642 13,615 19,554 12,855
9,112 8,723 8,471 7,630 6,844 6,534 6,157 5,850
1,492 585 1,240 2,786 978 383 117 324
43,590 53,005 43,880 39,019 51,715 37,493 42,189 46,072
- - - - - - - -
4,359 4,219 4,358 4,127 2,815 3,220 1,556 1,652
4,359 4,219 4,358 4,127 2,815 3,220 1,556 1,652
$ 340,050 $ 349,887 $ 347,051 $ 340,708 $ 341,826 $ 323,686 $ 323,318 $ 314,773
</TABLE>
II-254
<PAGE> 285
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
At December 31, 1993 1992 1991
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPTIALIZATION:
Common stock $ 54,223 $ 54,223 $ 54,223
Paid-in capital 23 23 -
Paid-in for common stock in excess of par value 8,665 8,665 8,665
Additional minimum liability
for under-funded pension obligations (2,121) - -
Retained Earnings 93,479 95,465 96,953
Total common equity 154,269 158,376 159,841
Preferred stock 35,000 20,000 20,000
Preferred and preference stock subject to mandatory redemption - - -
Long-term debt 151,338 110,767 119,280
Total capitalization 340,607 289,143 299,121
(excluding amount due within one year)
CURRENT LIABILITIES:
Notes payable to banks 3,000 7,500 -
Preferred and preference stock due within one year - - -
Long-term debt due within one year 4,499 1,319 2,442
Accounts payable 30,442 11,179 10,176
Customer deposits 4,714 4,541 4,528
Fuel cost over recovery - - 1,603
Taxes accrued 1,529 3,016 724
Interest accrued 6,730 5,733 4,657
Vacation pay accrued 1,638 1,790 1,672
Miscellaneous 8,703 5,025 4,823
Total current liabilities 61,255 40,103 30,625
DEFERED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 66,947 - -
Accumulated deferred investment tax credits 15,301 15,964 16,628
Deferred credits related to income taxes 26,173 - -
Deferred under-funded accrued benefit obligation 5,855 - -
Miscellaneous 11,049 6,965 6,131
Total deferred credits and other liabilities 125,325 22,929 22,759
TOTAL CAPITALIZATION AND LIABILITIES $ 527,187 $ 352,175 $ 352,505
</TABLE>
II-255
<PAGE> 286
BALANCE SHEETS
Savannah Electric and Power Company
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C>
$ 54,223 $ 54,223 $ 54,223 $ 54,131 $ 53,174 $ 52,332 $ 51,271 $ 49,462
- - - - - - - -
8,665 8,665 8,665 8,353 7,623 6,774 6,059 6,229
- - - - - - - -
94,923 90,849 85,995 73,723 62,336 51,279 44,334 37,385
157,811 153,737 148,883 136,207 123,133 110,385 101,664 93,076
20,000 22,300 22,300 2,300 2,300 2,300 2,300 2,300
- 2,884 3,075 9,665 10,256 10,848 11,446 12,043
112,377 117,522 98,285 129,329 137,821 128,850 136,709 145,900
290,188 296,443 272,543 277,501 273,510 252,383 252,119 253,319
1,500 - - - - 4,500 9,000 -
- 190 6,590 553 550 568 558 486
2,358 7,091 23,217 8,956 14,836 12,636 8,510 12,910
8,786 9,078 7,950 9,427 10,329 12,584 9,956 7,558
4,472 4,296 3,983 3,729 3,403 3,256 2,846 2,537
- - - 599 - - - -
1,387 1,749 1,899 3,713 4,834 3,595 8,663 7,789
3,415 4,287 4,154 4,599 4,906 4,984 5,253 5,460
1,604 1,477 1,412 1,306 1,255 1,150 1,086 997
3,398 2,880 1,705 6,257 3,650 3,356 3,336 3,107
26,920 31,048 50,910 39,139 43,763 46,629 49,208 40,844
- - - - - - - -
17,292 17,971 19,106 20,264 21,663 22,265 20,117 19,040
- - - - - - - -
- - - - - - - -
5,650 4,425 4,492 3,804 2,890 2,409 1,874 1,570
22,942 22,396 23,598 24,068 24,553 24,674 21,991 20,610
$ 340,050 $ 349,887 $ 347,051 $ 340,708 $ 341,826 $ 323,686 $ 323,318 $ 314,773
</TABLE>
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<PAGE> 287
SAVANNAH ELECTRIC AND POWER COMPANY
OUTSTANDING SECURITIES
AT DECEMBER 31, 1993
FIRST MORTGAGE BONDS
<TABLE>
<CAPTION>
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1964 $ 8,000 4-5/8% $ 3,715 4/1/94
1993 20,000 6-3/8% 20,000 7/1/03
1989 30,000 9-1/4% 30,000 10/1/19
1991 30,000 9-3/8% 30,000 7/1/21
1992 30,000 8.30% 30,000 7/1/22
1993 25,000 7.40% 25,000 7/1/23
$ 143,000 $ 138,715
</TABLE>
<TABLE>
<CAPTION>
POLLUTION CONTROL BONDS
Amount Interest Amount
Series Issued Rate Outstanding Maturity
(Thousands) (Thousands)
<S> <C> <C> <C> <C>
1993 $ 4,085 Variable $ 4,085 1/1/16
1992 13,870 6-3/4% 13,870 2/1/22
$ 17,955 $ 17,955
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCK
Shares Dividend Amount
Series Outstanding Rate Outstanding
(Thousands)
<S> <C> <C> <C>
1993 1,400,000 6.64% $ 35,000
</TABLE>
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<PAGE> 288
SAVANNAH ELECTRIC AND POWER COMPANY
SECURITIES RETIRED
DURING 1993
POLLUTION CONTROL BONDS
<TABLE>
<CAPTION>
Principal Interest
Series Amount Rate
(Thousands)
<S> <C> <C>
1978 $ 4,085 6.25%
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCK
Principal Dividend
Series Amount Rate
(Thousands)
<S> <C> <C>
1988 $ 20,000 9.50%
</TABLE>
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<PAGE> 289
PART III
Items 10, 11, 12 and 13 for SOUTHERN are incorporated by reference to ELECTION
OF DIRECTORS in SOUTHERN's definitive Proxy Statement relating to the 1994
annual meeting of stockholders.
Item 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANTS
ALABAMA
(a) (1) Identification of directors of ALABAMA.
ELMER B. HARRIS (1)
President and Chief Executive Officer of ALABAMA
Age 54
Served as Director since 3-1-89.
BILL M. GUTHRIE
Executive Vice President of ALABAMA
Age 60
Served as Director since 12-16-88
EDWARD L. ADDISON (2)
Age 63
Served as Director since 11-1-83
WHIT ARMSTRONG (2)
Age 46
Served as Director since 9-24-82
PHILIP E. AUSTIN (2)
Age 52
Served as Director since 1-25-91
MARGARET A. CARPENTER (2)
Age 69
Served as Director since 2-26-93
PETER V. GREGERSON, SR. (2)
Age 65
Served as Director since 10-22-93
CRAWFORD T. JOHNSON, III (2)
Age 68
Served as Director since 4-18-69
CARL E. JONES, JR. (2)
Age 53
Served as Director since 4-22-88
WALLACE D. MALONE, JR. (2)
Age 57
Served as Director since 6-22-90
WILLIAM V. MUSE (2)
Age 54
Served as Director since 2-26-93
JOHN T. PORTER (2)
Age 62
Served as Director since 10-22-93
GERALD H. POWELL (2)
Age 67
Served as Director since 2-28-86
ROBERT D. POWERS (2)
Age 43
Served as Director since 1-24-92
JOHN W. ROUSE (2)
Age 56
Served as Director since 4-22-88
WILLIAM J. RUSHTON, III (2)
Age 64
Served as Director Since 9-18-70
JAMES H. SANFORD (2)
Age 49
Served as Director since 8-1-83
JOHN C. WEBB, IV (2)
Age 51
Served as Director since 4-22-77
LOUIS J. WILLIE (2)
Age 70
Served as Director since 3-23-84
JOHN W. WOODS (2)
Age 62
Served as Director since 4-20-73
(1) Previously served as Director of ALABAMA from 1980 to 1985.
(2) No position other than Director.
Each of the above is currently a director of ALABAMA, serving a term running
from the last annual meeting of ALABAMA's stockholder (April 23, 1993) for
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<PAGE> 290
meeting of ALABAMA's stockholder (April 23, 1993) for one year until the next
annual meeting or until a successor is elected and qualified, except for the
individuals elected in October 1993.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as a director or nominee, other than any arrangements or understandings with
directors or officers of ALABAMA acting solely in their capacities as such.
(b)(1) Identification of executive officers of ALABAMA.
ELMER B. HARRIS (1)
President, Chief Executive Officer and Director
Age 54
Served as Executive Officer since 3-1-89
BANKS H. FARRIS
Senior Vice President
Age 59
Served as Executive Officer since 12-3-91
WILLIAM B. HUTCHINS, III
Senior Vice President and Chief Financial Officer
Age 50
Served as Executive Officer since 12-3-91
T. HAROLD JONES
Senior Vice President
Age 63
Served as Executive Officer since 12-1-91
CHARLES D. MCCRARY
Senior Vice President
Age 42
Served as Executive Officer since 1-1-91
(1) Previously served as executive officer of ALABAMA from 1979 to 1985.
Each of the above is currently an executive officer of ALABAMA, serving a
term running from the last annual meeting of the directors (April 23, 1993) for
one year until the next annual meeting or until his successor is elected and
qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
ALABAMA acting solely in their capacities as such.
(c)(1) Identification of certain significant employees.
None.
(d)(1) Family relationships.
None.
(e)(1) Business experience.
ELMER B. HARRIS - Elected in 1989; Chief Executive Officer. He previously
served as Senior Executive Vice President of GEORGIA from 1986 to 1989.
Director of SOUTHERN and AmSouth Bancorporation.
BILL M. GUTHRIE - Elected in 1988; also served since 1991 as Chief Production
Officer of SOUTHERN system and Executive Vice President and Chief Production
Officer of SCS; Vice President of SOUTHERN, GULF, MISSISSIPPI and SAVANNAH and
Executive Vice President of GEORGIA. Responsible primarily for providing
overall management of materials management, fuel services, operating and
planning services, fossil, hydro and bulk power operations of the Southern
electric system.
EDWARD L. ADDISON - Elected in 1983; President of SOUTHERN from 1983 until
elected Chairman of the Board in 1994. Director of SOUTHERN, GEORGIA, Phelps
Dodge Corporation, Protective Life Corporation, Wachovia Bank of Georgia, N.A.,
Wachovia Corporation of Georgia and CSX Corporation.
WHIT ARMSTRONG - President, Chairman and Chief Executive Officer of The
Citizens Bank, Enterprise, Alabama. Also, President and Chairman of the Board
of Enterprise Capital Corporation, Inc.
PHILIP E. AUSTIN - Chancellor, The University of Alabama System. Previously
President and Chancellor of Colorado State University.
MARGARET A. CARPENTER - President, Compos-it, Inc. (typographics), Montgomery,
Alabama.
PETER V. GREGERSON, SR. - Chairman Emeritus of Gregerson's Foods, Inc. (retail
groceries), Gadsden, Alabama. Director of AmSouth Bank of Gadsden, Alabama.
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<PAGE> 291
CRAWFORD T. JOHNSON, III - Chairman of Coca-Cola Bottling Company United, Inc.,
Birmingham, Alabama. Director of Protective Life Corporation, AmSouth
Bancorporation and Russell Corporation.
CARL E. JONES, JR. - Chairman and Chief Executive Officer of First Alabama
Bank, Mobile, Alabama.
WALLACE D. MALONE, JR. - Chairman and Chief Executive Officer of SouthTrust
Corporation, bank holding company, Birmingham, Alabama.
WILLIAM V. MUSE - President and Chief Executive Officer of Auburn University.
He previously served as President of the University of Akron from 1984 to 1992.
JOHN T. PORTER - Pastor of Sixth Avenue Baptist Church, Birmingham, Alabama.
Director of Citizen Federal Bank.
GERALD H. POWELL - President, Dixie Clay Company of Alabama, Inc. (refractory
clay producer), Jacksonville, Alabama.
ROBERT D. POWERS - President, The Eufaula Agency, Inc. (real estate and
insurance), Eufaula, Alabama.
JOHN W. ROUSE - President and Chief Executive Officer of Southern Research
Institute (non-profit research institute), Birmingham, Alabama. Director of
Protective Life Corporation.
WILLIAM J. RUSHTON, III - Chairman of the Board, Protective Life Corporation
(insurance holding company), Birmingham, Alabama. Director of SOUTHERN and
AmSouth Bancorporation.
JAMES H. SANFORD - President, HOME Place Farms Inc. (diversified farmers and
ginners), Prattville, Alabama.
JOHN C. WEBB, IV - President, Webb Lumber Company, Inc. (wholesale lumber),
Demopolis, Alabama.
LOUIS J. WILLIE - Chairman of the Board and President of Booker T. Washington
Insurance Co. Director of SOUTHERN.
JOHN W. WOODS - Chairman and Chief Executive Officer, AmSouth Bancorporation
(multi-bank holding company), Birmingham, Alabama. Director of Protective Life
Corporation.
BANKS H. FARRIS - Elected in 1991; responsible primarily for providing the
overall management of the Human Resources, Information Resources, Power
Delivery and Marketing Departments and the six geographic divisions. He
previously served as Vice President - Human Resources from 1989 to 1991 and
Division Vice President from 1985 to 1989.
WILLIAM B. HUTCHINS, III - Elected in 1991; Chief Financial Officer,
responsible primarily for providing the overall management of accounting and
financial planning activities. He previously served as Vice President and
Treasurer from 1983 to 1991.
T. HAROLD JONES - Elected in 1991; responsible primarily for providing the
overall management of the Fossil Generation, Hydro Generation, Power Generation
Services and Fuels Departments. He previously served as Vice President -
Fossil Generation from 1986 to 1991.
CHARLES D. MCCRARY - Elected in 1991; responsible for the External Relations
Department, Operating Services and Corporate Services. Also, assumes
responsibility for financial matters while Mr. Hutchins is on medical leave.
He previously served as Vice President of Administrative Services - Nuclear of
SCS from 1988 to 1991.
(f)(1) Involvement in certain legal proceedings.
None.
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<PAGE> 292
GEORGIA
(a)(2) Identification of directors of GEORGIA.
H. ALLEN FRANKLIN
President and Chief Executive Officer.
Age 49
Served as Director since 1-1-94.
WARREN Y. JOBE
Executive Vice President, Treasurer and Chief Financial Officer.
Age 53
Served as Director since 8-1-82
EDWARD L. ADDISON (1)
Age 63
Served as Director since 11-1-83
BENNETT A. BROWN (1)
Age 64
Served as Director since 5-15-80
WILLIAM P. COPENHAVER (1)
Age 69
Served as Director since 6-18-86
A. W. DAHLBERG (1)
Age 53
Served as Director since 6-1-88
WILLIAM A. FICKLING, JR. (1)
Age 61
Served as Director since 4-18-73
L. G. HARDMAN, III (1)
Age 54
Served as Director since 6-25-79
JAMES R. LIENTZ, JR. (1)
Age 50
Served as Director since 7-1-93
WILLIAM A. PARKER, JR. (1)
Age 66
Served as Director since 5-19-65
G. JOSEPH PRENDERGAST (1)
Age 48
Served as Director since 1-20-93
HERMAN J. RUSSELL (1)
AGE 63
Served as Director since 5-18-88
GLORIA M. SHATTO (1)
Age 62
Served as Director since 2-20-80
ROBERT STRICKLAND (1)
Age 66
Served as Director since 11-21-79
WILLIAM JERRY VEREEN (1)
Age 53
Served as Director since 5-18-88
THOMAS R. WILLIAMS (1)
Age 65
Served as Director since 3-17-82
(1) No position other than Director.
Each of the above is currently a director of GEORGIA, serving a term running
from the last annual meeting of GEORGIA's stockholder (May 19, 1993) for one
year until the next annual meeting or until a successor is elected and
qualified, except Messrs. Franklin and Lientz.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he/she was or is to be
selected as a director or nominee, other than any arrangements or
understandings with directors or officers of GEORGIA acting solely in their
capacities as such.
(b)(2) Identification of executive officers of GEORGIA.
H. ALLEN FRANKLIN
President, Chief Executive Officer and Director
Age 49
Served as Executive Officer since 1-1-94
WARREN Y. JOBE
Executive Vice President, Treasurer, Chief Financial Officer and Director
Age 53
Served as Executive Officer since 5-19-82
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<PAGE> 293
DWIGHT H. EVANS
Executive Vice President - External Affairs
Age 45
Served as Executive Officer since 4-19-89
GENE R. HODGES
Executive Vice President - Customer Operations
Age 55
Served as Executive Officer since 11-19-86
KERRY E. ADAMS
Senior Vice President - Fossil and Hydro Power
Age 49
Served as Executive Officer since 5-1-89
WAYNE T. DAHLKE
Senior Vice President - Power Delivery
Age 53
Served as Executive Officer since 4-19-89
JAMES K. DAVIS
Senior Vice President - Corporate Relations
Age 53
Served as Executive Officer since 10-1-93
ROBERT H. HAUBEIN
Senior Vice President - Administrative Services
Age 54
Served as Executive Officer since 2-19-92
GALE E. KLAPPA
Senior Vice President - Marketing
Age 43
Served as Executive Officer since 2-19-92
FRED D. WILLIAMS
Senior Vice President - Bulk Power Markets
Age 49
Served as Executive Officer since 11-18-92
Each of the above is currently an executive officer of GEORGIA, serving a
term running from the last annual meeting of the directors (May 19,1993) for
one year until the next annual meeting or until his successor is elected and
qualified, except Messrs. Franklin and Davis.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
GEORGIA acting solely in their capacities as such.
(c)(2) Identification of certain significant employees.
None.
(d)(2) Family relationships.
None.
(e)(2) Business experience.
H. ALLEN FRANKLIN - President and Chief Executive Officer since January 1994.
He previously served as President and Chief Executive Officer of SCS from 1988
through 1993. Director of SOUTHERN and SouthTrust Bank.
WARREN Y. JOBE - Executive Vice President and Chief Financial Officer since
1982 and Treasurer since 1992. Responsible for financial and accounting
operations and planning, internal auditing, procurement, corporate secretary
and treasury operations.
EDWARD L. ADDISON - President of SOUTHERN from 1983 until his election as
Chairman of Board in 1994. Director of SOUTHERN, ALABAMA, Wachovia Bank of
Georgia, N.A., Wachovia Corporation of Georgia, Phelps Dodge Corporation,
Protective Life Corporation and CSX Corporation.
BENNETT A. BROWN - Retired from serving as Chairman of the Board of NationsBank
on December 31, 1992. Previously Chairman of the Board and Chief Executive
Officer of C&S/Sovran Corporation. Director of Confederation Life Insurance
Company.
WILLIAM P. COPENHAVER - Director, Arcadian Fertilizer, L.P. (agricultural and
industrial chemicals). Director of SOUTHERN and Georgia Bank & Trust Company.
A. W. DAHLBERG - President of SOUTHERN effective in 1994. He previously served
as President and Chief Executive Officer of GEORGIA from 1988 through 1993.
Director of SOUTHERN, Trust Company Bank, Trust Company of Georgia, Protective
Life Corporation and Equifax, Inc.
WILLIAM A. FICKLING, JR. - Chairman of the Board, Mulberry Street Investment
Company, Macon, Georgia, and Co-chairman of Beech Street Corporation
(insurance).
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<PAGE> 294
L. G. HARDMAN, III - Chairman of the Board of First National Bank of
Commerce, Georgia and Chairman of the Board and Chief Executive Officer of
First Commerce Bancorp. Chairman of the Board, President and Treasurer of
Harmony Grove Mills, Inc. (real estate investments). Director of SOUTHERN.
JAMES R. LIENTZ, JR. - President of NationsBank of Georgia since 1993. He
previously served as President and Chief Executive Officer of former Citizens &
Southern Bank of South Carolina (now NationsBank) from 1990 to 1993, and from
1987 to 1990, he was head of Corporate Bank Group of NationsBank of Georgia,
N.A.
WILLIAM A. PARKER, JR. - Chairman of the Board, Cherokee Investment Company,
Inc. (private investments), Atlanta, Georgia. Director of SOUTHERN, Genuine
Parts Company, Life Insurance Company of Georgia, First Union Real Estate
Investment Trust, Atlantic Realty Company, ING North America Insurance Company,
Post Properties, Inc. and Haverty Furniture Companies, Inc.
G. JOSEPH PRENDERGAST - President and Chief Executive Officer, Wachovia
Corporation of Georgia and Wachovia Bank of Georgia, N.A. since 1993. From
1988 to 1993, he served as Executive Vice President of Wachovia Corporation and
President of Wachovia Corporate Services, Inc.
HERMAN J. RUSSELL - Chairman of the Board and Chief Executive Officer, H. J.
Russell & Company (construction), Atlanta, Georgia. Chairman of the Board,
Citizens Trust Bank, and Citizens Bancshares Corporation Atlanta, Georgia.
Director of Wachovia Corporation.
GLORIA M. SHATTO - President, Berry College, Mount Berry, Georgia. Director of
SOUTHERN, Becton Dickinson & Company, Kmart Corporation and Texas Instruments,
Inc.
ROBERT STRICKLAND - Retired Chairman of the Board and Chief Executive Officer
of SunTrust Banks, Inc. Director of Georgia US Corporation, Equifax, Inc.,
Life Insurance Company of Georgia, Oxford Industries, Inc. and The Investment
Centre.
WILLIAM JERRY VEREEN - President and Chief Executive Officer of Riverside
Manufacturing Company (manufacture and sale of uniforms), Moultrie, Georgia.
Director of Gerber Garment Technology, Inc. and Textile Clothing Technology
Corp.
THOMAS R. WILLIAMS - President of The Wales Group, Inc. (investments) Atlanta,
Georgia. Director of ConAgra, Inc., BellSouth Corporation, National Life
Insurance Company of Vermont, AppleSouth, Inc., and American Software, Inc.
DWIGHT H. EVANS - Executive Vice President - External Affairs since 1989.
Senior Vice President - Public Affairs from 1988 to 1989.
GENE R. HODGES - Executive Vice President - Customer Operations since 1992.
Senior Vice President - Region/Land Operations from 1990 to 1992. Senior Vice
President - Division Operations from 1986 to 1990.
KERRY E. ADAMS - Senior Vice President - Fossil and Hydro Power since 1989.
WAYNE T. DAHLKE - Senior Vice President - Power Delivery since February 1992.
Senior Vice President - Marketing from 1989 to 1992.
JAMES K. DAVIS - Senior Vice President - Corporate Relations since October
1993. Vice President of Corporate Relations from 1988 to 1993.
ROBERT H. HAUBEIN - Senior Vice President - Administrative Services since 1992.
Vice President - Northern Region from 1990 to 1992. Division Vice President of
ALABAMA from 1985 to 1990.
GALE E. KLAPPA - Senior Vice President - Marketing since 1992. Vice President
- - Public Relations of SCS from 1981 to 1992.
FRED D. WILLIAMS - Senior Vice President - Bulk Markets since 1992. Vice
President - Bulk Power Markets from 1984 to 1992.
(f)(2) Involvement in certain legal proceedings.
None.
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<PAGE> 295
GULF
(a)(3) Identification of directors of GULF.
D. L. MCCRARY (1)
Chairman of the Board and Chief Executive Officer
Age 64
Served as Director since 4-28-83
TRAVIS J. BOWDEN
President
Age 55
Served as Director since 2-1-94
PAUL J. DENICOLA (2)
Age 45
Served as Director since 4-19-91
REED BELL, SR., M.D. (2)
Age 67
Served as Director since 1-17-86
FRED C. DONOVAN, SR. (2)
Age 53
Served as Director since 1-18-91
W. D. HULL, JR. (2)
Age 61
Served as Director since 10-14-83
C. W. RUCKEL (2)
Age 66
Served as Director since 4-20-62
J. K. TANNEHILL (2)
Age 60
Served as Director since 7-19-85
(1) Retires May 1, 1994.
(2) No position other than Director.
Each of the above is currently a director of GULF, serving a term running
from the last annual meeting of GULF's stockholder (June 29, 1993) for one year
until the next annual meeting or until a successor is elected and qualified,
except for Mr. Bowden.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as a director or nominee, other than any arrangements or understandings with
directors or officers of GULF acting solely in their capacities as such.
(b)(3) Identification of executive officers of GULF.
D. L. MCCRARY
Chairman of the Board and Chief Executive Officer
Age 64
Served as Executive Officer since 5-1-83
TRAVIS J. BOWDEN
President
Age 55
Served as Executive Officer since 2-1-94
F. M. FISHER, JR.
Vice President - Employee and External Relations
Age 45
Served as Executive Officer since 5-19-89
JOHN E. HODGES, JR.
Vice President - Customer Operations
Age 50
Served as Executive Officer since 5-19-89
G. EDISON HOLLAND, JR.
Vice President and Corporate Counsel
Age 41
Served as Executive Officer since 4-25-92
EARL B. PARSONS, JR.
Vice President - Power Generation and Transmission
Age 55
Served as Executive Officer since 4-14-78
A. E. SCARBROUGH
Vice President - Finance
Age 57
Served as Executive Officer since 9-21-77
Each of the above is currently an executive officer of GULF, serving a term
running from the last annual meeting of the directors (July 23, 1993) for one
year until the next annual meeting or until his successor is elected and
qualified, except for Mr. Bowden.
III-7
<PAGE> 296
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
GULF acting solely in their capacities as such.
(c)(3) Identification of certain significant employees.
None.
(d)(3) Family relationships.
None.
(e)(3) Business experience.
D. L. MCCRARY - Elected Chairman of the Board effective February 1994. He
previously served as President and Chief Executive Officer from 1983 to 1994;
responsible primarily for formation of overall corporate policy.
TRAVIS J. BOWDEN - Elected President effective February 1994 and, upon Mr.
McCrary's retirement May 1994, Chief Executive Officer. He previously served
as Executive Vice President of ALABAMA from 1985 to 1994.
PAUL J. DENICOLA - President and Chief Executive Officer of SCS effective
January 1994. He previously served as Executive Vice President of SCS from
1991 through 1993 and President and Chief Executive Officer of MISSISSIPPI from
1989 to 1991. Director of SOUTHERN, MISSISSIPPI and SAVANNAH.
REED BELL, SR., M.D. - Medical Doctor and since 1989, employee of the State of
Florida. He serves as Medical Director of Children's Medical Services,
District 1. He previously served as Medical Director of the Escambia County
Public Health Unit until July 1992. He also previously maintained a private
medical practice and served as Medical Director of Children's Medical Services
from 1988 to 1989.
FRED C. DONOVAN, SR. - President of Baskerville - Donovan, Inc., Pensacola,
Florida, an architectural and engineering firm. Director of Baptist Health
Care, Inc.
W. D. HULL, JR. - Vice Chairman of the Sun Bank/West Florida,
Panama City, Florida. He previously served as President and Chief Executive
Officer and Director of the Sun Commercial Bank, Panama City, Florida from 1987
to 1992.
C. W. RUCKEL - Chairman of the Board of The Vanguard Bank and Trust Company,
Valparaiso, Florida. President and owner of Ruckel Properties, Inc.,
Valparaiso, Florida.
J. K. TANNEHILL - President and Chief Executive Officer of Tannehill
International Industries, Lynn Haven, Florida. He previously served as
President and Chief Executive Officer of Stock Equipment Company, Chagrin
Falls, Ohio, until 1991. Director of Sun Bank/West Florida, Panama City,
Florida.
F. M. FISHER, JR. - Elected Vice President - Employee and External Relations in
1989. He previously served as General Manager of Central Division from 1988 to
1989.
JOHN E. HODGES, JR. - Elected Vice President - Customer Operations in 1989. He
previously served as General Manager of Western Division from 1986 to 1989.
G. EDISON HOLLAND, JR. - Elected Vice President and Corporate Counsel in 1992;
responsible for all legal matters associated with GULF and serves as compliance
officer. Also served, since 1982, as a partner in the law firm, Beggs & Lane.
EARL B. PARSONS, JR. - Elected Vice President - Power Generation and
Transmission in 1989; responsible for generation and transmission of electrical
energy. He previously served as Vice President - Electric Operations from 1978
to 1989.
A. E. SCARBROUGH - Elected Vice President - Finance in 1980; responsible for
all accounting and financial services of GULF.
(f)(3) Involvement in certain legal proceedings.
None.
III-8
<PAGE> 297
MISSISSIPPI
(a)(4) Identification of directors of MISSISSIPPI.
DAVID M. RATCLIFFE
President and Chief Executive Officer
Age 45
Served as Director since 4-24-91
PAUL J. DENICOLA (1)
Age 45
Served as Director since 5-1-89
EDWIN E. DOWNER (1)
Age 62
Served as Director since 4-24-84
ROBERT S. GADDIS (1)
Age 62
Served as Director since 1-21-86
WALTER H. HURT, III (1)
Age 58
Served as Director since 4-6-82
AUBREY K. LUCAS (1)
Age 59
Served as Director since 4-24-84
EARL D. MCLEAN, JR. (1)
Age 68
Served as Director since 10-21-78
GERALD J. ST. Pe (1)
Age 54
Served as Director since 1-21-86
LEO W. SEAL, JR. (1)
Age 69
Served as Director since 4-4-67
N. EUGENE WARR (1)
Age 58
Served as Director since 1-21-86
(1) No position other than Director.
Each of the above is currently a director of MISSISSIPPI, serving a term
running from the last annual meeting of MISSISSIPPI's stockholder (April 6,
1993) for one year until the next annual meeting or until a successor is
elected and qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he or she was or is to be
selected as a director or nominee, other than any arrangements or
understandings with directors or officers of MISSISSIPPI acting solely in their
capacities as such.
(b)(4) Identification of executive officers of MISSISSIPPI.
DAVID M. RATCLIFFE
President, Chief Executive Officer and Director
Age 45
Served as Executive Officer since 4-24-91
H. E. BLAKESLEE
Vice President - Customer Services and Marketing
Age 53
Served as Executive Officer since 1-25-84
THOMAS A. FANNING
Vice President and Chief Financial Officer
Age 37
Served as Executive Officer since 4-1-92
DON E. MASON
Vice President - External Affairs and Corporate Services
Age 52
Served as Executive Officer since 7-27-83
Each of the above is currently an executive officer of MISSISSIPPI, serving
a term running from the last annual meeting of the directors (April 28, 1993)
for one year until the next annual meeting or until his successor is elected
and qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
MISSISSIPPI acting solely in their capacities as such.
(c)(4) Identification of certain significant employees.
None.
(d)(4) Family relationships.
None.
(e)(4) Business experience.
III-9
<PAGE> 298
DAVID M. RATCLIFFE - President and Chief Executive Officer since 1991. He
previously served as Executive Vice President of SCS from 1989 to 1991 and Vice
President of SCS from 1985 to 1989.
PAUL J. DENICOLA - President and Chief Executive Officer of SCS effective 1994.
Executive Vice President of SCS from 1991 through 1993. He previously served
as President and Chief Executive Officer of MISSISSIPPI from 1989 to 1991.
Director of SOUTHERN, SAVANNAH and GULF.
EDWIN E. DOWNER - Business consultant specializing in economic analysis,
management controls and procedural studies since 1990. President and Chief
Executive Officer, Unifirst Bank for Savings, F.A., Midland Division, Meridian,
Mississippi from 1985 to 1990.
ROBERT S. GADDIS - President of the Trustmark National Bank - Laurel,
Mississippi.
WALTER H. HURT, III - President and Director of NPC Inc. (Investments). Vicar,
All Saints Church, Inverness, Mississippi, and St. Thomas Church, Belzoni,
Mississippi. Retired newspaper editor and publisher.
AUBREY K. LUCAS - President of the University of Southern Mississippi,
Hattiesburg, Mississippi.
EARL D. MCLEAN, JR. - Co-owner of the T. C. Griffith Insurance Agency, Inc.
(insurance and real estate), Columbia, Mississippi. Director of SOUTHERN.
GERALD J. ST. Pe - President of Ingalls Shipbuilding and Corporate Vice
President of Litton Industries, Inc. since 1985. Director of Merchants and
Marine Bank, Pascagoula, Mississippi.
LEO W. SEAL, JR. - Chairman of the Board and Chief Executive Officer of Hancock
Bank, Gulfport, Mississippi, and Chairman of the Board of Harrison Life
Insurance Company. Director of Hancock Bank and Bank of Wiggins.
N. EUGENE WARR - Retailer (Biloxi and Gulfport, Mississippi.) Chairman of the
Board of First Jefferson Corporation and the Jefferson Bank of Biloxi,
Mississippi.
H. E. BLAKESLEE - Elected Vice President in 1984. Primarily responsible
for rate design, economic analysis and revenue forecasting, economic
development, marketing and district operations.
THOMAS A. FANNING - Elected Vice President in 1992; responsible primarily for
accounting, treasury, finance, information resources and risk management. He
previously served as Treasurer of SEI from 1986 to 1992 and Director of
Corporate Finance of SCS from 1988 to 1992.
DON E. MASON - Elected Vice President in 1983. Primarily responsible for the
external affairs functions, including governmental and regulatory affairs,
corporate communications, security, materials and general services, as well as
the human resources function.
(f)(4) Involvement in certain legal proceedings.
None.
SAVANNAH
(a)(5) Identification of directors of SAVANNAH.
ARTHUR M. GIGNILLIAT, JR.
President and Chief Executive Officer
Age 61
Served as Director since 8-31-82
HELEN QUATTLEBAUM ARTLEY (1)
Age 66
Served as Director since 5-17-77
PAUL J. DENICOLA (1)
Age 45
Served as Director since 3-14-91
BRIAN R. FOSTER (1)
Age 44
Served as Director since 5-16-89
WALTER D. GNANN (1)
Age 58
Served as Director since 5-17-83
JOHN M. MCINTOSH (1)
Age 69
Served as Director since 2-27-68
III-10
<PAGE> 299
ROBERT B. MILLER, III (1)
Age 48
Served as Director since 5-17-83
JAMES M. PIETTE (1)
Age 69
Served as Director since 6-12-73
ARNOLD M. TENEBAUM (1)
Age 57
Served as Director since 5-17-77
FREDERICK F. WILLIAMS, JR. (1)
Age 66
Served as Director since 7-2-75
(1) No Position other than Director.
Each of the above is currently a director of SAVANNAH, serving a term
running from the last annual meeting of SAVANNAH's stockholder (May 18, 1993)
for one year until the next annual meeting or until a successor is elected and
qualified.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he/she was or is to be
selected as a director or nominee, other than any arrangements or
understandings with directors or officers of SAVANNAH acting solely in their
capacities as such.
(b)(5) Identification of executive officers of SAVANNAH.
ARTHUR M. GIGNILLIAT, JR.
President, Chief Executive Officer and Director
Age 61
Served as Executive Officer since 2-15-72
W. MILES GREER
Vice President - Marketing and Customer Services
Age 50
Served as Executive Officer since 11-20-85
LARRY M. PORTER
Vice President - Operations
Age 49
Served as Executive Officer since 7-1-91
KIRBY R. WILLIS
Vice President, Treasurer and
Chief Financial Officer
Age 42
Served as Executive Officer since 1-1-94
Each of the above is currently an executive officer of SAVANNAH, serving a
term running from the last annual meeting of the directors (May 18, 1993) for
one year until the next annual meeting or until his successor is elected and
qualified, except Mr. Willis.
There are no arrangements or understandings between any of the individuals
listed above and any other person pursuant to which he was or is to be selected
as an officer, other than any arrangements or understandings with officers of
SAVANNAH acting solely in their capacities as such.
(c)(5) Identification of certain significant employees.
None.
(d)(5) Family relationships.
None.
(e)(5) Business experience.
ARTHUR M. GIGNILLIAT, JR. - Elected President and Chief Executive Officer in
1985. Director of Savannah Foods and Industries, Inc.
HELEN QUATTLEBAUM ARTLEY - Homemaker and Civic Worker.
PAUL J. DENICOLA - President and Chief Executive Officer of SCS effective
January 1994. Executive Vice President of SCS from 1991 through 1993. He
previously served as President and Chief Executive Officer of MISSISSIPPI from
1989 to 1991. Director of SOUTHERN, GULF and MISSISSIPPI.
BRIAN R. FOSTER - President of NationsBank of Georgia, N.A., in Savannah since
1988.
WALTER D. GNANN - President of Walt's TV, Appliance and Furniture Co., Inc.,
Springfield, Georgia. Past Chairman of the Development Authority of Effingham
County, Georgia.
III-11
<PAGE> 300
JOHN M. MCINTOSH - Chairman of the Executive Committee, SAVANNAH; retired
Chairman of the Board of Directors and Chief Executive Officer, SAVANNAH from
1974 to 1984. Director of SOUTHERN.
ROBERT B. MILLER, III - President of American Builders of Savannah.
JAMES M. PIETTE - Vice President - Special Projects, Union Camp Corporation,
since 1989. Retired Vice Chairman, Board of Directors, Union Camp Corporation
from 1987 to 1989.
ARNOLD M. TENENBAUM - President of Chatham Steel Corporation. Director of
First Union National Bank of Georgia and Savannah Foods and Industries, Inc.
FREDERICK F. WILLIAMS, JR. - Retired Partner and Consultant, Hilb, Rogal and
Hamilton Employee Benefits, Incorporated (Insurance Brokers), formerly Jones,
Hill & Mercer.
W. MILES GREER - Vice President - Marketing and Customer Services effective
January 1994. Formerly served as Vice President - Economic Development and
Corporate Services from 1989 through 1993 and Vice President - Economic
Development and Governmental Affairs from 1985 to 1989.
LARRY M. PORTER - Vice President - Operations since 1991. Responsible for
managing the areas of fuel procurement, power production, transmission and
distribution, engineering and system operation. Previously he served as
Assistant Plant Manager of GEORGIA's Plant Scherer from 1984 to 1991.
KIRBY R. WILLIS - Vice President, Treasurer and Chief Financial Officer
effective January 1994. Responsible for all financial activities, Information
Resources, Human Resources, Corporate Services, and Environmental Affairs and
Safety. He previously served as Treasurer, Controller and Assistant Secretary
from 1991 to 1993 and Treasurer and Secretary from 1987 to 1991.
(f)(5) Involvement in certain legal proceedings.
None.
III-12
<PAGE> 301
ITEM 11. EXECUTIVE COMPENSATION
(A) SUMMARY COMPENSATION TABLES. The following tables set forth
information concerning the Chief Executive Officer and the four most highly
compensated executive officers for each of the operating affiliates (ALABAMA,
GEORGIA, GULF, MISSISSIPPI and SAVANNAH), serving as of December 31, 1993 whose
total annual salary and bonus exceeded $100,000. No information is provided
for any person for any year in which such person did not serve as an executive
officer of the operating affiliate. The number of SOUTHERN common shares do
not reflect the stock distribution resulting from the two-for-one common stock
split approved by SOUTHERN's board of directors in January, 1994.
KEY TERMS used in this Item will have the following meanings:-
AME........... ABOVE-MARKET EARNINGS ON DEFERRED COMPENSATION
ESP........... EMPLOYEE SAVINGS PLAN
ESOP.......... EMPLOYEE STOCK OWNERSHIP PLAN
SBP........... SUPPLEMENTAL BENEFIT PLAN
VBP........... VEHICLE BUYOUT PROGRAM
ALABAMA
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
NUMBER OF
SECURITIES LONG-
NAME UNDERLYING TERM
AND OTHER ANNUAL STOCK INCENTIVE ALL OTHER
PRINCIPAL COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) (SHARES) ($)(2) ($)(3)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ELMER B. HARRIS
President,
Chief Executive 1993 418,818 117,630 23,469 13,446 198,131 39,388
Officer, 1992 397,499 96,615 9,161 15,018 147,278 24,435
Director 1991 371,491 45,147 - 18,344 107,729 -
TRAVIS J. BOWDEN(4)
Executive Vice 1993 257,089 23,161 16,118 6,119 61,524 31,271
President, 1992 244,139 35,804 1,636 6,802 44,345 13,550
Director 1991 215,002 34,593 - 5,883 34,775 -
BANKS H. FARRIS 1993 176,041 17,642 24,222 3,151 28,394 27,418
Senior Vice 1992 165,746 27,274 6,211 3,453 19,021 8,916
President 1991 141,818 21,411 - - 13,607 -
</TABLE>
III-13
<PAGE> 302
ALABAMA
SUMMARY COMPENSATION TABLE
(CONTINUED)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
NUMBER OF
SECURITIES LONG-
NAME UNDERLYING TERM
AND OTHER ANNUAL STOCK INCENTIVE ALL OTHER
PRINCIPAL COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) (SHARES) ($)(2) ($)(3)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
T. HAROLD JONES 1993 170,266 11,400 4,032 3,037 27,350 14,093
Senior Vice 1992 163,164 15,000 32,611 3,392 19,181 8,631
President 1991 146,643 15,136 - - 14,560 -
WILLIAM B.
HUTCHINS, III
Senior Vice
President, 1993 164,972 16,103 14,791 2,948 26,429 26,817
Chief Financial 1992 156,520 24,893 973 2,826 17,347 8,307
Officer 1991 - - - - - -
</TABLE>
(1) Tax reimbursement by ALABAMA and certain personal benefits, including
membership fee of $28,402 for Mr. Jones in 1992. In accordance with the
transition rules of the SEC, information for 1991 is omitted.
(2) Payouts made in 1992, 1993 and 1994 for the four-year performance periods
ending December 31, 1991, 1992 and 1993, respectively.
(3) ALABAMA contributions to the ESP, ESOP, non-pension related accruals under
the SBP (ERISA excess plan under which accruals are made to offset Internal
Revenue Code imposed limitations under the Employee Savings and Stock Ownership
Plans), and payments under a VBP for the following:-
Name ESP ESOP SBP VBP
- ---- --- ---- --- ---
E. B. Harris $6,746 $1,709 $12,933 $18,000
T. J. Bowden 8,369 1,709 3,193 18,000
B. H. Farris 7,193 1,499 726 18,000
T. H. Jones 6,908 1,331 754 5,100
W. B. Hutchins, III 6,746 1,400 671 18,000
In accordance with the transition rules of the SEC, information for 1991 is
omitted.
(4) Effective January 31, 1994, Mr. Bowden resigned to become president of
GULF.
III-14
<PAGE> 303
GEORGIA
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
NUMBER OF
SECURITIES LONG-
NAME UNDERLYING TERM
AND OTHER ANNUAL STOCK INCENTIVE ALL OTHER
PRINCIPAL COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY($)(1) BONUS($) ($)(2) (SHARES) ($)(3) ($)(4)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A. W. DAHLBERG(5)
President, 1993 477,967 96,331 17,707 15,322 225,406 44,547
Chief Executive 1992 469,178 110,094 6,508 17,113 171,243 26,979
Officer, Director 1991 418,968 67,958 - 20,710 126,085 -
DWIGHT H. EVANS 1993 210,544 34,763 14,642 3,749 48,282 29,519
Executive 1992 206,980 40,598 3,505 4,207 36,284 10,925
Vice President 1991 178,777 36,058 - 4,910 25,081 -
WARREN Y. JOBE
Executive
Vice President,
Treasurer, 1993 210,200 27,038 15,645 3,740 48,282 29,258
Chief Financial 1992 209,249 30,521 2,566 4,217 37,320 11,535
Officer, Director 1991 192,458 21,635 - 5,249 29,428 -
GENE R. HODGES 1993 206,727 28,228 14,903 3,439 35,285 30,629
Executive 1992 177,966 27,666 2,471 3,606 29,367 9,600
Vice President 1991 158,339 18,117 - 4,364 20,899 -
KERRY E. ADAMS 1993 183,845 24,699 15,034 3,281 35,285 28,300
Senior Vice 1992 177,919 30,652 2,206 3,630 25,736 9,539
President 1991 153,970 23,058 - 3,671 17,857 -
</TABLE>
(1) Due to the pay schedules at GEORGIA, 1992 salary reflects one additional
pay period compared with 1991.
(2) Tax reimbursement by GEORGIA on certain personal benefits. In accordance
with the transition rules of the SEC, information for 1991 is omitted.
(3) Payouts made in 1992, 1993 and 1994 for the four-year performance periods
ending December 31, 1991, 1992 and 1993, respectively.
(4) GEORGIA contributions to the ESP, ESOP, non-pension related accruals
under the SBP (ERISA excess plan under which accruals are made to offset
Internal Revenue Code imposed limitations under the Employee Savings and Stock
Ownership Plans) and payments under a VBP for the following:-
Name ESP ESOP SBP VBP
- ---- --- ---- --- ---
A. W. Dahlberg $6,746 $1,709 $18,092 $18,000
D. H. Evans 8,592 1,709 1,218 18,000
W. Y. Jobe 7,667 1,709 1,882 18,000
G. R. Hodges 7,349 1,620 3,660 18,000
K. E. Adams 7,204 1,634 1,462 18,000
In accordance with the transition rules of the SEC, information for 1991 is
omitted.
(5) Effective December 31, 1993, Mr. Dahlberg resigned to become president of
SOUTHERN.
III-15
<PAGE> 304
GULF
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
NUMBER OF
SECURITIES LONG-
NAME UNDERLYING TERM
AND OTHER ANNUAL STOCK INCENTIVE ALL OTHER
PRINCIPAL COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) (SHARES) ($)(2) ($)(3)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DOUGLAS L. MCCRARY
President, 1993 310,701 40,856 3,639 7,406 104,719 19,854
Chief Executive 1992 299,960 42,307 1,719 8,351 80,942 16,386
Officer, Director 1991 290,568 37,774 - 10,495 68,429 -
G. E. HOLLAND, JR. 1993 162,651 20,934 9,504 2,920 - 21,015
Vice President, 1992 101,725 17,980 724 2,795 n/e(4) -(5)
Corporate Counsel 1991 - - - - - -
EARL B. PARSONS, JR. 1993 160,089 19,129 9,572 - 22,072 25,430
Vice President 1992 155,495 22,050 420 - 17,875 8,460
1991 159,962 17,979 - - 16,768 -
A. E. SCARBROUGH 1993 155,565 19,129 11,582 - 22,072 24,729
Vice President 1992 147,418 23,173 185 - 17,060 7,891
1991 139,349 17,334 - - 14,422 -
JOHN E. HODGES, JR. 1993 147,144 20,934 9,726 2,289 32,206 24,327
Vice President 1992 139,296 25,360 448 2,532 23,218 7,425
1991 130,903 20,384 - 2,388 16,232 -
</TABLE>
(1) Tax reimbursement by GULF on certain personal benefits. In accordance with
the transition rules of the SEC, information for 1991 is omitted.
(2) Payouts made in 1992, 1993 and 1994 for the four-year performance periods
ending December 31, 1991, 1992 and 1993, respectively.
(3) GULF contributions to the ESP, ESOP, non-pension related accruals under
the SBP (ERISA excess plan under which accruals are made to offset Internal
Revenue Code imposed limitations under the Employee Savings and Stock
Ownership Plans) and payments under a VBP for the following:-
Name ESP ESOP SBP VBP
- ---- --- ---- --- ---
D. L. McCrary $9,300 $1,709 $6,057 $ 2,788
G. E. Holland, Jr. 4,652 - - 16,363
E. B. Parsons, Jr 6,948 1,709 410 16,363
A. E. Scarbrough 6,746 1,338 282 16,363
J. E. Hodges, Jr. 6,651 1,313 - 16,363
In accordance with the transition rules of the SEC, information for 1991 is
omitted.
(4) Employee and executive officer of GULF since April 25, 1992. Not eligible
to participate in the Long-Term Incentive Plan until January 1, 1993.
(5) "All Other Compensation" previously reported as $4,149 for Mr. Holland
in the Form 10-K for the year ended December 31, 1992, should have been $0 since
Mr. Holland was not yet eligible to participate in ESP and ESOP.
III-16
<PAGE> 305
MISSISSIPPI
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
NUMBER OF
SECURITIES LONG-
NAME UNDERLYING TERM
AND OTHER ANNUAL STOCK INCENTIVE ALL OTHER
PRINCIPAL COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) (SHARES) ($)(2) ($)(3)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DAVID M. RATCLIFFE
President, Chief 1993 226,373 45,917 8,722 4,057 75,378 17,887
Executive 1992 213,095 33,395 6,380 4,326 48,722 10,860
Officer, Director 1991 163,805 26,564 - 5,140 30,268 -
ROBERT G. DAWSON(4) 1993 154,668 14,996 4,539 2,390 25,661 15,043
Vice President 1992 147,771 14,002 10,841(5) - 15,685 20,714
1991 - - - - - -
H. E. BLAKESLEE 1993 154,332 15,271 3,528 2,384 32,206 15,650
Vice President 1992 151,176 15,558 507 2,642 23,728 7,756
1991 138,749 12,029 - 3,287 18,091 -
DON E. MASON 1993 148,305 11,016 4,321 - 22,072 15,409
Vice President 1992 146,153 9,951 1,352 - 17,060 7,505
1991 133,567 11,450 - - 14,422 -
THOMAS A. FANNING 1993 122,724 28,244 3,016 - 15,233 14,655
Vice President 1992 89,089 15,574 16,539(5) - 10,085 18,364
1991 - - - - - -
</TABLE>
(1) Tax reimbursement by MISSISSIPPI on certain personal benefits. In
accordance with the transition rules of the SEC, information for 1991 is
omitted.
(2) Payouts made in 1992, 1993 and 1994 for the four-year performance periods
ending December 31, 1991, 1992 and 1993, respectively.
(3) MISSISSIPPI contributions to the ESP, ESOP, non-pension related accruals
under the SBP (ERISA excess plan under which accruals are made to offset
Internal Revenue Code imposed limitations under the Employee Savings and Stock
Ownership Plans) and payments under a VBP for the following:-
Name ESP ESOP SBP VBP
- ---- --- ---- --- ---
David M. Ratcliffe $7,895 $1,709 $2,774 $5,509
R. G. Dawson 6,746 1,252 - 7,045
H. E. Blakeslee 6,843 1,355 - 7,452
D. E. Mason 6,671 1,286 - 7,452
T. A. Fanning 5,520 1,019 - 8,116
In accordance with the transition rules of the SEC, information for 1991 is
omitted.
(4) Effective March 1, 1994, Mr. Dawson resigned to become a vice president of
SEI.
(5) Benefits under MISSISSIPPI's VBP for 1992 in the amounts of $13,169 and
$12,425 to Messrs. Dawson and Fanning, respectively, previously reported in the
Form 10-K for the year ended December 31, 1992, under the "Other Annual
Compensation" column have been moved to the "All Other Compensation" column.
III-17
<PAGE> 306
SAVANNAH
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
NUMBER OF
SECURITIES LONG-
NAME UNDERLYING TERM
AND OTHER ANNUAL STOCK INCENTIVE ALL OTHER
PRINCIPAL COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) (SHARES) ($)(2) ($)(3)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ARTHUR M.
GIGNILLIAT, JR.
President, 1993 202,259 26,470 12,231 3,599 64,932 31,512
Chief Executive 1992 201,338 27,409 - 4,058 50,269 14,466
Officer, Director 1991 184,634 24,232 - 5,051 42,498 -
E. OLIN VEALE(4)
Senior Vice
President, 1993 174,870 12,447 299 - 21,711 14,224
Chief Financial 1992 150,349 12,803 34 - 16,410 12,282
Officer, Director 1991 137,992 10,684 - - 13,558 -
LARRY M. PORTER 1993 126,133 10,070 7,251 - 7,810 21,570
Vice President 1992 122,274 11,621 4,818 - n/e(5) 6,142
1991 105,465 8,993 - - n/e -
W. MILES GREER 1993 117,766 10,337 7,458 - 12,202 21,881
Vice President 1992 115,114 10,776 34 - 9,243 6,599
1991 104,371 7,869 - - 7,571 -
JAMES L. RAYBURN(6) 1993 113,470 - 7,467 - 11,153 20,040
Vice President 1992 109,624 8,934 34 - 7,432 4,281
1991 100,520 7,248 - - 5,278 -
</TABLE>
(1) Tax reimbursement by SAVANNAH on certain personal benefits. In accordance
with the transition rules of the SEC, information for 1991 is omitted.
(2) Payouts made in 1992, 1993 and 1994 for the four-year performance periods
ending December 31, 1991, 1992 and 1993, respectively.
(3) SAVANNAH contributions to the ESP, under Section 401(k) of the Internal
Revenue Code, ESOP, AME and payments under a VBP for the following:-
Name ESP ESOP AME VBP
- ---- --- ---- --- ---
A. M. Gignilliat $6,746 $3,092 $7,479 $14,195
E. O. Veale 6,163 2,359 5,702 -
L. M. Porter 4,943 1,774 658 14,195
W. M. Greer 5,045 1,764 877 14,195
J. L. Rayburn 2,284 1,650 1,911 14,195
In accordance with the transition rules of the SEC, information for 1991 is
omitted.
(4) Retired effective December 31, 1993.
(5) Not eligible for Long-term Incentive Payout until January 1, 1994.
(6) Resigned effective December 31, 1993.
III-18
<PAGE> 307
STOCK OPTION GRANTS IN 1993
(B) STOCK OPTION GRANTS. The following table sets forth all stock
option grants to the named executive officers of each operating subsidiary
during the year ending December 31, 1993. The number of SOUTHERN common shares
shown and the per share exercise price and market price do not reflect the
stock distribution resulting from the two-for-one common stock split approved
by SOUTHERN's board of directors in January, 1994.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
# OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR(2) ($/SH)(1) DATE(1) PRESENT VALUE($)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALABAMA
Elmer B. Harris 13,446 7.5% $42.4375 07/19/2003 54,187
Travis Bow 6,119 3.4% $42.4375 07/19/2003 24,660
Banks H. Farris 3,151 1.8% $42.4375 07/19/2003 12,699
T. H. Jones 3,037 1.7% $42.4375 04/01/1998 12,178
W. B. Hutchins, III 2,948 1.6% $42.4375 07/19/2003 11,880
GEORGIA
A. W. Dahlberg 15,322 8.5% $42.4375 07/19/2003 61,748
Dwight H. Evans 3,749 2.1% $42.4375 07/19/2003 15,108
Warren Y. Jobe 3,740 2.1% $42.4375 07/19/2003 15,072
Gene R. Hodges 3,439 1.9% $42.4375 07/19/2003 13,859
Kerry E. Adams 3,281 1.8% $42.4375 07/19/2003 13,222
GULF
Douglas L. McCrary 7,406 4.1% $42.4375 05/01/1997 26,736
G. E. Holland, Jr. 2,920 1.6% $42.4375 07/19/2003 11,768
Earl B. Parsons, Jr. - - - - -
A. E. Scarbrough - - - - -
John E. Hodges, Jr. 2,289 1.3% $42.4375 07/19/2003 9,225
</TABLE>
See next page for footnotes.
III-19
<PAGE> 308
STOCK OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
# OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR(2) ($/SH)(1) DATE(1) PRESENT VALUE($)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MISSISSIPPI
David M. Ratcliffe 4,057 2.0% $42.4375 07/19/2003 16,350
Robert G. Dawson 2,390 1.3% $42.4375 07/19/2003 9,632
H. E. Blakeslee 2,384 1.2% $42.4375 07/19/2003 9,608
Don E. Mason - - - - -
Thomas A. Fanning - - - - -
SAVANNAH
A. M. Gignilliat, Jr. 3,599 2.0% $42.4375 09/03/2000 15,080
E. Olin Veale - - - - -
Larry M. Porter - - - - -
W. Miles Greer - - - - -
James L. Rayburn - - - - -
- ----------------------------------
</TABLE>
(1) Grants were made on July 19, 1993, and vest 25% per year on the anniversary
date of the grant. Grants fully vest upon termination incident to death,
disability, or retirement. The exercise price is the average of the high and
low fair market value of SOUTHERN's common stock on the date granted. In
accordance with the terms of the Executive Stock Plan, Mr. Jones' unexercised
options expire on April 1, 1998, three years after his normal retirement date;
Mr. McCrary's unexercised options expire on May 1, 1997, three years after his
normal retirement date; and Mr. Gignilliat's unexercised options expire on
September 3, 2000, three years after his normal retirement date.
(2) A total of 179,746 stock options were granted in 1993 to key executives
participating in SOUTHERN's Executive Stock Plan.
(3) Based on the Black-Scholes option valuation model. The actual value, if
any, an executive officer may realize ultimately depends on the market value of
SOUTHERN's common stock at a future date. This valuation is provided pursuant
to SEC disclosure rules and there is no assurance that the value realized will
be at or near the value estimated by the Black-Scholes model. Assumptions used
to calculate this value: price volatility - 12.45%; risk-free rate of return -
5.81%; dividend yield - 5.37%; and time to exercise - ten years.
III-20
<PAGE> 309
AGGREGATED STOCK OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES
(C) AGGREGATED STOCK OPTION EXERCISES. The following table sets forth
information concerning options exercised during the year ending December 31,
1993, by the named executive officers and the value of unexercised options held
by them as of December 31, 1993. The number of SOUTHERN common shares shown
and the per share exercise price and market price do not reflect the stock
distribution resulting from the two-for-one common stock split approved by
SOUTHERN's board of directors in January, 1994.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
YEAR-END (#) YEAR-END($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($)(2) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA
Elmer B. Harris - - 14,215/37,398 211,494/330,107
Travis J. Bowden - - 5,763/15,708 84,560/128,730
Banks H. Farris - - 863/5,741 6,850/22,875
T. H. Jones - - 848/5,581 6,731/25,318
W. B. Hutchins, III - - 706/5,068 5,604/21,802
GEORGIA
A. W. Dahlberg 14,211 252,088 4,278/43,871 33,957/400,435
Dwight H. Evans 3,982 57,454 0/10,380 0/91,239
Warren Y. Jobe 4,741 75,241 0/11,934 0/101,456
Gene R. Hodges 3,449 52,973 0/9,287 0/81,520
Kerry E. Adams 3,257 49,639 0/8,742 0/75,346
GULF
D. L. McCrary - - 9,668/21,814 149,219/203,868
G. E. Holland, Jr. - - 698/5,017 5,540/21,572
Earl B. Parsons, Jr. 700 11,769 - -
A. E. Scarbrough - - - -
John E. Hodges, Jr. - - 5,429/6,008 89,119/50,535
</TABLE>
See next page for footnotes.
III-21
<PAGE> 310
AGGREGATED STOCK OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
YEAR-END (#) YEAR-END($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($)(2) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSISSIPPI
David M. Ratcliffe 2,996 58,422 5,643/10,871 83,817/93,954
Robert G. Dawson - - 0/2,390 0/4,033
H. E. Blakeslee 2,310 36,298 660/6,677 5,239/59,535
Don E. Mason - - - -
Thomas A. Fanning - - - -
SAVANNAH
A. M. Gignilliat, Jr. - - 8,556/10,502 136,063/97,250
E. Olin Veale - - - -
Larry M. Porter - - - -
W. Miles Greer - - - -
James L. Rayburn - - - -
</TABLE>
(1) This represents the excess of the fair market value of SOUTHERN's common
stock of $44.125 per share, as of December 31, 1993, above the exercise price
of the options. One column reports the "value" of options that are vested and
therefore could be exercised; the other "value" of options that are not vested
and therefore could not be exercised as of December 31, 1993.
(2) The "Value Realized" is ordinary income, before taxes, and represents the
amount equal to the excess of the fair market value of the shares at the time
of exercise over the exercise price.
III-22
<PAGE> 311
LONG-TERM INCENTIVE PLANS - AWARDS IN 1993
(D) LONG-TERM INCENTIVE PLANS. The following table sets forth the
long-term incentive plan awards made to the named executive officers for the
performance period January 1, 1993 through December 31, 1996.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
------------------------------
NUMBER PERFORMANCE OR
OF OTHER PERIOD
UNITS UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME (#)(1) OR PAYOUT ($)(2) ($)(2) ($)(2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALABAMA
Elmer B. Harris 234,145 4 years 117,073 234,145 292,681
Travis J. Bowden 78,536 4 years 39,268 78,536 98,170
Banks H. Farris 39,883 4 years 19,942 39,883 49,854
T. Harold Jones 36,401 4 years 18,201 36,401 45,501
W. B. Hutchins, III 36,401 4 years 18,201 36,401 45,501
GEORGIA
A. W. Dahlberg 265,675 4 years 132,838 265,675 332,094
Dwight H. Evans 54,574 4 years 27,287 54,574 68,218
Warren Y. Jobe 54,574 4 years 27,287 54,574 68,218
Gene R. Hodges 39,883 4 years 19,942 39,883 49,854
Kerry E. Adams 39,883 4 years 19,942 39,883 49,854
GULF
D. L. McCrary 118,364 4 years 59,182 118,364 147,955
G. E. Holland, Jr. 36,401 4 years 18,201 36,401 45,501
E. B. Parsons, Jr. 24,947 4 years 12,474 24,947 31,184
A. E. Scarbrough 24,947 4 years 12,474 24,947 31,184
J. E. Hodges, Jr. 36,401 4 years 18,201 36,401 45,501
</TABLE>
See next page for footnotes.
III-23
<PAGE> 312
LONG-TERM INCENTIVE PLANS - AWARDS IN 1993
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
------------------------------
NUMBER PERFORMANCE OR
OF OTHER PERIOD
UNITS UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME (#)(1) OR PAYOUT ($)(2) ($)(2) ($)(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MISSISSIPPI
D. M. Ratcliffe 100,514 4 years 50,257 100,514 125,643
Robert G. Dawson 36,401 4 years 18,201 36,401 45,501
H. E. Blakeslee 36,401 4 years 18,201 36,401 45,501
Don E. Mason 24,947 4 years 12,474 24,947 31,184
Thomas A. Fanning 22,774 4 years 11,387 22,774 28,468
SAVANNAH
A. M. Gignilliat, Jr. 73,509 4 years 36,755 73,509 91,886
E. Olin Veale 24,947 4 years 12,474 24,947 31,184
Larry M. Porter 22,774 4 years 12,387 22,774 28,468
W. Miles Greer 13,999 4 years 7,000 13,999 17,499
James L. Rayburn 12,896 4 years 6,448 12,896 16,120
(1) A performance unit is a method of asigning a dollar value to a performance
award opportunity. The actual number of units granted to a participant will be
based on an award percentage of an individual's base salary range control
mid-point over the performance period. For illustration purposes, the base
salary range mid-points have been projected at a four percent growth rate for
the four-year term.
(2) The threshold, target and maximum value of a unit is $0.50, $1.00, and
$1.25, respectively, and can vary based on SOUTHERN's return on common
equity relative to a selected group of electric and gas utilities in the
Southeastern United States. If certain minimum performance relative to the
selected group is not achieved, there will be no payout; nor is there a payout
if the current earnings of SOUTHERN are not sufficient to fund the dividend rate
paid in the last calendar year. All awards are payable in cash at the end of
the performance period.
</TABLE>
III-24
<PAGE> 313
PENSION PLAN TABLE
(e)(1) The following table sets forth the estimated combined annual pension
benefits under the pension and supplemental defined benefit plans in effect
during 1993 for ALABAMA, GEORGIA, GULF and MISSISSIPPI. Employee compensation
covered by the pension and supplemental benefit plans for pension purposes is
limited to the average of the highest three of the final 10 years' base salary
and wages (reported under column titled "Salary" in the Summary Compensation
Tables on pages III-13 through III-18).
The amounts shown in the table were calculated according to the final
average pay formula and are based on a single life annuity without reduction
for joint and survivor annuities (although married employees are required to
have their pension benefits paid in one of various joint and survivor annuity
forms, unless the employee elects otherwise with the spouse's consent) or
computation of the Social Security offset which would apply in most cases.
This offset amounts to one-half of the estimated Social Security benefit
(primary insurance amount) in excess of $3,000 per year times the number of
years of accredited service, divided by the total possible years of accredited
service to normal retirement age.
<TABLE>
<CAPTION>
YEARS OF ACCREDITED SERVICE
REMUNERATION 15 20 25 30 35 40
- ------------ -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 12,750 $ 17,000 $ 21,250 $ 25,500 $ 29,750 $ 34,000
$100,000 25,500 34,000 42,500 51,000 59,500 68,000
$300,000 76,500 102,000 127,500 153,000 178,500 204,000
$500,000 127,500 170,000 212,500 255,000 297,500 340,000
$700,000 178,500 238,000 297,500 357,000 416,500 476,000
$850,000 216,750 289,000 361,250 433,500 505,750 578,000
</TABLE>
As of December 31, 1993, the applicable compensation levels and years of
accredited service are presented in the following tables:
<TABLE>
<CAPTION>
ALABAMA
COMPENSATION
NAME LEVEL YEARS OF SERVICE
---- ------------ ----------------
<S> <C> <C>
Harris $415,980 29
Bowden 255,180 17
Farris 174,396 34
Jones 169,116 41
Hutchins 163,644 23
</TABLE>
III-25
<PAGE> 314
<TABLE>
<S> <C> <C>
GEORGIA
COMPENSATION
NAME LEVEL YEARS OF SERVICE
---- ------------ ----------------
Dahlberg $474,012 33
Evans 209,076 24
Jobe 208,896 22
Hodges 187,716 29
Adams 182,160 29
GULF
COMPENSATION
NAME LEVEL YEARS OF SERVICE
---- ------------ ----------------
McCrary $302,352 39
Holland 160,404 11(1)
Parsons 156,684 32
Scarbrough 149,208 30
Hodges 140,880 27
MISSISSIPPI
COMPENSATION
NAME LEVEL YEARS OF SERVICE
---- ------------ ----------------
Ratcliffe $209,352 21
Dawson 144,900 25
Blakeslee 147,576 27
Mason 142,200 27
Fanning 113,712 12
</TABLE>
SAVANNAH has in effect a qualified, trusteed, noncontributory, defined
benefit pension plan which provides pension benefits to employees upon
retirement at the normal retirement age after designated periods of accredited
service and at a specified compensation level. The plan provides pension
benefits under a formula which includes each participant's years of service
with the Southern system and average annual earnings of the highest three of
the final ten years of service with the Southern system preceding retirement.
Plan benefits are reduced by a portion of the benefits participants are
entitled to receive under Social Security. The plan provides for reduced early
retirement benefits at age 55 and a pension for the surviving spouse equal to
one-half of the deceased retiree's pension.
The following table sets forth the estimated annual pension benefits
under the pension plan in effect during 1993 which are payable by SAVANNAH to
employees upon retirement at the normal retirement age after designated periods
of accredited service and at a specified compensation level.
(1)The number of accredited years of service includes ten years credited to Mr.
Holland pursuant to a supplemental pension agreement.
III-26
<PAGE> 315
<TABLE>
<CAPTION>
ANNUAL BENEFITS EXCLUSIVE OF SOCIAL SECURITY(1)
AVERAGE ANNUAL SALARY YEARS OF SERVICE
FOR LAST 36 MONTHS OF -----------------------------------------------
EMPLOYMENT 15 25 35
- --------------------- -- -- --
<S> <C> <C> <C>
$ 90,000 $22,505 $37,508 $ 52,511
120,000 30,006 50,010 70,014
150,000 37,508 62,513 87,518
180,000 45,009 75,015 105,021
200,000 50,010 83,350 116,690
230,000 57,512 95,853 134,194
</TABLE>
As of December 31, 1993, the applicable compensation levels and years of
accredited service is presented in the following table:
<TABLE>
<CAPTION>
SAVANNAH
COMPENSATION
NAME LEVEL YEARS OF SERVICE
---- ------------- ----------------
<S> <C> <C>
Gignilliat $180,077 35
Veale 144,404 38
Porter 102,500 16
Greer 107,750 9
Rayburn 97,605 26
</TABLE>
(e)(2) DEFERRED COMPENSATION PLAN; SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN.
SAVANNAH has in effect a voluntary deferred compensation plan for certain
executive employees pursuant to which such employees may defer a portion of
their respective annual salaries. In addition, SAVANNAH has a supplemental
executive retirement plan for certain of its executive employees which became
effective January 1, 1984. The deferred compensation plan is designed to
provide supplemental retirement or survivor benefit payments. The supplemental
executive retirement plan is also designed to provide retiring executives of
SAVANNAH with a supplemental retirement benefit, which, in conjunction with
social security and benefits under SAVANNAH's qualified pension plan, will
equal 70 percent of the highest three of the final ten years average annual
compensation (including deferrals under the deferred compensation plan). Both
of these plans are unfunded and the liability is payable from general funds of
SAVANNAH. The deferred compensation plan became effective December 1, 1983,
and all of SAVANNAH's executive officers are participating in the plan. In
addition, all executives are participating in the supplemental executive
retirement plan.
In order to provide for its liabilities under the deferred compensation
plan and the supplemental executive retirement plan, SAVANNAH has purchased
life insurance on participating executive employees in actuarially determined
amounts which, based upon assumptions as to mortality experience, policy
dividends, tax effects, and other factors which, if realized, along with
compensation deferred by employees and the death benefits payable to
(1) The plan benefits are subject to the maximum benefit limitations set forth
in Section 415 of the Internal Revenue Code.
III-27
<PAGE> 316
SAVANNAH, are expected to cover all such insurance premium payments, and all
benefit payments to participants, plus a factor for the cost of funds of
SAVANNAH.
(f) COMPENSATION OF DIRECTORS.
(1) Standard Arrangements. The following table presents compensation
paid to the directors, during 1993 for service as a member of the board of
directors and any board committee(s), except that employee directors received
no fees or compensation for service as a member of the board of directors or
any board committee. All or a portion of these fees may be deferred until
membership on the board is terminated.
<TABLE>
<CAPTION>
ALABAMA GEORGIA GULF MISSISSIPPI SAVANNAH
<C> <C> <C> <C> <C>
RETAINER FEE $15,000 $18,000 $8,000 $8,000 $8,000
MEETING FEE 800 900 500 500 500
COMMITTEES:
Audit 800 900 500 500 500(1)
Compensation 800 900 500 500 500(1)
Corporate Governance(2) - 900 - - -
Executive 800 900 - - 500(1,3)
Finance - 900 - 500 -
Nominating 800 - - - -
Nuclear Safety 800 - - - -
Nuclear
Operations
Overview - 1,800 - - -
</TABLE>
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH also provide
retirement benefits to non-employee directors who are credited with a minimum
of 60 months of service on the board of directors of one or more system
companies, under the Outside Directors Pension Plan. Eligible directors are
entitled to benefits under the Plan upon retirement from the board on the
retirement date designated in the respective companies by-laws. The annual
benefit payable ranges from 75 to 100 percent of the annual retainer fee in
effect on the date of retirement, based upon length of service. Payments
continue for the greater of the lifetime of the participant or 10 years.
(2) Other Arrangements. No director received other compensation for
services as a director during the year ending December 31, 1993 in addition to
or in lieu of that specified by the standard arrangements specified above.
(1) Committee Chairmen receive an additional $500 per year fee.
(2) Established for period September 15, 1993 through May 31, 1994.
(3) Chairman of Executive Committee receives an additional $3,000 per month fee.
III-28
<PAGE> 317
(g) EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENTS.
None.
(h) REPORT ON REPRICING OF OPTIONS.
None.
(i) ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISION.
ALABAMA
Elmer B. Harris serves on the Compensation Committee of AmSouth
Bancorporation. John W. Woods, a director of ALABAMA is an executive
officer of AmSouth Bancorporation.
GULF
Messrs. Paul J. DeNicola and Douglas L. McCrary are ex officio
members of its Compensation Committee.
III-29
<PAGE> 318
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
SOUTHERN is the beneficial owner of 100% of the outstanding common
stock of registrants ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH.
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of Percent
of Beneficial Beneficial of
Title of Class Owner Ownership Class
- -------------- ---------------- ---------- -------
<S> <C> <C> <C>
Common Stock The Southern Company 100%
64 Perimeter Center East
Atlanta, Georgia 30346
REGISTRANTS:
------------
ALABAMA 5,608,955
GEORGIA 7,761,500
GULF 992,717
MISSISSIPPI 1,121,000
SAVANNAH 10,844,635
</TABLE>
(B) SECURITY OWNERSHIP OF MANAGEMENT. The following table shows
the number of shares of SOUTHERN common stock and operating subsidiary
preferred stock owned by the directors, nominees and executive officers as of
December 31, 1993. It is based on information furnished by the directors,
nominees and executive officers. The shares owned by all directors, nominees
and executive officers as a group constitute less than one percent of the total
number of shares of the respective classes outstanding on December 31, 1993.
The number of SOUTHERN common shares shown do not reflect the stock
distribution resulting from the two-for-one common stock split approved by
SOUTHERN'S board of directors in January, 1994.
<TABLE>
<CAPTION>
NAME OF DIRECTOR, NUMBER OF SHARES
NOMINEES AND BENEFICIALLY
EXECUTIVE OFFICERS TITLE OF CLASS OWNED 1,2
- ------------------ -------------- ---------------------------
<S> <C> <C>
ALABAMA
Edward L. Addison SOUTHERN Common 125,032
Whit Armstrong SOUTHERN Common 7,410
Travis Bowden SOUTHERN Common 16,185
Bill M. Guthrie SOUTHERN Common 23,003
Elmer B. Harris SOUTHERN Common 35,545
</TABLE>
III-30
<PAGE> 319
<TABLE>
<CAPTION>
NAME OF DIRECTOR, NUMBER OF SHARES
NOMINEES AND BENEFICIALLY
EXECUTIVE OFFICERS TITLE OF CLASS OWNED 1,2
- ------------------ -------------- --------------------------
<S> <C> <C>
Crawford T. Johnson, III SOUTHERN Common 286
Carl E. Jones, Jr. SOUTHERN Common 3,945
Gerald H. Powell SOUTHERN Common 2,000
John W. Rouse, Jr. SOUTHERN Common 1,688
William J. Rushton, III SOUTHERN Common 3,000
ALABAMA Preferred 20
John C. Webb, IV SOUTHERN Common 3,660
ALABAMA Preferred 985
Louis J. Willie SOUTHERN Common 1,587
ALABAMA Preferred 391
GEORGIA Preferred 200
GULF Preferred 50
Banks H. Farris SOUTHERN Common 15,693
William B. Hutchins, III SOUTHERN Common 9,458
Thomas H. Jones SOUTHERN Common 21,029
The directors, nominees,
and executive officers
as a group SOUTHERN Common 275,837 shares
ALABAMA Preferred 1,376 shares
GEORGIA Preferred 200 shares
GULF Preferred 50 shares
GEORGIA
Edward L. Addison SOUTHERN Common 125,032
W. P. Copenhaver SOUTHERN Common 1,350
A. W. Dahlberg SOUTHERN Common 29,287
W. A. Fickling, Jr. GEORGIA Preferred 50
L. G. Hardman, III SOUTHERN Common 3,053
</TABLE>
III-31
<PAGE> 320
<TABLE>
<CAPTION>
NAME OF DIRECTOR, NUMBER OF SHARES
NOMINEES AND BENEFICIALLY
EXECUTIVE OFFICERS TITLE OF CLASS OWNED 1,2
- ------------------ -------------- --------------------------
<S> <C> <C>
Warren Y. Jobe SOUTHERN Common 12,824
GEORGIA Preferred 203
James R. Lientz, Jr. SOUTHERN Common 21
W. A. Parker, Jr. SOUTHERN Common 16,822
GEORGIA Preferred 2
Gloria M. Shatto SOUTHERN Common 6,003
W. J. Vereen SOUTHERN Common 2,500
GEORGIA Preferred 1,701
Kerry E. Adams SOUTHERN Common 8,963
GEORGIA Preferred 200
Dwight E. Evans SOUTHERN Common 7,495
GEORGIA Preferred 100
Gene R. Hodges SOUTHERN Common 11,678
GEORGIA Preferred 800
The directors, nominees
and executive officers
as a group SOUTHERN Common 270,626 shares
GEORGIA Preferred 3,256 shares
GULF
Paul J. DeNicola SOUTHERN Common 10,846
W. Deck Hull, Jr. SOUTHERN Common 957
Douglas L. McCrary SOUTHERN Common 31,298
Joseph K. Tannehill SOUTHERN Common 2,000
J. E. Hodges, Jr. SOUTHERN Common 14,242
GULF Preferred 3
G. Edison Holland, Jr. SOUTHERN Common 807
</TABLE>
III-32
<PAGE> 321
<TABLE>
<CAPTION>
NAME OF DIRECTOR, NUMBER OF SHARES
NOMINEES AND BENEFICIALLY
EXECUTIVE OFFICERS TITLE OF CLASS OWNED 1,2
- ------------------ -------------- -------------------------
<S> <C> <C>
Earl B. Parsons, Jr. SOUTHERN Common 7,200
A. E. Scarbrough SOUTHERN Common 9,216
GULF Preferred 100
MISSISSIPPI Preferred 5
The directors, nominees SOUTHERN Common 78,488 shares
and executive officers GULF Preferred 105 shares
as a group MISSISSIPPI Preferred 5 shares
MISSISSIPPI
Paul J. DeNicola SOUTHERN Common 10,846
Edwin E. Downer SOUTHERN Common 322
Robert S. Gaddis SOUTHERN Common 1,547
Walter H. Hurt, III SOUTHERN Common 200
MISSISSIPPI Preferred 33
Aubrey K. Lucas SOUTHERN Common 416
Earl D. McLean, Jr. SOUTHERN Common 7,051
David M. Ratcliffe SOUTHERN Common 11,363
Leo W. Seal, Jr. SOUTHERN Common 1,000
Gerald J. St. Pe SOUTHERN Common 8,000
H. E. Blakeslee SOUTHERN Common 4,102
Robert G. Dawson SOUTHERN Common 7,660
Thomas A. Fanning SOUTHERN Common 1,827
Don E. Mason SOUTHERN Common 8,499
The directors, nominees
and executive officers SOUTHERN Common 62,834 shares
as a group MISSISSIPPI Preferred 33 shares
</TABLE>
III-33
<PAGE> 322
<TABLE>
<CAPTION>
NAME OF DIRECTOR, NUMBER OF SHARES
NOMINEES AND BENEFICIALLY
EXECUTIVE OFFICERS TITLE OF CLASS OWNED 33,34
- ------------------ -------------- ------------------------
<S> <C> <C>
SAVANNAH
Helen Quattlebaum Artley SOUTHERN Common 1,209
Paul J. DeNicola SOUTHERN Common 10,846
A. M. Gignilliat, Jr. SOUTHERN Common 18,134
Walter D. Gnann SOUTHERN Common 735
Robert B. Miller, III SOUTHERN Common 982
John C. Monroe SOUTHERN Common 420
John M. McIntosh SOUTHERN Common 7,016
James M. Piette SOUTHERN Common 563
Arnold M. Tenenbaum SOUTHERN Common 177
E. Olin Veale SOUTHERN Common 5,319
Fred F. Williams SOUTHERN Common 1,079
W. Miles Greer SOUTHERN Common 504
Larry M. Porter SOUTHERN Common 5,244
The directors, nominees
and executive officers
as a group SOUTHERN Common 52,228 shares
</TABLE>
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security and/or investment power
with respect to a security (i.e., the power to dispose of, or to direct the
disposition of, a security).
(2) The shares shown include shares of common stock of which certain
directors and executive officers have the right to acquire beneficial
ownership within 60 days pursuant to the Executive Stock Plan, as follows:
Mr. Addison, 86,357 shares; Mr. Blakeslee, 660 shares; Mr. Bowden, 5,763
shares; Mr. Dahlberg, 4,278 shares; Mr. Farris, 863 shares; Mr. Gignilliat,
8,556 shares; Mr. Guthrie 15,720 shares; Mr. Harris, 14,215 shares; Mr.
Haubein, 835 shares; Mr. Hodges, 5,429 shares; Mr. Holland, 698 shares; Mr.
Hutchins, 706 shares; Mr. Jones, 848 shares; Mr. Klappa, 671 shares, Mr. C. D.
McCrary, 691 shares; Mr. D. L. McCrary, 9,668 shares; and Mr. Ratcliffe,
5,643 shares. Also included are shares of SOUTHERN common stock held by
the spouses of the following directors: Mr. Addison, 670 shares; Mr.
Copenhaver, 350 shares; Mr. Harris, 155 shares; Mr. Parker, 22 shares; and Dr.
Shatto, 5,067 shares.
III-34
<PAGE> 323
(C) CHANGES IN CONTROL. The operating affiliates know of no
arrangements which may at a subsequent date result in any change in control.
GEORGIA'S Mr. Russell failed to file on a timely basis a single report
disclosing one transaction on Form 4 as required by Section 16 of the
Securities Exchange Act of 1934.
MISSISSIPPI'S Messrs. McLean, Jr., Hurt and Seal, Jr. each failed to
file on a timely basis a single report disclosing one transaction on Form 4 as
required by Section 16 of the Securities Exchange Act of 1934.
SAVANNAH'S Mr. Gnann failed to file on a timely basis a single report
disclosing one transaction on Form 4 as required by Section 16 of the
Securities Exchange Act of 1934.
MR. DENICOLA, a director of GULF, MISSISSIPPI and SAVANNAH, failed to
file on a timely basis a single report, disclosing one transaction on Form 4 as
required by Section 16 of the Securities Exchange Act of 1934.
III-35
<PAGE> 324
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ALABAMA
(a) Transactions with management and others.
During 1993, ALABAMA, in the ordinary course of business, paid premiums
amounting to approximately $400,000 for various types of insurance policies
purchased from Protective Life Insurance Company, a subsidiary of Protective
Life Corporation, a company in which Mr. William J. Rushton, III, a director of
ALABAMA, owns an interest and of which he serves as Chairman.
The firm of Inzer, Stivender, Haney & Johnson, P.A., performed certain legal
services for ALABAMA during 1993. Mr. James C. Inzer, Jr., partner in this
firm, is also a director of ALABAMA.
ALABAMA purchased automobiles and parts in the amount of approximately
$200,000 from companies in which Mr. Blount, a director of ALABAMA, owns 85%
interests.
ALABAMA purchased electrical supplies in the amount of approximately
$200,000 from L & K Electric Supply Company, Ltd. during 1993. Mr. Willie,
director of ALABAMA and SOUTHERN, owns an interest in and serves as president
of this firm.
ALABAMA believes that these transactions have been on terms representing
competitive market prices that are no less favorable than those available from
others.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
GEORGIA
(a) Transactions with management and others.
In 1993, GEORGIA was indebted in a maximum amount of $105 million to
Wachovia Bank and its affiliates, of which G. Joseph Prendergast serves as
President and Chief Executive Officer of Wachovia Corporation of Georgia and
Wachovia Bank of Georgia, N.A.
In 1993, GEORGIA was indebted in a maximum amount of $285 million to
NationsBank and its affiliates of which Mr. James R. Lientz, Jr. serves as
President of NationsBank of Georgia.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
GULF
(a) Transactions with management and others.
The firm of Beggs & Lane, P.A. serves as local counsel for GULF and received
from GULF approximately $800,000 for services rendered. Mr. G. Edison Holland,
Jr. is a partner in the firm and also serves as Vice President and Corporate
Counsel of GULF.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
MISSISSIPPI
(a) Certain business relationships.
During 1993, MISSISSIPPI was indebted in a maximum amount of $12.4 million
to Hancock Bank, of which Leo W. Seal, Jr. serves as Chairman of the Board and
Chief Executive Officer.
(b) Certain business relationships.
None.
(c) Indebtedness of management.
None.
III-36
<PAGE> 325
(d) Transactions with promoters.
None.
SAVANNAH
(a) Transactions with management and others.
Mr. Tenenbaum is a Director of First Union national Bank of Georgia, and Mr.
Foster is President of NationsBank of Georgia, N.A., in Savannah. During 1993,
these banks furnished a number of regular banking services in the ordinary
course of business to SAVANNAH. SAVANNAH intends to maintain normal banking
relations with all of the aforesaid banks in the future.
(b) Certain business relationships.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
None.
III-37
<PAGE> 326
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report on this
Form 10-K:
(1) Financial Statements:
Reports of Independent Public Accountants on the financial
statements for SOUTHERN and Subsidiary Companies, ALABAMA,
GEORGIA, GULF, MISSISSIPPI and SAVANNAH are listed under Item
8 herein.
The financial statements filed as a part of this report for
SOUTHERN and Subsidiary Companies, ALABAMA, GEORGIA, GULF,
MISSISSIPPI and SAVANNAH are listed under Item 8 herein.
(2) Financial Statement Schedules:
Reports of Independent Public Accountants as to Schedules for
SOUTHERN and Subsidiary Companies, ALABAMA, GEORGIA, GULF,
MISSISSIPPI and SAVANNAH are included herein on pages IV-12
through IV-17.
Financial Statement Schedules for SOUTHERN and Subsidiary
Companies, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH
are listed in the Index to the Financial Statement Schedules
at page S-1.
(3) Exhibits:
Exhibits for SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and
SAVANNAH are listed in the Exhibit Index at page E-1.
(b) Reports on Form 8-K: During the fourth quarter of 1993 the
registrants filed Current Reports on Form 8-K as follows:
ALABAMA filed Forms 8-K dated October 27, 1993, and November 16,
1993, to facilitate security sales.
GEORGIA filed a Form 8-K dated October 20, 1993, to facilitate a
security sale.
GULF filed a Form 8-K dated November 3, 1993, to facilitate a
security sale.
SAVANNAH filed a Form 8-K dated November 9, 1993, to facilitate a
security sale.
IV-1
<PAGE> 327
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
THE SOUTHERN COMPANY
By Edward L. Addison, Chairman
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. The signature of
each of the undersigned shall be deemed to relate only to matters having
reference to the above-named company and any subsidiaries thereof.
Edward L. Addison
Chairman of the Board
(Principal Executive Officer)
W. L. Westbrook
Financial Vice President
(Principal Financial and Accounting Officer)
Directors:
W. P. Copenhaver John M. McIntosh.
A. W. Dahlberg Earl D. McLean, Jr.
Paul J. DeNicola William A. Parker
Jack Edwards William J. Rushton, III
H. Allen Franklin Gloria M. Shatto
L. G. Hardman, III Herbert Stockham
Elmer B. Harris Louis J. Willie
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
ALABAMA POWER COMPANY
By Elmer B. Harris, President
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. The signature of
each of the undersigned shall be deemed to relate only to matters having
reference to the above-named company and any subsidiaries thereof.
Elmer B. Harris
President, Chief Executive Officer and Director
(Principal Executive Officer)
Charles D. McCrary
Senior Vice President
(Principal Financial Officer)
David L. Whitson
Vice President and Comptroller
(Principal Accounting Officer)
Directors:
Edward L. Addison William V. Muse
Whit Armstrong John T. Porter
Philip E. Austin Gerald H. Powell
Margaret A. Carpenter Robert D. Powers
Peter V. Gregerson, Sr. John W. Rouse
Bill M. Guthrie James H. Sanford
Crawford T. Johnson, III John Cox Webb, IV
Carl E. Jones, Jr. Louis J. Willie
Wallace D. Malone, Jr. John W. Woods
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
IV-2
<PAGE> 328
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
GEORGIA POWER COMPANY
By H. Allen Franklin, President
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. The signature of
each of the undersigned shall be deemed to relate only to matters having
reference to the above-named company and any subsidiaries thereof.
H. Allen Franklin
President, Chief Executive Officer and Director
(Principal Executive Officer)
Warren Y. Jobe
Executive Vice President,
Treasurer, Chief Financial Officer and Director
(Principal Financial Officer)
C. B. Harreld
Vice President and Comptroller
(Principal Accounting Officer)
Directors:
Edward L. Addison G. Joseph Prendergast
Bennett A. Brown Herman J. Russell
William P. Copenhaver Gloria M. Shatto
A. W. Dahlberg Robert Strickland
William A. Fickling, Jr. William Jerry Vereen
L. G. Hardman, III Thomas R. Williams
James R. Lientz, Jr.
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
GULF POWER COMPANY
By D. L. McCrary, Chairman of the Board
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. The signature of
each of the undersigned shall be deemed to relate only to matters having
reference to the above-named company and any subsidiaries thereof.
D. L. McCrary
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
A. E. Scarbrough
Vice President - Finance
(Principal Financial and Accounting Officer)
Directors:
Reed Bell
Travis J. Bowden
Paul J. DeNicola
Fred C. Donovan
W. D. Hull, Jr.
C. W. Ruckel
J. K. Tannehill
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25,1994
IV-3
<PAGE> 329
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
MISSISSIPPI POWER COMPANY
By David M. Ratcliffe, President
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. The signature of
each of the undersigned shall be deemed to relate only to matters having
reference to the above-named company and any subsidiaries thereof.
David M. Ratcliffe
President, Chief Executive Officer and Director
(Principal Executive Officer)
Thomas A. Fanning
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Directors:
Paul J. DeNicola
Edwin E. Downer
Robert S. Gaddis
Walter H. Hurt, III
Aubrey K. Lucas
Earl D. McLean, Jr.
Gerald J. St. Pe'
Leo W. Seal, Jr.
N. Eugene Warr
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
SAVANNAH ELECTRIC AND POWER COMPANY
By Arthur M. Gignilliat, Jr., President
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. The signature of
each of the undersigned shall be deemed to relate only to matters having
reference to the above-named company and any subsidiaries thereof.
Arthur M. Gignilliat, Jr.
President, Chief Executive Officer and Director
(Principal Executive Officer)
Kirby R. Willis
Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Directors:
Helen Q. Artley
Paul J. DeNicola
Brian R. Foster
Walter D. Gnann
John M. McIntosh
Robert B. Miller, III
James M. Piette
Arnold M. Tenenbaum
Frederick F. Williams, Jr.
By Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 25, 1994
IV-4
<PAGE> 330
EXHIBIT 21. SUBSIDIARIES OF THE REGISTRANTS.
<TABLE>
<CAPTION>
Common Stock
Jurisdiction of Owned by
Name of Company Organization Southern
--------------------------------------------------- --------------- ------------
<S> <C> <C>
ALABAMA POWER COMPANY Alabama 100%
Alabama Property Company Alabama (1)
Columbia Fuels, Inc. Alabama (1)
GEORGIA POWER COMPANY Georgia 100
Piedmont-Forrest Corporation Georgia (2)
GULF POWER COMPANY Maine 100
MISSISSIPPI POWER COMPANY Mississippi 100
SAVANNAH ELECTRIC AND POWER COMPANY Georgia 100
SEI HOLDINGS, INC. Delaware 100
Asociados de Electricidad, S. A. Argentina (3)
SEI y Asociados de Argentina, S. A. Argentina (4)
Hidroelectrica Alicura, S. A. Argentina (5)
SEI HOLDINGS III, INC. Delaware 100
SEI Chile, S.A. Chile (6)
Empressa Electricia del Norte Grande, S.A. Chile (7)
SEI HOLDINGS IV, INC. Delaware 100
Inversores de Electricidad, S.A. Argentina (8)
SEI Inversora, S.A. Argentina (9)
SEI Bahamas Argentina I, Inc. Bahamas (8)
SEI Bahamas Argentina II, Inc. Bahamas (8)
Tesro Holding B.V. Netherlands (8)
SOUTHERN COMPANY SERVICES, INC. Alabama 100
SOUTHERN ELECTRIC BAHAMAS HOLDINGS, LTD. Bahamas 100
Southern Electric Bahamas, Ltd. Bahamas (10)
Freeport Power Company Limited Bahamas (11)
SOUTHERN ELECTRIC GENERATING COMPANY Alabama (12)
SOUTHERN ELECTRIC INTERNATIONAL, INC. Delaware 100
SEI Operadora de Argentina, S.A. Argentina (13)
SOUTHERN ELECTRIC RAILROAD COMPANY Delaware 100
SOUTHERN ELECTRIC WHOLESALE GENERATORS, INC. Delaware 100
Birchwood Development Corp. Delaware (14)
Birchwood Power Partners, L.P. Delaware (14)
SEI Birchwood, Inc. Delaware (14)
SEI Hawaiian Cogenerators, Inc. Delaware (14)
SOUTHERN NUCLEAR OPERATING COMPANY, INC. Delaware 100
THE SOUTHERN DEVELOPMENT AND INVESTMENT GROUP, INC. Georgia 100
</TABLE>
(1) Owned by Alabama Power Company.
(2) Owned by Georgia Power Company.
(3) Owned by SEI Holdings, Inc.
(4) 94% owned jointly by Asociados de Electricidad, S. A. (14%) and SEI
Holdings, Inc. (80%)
(5) 59% owned by SEI y Asociados de Argentina, S. A.
(6) Owned by SEI Holdings III, Inc.
(7) 36% owned by SEI Chile, S. A.
(8) Owned by SEI Holdings IV, Inc.
(9) Owned jointly by Inversores de Electricidad, S. A. (15%) and SEI
Bahamas Argentina I, Inc. (85%)
(10) Owned by Southern Electric Bahamas Holdings, Ltd.
(11) 50% owned by Southern Electric Bahamas, Ltd.
(12) Owned equally by Alabama Power Company and Georgia Power Company.
(13) Owned by Southern Electric International, Inc.
(14) Owned by Southern Electric Wholesale Generators, Inc.
IV-5
<PAGE> 331
ARTHUR ANDERSEN & CO.
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 16, 1994 on the financial statements of The
Southern Company and its subsidiaries and the related financial statement
schedules, included in this Form 10-K, into The Southern Company's previously
filed Registration Statement File Nos. 2-78617, 33-3546, 33-23152, 33-30171,
33-23153 and 33-51433.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
March 25, 1994
IV-6
<PAGE> 332
ARTHUR ANDERSEN & CO.
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 16, 1994 on the financial statements of Alabama
Power Company and the related financial statement schedules, included in this
Form 10-K, into Alabama Power Company's previously filed Registration Statement
File No. 33-49653.
/s/ Arthur Andersen & Co.
Birmingham, Alabama
March 25, 1994
IV-7
<PAGE> 333
ARTHUR ANDERSEN & CO.
Exhibit 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 16, 1994 on the financial statements of Georgia
Power Company and the related financial statement schedules, included in this
Form 10-K, into Georgia Power Company's previously filed Registration Statement
File No. 33-49661.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
March 25, 1994
IV-8
<PAGE> 334
ARTHUR ANDERSEN & CO.
Exhibit 23(d)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 16, 1994 on the financial statements of Gulf
Power Company and the related financial statement schedules, included in this
Form 10-K, into Gulf Power Company's previously filed Registration Statement
File No. 33-50165.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
March 25, 1994
IV-9
<PAGE> 335
ARTHUR ANDERSEN & CO.
Exhibit 23(e)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 16, 1994 on the financial statements of
Mississippi Power Company and the related financial statement schedules,
included in this Form 10-K, into Mississippi Power Company's previously filed
Registration Statement File Nos. 33-49320 and 33-49649.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
March 25, 1994
IV-10
<PAGE> 336
ARTHUR ANDERSEN & CO.
Exhibit 23(f)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated February 16, 1994 on the financial statements of Savannah
Electric and Power Company and the related financial statement schedules,
included in this Form 10-K, into Savannah Electric and Power Company's
previously filed Registration Statement File Nos. 33-45757 and 33-52509.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
March 25, 1994
IV-11
<PAGE> 337
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To The Southern Company:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of The Southern Company and its
subsidiaries included in this Form 10-K, and have issued our report thereon
dated February 16, 1994. Our report on the consolidated financial statements
includes an explanatory paragraph which states that an uncertainty exists with
respect to the actions of the regulators regarding recoverability of the
investment in the Rocky Mountain pumped storage hydroelectric project, as
discussed in Note 4 to The Southern Company's consolidated financial
statements. Our audits were made for the purpose of forming an opinion on
those statements taken as a whole. The schedules listed under Item 14(a)(2)
herein as it relates to The Southern Company and its subsidiaries (pages S-2
and S-3, S-11 through S-14, S-35 through S-37, S-53, and S-59) are the
responsibility of The Southern Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic consolidated financial statements. These schedules
have been subjected to the auditing procedures applied in the audits of the
basic consolidated financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16, 1994
IV-12
<PAGE> 338
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Alabama Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Alabama Power Company included in this Form 10-K,
and have issued our report thereon dated February 16, 1994. Our audits were
made for the purpose of forming an opinion on those statements taken as a
whole. The schedules listed under Item 14(a)(2) herein as it relates to
Alabama Power Company (pages S-4, S-15 through S-18, S-38 through S-40, S-54,
and S-60) are the responsibility of Alabama Power Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen & Co.
Birmingham, Alabama
February 16, 1994
IV-13
<PAGE> 339
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Georgia Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Georgia Power Company included in this Form 10-K,
and have issued our report thereon dated February 16, 1994. Our report on the
financial statements includes an explanatory paragraph which states that an
uncertainty exists with respect to the actions of the regulators regarding the
recoverability of Georgia Power Company's investment in the Rocky Mountain
pumped storage hydroelectric project, as discussed in Note 4 to Georgia Power
Company's financial statements. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The schedules listed
under Item 14(a)(2) herein as it relates to Georgia Power Company (pages S-5,
S-19 through S-22, S-41 through S-43, S-55, and S-61) are the responsibility
of Georgia Power Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16, 1994
IV-14
<PAGE> 340
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Gulf Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Gulf Power Company included in this Form 10-K, and
have issued our report thereon dated February 16, 1994. Our audits were made
for the purpose of forming an opinion on those statements taken as a whole.
The schedules listed under Item 14(a)(2) herein as it relates to Gulf Power
Company (pages S-6, S-23 through S-26, S-44 through S-46, S-56, and S-62) are
the responsibility of Gulf Power Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16, 1994
IV-15
<PAGE> 341
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Mississippi Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Mississippi Power Company included in this Form
10-K, and have issued our report thereon dated February 16, 1994. Our audits
were made for the purpose of forming an opinion on those statements taken as a
whole. The schedules listed under Item 14(a)(2) herein as it relates to
Mississippi Power Company (pages S-7 and S-8, S-27 through S-30, S-47 through
S-49, S-57, and S-63) are the responsibility of Mississippi Power Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16, 1994
IV-16
<PAGE> 342
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Savannah Electric and Power Company:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Savannah Electric and Power Company included in
this Form 10-K, and have issued our report thereon dated February 16, 1994.
Our audits were made for the purpose of forming an opinion on those statements
taken as a whole. The schedules listed under Item 14(a)(2) herein as it
relates to Savannah Electric and Power Company (pages S-9 and S-10, S-31
through S-34, S-50 through S-52, S-58, and S-64) are the responsibility of
Savannah Electric and Power Company's management and are presented for purposes
of complying with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules have been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
February 16, 1994
IV-17
<PAGE> 343
INDEX TO FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Schedule Page
- -------- ----
<S> <C>
V Utility Plant, Including Intangibles
1993, 1992 and 1991
The Southern Company and Subsidiary Companies . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Alabama Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Georgia Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Gulf Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Mississippi Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Savannah Electric and Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
VI Accumulated Provision for Depreciation of Utility Plant
1993, 1992 and 1991
The Southern Company and Subsidiary Companies . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Alabama Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Georgia Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
Gulf Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Mississippi Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27
Savannah Electric and Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
VIII Valuation and Qualifying Accounts and Reserves
1993, 1992 and 1991
The Southern Company and Subsidiary Companies . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Alabama Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-38
Georgia Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Gulf Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Mississippi Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-47
Savannah Electric and Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
IX Short-Term Borrowings
1993, 1992 and 1991
The Southern Company and Subsidiary Companies . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Alabama Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-54
Georgia Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-55
Gulf Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-56
Mississippi Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-57
Savannah Electric and Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-58
X Supplementary Income Statement Information
1993, 1992 and 1991
The Southern Company and Subsidiary Companies . . . . . . . . . . . . . . . . . . . . . . . . . S-59
Alabama Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-60
Georgia Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
Gulf Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-62
Mississippi Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-63
Savannah Electric and Power Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-64
</TABLE>
Schedules I through XIV not listed above are omitted as not applicable or
not required. Columns omitted from schedules filed have been omitted because
the information is not applicable or not required.
S-1
<PAGE> 344
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE V - UTILITY PLANT, INCLUDING INTANGIBLES
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Column F Column F Column F Column F
- -----------------------------------------------------------------------------------------------------
Balance at Balance at Balance at Balance at
End of End of End of End of
Classification 1990 1991 1992 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTRIC PLANT-IN-SERVICE
Intangibles:
Organization $ 2,334 $ 2,101 $ 2,889 $ 4,665
Franchises & Consents 71 71 71 71
Miscellaneous 25,689 27,142 30,422 30,746
Production Plant:
Steam 7,511,289 7,848,674 7,882,552 7,854,330
Nuclear 5,820,402 5,902,360 5,911,852 5,930,141
Hydraulic 1,221,735 1,246,975 1,252,704 1,262,736
Other 149,372 148,151 150,490 151,378
Transmission Plant 2,824,596 2,954,395 3,092,940 3,224,009
Distribution Plant 5,737,724 6,091,816 6,430,557 6,847,653
General Plant:
Coal Mine Plant 5,866 5,865 5,865 5,865
Other 1,848,629 1,974,669 2,064,594 2,165,114
Nuclear Fuel, at Unamortized Cost:
Assemblies in Reactor 564,356 534,545 502,997 473,830
In-Process 93,559 54,838 34,226 24,171
Materials & Assemblies 9,611 23,154 17,557 2,663
Spent Nuclear Fuel 645,857 731,245 749,908 786,314
Construction Work in Progress 1,091,712 603,508 665,203 1,031,197
Plant Leased to Others 56,962 56,975 56,975 56,975
Plant Held for Future Use 41,977 38,419 40,136 40,152
Electric Plant Acquisition 59,289 52,835 52,612 44,391
Other Miscellaneous Plant 37,619 37,557 37,754 47,387
- -----------------------------------------------------------------------------------------------------
Total Electric Plant 27,748,649 28,335,295 28,982,304 29,983,788
STEAM HEAT PLANT:
Plant-in-Service 20,091 20,214 20,924 20,926
Work-in-Progress 74 181 33 43
- -----------------------------------------------------------------------------------------------------
TOTAL UTILITY PLANT $ 27,768,814 $28,355,690 $29,003,261 $30,004,757
=====================================================================================================
</TABLE>
See Summary of Transactions and Notes on Page S-3
S-2
<PAGE> 345
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE V - UTILITY PLANT, INCLUDING INTANGIBLES
(STATED IN THOUSANDS OF DOLLARS)
Total additions and total retirements for 1991, 1992 and 1993, as summarized
below, were each less than 10% of the total balances as of the respective
year-ends. Retirements include non-depreciable plant retirements and
unamortized portions of retirements to acquisition adjustments. There were no
additions to individual accounts in excess of two percent of total assets
other than transfers from Construction Work in Progress.
<TABLE>
<CAPTION>
1991 1992 1993
------------------------------------------------
<S> <C> <C> <C>
Gross Property Additions $ 1,123,021 $ 1,104,840 $ 1,440,603
Retirements 532,461 382,885 596,259
Other Changes (Note 1) (3,684) (74,384) 157,152
</TABLE>
(NOTE 1) OTHER CHANGES INCLUDE THE FOLLOWING (STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<S> <C>
1993
Acquisition of Freeport Power Company $ 112,793
GEORGIA adjustment to plant for taxes applicable to capitalized AFUDC debt 46,473
Miscellaneous amortizations, property reclassifications and adjustments (2,114)
------------
157,152
============
1992
Partial Sale of ALABAMA's Miller Steam Plant $ (61,960)
Miscellaneous amortizations, property reclassifications and adjustments (12,424)
------------
(74,384)
============
1991
Miscellaneous amortizations, property reclassifications and adjustments (3,684)
============
</TABLE>
S-3
<PAGE> 346
ALABAMA POWER COMPANY
SCHEDULE V -- UTILITY PLANT, INCLUDING INTANGIBLES
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Column F Column F Column F Column F
- ---------------------------------------------------------------------------------------------------
Balance at Balance at Balance at Balance at
End of End of End of End of
Classification 1990 1991 1992 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTRIC PLANT-IN-SERVICE:
Intangibles:
Organization $ 342 $ 342 $ 1,213 $ 3,339
Production Plant:
Steam 2,462,098 2,991,874 2,953,681 2,987,008
Nuclear 1,794,540 1,851,317 1,860,832 1,860,842
Hydraulic 809,578 814,301 818,363 819,848
Other 2 2 2 2
Transmission Plant 925,368 977,239 1,013,464 1,051,130
Distribution Plant 1,815,265 1,947,972 2,072,165 2,206,834
General Plant:
Coal Mine Plant 3,636 3,635 3,635 3,635
Transportation Equipment 114,117 120,915 124,953 127,057
Other 526,170 572,832 601,445 647,876
Nuclear Fuel, at Unamortized Cost:
Assemblies in Reactor 225,067 220,083 198,486 192,392
In-Process 45,959 27,879 11,221 14,918
Spent Nuclear Fuel 591,866 638,114 716,722 758,110
Construction Work in Progress 654,055 148,564 164,555 225,743
Plant Held for Future Use 11,095 11,793 16,378 25,019
Electric Plant Acquisition Adjustment 4,857 4,431 4,028 3,625
- ---------------------------------------------------------------------------------------------------
Total Electric Plant 9,984,015 10,331,293 10,561,143 10,927,378
STEAM HEAT PLANT:
Plant-in-Service 20,091 20,214 20,924 20,926
Work-in-Progress 74 181 33 43
- ---------------------------------------------------------------------------------------------------
TOTAL UTILITY PLANT $ 10,004,180 $10,351,688 $10,582,100 $10,948,347
===================================================================================================
</TABLE>
Total additions and total retirements for 1991, 1992 and 1993, as summarized
below, were each less than 10% of the total balances as of the respective
year-ends. Retirements below include non-depreciable plant retirements. There
were no additions to individual accounts in excess of two percent of total
assets other than transfers from Construction Work in Progress. Other changes
include a reduction to utility plant of $61,960,000 for the partial sale of
Miller Steam Plant in 1992.
<TABLE>
<CAPTION>
1991 1992 1993
-----------------------------------------
<S> <C> <C> <C>
Gross Property Additions $ 397,011 $ 367,463 $ 435,843
Retirements 53,739 66,477 65,353
Other Changes 4,236 (70,574) (4,243)
</TABLE>
S-4
<PAGE> 347
GEORGIA POWER COMPANY
SCHEDULE V - UTILITY PLANT, INCLUDING INTANGIBLES
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Column F Column F Column F Column F
- -----------------------------------------------------------------------------------------------
Balance at Balance at Balance at Balance at
End of End of End of End of
Classification 1990 1991 1992 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTRIC PLANT-IN-SERVICE:
Intangibles:
Organization $ 214 $ 214 $ 364 $ 214
Franchises & Consents 70 70 70 70
Miscellaneous 22,989 24,049 27,018 27,232
Production Plant:
Steam 3,235,069 3,013,435 3,028,094 2,860,896
Nuclear 4,025,862 4,051,043 4,051,020 4,069,299
Hydraulic 412,157 432,674 434,341 442,888
Other 114,949 115,159 116,311 115,910
Transmission Plant 1,522,157 1,566,173 1,646,904 1,713,122
Distribution Plant 3,056,825 3,252,111 3,413,681 3,600,115
General Plant 744,488 772,839 798,784 823,534
Nuclear Fuel, at Unamortized Cost:
Assemblies in Reactor 339,289 314,462 304,511 281,438
In-Process 47,600 26,959 23,005 9,253
Materials & Assemblies 9,611 23,154 17,557 2,663
Spent Nuclear Fuel 53,991 93,131 33,186 28,204
Construction Work in Progress 370,243 390,732 405,606 584,013
Plant Held for Future Use 25,080 20,697 17,829 9,225
Electric Plant Acquisition 46,529 40,756 41,191 33,629
Other Miscellaneous Plant 37,619 37,557 37,754 47,387
- -----------------------------------------------------------------------------------------------
TOTAL UTILITY PLANT $ 14,064,742 $14,175,215 $14,397,226 $14,649,092
===============================================================================================
</TABLE>
Total additions and total retirements for 1991, 1992 and 1993, as summarized
below, were each less than 10% of the total balances as of the respective
year-ends. Retirements include non-depreciable plant retirements and
unamortized portions of Plant Scherer acquisition adjustment retired for sales
in 1991 and 1993. There were no additions to individual accounts in excess
of two percent of total assets other than transfers from Construction Work in
Progress. Other changes for 1993, include an increase to plant of $46,473,000
for the taxes applicable to capitalized AFUDC debt.
<TABLE>
<CAPTION>
1991 1992 1993
------------------------------------------
<S> <C> <C> <C>
Gross Property Additions $ 548,051 $ 508,444 $ 674,432
Retirements 432,828 284,948 468,926
Other Changes (4,750) (1,485) 46,360
</TABLE>
S-5
<PAGE> 348
GULF POWER COMPANY
SCHEDULE V - UTILITY PLANT, INCLUDING INTANGIBLES
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Column F Column F Column F Column F
- ----------------------------------------------------------------------------------------------
Balance at Balance at Balance at Balance at
End of End of End of End of
Classification 1990 1991 1992 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTRIC PLANT-IN-SERVICE:
Intangibles:
Organization $ 7 $ 7 $ 7 $ 7
Franchises & Consents 1 1 1 1
Production Plant:
Steam 813,266 833,496 837,280 858,972
Other 4,224 4,216 4,209 4,251
Transmission Plant 136,813 143,275 148,822 154,304
Distribution Plant 400,016 419,228 443,352 464,182
General Plant:
Transportation 16,216 16,530 17,865 20,474
Other 94,429 96,455 97,873 97,687
Construction Work in Progress 16,868 13,684 29,564 34,591
Plant Held for Future Use 4,503 4,689 4,689 4,689
Electric Plant Acquisition Adjustment 7,903 7,648 7,393 7,137
- ----------------------------------------------------------------------------------------------
TOTAL UTILITY PLANT $ 1,494,246 $1,539,229 $1,591,055 $ 1,646,295
==============================================================================================
</TABLE>
Total additions and total retirements for 1991, 1992 and 1993, as summarized
below, were each less than 10% of the total balances as of the respective
year-ends. There were no additions to individual accounts in excess of two
percent of total assets other than transfers from Construction Work in
Progress.
<TABLE>
<CAPTION>
1991 1992 1993
----------------------------------------
<S> <C> <C> <C>
Gross Property Additions $ 64,323 $ 64,671 $ 78,562
Retirements 19,174 12,159 23,114
Other Changes (166) (686) (208)
</TABLE>
S-6
<PAGE> 349
MISSISSIPPI POWER COMPANY
SCHEDULE V - UTILITY PLANT, INCLUDING INTANGIBLES
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Column F Column F Column F Column F
- ---------------------------------------------------------------------------------------
Balance at Balance at Balance at Balance at
End of End of End of End of
Classification 1990 1991 1992 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTRIC PLANT-IN-SERVICE:
Production Plant:
Steam $ 536,901 $ 545,058 $ 552,775 $ 571,722
Other 23,636 22,530 24,073 25,703
Transmission Plant 151,949 162,379 173,278 188,375
Distribution Plant 247,705 259,929 279,335 295,799
General Plant:
Transportation 13,970 14,144 14,056 13,566
Other 65,249 69,870 79,438 86,153
Construction Work in Progress 26,816 33,078 41,692 108,063
Plant Leased to Others 56,962 56,975 56,975 56,975
Plant Held for Future Use 634 575 575 554
- ---------------------------------------------------------------------------------------
TOTAL UTILITY PLANT $ 1,123,822 $1,164,538 $1,222,197 $1,346,910
=======================================================================================
</TABLE>
Total additions and total retirements for 1991 and 1992, as summarized below,
were each less than 10% of the total balances as of the respective year-ends.
Additions for 1993 were greater than 10% of the year-end balance and,
consequently, 1993 is reported in full detail on page S-8. There were no
additions to individual accounts in excess of two percent of total assets
other than transfers from Construction Work in Progress.
<TABLE>
<CAPTION>
1991 1992 1993
---------------------------------------
<S> <C> <C> <C>
Gross Property Additions $ 53,675 $ 68,189 $ 139,976
Retirements 12,918 10,530 15,386
Other Changes (41) - 123
</TABLE>
S-7
<PAGE> 350
MISSISSIPPI POWER COMPANY
SCHEDULE V - UTILITY PLANT, INCLUDING INTANGIBLES
FOR THE YEAR ENDED DECEMBER 31,1993
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Balance at Balance at
Beginning Additions Other End of
Classification of Period at Cost Retirements Changes Period
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ELECTRIC PLANT-IN-SERVICE:
Production Plant:
Steam $ 552,775 $ 24,746 $ 5,980 $ 181 $ 571,722
Other 24,073 1,820 194 4 25,703
Transmission Plant 173,278 15,861 821 57 188,375
Distribution Plant 279,335 22,306 5,783 (59) 295,799
General Plant:
Transportation 14,056 903 1,463 70 13,566
Other 79,438 7,968 1,145 (108) 86,153
Construction Work in Progress 41,692 66,372 - (1) 108,063
Plant Leased to Others 56,975 - - - 56,975
Plant Held for Future Use 575 - - (21) 554
- ---------------------------------------------------------------------------------------------------
TOTAL UTILITY PLANT $ 1,222,197 $ 139,976 $ 15,386 $ 123 $1,346,910
===================================================================================================
</TABLE>
S-8
<PAGE> 351
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE V - UTILITY PLANT, INCLUDING INTANGIBLES
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Column F Column F Column F Column F
- -----------------------------------------------------------------------------------
Balance at Balance at Balance at Balance at
End of End of End of End of
Classification 1990 1991 1992 1993
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTRIC PLANT-IN-SERVICE:
Intangibles:
Organization $ 1,755 $ 1,522 $ 1,289 $ 1,055
Miscellaneous 2,700 3,093 3,404 3,514
Production Plant:
Steam 241,391 242,447 254,318 253,870
Other 4,887 4,570 4,221 3,838
Transmission Plant 73,358 90,198 93,182 99,791
Distribution Plant 217,913 212,576 222,024 237,012
General Plant 17,870 19,003 20,493 22,776
Construction Work in Progress 1,354 4,211 5,966 49,797
Plant Held for Future Use 665 665 665 665
- -----------------------------------------------------------------------------------
TOTAL UTILITY PLANT $ 561,893 $ 578,285 $ 605,562 $ 672,318
===================================================================================
</TABLE>
Total additions and total retirements for 1991 and 1992, as summarized below,
were each less than 10% of the total balances as of the respective year-ends.
Additions for 1993 were greater than 10% of the year-end balance and,
consequently, 1993 is reported in full detail on page S-10. There were no
additions to individual accounts in excess of two percent of total assets
other than transfers from Construction Work in Progress.
<TABLE>
<CAPTION>
1991 1992 1993
-----------------------------------
<S> <C> <C> <C>
Gross Property Additions $ 19,478 $ 30,132 $ 72,858
Retirements 2,435 2,404 5,513
Other Changes (651) (451) (589)
</TABLE>
S-9
<PAGE> 352
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE V - UTILITY PLANT, INCLUDING INTANGIBLES
FOR THE YEAR ENDED DECEMBER 31, 1993
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Balance at Balance at
Beginning Additions Other End of
Classification of Period at Cost Retirements Changes Period
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ELECTRIC PLANT-IN-SERVICE:
Intangibles:
Organization $ 1,289 $ - $ - $ (234) $ 1,055
Miscellaneous 3,404 110 - - 3,514
Production Plant:
Steam 254,318 2,058 2,506 - 253,870
Other 4,221 - - (383) 3,838
Transmission Plant 93,182 6,771 162 - 99,791
Distribution Plant 222,024 17,266 2,278 - 237,012
General Plant 20,493 2,822 567 28 22,776
Construction Work in Progress 5,966 43,831 - - 49,797
Plant Held for Future Use 665 - - - 665
- ---------------------------------------------------------------------------------------------
TOTAL UTILITY PLANT $ 605,562 $ 72,858 $ 5,513 $ (589) $ 672,318
=============================================================================================
</TABLE>
S-10
<PAGE> 353
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1993
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Additions Deductions
-------------------------------- ---------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- ----------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam (Note 6) $ 2,884,892 $ 226,064 $ 224 $199,231 $262,552 $13,013 $(27,495) $3,062,341
Nuclear 1,622,060 191,278 - 11,545 17,496 4,141 499 1,802,747
Hydraulic 269,821 15,216 - 7 284 137 (5) 284,628
Other 118,812 2,007 - 1,378 2,194 105 1,023 118,875
Transmission Plant 889,731 85,834 - 8,752 26,397 7,560 (4,987) 955,347
Distribution Plant 1,768,771 242,520 - 22,216 89,464 31,737 (25,518) 1,937,824
General Plant 701,236 60,216 50,374 10,199 82,178 2,086 (6,992) 744,753
Plant Acquisition
Adjustment 3,774 910 133 - 739 - - 4,078
Nuclear Fuel (Note 5) 1,048,366 - 111,384 - 102,065 - - 1,057,685
Plant Leased to Others 11,874 - 1,404 - - - - 13,278
- ----------------------------------------------------------------------------------------------------------------------
Total Electric Plant 9,319,337 824,045 163,519 253,328 583,369 58,779 (63,475) 9,981,556
STEAM HEAT PLANT 9,211 - 736 - 93 8 - 9,846
- ----------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 9,328,548 $ 824,045 $164,255 $253,328 $583,462 $58,787 $(63,475) $9,991,402
======================================================================================================================
</TABLE>
See Notes on Page S-14
S-11
<PAGE> 354
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1992
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Additions Deductions
----------------------------------- --------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- ------------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 7) (Note 7) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $2,708,765 $227,091 $ 528 $ 43,799 $ 56,259 $13,502 $25,530 $2,884,892
Nuclear 1,447,771 190,589 - 19,380 29,928 2,002 3,750 1,622,060
Hydraulic 256,126 15,126 - 40 1,245 226 - 269,821
Other 117,194 1,919 - - 249 60 (8) 118,812
Transmission Plant 828,289 83,143 - 2,685 20,786 8,773 (5,173) 889,731
Distribution Plant 1,657,122 228,465 - 12,657 94,858 29,702 4,913 1,768,771
General Plant 646,976 55,211 50,011 8,346 58,173 990 145 701,236
Plant Acquisition
Adjustment 2,651 1,003 120 - - - - 3,774
Nuclear Fuel (Note 5) 1,042,797 - 124,198 - 118,671 - (42) 1,048,366
Plant Leased to Others 10,470 - 1,404 - - - - 11,874
- ------------------------------------------------------------------------------------------------------------------------
Total Electric Plant 8,718,161 802,547 176,261 86,907 380,169 55,255 29,115 9,319,337
STEAM HEAT PLANT 8,492 - 719 - - - - 9,211
========================================================================================================================
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $8,726,653 $802,547 $176,980 $ 86,907 $380,169 $55,255 $29,115 $9,328,548
========================================================================================================================
</TABLE>
See Notes on Page S-14
S-12
<PAGE> 355
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Additions Deductions
----------------------------- -------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- ------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam (Note 6) $ 2,533,546 $ 229,553 $ 966 $219,727 $266,722 $15,220 $ (6,915) $2,708,765
Nuclear 1,266,341 194,459 - 497 10,900 3,431 (805) 1,447,771
Hydraulic 239,072 17,016 - (22) 473 148 (681) 256,126
Other 116,713 1,886 - 142 1,454 93 - 117,194
Transmission Plant 765,117 79,979 - 16,922 35,154 6,931 (8,356) 828,289
Distribution Plant 1,562,262 219,116 - 11,245 104,167 28,410 2,924 1,657,122
General Plant 585,525 58,641 49,272 3,936 47,341 576 2,481 646,976
Plant Acquisition
Adjustment 1,863 1,089 85 - 386 - - 2,651
Nuclear Fuel (Note 5) 959,352 - 136,891 - 53,991 - (545) 1,042,797
Plant Leased to Others 9,079 - 1,391 - - - - 10,470
- ------------------------------------------------------------------------------------------------------------------
Total Electric Plant 8,038,870 801,739 188,605 252,447 520,588 54,809 (11,897) 8,718,161
STEAM HEAT PLANT 7,861 - 716 (68) 17 - - 8,492
- ------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 8,046,731 $ 801,739 $189,321 $252,379 $520,605 $54,809 $(11,897) $8,726,653
==================================================================================================================
</TABLE>
See Notes on Page S-14
S-13
<PAGE> 356
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
NOTES TO SCHEDULE VI -ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992 AND 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Explanation 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. See Note 1 to SOUTHERN's financial statements in Item 8 herein for the policy of SOUTHERN with respect to depreciation.
2. Amounts charged to electric operations as "Depreciation and Amortization" on the statements of income are as follows:
Depreciation (Schedule VI) $ 824,045 $ 802,547 $801,739
Investment Tax Credits (24,611) (35,092) (39,355)
Regulatory Assets and Liabilities (13,482) (347) -
Alicura Investment Amortization 7,186 - -
Other 344 1,418 753
------------------------------------
$ 793,482 $ 768,526 $763,137
====================================
3. Depreciation and Amortization charged to Other Accounts are as follows:
Nuclear Fuel $ 111,384 $ 124,198 $136,891
Transportation Expense 25,141 25,353 25,591
SCS - Depreciation 19,571 19,151 18,377
Fuel Stock 2,213 2,316 2,788
SNC - Depreciation 1,577 1,685 1,620
Leasehold Improvements 1,836 1,773 1,598
Plant Leased to Others 1,469 1,463 1,453
Steam Heat 736 719 716
Other 328 322 287
------------------------------------
$ 164,255 $ 176,980 $189,321
====================================
4. Other Changes include the following:
Freeport Power Company Acquisition $ (61,295) $ - $ -
Retirement Adjustments - - (8,263)
Santee-Cooper Refund (2,002) - -
Partial Sale of Miller Steam Plant - 19,187 -
Reclassification of Spare Parts Inventory - 12,506 -
Property received from the City of Dalton - - (4,606)
Likekind Exchange - - 2,400
Nuclear Decommissioning Trust Fund Earnings (3,303) (1,875) (688)
Retirement Unit Conversion 8,931 - -
Functional Gross-up of AFUDC Debt (6,656) - -
Miscellaneous Adjustments 850 (703) (740)
------------------------------------
$ (63,475) $ 29,115 $(11,897)
====================================
5. The accumulated amortization of nuclear fuel is netted against original cost of such fuel on the balance sheet.
6. Retirements and Salvage in 1991 and 1993 include the sale of a portion of Plant Scherer Unit 4. See Note 7 to SOUTHERN's
financial statements in Item 8 herein for a discussion of this transaction.
7. Retirements and Salvage in 1992 include GEORGIA'S reclassification of capitalized spare parts to inventory. See Note 1 to
GEORGIA's financial statements in Item 8 herein for a discussion of this transaction.
</TABLE>
S-14
<PAGE> 357
ALABAMA POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1993
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Additions Deductions
------------------------------ -----------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacement Cost Changes Period
- ------------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 882,321 $ 87,163 $ - $ 64 $ 12,422 $ 3,974 $ - $ 953,152
Nuclear 878,472 71,230 - 3,164 4,707 215 (606) 948,550
Hydraulic 169,144 11,038 - - 233 48 - 179,901
Other - - - - - - - -
Transmission Plant 325,425 32,227 - 4,327 4,862 2,868 (74) 354,323
Distribution Plant 662,444 80,143 - 14,240 23,217 12,808 - 720,802
General Plant
Coal Mine Plant 1,981 - 60 - - - - 2,041
Transportation 45,634 - 9,393 2,075 13,593 - - 43,509
Other 156,911 20,120 1,115 336 6,216 452 (218) 172,032
- ------------------------------------------------------------------------------------------------------------------------
Total Electric Plant 3,122,332 301,921 10,568 24,206 65,250 20,365 (898) 3,374,310
STEAM HEAT PLANT 9,211 - 736 - 93 8 - 9,846
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 3,131,543 $ 301,921 $ 11,304 $ 24,206 $ 65,343 $ 20,373 $ (898) $3,384,156
========================================================================================================================
ACCUMULATED
PROVISION FOR
AMORTIZATION OF
NUCLEAR FUEL (NOTE 5) $ 825,301 $ - $ 46,568 $ - $ - $ - $ - $ 871,869
========================================================================================================================
</TABLE>
See Notes on Page S-18
S-15
<PAGE> 358
ALABAMA POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1992
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Additions Deductions
------------------------------- ------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacement Cost Changes Period
- ------------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 830,914 $ 86,773 $ - $ 706 $ 11,058 $ 6,182 $18,832 $ 882,321
Nuclear 815,216 70,492 - 234 8,096 225 (851) 878,472
Hydraulic 159,389 11,015 - 17 1,121 156 - 169,144
Other - - - - - - - -
Transmission Plant 300,904 32,310 - 601 5,806 2,584 - 325,425
Distribution Plant 616,777 76,473 - 3,911 23,856 10,861 - 662,444
General Plant
Coal Mine Plant 1,886 - 95 - - - - 1,981
Transportation 44,862 - 9,012 1,933 10,173 - - 45,634
Other 143,437 17,248 888 2,026 6,349 339 - 156,911
- ------------------------------------------------------------------------------------------------------------------------
Total Electric Plant 2,913,385 294,311 9,995 9,428 66,459 20,347 17,981 3,122,332
STEAM HEAT PLANT 8,492 - 719 - - - - 9,211
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 2,921,877 $ 294,311 $ 10,714 $ 9,428 $ 66,459 $20,347 $17,981 $3,131,543
========================================================================================================================
ACCUMULATED
PROVISION FOR
AMORTIZATION OF
NUCLEAR FUEL (NOTE 5) $ 776,817 $ - $ 48,442 $ - $ - $ - $ (42) $ 825,301
========================================================================================================================
</TABLE>
See Notes on Page S-18
S-16
<PAGE> 359
ALABAMA POWER COMPANY
SCHEDULE VI --ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Additions Deductions
-------------------------------- ---------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- ------------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 752,908 $ 83,837 $ - $ 172 $ 6,674 $ 6,571 $(7,242) $ 830,914
Nuclear 747,079 69,294 - - 51 1,294 (188) 815,216
Hydraulic 148,287 10,956 - 1 411 125 (681) 159,389
Other - - - - - - - -
Transmission Plant 278,609 30,095 - 424 5,244 2,942 38 300,904
Distribution Plant 579,911 71,348 - 4,908 29,162 10,269 (41) 616,777
General Plant
Coal Mine Plant 1,832 - 54 - - - - 1,886
Transportation 42,044 - 8,666 1,050 6,898 - - 44,862
Other 126,287 21,053 1,237 316 5,280 172 4 143,437
- ------------------------------------------------------------------------------------------------------------------------
Total Electric Plant 2,676,957 286,583 9,957 6,871 53,720 21,373 (8,110) 2,913,385
STEAM HEAT PLANT 7,861 - 716 (68) 17 - - 8,492
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 2,684,818 $ 286,583 $ 10,673 $ 6,803 $ 53,737 $21,373 $(8,110) $2,921,877
========================================================================================================================
ACCUMULATED
PROVISION FOR
AMORTIZATION OF
NUCLEAR FUEL (Note 5) $ 719,181 $ - $ 57,091 $ - $ - $ - $ (545) $ 776,817
========================================================================================================================
</TABLE>
See Notes on Page S-18
S-17
<PAGE> 360
ALABAMA POWER COMPANY
NOTES TO SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992 AND 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Explanation 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.See Note 1 to ALABAMA's financial statements in Item 8 herein for the policy of ALABAMA with respect to depreciation.
2.Amounts charged to electric operations as "Depreciation and Amortization" on the statements of income are as follows:
Depreciation $ 301,921 $ 294,311 $ 286,583
Investment Tax Credits (12,014) (13,833) (15,552)
Plant Acquisition Adjustment 403 403 402
-------------------------------------
$ 290,310 $ 280,881 $ 271,433
=====================================
3.Depreciation and Amortization charged to Other Accounts are as follows:
Fuel Stock $ 1,092 $ 898 $ 1,203
Transportation Expense 9,393 9,012 8,666
Shop Expense 83 85 88
Steam Heat Plant 736 719 716
-------------------------------------
$ 11,304 $ 10,714 $ 10,673
=====================================
Nuclear Fuel $ 46,568 $ 48,442 $ 57,091
=====================================
4.Other Changes include the following:
Retirement Adjustments $ - $ - $ (7,923)
Partial sale of Miller Steam Plant - 19,187 -
Nuclear Decommissioning Trust Fund Earnings (1,485) (851) (188)
Miscellaneous Adjustments 587 (355) 1
--------------------------------------
$ (898) $ 17,981 $ (8,110)
=====================================
Westinghouse Settlement (Nuclear Fuel) $ - $ (42) $ (545)
=====================================
5.The accumulated amortization of nuclear fuel is netted against original cost of such fuel on the balance sheet.
</TABLE>
S-18
<PAGE> 361
GEORGIA POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1993
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Additions Deductions
------------------------------ --------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Retirements Cost Changes Period
- ----------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam (Note 6) $ 1,141,658 $ 76,528 $ 46 $ 193,746 $ 232,941 $ 4,343 $ 5,395 $ 1,169,299
Nuclear 743,588 120,048 - 8,381 12,789 3,926 1,105 854,197
Hydraulic 100,677 4,178 - 7 51 89 (5) 104,727
Other 98,764 1,263 - 1,023 1,986 97 1,023 97,944
Transmission Plant 404,818 41,658 - 4,404 19,338 3,756 (4,870) 432,656
Distribution Plant 817,555 126,419 - 4,256 50,366 12,818 (2,641) 887,687
General Plant 258,883 29,943 14,920 7,004 38,507 1,603 (1,116) 271,756
Plant Acquisition
Adjustment 3,774 910 133 - 739 - - 4,078
Nuclear Fuel (Note 5) 223,065 - 64,816 - 102,065 - - 185,816
- ----------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 3,792,782 $ 400,947 $ 79,915 $ 218,821 $ 458,782 $ 26,632 $ (1,109)$ 4,008,160
================================================================================================================
</TABLE>
See Notes on Page S-22
S-19
<PAGE> 362
GEORGIA POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1992
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Additions Deductions
----------------------------- ------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacement Cost Changes Period
- -----------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 7) (Note 7) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 1,096,340 $ 77,508 $ 348 $ 15,827 $ 39,871 $ 1,910 $ 6,584 $ 1,141,658
Nuclear 632,555 120,097 - 19,146 21,832 1,777 4,601 743,588
Hydraulic 96,737 4,111 - 23 124 70 - 100,677
Other 97,771 1,264 - - 211 60 - 98,764
Transmission Plant 376,536 39,198 - 2,012 12,617 5,321 (5,010) 404,818
Distribution Plant 766,710 120,321 - 4,996 56,883 12,970 4,619 817,555
General Plant 245,947 27,284 15,399 3,732 32,717 610 152 258,883
Plant Acquisition
Adjustment 2,651 1,003 120 - - - - 3,774
Nuclear Fuel (Note 5) 265,980 - 75,756 - 118,671 - - 223,065
- -----------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 3,581,227 $ 390,786 $ 91,623 $ 45,736 $ 282,926 $ 22,718 $ 10,946 $ 3,792,782
=================================================================================================================
</TABLE>
See Notes on Page S-22
S-20
<PAGE> 363
GEORGIA POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Additions Deductions
--------------------------------- ----------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacement Cost Changes Period
- ----------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam (Note 6) $1,038,054 $ 84,195 $ 787 $ 218,246 $ 240,052 $ 4,543 $ 347 $1,096,340
Nuclear 519,262 125,165 - 497 10,849 2,137 (617) 632,555
Hydraulic 90,785 6,060 - (23) 62 23 - 96,737
Other 96,858 1,232 - 12 251 80 - 97,771
Transmission Plant 351,316 39,372 - 16,397 27,887 3,281 (619) 376,536
Distribution Plant 715,631 117,284 - 4,479 62,297 12,993 (4,606) 766,710
General Plant 226,529 27,351 15,831 2,428 25,721 379 92 245,947
Plant Acquisition
Adjustment 1,863 1,089 85 - 386 - - 2,651
Nuclear Fuel (Note 5) 240,171 - 79,800 - 53,991 - - 265,980
- ----------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $3,280,469 $401,748 $96,503 $ 242,036 $ 421,496 $23,436 $(5,403) $3,581,227
======================================================================================================================
</TABLE>
See Notes on Page S-22
S-21
<PAGE> 364
GEORGIA POWER COMPANY
NOTES TO SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992 AND 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Explanation 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
1.See Note 1 to GEORGIA's financial statements in Item 8 herein for the policy of GEORGIA with respect to depreciation.
2.Amounts charged to electric operations as "Depreciation and Amortization" on the statements of income are as follows:
<S> <C> <C> <C>
Depreciation $ 400,947 $ 390,786 $ 401,748
Investment Tax Credits (8,293) (17,039) (19,501)
Nuclear Study Costs 562 519 396
Write-off of Future Use Property (51) 1,634 -
Regulatory Liability (13,154) (347) -
Transfer Reserve from Non-Utility Property (43) - -
Charge Off Consulting Fees (412) - -
Deferred Depreciation - Demand Side Options (40) - -
Deferred Expense (Rome Headquarters) (91) (93) (94)
----------- ---------- ----------
$ 379,425 $ 375,460 $ 382,549
=========== ========== ==========
3.Depreciation and Amortization charged to Other Accounts are as follows:
Nuclear Fuel $ 64,816 $ 75,756 $ 79,800
Transportation Expense 13,068 13,610 14,217
Leasehold Improvements 1,836 1,773 1,598
Amortization Of Rail Cars 46 348 787
Plant Acquisition Expense 133 120 85
Rental Expense 16 16 16
----------- ---------- ----------
$ 79,915 $ 91,623 $ 96,503
=========== ========== ==========
4.Other Changes include the following:
Property Received from City of Dalton $ - $ - $ (4,606)
Santee-Cooper Refund (2,002) - -
Nuclear Decommissioning Trust Fund Earnings (1,818) (1,024) (500)
Reclassification of Spare Parts - 12,392 -
Retirement Unit Conversion 8,931 - -
Functional Gross-up of AFUDC Debt (6,656) - -
Plant Transfers 22 (422) (297)
Scherer and Hatch Material Retirements 414 - -
----------- ---------- ----------
$ (1,109) $ 10,946 $ (5,403)
=========== ========== ==========
5.The accumulated amortization of nuclear fuel is netted against original cost of such fuel on the balance sheet.
6.Retirements and Salvage in 1991 and 1993 include the sale of a portion of Plant Scherer Unit 4. See Note 5 to GEORGIA's
financial statements in Item 8 herein for a discussion of this transaction.
7.Retirements and Salvage in 1992 include GEORGIA'S reclassification of capitalized spare parts to inventory. See Note 1
to GEORGIA's financial statements in Item 8 herein for a discussion of this transaction.
</TABLE>
S-22
<PAGE> 365
GULF POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1993
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Additions Deductions
------------------------------ -------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- -------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $344,354 $30,490 $ 93 $ 395 $ 7,485 $ 2,863 $ (146) $ 365,130
Other 3,513 79 - - 14 3 - 3,575
Transmission Plant 53,556 4,412 - (2) 1,214 475 (43) 56,320
Distribution Plant 137,965 17,194 - 1,689 7,821 3,622 60 145,345
General Plant
Transportation 5,983 - 1,451 385 1,562 - - 6,257
Other 33,480 5,377 96 2 5,018 25 (3) 33,915
- -------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $578,851 $57,552 $1,640 $ 2,469 $23,114 $ 6,988 $ (132) $ 610,542
===================================================================================================================
</TABLE>
See Notes on Page S-26
S-23
<PAGE> 366
GULF POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1992
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Additions Deductions
------------------------------- ---------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- -----------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $315,782 $30,054 $ 93 $ 204 $ 1,251 $ 414 $ 114 $344,354
Other 3,426 79 - - - - (8) 3,513
Transmission Plant 50,627 4,215 - 22 920 551 (163) 53,556
Distribution Plant 131,174 16,301 - 1,879 7,699 3,396 294 137,965
General Plant
Transportation 5,827 - 1,320 269 1,433 - - 5,983
Other 28,572 5,618 101 80 856 41 (6) $ 33,480
- -----------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $535,408 $56,267 $1,514 $2,454 $12,159 $4,402 $ 231 $578,851
=================================================================================================================
</TABLE>
See Notes on Page S-26
S-24
<PAGE> 367
GULF POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Additions Deductions
------------------------------- ------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- ------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $295,757 $29,592 $ 93 $ 108 $ 8,790 $ 999 $ (21) $ 315,782
Other 3,355 79 - - 8 - - 3,426
Transmission Plant 47,761 3,996 - 9 947 332 (140) 50,627
Distribution Plant 125,116 15,460 - 620 7,117 3,035 (130) 131,174
General Plant
Transportation 5,809 - 1,285 197 1,464 - - 5,827
Other 23,941 5,309 98 7 848 8 (73) 28,572
- ------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $501,739 $54,436 $1,476 $ 941 $ 19,174 $4,374 $ (364) $ 535,408
==================================================================================================================
</TABLE>
See Notes on Page S-26
S-25
<PAGE> 368
GULF POWER COMPANY
NOTES TO SCHEDULE VI -ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992 AND 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Explanation 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. See Note 1 to GULF's financial statements in Item 8 herein for the policy of GULF with respect
to depreciation.
2. Amounts charged to electric operations as "Depreciation and Amortization" on the statements
are as follows:
Depreciation $ 57,552 $56,267 $ 54,436
Investment Tax Credits (2,241) (2,241) (2,241)
Reclassification of Spare Parts - (114) -
Adjustment (2) (154) -
-------------------------------------
$ 55,309 $53,758 $ 52,195
=====================================
3.Depreciation and Amortization charged to Other
Accounts are as follows:
Transportation Expense $ 1,451 $ 1,320 $ 1,285
Merchandise and Appliance Service 96 101 98
Railroad Track System 93 93 93
-------------------------------------
$ 1,640 $ 1,514 $ 1,476
=====================================
4.Other Changes include the following:
Retirement Adjustment $ - $ (8) $ (340)
Reclassification of Spare Parts - 114 -
Miscellaneous Adjustments and Property Reclassifications (132) 125 (24)
-------------------------------------
$ (132) $ 231 $ (364)
=====================================
</TABLE>
S-26
<PAGE> 369
MISSISSIPPI POWER COMPANY
SCHEDULE VI --ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1993
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Additions Deductions
---------------------------- --------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- -------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 225,455 $ 15,199 $ 85 $ 281 $ 5,980 $ 1,193 $ - $233,847
Other 13,064 634 - 355 194 5 - 13,854
Transmission Plant 61,424 4,547 - 26 821 308 - 64,868
Distribution Plant 98,221 10,675 - 1,805 5,783 1,442 - 103,476
General Plant
Transportation 6,751 - 1,108 268 1,463 - - 6,664
Other 23,988 3,825 65 5 1,145 - - 26,738
Plant Leased to Others 11,874 - 1,404 - - - - 13,278
- -------------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 440,777 $ 34,880 $ 2,662 $ 2,740 $ 15,386 $ 2,948 $ - $462,725
===================================================================================================================
</TABLE>
See Notes on Page S-30
S-27
<PAGE> 370
MISSISSIPPI POWER COMPANY
SCHEDULE VI --ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1992
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Additions Deductions
---------------------------- ------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- ------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 214,123 $ 15,853 $ 87 $ 283 $ 3,402 $ 1,489 $ - $225,455
Other 12,626 476 - - 38 - - 13,064
Transmission Plant 58,197 4,669 - 42 1,261 223 - 61,424
Distribution Plant 93,084 9,858 - 1,552 4,453 1,820 - 98,221
General Plant
Transportation 6,242 - 1,128 136 755 - - 6,751
Other 20,393 4,130 59 51 621 - 24 23,988
Plant Leased to Others 10,470 - 1,404 - - - - 11,874
- -------------------------------------------- --------- ----------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 415,135 $ 34,986 $ 2,678 $ 2,064 $ 10,530 $ 3,532 $ 24 $440,777
============================================================================================================
</TABLE>
See Notes on Page S-30
S-28
<PAGE> 371
MISSISSIPPI POWER COMPANY
SCHEDULE VI --ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Additions Deductions
--------------------------------- --------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- --------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 204,605 $ 15,743 $ 86 $ 396 $ 5,939 $ 767 $ 1 $214,123
Other 13,229 475 - 130 1,195 13 - 12,626
Transmission Plant 55,263 4,260 - 89 1,050 365 - 58,197
Distribution Plant 87,819 9,310 - 970 3,737 1,278 - 93,084
General Plant
Transportation 5,635 - 1,126 145 666 - (2) 6,242
Other 16,810 3,815 62 41 331 4 - 20,393
Plant Leased to Others 9,079 - 1,391 - - - - 10,470
- -----------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISIONS FOR
DEPRECIATION $ 392,440 $ 33,603 $ 2,665 $ 1,771 $ 12,918 $ 2,427 $ (1) $415,135
=================================================================================================================
</TABLE>
See Notes on Page S-30
S-29
<PAGE> 372
MISSISSIPPI POWER COMPANY
NOTES TO SCHEDULE VI -ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PL
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992 AND 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Explanation 1993 1992 1991
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.See Note 1 to MISSISSIPPI's financial statements in Item 8 herein for the policy of MISSISSIPPI
with respect to depreciation.
2.Amounts charged to electric operation as "Depreciation and Amortization" on the statements of
income are as follows:
Depreciation $34,880 $34,986 $ 33,603
Investment Tax Credits (1,270) (1,186) (1,272)
Property Losses (183) (988) (184)
Regulatory Asset (328) - -
Other - (23) -
-----------------------------------
$33,099 $32,789 $ 32,147
===================================
3.Depreciation and Amortization charged to Other Accounts are as follows:
Plant Leased To Others $ 1,469 $ 1,463 $ 1,453
Transportation Expense 1,108 1,128 1,126
Fuel Stock 85 87 86
-----------------------------------
$ 2,662 $ 2,678 $ 2,665
===================================
4.Other Changes include the following:
Miscellaneous Adjustments $ - $ 24 $ (1)
===================================
</TABLE>
S-30
<PAGE> 373
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE VI --ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1993
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Additions Deductions
-------------------------- ---------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Account Recoveries Replacement Cost Changes Period
- -----------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 141,795 $ 6,293 $ - $ 889 $ 2,506 $ 120 $ - $146,351
Other 1,797 31 - - - - - 1,828
Transmission Plant 34,756 2,591 - (3) 162 98 - 37,084
Distribution Plant 52,586 7,241 - 226 2,277 1,047 - 56,729
General Plant 9,160 742 121 124 568 6 - 9,573
- ------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 240,094 $ 16,898 $ 121 $ 1,236 $ 5,513 $ 1,271 $ - $251,565
===========================================================================================================
</TABLE>
See Notes on Page S-34
S-31
<PAGE> 374
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1992
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Additions Deductions
----------------------------- -------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- -------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $134,137 $ 8,335 $ - $ 26 $ 331 $ 372 $ - $ 141,795
Other 1,697 100 - - - - - 1,797
Transmission Plant 32,507 2,381 - 8 46 94 - 34,756
Distribution Plant 49,377 5,512 - 319 1,967 655 - 52,586
General Plant 7,887 931 283 119 60 - - 9,160
- -------------------------------------------------------------------------------------------------------------
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $225,605 $17,259 $ 283 $ 472 $ 2,404 $ 1,121 $ - $ 240,094
=============================================================================================================
</TABLE>
See Notes on Page S-34
S-32
<PAGE> 375
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Additions Deductions
--------------------------------- --------------------------------
Balance at Retirements, Balance at
Beginning Operating Other Salvage Renewals and Removal Other End of
Classification of Period Expenses Accounts Recoveries Replacements Cost Changes Period
- ------------------------------------------------------------------------------------------------------------------
(Note 2) (Note 3) (Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC PLANT
Production Plant
Steam $ 126,380 $ 8,152 $ - $ 5 $ 62 $ 338 $ - $ 134,137
Other 1,597 100 - - - - - 1,697
Transmission Plant 23,000 1,900 - 3 26 5 (7,635) 32,507
Distribution Plant 53,785 5,714 - 268 1,854 835 7,701 49,377
General Plant 6,963 1,113 297 20 493 13 - 7,887
TOTAL ACCUMULATED
PROVISION FOR
DEPRECIATION $ 211,725 $ 16,979 $ 297 $ 296 $ 2,435 $ 1,191 $ 66 $ 225,605
==================================================================================================================
</TABLE>
See Notes on Page S-34
S-33
<PAGE> 376
SAVANNAH ELECTRIC AND POWER COMPANY
NOTES TO SCHEDULE VI -- ACCUMULATED PROVISION FOR DEPRECIATION OF UTILITY PLANT
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992 AND 1991
(STATED IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Explanation 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------
1.See Note 1 to SAVANNAH's financial statements in Item 8 herein for the policy of SAVANNAH with respect
to depreciation
2.Amounts charged to electric operation as "Depreciation and Amortization" on the statements of income
are as follows:
<S> <C> <C> <C>
Depreciation $ 16,898 $17,259 $ 16,979
Amortization of Investment Tax Credits (664) (664) (663)
Amortization of Intangible Plant (Merger Cost) 233 234 233
----------------------------------
$ 16,467 $16,829 $ 16,549
==================================
3.Depreciation and Amortization charged to Other Accounts are as follows:
Transportation Expense $ 121 $ 283 $ 297
==================================
4.Other Changes include the following:
Miscellaneous Adjustments $ - $ - $ 66
==================================
</TABLE>
S-34
<PAGE> 377
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
----------------------------
Balance at Charged to Balance at
Beginning Charged to Other End of
Description of Period Income Accounts Deductions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $ 7,255 $24,040 $ 2 $ 22,230(1) $ 9,067
Deferred credit
Provision for property
insurance $23,594 $ 4,164 - $ 5,711 $22,047
Other property and
investments
Nuclear
decommissioning
trust (3) $52,701 $15,759 $19,351(4) $ 324 $87,487
Deferred charges
Uranium enrichment,
decontamination
and decommissioning
fund (5) $90,099 - $ 1,219 $ 4,976 $86,342
</TABLE>
- -------------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible,
less recoveries of amounts previously written off.
(2) Insurance recoveries net of charges to reserve for purposes for
which reserve was created.
(3) See Note 1 to SOUTHERN's financial statements under "Nuclear
Decommissioning" in Item 8 herein for further information.
(4) Represents additional funding to reserve.
(5) See Note 1 to SOUTHERN's financial statements under "Revenues and
Fuel Costs" in Item 8 herein for further information.
S-35
<PAGE> 378
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
----------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $12,568 $18,366 - $23,679(1) $ 7,255
Deferred credit
Provision for property
insurance $20,928 $ 3,298 $ 25(4) $ 657 $23,594
Other property and investments
Nuclear
decommissioning
trust (2) $25,871 $14,782 $12,189 $ 141 $52,701
Deferred charges
Uranium enrichment,
decontamination and
decommissioning - - $90,099 - $90,099
fund (3)
</TABLE>
- -----------------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible,
less recoveries of amounts previously written off.
(2) See Note 1 to SOUTHERN's financial statements under "Depreciation
and Nuclear Decommissioning" in Item 8 herein for further
information.
(3) See Note 1 to SOUTHERN's financial statements under "Revenues and
Fuel Costs" in Item 8 herein for further information.
(4) Capitalized.
S-36
<PAGE> 379
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1991
(Stated in Thousands of Dollars)
<TABLE>
<Captions>
Additions
---------------------------
Balance at Charge to Balance at
Beginning of Charged to Other End
Description Period Income Accounts Deductions of Period
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts
Gulf States $ 259,068 $ (256,067)(1) - $ 3,001 $ -
Nu South 5,858 - - 5,858 -
Other 12,759 - 33,172(2) 12,568
--------- ----------- -------- --------
32,981
-----------
$ 277,685 $ (223,086) - $ 42,031 $ 12,568
========= =========== ======== ========
Deferred credits
Provision for property
insurance $ 17,712 $ 3,945 - $ 729(3) $ 20,928
Other property and investments
Nuclear
decommissioning
trust (4) $ 2,387 $ 14,173 $9,367 $ 56 $ 25,871
</TABLE>
- ------------------
Notes:
(1) See Note 8 to SOUTHERN's financial statements in Item 8 herein for a
description of the Gulf States settlement.
(2) Represents write-off of accounts considered to be uncollectible,
less recoveries of amounts previously written off.
(3) Insurance recoveries net of charges to reserve for purposes for
which reserve was created.
(4) See Note 1 to SOUTHERN's financial statements under "Depreciation
and Nuclear Decommissioning" in Item 8 herein for further
information.
S-37
<PAGE> 380
ALABAMA POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
---------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $ 1,482 $ 7,157 - $6,007(1) $ 2,632
Other property and investments
Nuclear
decommissioning
trust (2) $ 32,390 $ 13,617 $ 3,543(3) - $ 49,550
Deferred charges
Uranium enrichment,
decontamination and
decommissioning
fund (4) $ 47,730 - $ 1,873 $4,049 $ 45,554
</TABLE>
- ------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible,
less recoveries of amounts previously written off.
(2) See Note 1 to ALABAMA's financial statements under "Depreciation
and Nuclear Decommissioning" in Item 8 herein for further
information.
(3) Represents additional funding to reserve.
(4) See Note 1 to ALABAMA's financial statements under "Revenues and
Fuel Costs" in Item 8 herein for further information.
S-38
<PAGE> 381
ALABAMA POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
----------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $ 1,721 $ 4,878 - $ 5,117 (1) $ 1,482
Other property and investments
Nuclear
decommissioning
trust (2) $ 15,864 $ 13,617 $ 2,909 - $ 32,390
Deferred charges
Uranium enrichment,
decontamination and
decommissioning
fund (3) - - $ 47,730 - $ 47,730
</TABLE>
- -----------------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible,
less recoveries of amounts previously written off.
(2) See Note 1 to ALABAMA's financial statements under "Depreciation
and Nuclear Decommissioning" in Item 8 herein for further
information.
(3) See Note 1 to ALABAMA's financial statements under "Revenues and
Fuel Costs" in Item 8 herein for further Information.
S-39
<PAGE> 382
ALABAMA POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
-----------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End
Description Period Income Accounts Deductions of Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts
Gulf States $73,324 $(73,324) - $ - $ -
Other 1,656 4,020 - 3,955(2) 1,721
------- -------- ------- -------
$74,980 $(69,304) - $ 3,955 $ 1,721
======= ======== ======= =======
Other property and investments
Nuclear
decommissioning
trust (3) - $ 13,617 $2,247 - $15,864
</TABLE>
- -----------------------
Notes:
(1) See Note 7 to the financial statements in Item 8 herein for a
description of the Gulf States settlement. The provision for
uncollectible was reversed.
(2) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(3) See Note 1 to ALABAMA's financial statements under "Depreciation and
Nuclear Decommissioning" in Item 8 herein for further information.
S-40
<PAGE> 383
GEORGIA POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
----------------------------
Balance at Charged to Balance at
Beginning Charged to Other End of
Description of Period Income Accounts Deductions Period
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $ 4,121 $ 14,310 - $ 14,131(1) $ 4,300
Other property and investments
Nuclear
decommissioning
trust (2) $ 20,311 $ 2,142 $ 15,808(3) $ 324 $ 37,937
Deferred charges
Uranium enrichment,
decontamination and
decommissioning
fund (4) $ 42,369 - $ (654) $ 927 $ 40,788
</TABLE>
- --------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to GEORGIA's financial statements under "Nuclear
Decommissioning" in Item 8 herein for further information.
(3) Represents additional funding to reserve.
(4) See Note 1 to GEORGIA's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
S-41
<PAGE> 384
GEORGIA POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
-----------------------------
Balance Charged to Balance at
at Beginning Charged to Other End of
Description of Period Income Accounts Deductions Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $ 7,519 $ 11,440 - $14,838(1) $ 4,121
Other property and investments
Nuclear decommissioning
trust (2) $ 10,007 $ 1,165 $ 9,280 $ 141 $20,311
Deferred charges
Uranium enrichment,
decontamination and
decommissioning
fund (3) - - $42,369 - $42,369
</TABLE>
- -----------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) See Note 1 to GEORGIA's financial statements under "Nuclear
Decommissioning" in Item 8 herein for further information.
(3) See Note 1 to GEORGIA's financial statements under "Revenues and Fuel
Costs" in Item 8 herein for further information.
S-42
<PAGE> 385
GEORGIA POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
-----------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts
Gulf States $148,383 $(145,382)(1) - $ 3,001 $ -
Other 8,063 22,492 - 23,036(2) 7,519
-------- --------- -------- --------
$156,446 $(122,890) - $ 26,037 $ 7,519
======== ========= ======== ========
Other property and investments
Nuclear
decommissioning
trust (3) $ 2,387 $ 556 $7,120 $ 56 $ 10,007
</TABLE>
- ------------------
Note:
(1) See Note 3 to GEORGIA's financial statements in Item 8 herein for a
description of the Gulf States settlement. The provision for
uncollectible accounts was reversed.
(2) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(3) See Note 1 to GEORGIA's financial statements under "Nuclear
Decommissioning" in Item 8 herein for further information.
S-43
<PAGE> 386
GULF POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
--------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $ 356 $ 875 - $784 (Note) $ 447
Deferred credit
Provision for property
insurance $9,692 $1,200 - $383 $10,509
</TABLE>
- ---------------
Note: Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
S-44
<PAGE> 387
GULF POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
--------------------------
Balance at Charged to Balance at
Beginning Charged to Other End of
Description of Period Income Accounts Deductions Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $ 660 $ 356 - $600 (Note) $ 356
Deferred credit
Provision for property
insurance $8,492 $1,200 - - $9,692
</TABLE>
- --------------------
Note: Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
S-45
<PAGE> 388
GULF POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
---------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts
Gulf States $30,375 $(30,375)(1) - $ - $ -
Other 635 1,180 - 1,155(2) 660
------- -------- ------ -------
$31,010 $(29,195) - $1,155 $ 660
======= ======== ====== =======
Deferred credit
Provision for property
insurance $ 7,292 $ 1,200 - - $ 8,492
</TABLE>
- ------------------
Notes:
(1) See Note 7 to GULF's financial statements in Item 8 herein for a
description of the Gulf States settlement. The provision for
uncollectible was reversed.
(2) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
S-46
<PAGE> 389
MISSISSIPPI POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
-----------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $ 508 $1,326 $2 $1,099 (Note) $ 737
Deferred credit
Provision for property
insurance $9,294 $1,244 - - $10,538
</TABLE>
- ---------------
Note: Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
S-47
<PAGE> 390
MISSISSIPPI POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
---------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $2,102 $1,173 - $2,767 (Note) $ 508
Deferred credit
Provision for property
insurance $8,216 $1,078 - - $9,294
</TABLE>
- ------------------
Note: Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
S-48
<PAGE> 391
MISSISSIPPI POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1991
(Stated in thousands of Dollars)
<TABLE>
<CAPTION>
Additions
----------------------------
Balance at Charged to Balance at
Beginning of Charged to Other End of
Description Period Income Accounts Deductions Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for
uncollectible accounts
Gulf States $ 6,986 $(6,986)(1) - $ - $ -
Nu South 5,858 - - 5,858 (2) -
Other 1,839 4,577 - 4,314 (2) 2,102
------- -------- ------- -------
$14,683 $(2,409) - $10,172 $ 2,102
======= ======== ======= =======
Deferred credit
Provision for property
insurance $ 6,716 $ 1,500 - - $ 8,216
</TABLE>
- -----------------
Notes:
(1) See Note 7 to MISSISSIPPI's financial statements in Item 8 herein for
a description of the Gulf States settlement. The provision for
uncollectible was reversed.
(2) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
S-49
<PAGE> 392
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
---------------------------
Balance at Charged to Balance at
Beginning Charged to Other End of
Description of Period Income Accounts Deductions Period
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $536 $330 - $104 (Note) $ 762
Deferred credit
Provision for property
insurance $300 $700 - - $1,000
</TABLE>
- --------------------------
Note: Represents write-off of accounts receivable considered to be
uncollectible, less recoveries of amounts previously written off.
S-50
<PAGE> 393
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
----------------------------
Balance at Charged to Balance at
Beginning Charged to Other End of
Description of Period Income Accounts Deduction Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $339 $455 - $258 (Note) $536
Deferred credit
Provision for property
insurance $300 - - - $300
</TABLE>
- ----------------------
Note: Represents write-off of accounts receivable considered to be
uncollectible, less recoveries of amounts previously written off.
S-51
<PAGE> 394
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Additions
---------------------------
Balance at Charged to Balance at
Beginning Charged to Other End of
Description of Period Income Accounts Deductions Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for uncollectible
accounts $367 $454 - $482 (Note) $339
Deferred credit
Provision for property
insurance $325 $225 - $250 $300
</TABLE>
Note: Represents write-off of accounts receivable considered to be
uncollectible, less recoveries of amounts previously written off.
S-52
<PAGE> 395
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE IX - SHORT-TERM BORROWINGS
DECEMBER 31, 1993, 1992 AND 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Weighted
Maximum Average Average
Category of Weighted Amount Amount Interest
Aggregate Balance Average Outstanding Outstanding Rate
Short-term At End of Interest During This During This During the
Borrowings Period Rate Period (1) Period (2) Period (2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Notes payable
to banks $735,953
Commercial paper 75,527
Other notes payable (3) 129,428
--------
$940,908 4.35% $1,122,489 $766,030 3.92%
========
1992
Notes payable
to banks $567,200
Commercial paper 259,388
--------
$826,588 3.92% $ 826,588 $394,575 4.06%
========
1991
Notes payable
to banks $301,500
Other notes payable (3) 188
--------
$301,688 5.18% $ 513,518 $322,249 6.50%
========
</TABLE>
- ----------------------
Notes:
(1) At month-end.
(2) Average based on daily borrowings during period (averages and rates
quoted on an actual day year basis).
(3) This note payable is an obligation of SEI and does not include
borrowings from SOUTHERN.
(4) See Note 5 to SOUTHERN's financial statements in Item 8 herein for
details regarding SOUTHERN's and its subsidiaries lines
of credit and general terms of commitment agreements.
S-53
<PAGE> 396
ALABAMA POWER COMPANY
SCHEDULE IX - SHORT -TERM BORROWINGS
DECEMBER 31, 1993, 1992, 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Weighted
Maximum Average Average
Category of Weighted Amount Amount Interest
Aggregate Balance Average Outstanding Outstanding Rate
Short-term At End of Interest During the During the During the
Borrowings Period Rate Period (1) Period (2) Period (2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Notes payable
to banks(3) $ 40,000 3.37% $257,319 $117,683 3.20%
1992
Notes payable
to banks $ 71,000
Commercial 125,917
---------
paper $ 196,917 3.57% $196,917 $ 96,682 3.83%
=========
1991
Notes payable
to banks $ 76,000 5.07% $337,000 $210,579 6.36%
</TABLE>
- -----------------
Notes:
(1) At month-end.
(2) Average based on daily borrowings during the period (averages and
rates quoted on an actual day year basis).
(3) ALABAMA also issued commercial paper during 1993, although none was
outstanding at year-end. The data shown reflects the issuance of
commercial paper.
(4) See Note 5 to ALABAMA's financial statements in Item 8 herein for
details regarding ALABAMA's lines of credit.
S-54
<PAGE> 397
GEORGIA POWER COMPANY
SCHEDULE IX - SHORT -TERM BORROWINGS
DECEMBER 31, 1993, 1992 AND 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Weighted
Maximum Average Average
Category of Weighted Amount Amount Interest
Aggregate Balance Average Outstanding Outstanding Rate
Short-Term At End of Interest During This During This During the
Borrowings Period Rate Period (1) Period (2) Period (2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Notes payable
to banks $406,700
Commercial
paper 75,527
--------
$482,227 3.52% $661,498 $425,180 3.65%
========
1992
Notes payable
to banks $400,200
Commercial
paper 133,471
--------
$533,671 4.10% $533,671 $232,755 4.16%
========
1991
Notes payable
to banks $199,000 5.15% $199,000 $ 75,245 6.52%
</TABLE>
- --------------------
Notes:
(1) At month-end
(2) Average based on daily borrowings during period (averages and rates
quoted on an actual day year basis).
(3) See Note 8 to GEORGIA's financial statements in Item 8 herein for
details regarding GEORGIA's lines of credit and general terms of its
commitment agreements.
S-55
<PAGE> 398
GULF POWER COMPANY
SCHEDULE IX - SHORT -TERM BORROWINGS
DECEMBER 31, 1993, 1992 AND 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Weighted
Maximum Average Average
Category Weighted Amount Amount Interest
Aggregate Balance Average Outstanding Outstanding Rate
Short-Term At End of Interest During This During This During the
Borrowings Period Rate Period (1) Period (2) Period (2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Notes payable
to banks $ 6,053(3) 0.00% $61,500 $25,873 3.37%
1992
Notes payable
to banks $44,000 3.63% $44,000 $26,045 4.00%
1991
Notes payable
to banks - - $23,000 $ 4,511 6.21%
</TABLE>
- ----------------------
Notes:
(1) At month-end
(2) Average based on daily borrowings during period (averages and rates
quoted on an actual day year basis).
(3) See Note 5 to GULF's financial statements in Item 8 herein for a
description of this short-term indebtedness.
(4) See Note 5 to GULF's financial statements in Item 8 herein for
details regarding GULF's lines of credit and general terms of its
commitment agreements.
S-56
<PAGE> 399
MISSISSIPPI POWER COMPANY
SCHEDULE IX - SHORT -TERM BORROWINGS
DECEMBER 31, 1993, 1992 AND 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Weighted
Maximum Average Average
Category Weighted Amount Amount Interest
Aggregate Balance Average Outstanding Outstanding Rate
Short-Term At End of Interest During This During This During the
Borrowings Period Rate Period (1) Period (2) Period
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Notes payable
to banks $40,000 3.43% $56,000 $30,208 3.31%
1992
Notes payable
to banks $31,000 3.48% $31,000 $10,086 3.60%
1991
Notes payable
to banks $ 4,500 6.78% $48,161 $19,327 8.28%
</TABLE>
- ----------------------
Notes:
(1) At month-end
(2) Average based on daily borrowings during period (averages and rates
quoted on an actual day year basis).
(3) See Note 5 to MISSISSIPPI's financial statements in Item 8 herein for
details regarding MISSISSIPPI's lines of credit and general terms of
its commitment agreements.
S-57
<PAGE> 400
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE IX - SHORT -TERM BORROWINGS
DECEMBER 31, 1993, 1992 AND 1991
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
Weighted
Maximum Average Average
Category Weighted Amount Amount Interest
Aggregate Balance Average Outstanding Outstanding Rate
Short-Term At End of Interest During This During This During the
Borrowings Period Rate Period (1) Period (2) Period (2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Notes payable
to banks $3,000 3.30% $17,500 $7,738 3.44%
1992
Notes payable
to banks $7,500 3.85% $ 7,500 $ 387 3.86%
1991
Notes payable
to banks - - $ 5,000 $ 386 6.45%
</TABLE>
Notes:
(1) At month-end
(2) Average based on daily borrowings during period (averages and rates
quoted on an actual day year basis).
(3) See Note 5 to SAVANNAH's financial statements in Item 8 herein for
details regarding SAVANNAH's lines of credit and general terms of its
commitment agreements.
S-58
<PAGE> 401
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Item Charged to Costs and Expenses
---- -----------------------------
Taxes, other than payroll and income taxes:
<S> <C>
1993
Real and personal property taxes $186,373
Municipal and state taxes on gross receipts 204,371
Other 12,544
--------
$403,288
========
1992
Real and personal property taxes $172,106
Municipal and state taxes on gross receipts 194,726
Other 12,553
--------
$379,385
========
1991
Real and personal property taxes $162,227
Municipal and state taxes on gross receipts 194,179
Other 13,514
--------
$369,920
========
</TABLE>
S-59
<PAGE> 402
ALABAMA POWER COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Item Charged to Costs and Expenses
---- -----------------------------
Taxes, other than payroll and income taxes:
<S> <C>
1993
Real and personal property taxes $ 55,921
Municipal and state taxes on gross receipts 96,933
Other 8,598
--------
$161,452
========
1992
Real and personal property taxes $ 51,043
Municipal and state taxes on gross receipts 95,031
Other 9,231
--------
$155,305
========
1991
Real and personal property taxes $ 48,600
Municipal and state taxes on gross receipts 91,656
Other 9,440
--------
$149,696
========
</TABLE>
S-60
<PAGE> 403
GEORGIA POWER COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Item Charged to Costs and Expenses
---- -----------------------------
Taxes, other than payroll and income taxes:
<S> <C>
1993
Real and personal property taxes $ 84,587
Municipal and state taxes on gross receipts 76,352
Other 1,210
--------
$162,149
========
1992
Real and personal property taxes $ 77,940
Municipal and state taxes on gross receipts 71,010
Other 902
--------
$149,852
========
1991
Real and personal property taxes $ 70,482
Municipal and state taxes on gross receipts 68,861
Other 1,186
--------
$140,529
========
</TABLE>
S-61
<PAGE> 404
GULF POWER COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Item Charged to Costs and Expenses
---- -----------------------------
Taxes, other than payroll and income taxes:
<S> <C>
1993
Real and personal property taxes $16,211
Municipal and state taxes on gross receipts 18,907
Other 988
-------
$36,106
=======
1992
Real and personal property taxes $15,383
Municipal and state taxes on gross receipts 17,710
Other 790
-------
$33,883
=======
1991
Real and personal property taxes $14,868
Municipal and state taxes on gross receipts 22,425
Other 1,185
-------
$38,478
=======
</TABLE>
S-62
<PAGE> 405
MISSISSIPPI POWER COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Item Charged to Costs and Expenses
---- -----------------------------
Taxes, other than payroll and income taxes:
<S> <C>
1993
Real and personal property taxes $23,279
Municipal and state taxes on gross receipts 8,160
Other 1,477
-------
$32,916
=======
1992
Real and personal property taxes $21,987
Municipal and state taxes on gross receipts 7,316
Other 1,388
-------
$30,691
=======
1991
Real and personal property taxes $22,701
Municipal and state taxes on gross receipts 7,451
Other 1,432
-------
$31,584
=======
</TABLE>
S-63
<PAGE> 406
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Item Charged to Costs and Expenses
---- -----------------------------
Taxes, other than payroll and income taxes:
<S> <C>
1993
Real and personal property taxes $5,285
Municipal and state taxes on gross receipts 4,019
Other 84
------
$9,388
======
1992
Real and personal property taxes $4,735
Municipal and state taxes on gross receipts 3,659
Other 64
------
$8,458
======
1991
Real and personal property taxes $4,653
Municipal and state taxes on gross receipts 3,786
Other 112
------
$8,551
======
</TABLE>
S-64
<PAGE> 407
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the exhibit
number are filed herewith. The balance of the exhibits have heretofore been
filed with the SEC, respectively, as the exhibits and in the file numbers
indicated and are incorporated herein by reference. Reference is made to a
duplicate list of exhibits being filed as a part of this Form 10-K, which list,
prepared in accordance with Item 601 of Regulation S-K of the SEC, immediately
precedes the exhibits being physically filed with this Form 10-K.
(3) ARTICLES OF INCORPORATION AND BY-LAWS
SOUTHERN
(a) 1 - Composite Certificate of Incorporation of SOUTHERN,
reflecting all amendments to date. (Designated in
Registration No. 33-3546 as Exhibit 4(a), in Certificate
of Notification, File No. 70-7341, as Exhibit A and in
Certificate of Notification, File No. 70-8181, as Exhibit
A.)
(a) 2 - By-laws of SOUTHERN as amended effective October 21, 1991,
and as presently in effect. (Designated in Form U-1, File
No. 70-8181 as Exhibit A-2.)
ALABAMA
(b) 1 - Charter of ALABAMA and amendments thereto through November
19, 1993. (Designated in Registration Nos. 2-59634 as
Exhibit 2(b), 2-60209 as Exhibit 2(c), 2-60484 as Exhibit
2(b), 2-70838 as Exhibit 4(a)-2, 2-85987 as Exhibit 4(a)-2,
33-25539 as Exhibit 4(a)-2, 33-43917 as Exhibit 4(a)-2, in
Form 8-K dated February 5, 1992, File No. 1-3164, as
Exhibit 4(b)-3, in Form 8-K dated July 8, 1992, File No.
1-3164, as Exhibit 4(b)-3, in Form 8-K dated October 27,
1993, File No. 1-3164, as Exhibits 4(a) and 4(b) and in
Form 8-K dated November 16, 1993, File No. 1-3164, as
Exhibit 4(a).)
(b) 2 - By-laws of ALABAMA as amended effective April 24, 1992,
and as presently in effect. (Designated in Registration
No. 33-48885 as Exhibit 4(c).)
GEORGIA
(c) 1 - Charter of GEORGIA and amendments thereto through October
25, 1993. (Designated in Registration Nos. 2-63392 as
Exhibit 2(a)-2, 2-78913 as Exhibits 4(a)-(2) and 4(a)-(3),
2-93039 as Exhibit 4(a)-(2), 2-96810 as Exhibit 4(a)-2,
33-141 as Exhibit 4(a)-(2), 33-1359 as Exhibit 4(a)(2),
33-5405 as Exhibit 4(b)(2), 33-14367 as Exhibits 4(b)-(2)
and 4(b)-(3), 33-22504 as Exhibits 4(b)-(2), 4(b)-(3) and
4(b)-(4), in GEORGIA's Form 10-K for the year ended
December 31, 1991, File No. 1-6468, as Exhibits 4(a)(2)
and 4(a)(3), in Registration No. 33-48895 as Exhibits
4(b)-(2) and 4(b)-(3), in Form 8-K dated December 10, 1992,
File No. 1-6468 as Exhibit 4(b), in Form 8-K dated June 17,
1993, File No. 1-6468, as Exhibit 4(b) and in Form 8-K
dated October 20, 1993, File No. 1-6468, as Exhibit 4(b).)
E-1
<PAGE> 408
(c) 2 - By-laws of GEORGIA as amended effective July 18, 1990, and
as presently in effect. (Designated in GEORGIA's Form
10-K for the year ended December 31, 1990, File No.1-6468,
as Exhibit 3.)
GULF
(d) 1 - Restated Articles of Incorporation of GULF and amendments
thereto through November 8, 1993. (Designated in
Registration No. 33-43739 as Exhibit 4(b)-1, in Form 8-K
dated January 15, 1992, File No. 0-2429, as Exhibit 1(b),
in Form 8-K dated August 18, 1992, File No. 0-2429, as
Exhibit 4(b)-2, in Form 8-K dated September 22, 1993, File
No. 0-2429, as Exhibit 4 and in Form 8-K dated November 3,
1993, File No. 0-2429, as Exhibit 4.)
*(d) 2 - By-laws of GULF as amended effective February 25, 1994, and
as presently in effect.
MISSISSIPPI
(e) 1 - Articles of incorporation of MISSISSIPPI, articles of
merger of Mississippi Power Company (a Maine corporation)
into MISSISSIPPI and articles of amendment to the articles
of incorporation of MISSISSIPPI through August 19, 1993.
(Designated in Registration No. 2-71540 as Exhibit 4(a)-1,
in Form U5S for 1987, File No. 30-222-2, as Exhibit B-10,
in Registration No. 33-49320 as Exhibit 4(b)-(1), in Form
8-K dated August 5, 1992, File No. 0-6849, as Exhibits
4(b)-2 and 4(b)-3, in Form 8-K dated August 4, 1993, File
No. 0-6849, as Exhibit 4(b)-3 and in Form 8-K dated August
18, 1993, File No. 0-6849, as Exhibit 4(b)-3.)
(e) 2 - By-laws of MISSISSIPPI as amended effective August 22,
1989, and as presently in effect. (Designated in
MISSISSIPPI's Form 10-K for the year ended December 31,
1989, as Exhibit 3(b).)
SAVANNAH
(f) 1 - Charter of SAVANNAH and amendments thereto through
November 10, 1993. (Designated in Registration Nos.
33-25183 as Exhibit 4(b)-(1), 33-45757 as Exhibit 4(b)-(2)
and in Form 8-K dated November 9, 1993, File No. 1-5072,
as Exhibit 4(b).)
*(f) 2 - By-laws of SAVANNAH as amended effective February 16, 1994,
and as presently in effect.
(4) INSTRUMENTS DESCRIBING RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
ALABAMA
(b) - Indenture dated as of January 1, 1942, between ALABAMA and
Chemical Bank, as Trustee, and indentures supplemental
thereto through that dated as of January 1, 1994.
(Designated in Registration Nos. 2-59843 as Exhibit 2(a)-2,
2-60484 as Exhibits 2(a)-3 and 2(a)-4, 2-60716 as Exhibit
2(c), 2-67574 as
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Exhibit 2(c), 2-68687 as Exhibit 2(c), 2-69599 as Exhibit
4(a)-2, 2-71364 as Exhibit 4(a)-2, 2- 73727 as Exhibit
4(a)-2, 33-5079 as Exhibit 4(a)-2, 33-17083 as Exhibit
4(a)-2, 33-22090 as Exhibit 4(a)-2, in ALABAMA's Form 10-K
for the year ended December 31, 1990, File No. 1-3164, as
Exhibit 4(c), in Registration Nos. 33-43917 as Exhibit
4(a)-2, 33-45492 as Exhibit 4(a)-2, 33- 48885 as Exhibit
4(a)-2, 33-48917 as Exhibit 4(a)-2, in Form 8-K dated
January 20, 1993, File No. 1-3436, as Exhibit 4(a)-3, in
Form 8-K dated February 17, 1993, File No.1-3436, as
Exhibit 4(a)-3, in Form 8-K dated March 10, 1993, File No.
1-3436, as Exhibit 4(a)-3, in Certificate of Notification,
File No. 70-8069, as Exhibits A and B, in Form 8-K dated
June 24, 1993, File No. 1- 3436, as Exhibit 4, in
Certificate of Notification, File No. 70-8069, as Exhibit A,
in Form 8-K dated November 16, 1993, File No. 1-3436, as
Exhibit 4(b) and in Certificate of Notification, File No.
70-8069, as Exhibits A and B.)
GEORGIA
(d) - Indenture dated as of March 1, 1941, between GEORGIA and
Chemical Bank, as Trustee, and indentures supplemental
thereto dated as of March 1, 1941, March 3, 1941 (3
indentures), March 6, 1941 (139 indentures), March 1, 1946
(88 indentures) and December 1, 1947, through January 1,
1994. (Designated in Registration Nos. 2-4663 as Exhibits B-3
and B-3(a), 2-7299 as Exhibit 7(a)-2, 2- 61116 as Exhibit
2(a)-3 and 2(a)-4, 2-62488 as Exhibit 2(a)-3, 2-63393 as
Exhibit 2(a)-4, 2-63705 as Exhibit 2(a)-3, 2-68973 as Exhibit
2(a)-3, 2-70679 as Exhibit 4(a)-(2), 2-72324 as Exhibit
4(a)-2, 2-73987 as Exhibit 4(a)-(2), 2-77941 as Exhibits
4(a)-(2) and 4(a)-(3), 2-79336 as Exhibit 4(a)-(2), 2-81303
as Exhibit 4(a)-(2), 2-90105 as Exhibit 4(a)-(2), 33-5405 as
Exhibit 4(a)-(2), 33-14367 as Exhibits 4(a)-(2) and 4(a)-(3),
33-22504 as Exhibits 4(a)-(2), 4(a)-(3) and 4(a)-(4),
33-32420 as Exhibit 4(a)-(2), 33-35683 as Exhibit 4(a)-(2),
in GEORGIA's Form 10-K for the year ended December 31, 1990,
File No. 1-6468, as Exhibit 4(a)(3), in Form 10-K for the
year ended December 31, 1991, File No. 1-6468, as Exhibit
4(a)(5), in Registration No. 33-48895 as Exhibit 4(a)-(2), in
Form 8-K dated August 26, 1992, File No. 1-6468, as Exhibit
4(a)-(3), in Form 8-K dated September 9, 1992, File No.
1-6468, as Exhibits 4(a)-(3) and 4(a)-(4), in Form 8-K dated
September 23, 1992, File No. 1-6468, as Exhibit 4(a)-(3), in
Form 8-A dated October 12, 1992, as Exhibit 2(b), in Form 8-K
dated January 27, 1993, File No. 1-6468, as Exhibit 4(a)-(3),
in Registration No. 33-49661 as Exhibit 4(a)-(2), in Form 8-K
dated July 26, 1993, File No. 1-6468, as Exhibit 4, in
Certificate of Notification, File No. 70-7832, as Exhibit M
and in Certificate of Notification, File No. 70-7832, as
Exhibit C.)
GULF
(e) - Indenture dated as of September 1, 1941, between GULF and
The Chase Manhattan Bank (National Association) and The
Citizens & Peoples National Bank of Pensacola, as Trustees,
and indentures supplemental thereto through
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November 1, 1993. (Designated in Registration Nos.
2-4833 as Exhibit B-3, 2-62319 as Exhibit 2(a)-3, 2-63765 as
Exhibit 2(a)-3, 2-66260 as Exhibit 2(a)-3, 33-2809 as
Exhibit 4(a)-2, 33-43739 as Exhibit 4(a)-2, in GULF's Form
10-K for the year ended December 31, 1991, File No. 0-2429,
as Exhibit 4(b), in Form 8-K dated August 18, 1992, File No.
0-2429, as Exhibit 4(a)-3, in Registration No. 33-50165 as
Exhibit 4(a)-2, in Form 8-K dated July 12, 1993, File No.
0-2429, as Exhibit 4 and in Certificate of Notification,
File No. 70-8229, as Exhibit A.)
MISSISSIPPI
(f) - Indenture dated as of September 1, 1941, between
MISSISSIPPI and Morgan Guaranty Trust Company of New York,
as Trustee, and indentures supplemental thereto through
November 1, 1993. (Designated in Registration Nos.
2-4834 as Exhibit B-3, 2-62965 as Exhibit 2(b)-2, 2-66845 as
Exhibit 2(b)-2, 2-71537 as Exhibit 4(a)-(2), 33-5414 as
Exhibit 4(a)-(2), 33-39833 as Exhibit 4(a)-2, in
MISSISSIPPI's Form 10-K for the year ended December 31,
1991, File No. 0-6849, as Exhibit 4(b), in Form 8-K dated
August 5, 1992, File No. 0-6849, as Exhibit 4(a)-2, in
Second Certificate of Notification, File No. 70-7941, as
Exhibit I, in MISSISSIPPI's Form 8-K dated February 26,
1993, File No. 0-6849, as Exhibit 4(a)-2, in Certificate of
Notification, File No. 70-8127, as Exhibit A, in Form 8-K
dated June 22, 1993, File No. 0-6849, as Exhibit 1 and in
Certificate of Notification, File No. 70-8127, as Exhibit
A.)
SAVANNAH
(g) - Indenture dated as of March 1, 1945, between SAVANNAH and
NationsBank of Georgia, National Association, as
Trustee, and indentures supplemental thereto through July 1,
1993. (Designated in Registration Nos. 33-25183 as Exhibit
4(a)-(1), 33-41496 as Exhibit 4(a)-(2), 33-45757 as Exhibit
4(a)-(2), in SAVANNAH's Form 10-K for the year ended
December 31, 1991, File No. 1-5072, as Exhibit 4(b), in Form
8-K dated July 8, 1992, File No. 1-5072, as Exhibit 4(a)-3,
in Registration No. 33-50587 as Exhibit 4(a)-(2) and in Form
8-K dated July 22, 1993, File No. 1-5072, as Exhibit 4.)
(10) MATERIAL CONTRACTS
SOUTHERN
(a) 1 - Service contracts dated as of January 1, 1984 and Amendment
No. 1 dated as of September 6, 1985, between SCS and
ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN.
(Designated in SOUTHERN's Form 10-K for the year ended
December 31, 1984, File No. 1-3526, as Exhibit 10(a) and in
SOUTHERN's Form 10-K for the year ended December 31, 1985,
File No. 1-3526, as Exhibit 10(a)(3).)
(a) 2 - Service contract dated as of July 17, 1981, between SCS and
SEI. (Designated in SOUTHERN's Form 10-K for the year ended
December 31, 1985, File No. 1-3526, as Exhibit 10(a)(2).)
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(a) 3 - Service contract dated as of March 3, 1988, between SCS and
SAVANNAH. (Designated in SAVANNAH's Form 10-K for the year
ended December 31, 1987, File No. 1-5072, as Exhibit 10-p.)
(a) 4 - Service contract dated as of January 15, 1991, between SCS
and Southern Nuclear. (Designated in SOUTHERN's Form 10-K
for the year ended December 31, 1991, File No. 1-3526, as
Exhibit 10(a)(4).)
(a) 5 - Interchange contract dated October 28, 1988, effective
January 1, 1989, between ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in SAVANNAH's Form 10-K for
the year ended December 31, 1988, File No. 1-5072, as
Exhibit 10(b).)
(a) 6 - Agreement dated as of January 27, 1959 and Amendment No. 1
dated as of October 27, 1982, among SEGCO, ALABAMA and
GEORGIA. (Designated in Registration No. 2-59634 as Exhibit
5(c) and in GEORGIA's Form 10-K for the year ended December
31, 1982, File No. 1-6468, as Exhibit 10(d)(2).)
(a) 7 - Joint Committee Agreement dated as of August 27, 1976, among
GEORGIA, OPC, MEAG and Dalton. (Designated in Registration
No. 2-61116 as Exhibit 5(d).)
(a) 8 - Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement dated as of January 6, 1975, between
GEORGIA and OPC. (Designated in Form 8-K for January, 1975,
File No. 1-6468, as Exhibit (b)(1).)
(a) 9 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as of
January 6, 1975, between GEORGIA and OPC. (Designated in
Form 8-K for January, 1975, File No. 1-6468, as Exhibit
(b)(3).)
(a) 10 - Revised and Restated Integrated Transmission System
Agreement dated as of November 12, 1990, between GEORGIA and
OPC. (Designated in GEORGIA's Form 10-K for the year ended
December 31, 1990, File No. 1-6468, as Exhibit 10(g).)
(a) 11 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of March 26, 1976, between GEORGIA and
OPC. (Designated in Certificate of Notification, File No.
70-5592, as Exhibit A.)
(a) 12 - Plant Hal Wansley Operating Agreement dated as of March 26,
1976, between GEORGIA and OPC. (Designated in Certificate of
Notification, File No. 70-5592, as Exhibit B.)
(a) 13 - Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement dated as of August 27, 1976, between
GEORGIA, MEAG and Dalton. (Designated in Form 8-K dated as
of June 13, 1977, File No. 1-6468, as Exhibit (b)(1).)
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(a) 14 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as of
August 27, 1976, between GEORGIA, MEAG and Dalton.
(Designated in Form 8-K for February, 1977, File No. 1-6468,
as Exhibit (b)(2).)
(a) 15 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase and
Ownership Participation Agreement dated as of August 27, 1976
and Amendment No. 1 dated as of January 18, 1977, among
GEORGIA, OPC, MEAG and Dalton. (Designated in Form U-1,
File No. 70-5792, as Exhibit B-1 and in Form 8-K for
January 1977, File No. 1-6468, as Exhibit (B)(3).)
(a) 16 - Alvin W. Vogtle Nuclear Units Number One and Two Operating
Agreement dated as of August 27, 1976, among GEORGIA, OPC,
MEAG and Dalton. (Designated in Form U-1, File No. 70-5792,
as Exhibit B-2.)
(a) 17 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase,
Amendment, Assignment and Assumption Agreement dated as of
November 16, 1983, between GEORGIA and MEAG. (Designated in
GEORGIA's Form 10-K for the year ended December 31, 1983,
File No. 1-6468, as Exhibit 10(k)(4).)
(a) 18 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of August 27, 1976, between GEORGIA and
MEAG. (Designated in Form 8-K dated as of July 5, 1977,
File No. 1-6468, as Exhibit (b)(2).)
(a) 19 - Plant Hal Wansley Operating Agreement dated as of August 27,
1976, between GEORGIA and MEAG. (Designated in Form 8-K dated
as of July 5, 1977, File No. 1-6468, as Exhibit (b)(4).)
(a) 20 - Integrated Transmission System Agreement dated as of August
27, 1976, between GEORGIA and Dalton. (Designated in Form
8-K dated as of July 5, 1977, File No. 1-6468, as Exhibit
(b)(8).)
(a) 21 - Integrated Transmission System Agreement dated as of August
27, 1976, between GEORGIA and MEAG. (Designated in Form 8-K
for February, 1977, File No. 1-6468, as Exhibit (b)(4).)
(a) 22 - Plant Hal Wansley Purchase and Ownership Participation
Agreement dated as of April 19, 1977, between GEORGIA and
Dalton. (Designated in Form 8-K dated as of June 13, 1977,
File No. 1-6468, as Exhibit (b)(3).)
(a) 23 - Plant Hal Wansley Operating Agreement dated as of April 19,
1977, between GEORGIA and Dalton. (Designated in Form 8-K
dated as of June 13, 1977, File No. 1-6468, as Exhibit
(b)(7).)
(a) 24 - Plant Robert W. Scherer Units Number One and Two Purchase
and Ownership Participation Agreement dated as of May 15,
1980, Amendment No. 1 dated as of December 30, 1985,
Amendment No. 2 dated as of July 1, 1986 and Amendment No. 3
dated as of August 1, 1988, among GEORGIA, OPC, MEAG and
Dalton. (Designated in Form U-1, File No. 70-6481, as
Exhibit B-3, in SOUTHERN's Form 10-K for the year ended
December 31, 1987, File
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No. 1-3526, as Exhibit 10(o)(2) and in SOUTHERN's Form
10-K for the year ended December 31, 1989, File No.
1-3526, as Exhibit 10(n)(2).)
(a) 25 - Plant Robert W. Scherer Units Number One and Two Operating
Agreement dated as of May 15, 1980 and Amendment No. 1
dated as of December 3, 1985, among GEORGIA, OPC, MEAG and
Dalton. (Designated in Form U-1, File No. 70-6481, as
Exhibit B-4 and in SOUTHERN's Form 10-K for the year ended
December 31, 1987, File No. 1-3526, as Exhibit 10(o)(4).)
(a) 26 - Plant Robert W. Scherer Purchase, Sale and Option
Agreement dated as of May 15, 1980, between GEORGIA and
MEAG. (Designated in Form U-1, File No. 70-6481, as
Exhibit B-1.)
(a) 27 - Plant Robert W. Scherer Purchase and Sale Agreement dated
as of May 16, 1980, between GEORGIA and Dalton.
(Designated in Form U-1, File No. 70-6481, as Exhibit
B-2.)
(a) 28 - Plant Robert W. Scherer Unit Number Three Purchase and
Ownership Participation Agreement dated as of March 1,
1984, Amendment No. 1 dated as of July 1, 1986 and
Amendment No. 2 dated as of August 1, 1988, between
GEORGIA and GULF. (Designated in Form U-1, File No.
70-6573, as Exhibit B-4, in SOUTHERN's Form 10-K for the
year ended December 31, 1987, as Exhibit 10(o)(2) and in
SOUTHERN's Form 10-K for the year ended December 31, 1989,
as Exhibit 10(n)(2).)
(a) 29 - Plant Robert W. Scherer Unit Number Three Operating
Agreement dated as of March 1, 1984, between GEORGIA
and GULF. (Designated in Form U-1, File No. 70-6573, as
Exhibit B-5.)
(a) 30 - Plant Robert W. Scherer Unit No. Four Amended and Restated
Purchase and Ownership Participation Agreement by and
among GEORGIA, FP&L and JEA, dated as of December 31,
1990. (Designated in Form U-1, File No. 70-7843, as
Exhibit B-1.)
(a) 31 - Plant Robert W. Scherer Unit No. Four Operating Agreement
by and among GEORGIA, FP&L and JEA, dated as of
December 31, 1990. (Designated in Form U-1, File No.
70-7843, as Exhibit B-2.)
(a) 32 - Amended and Restated Unit Power Sales Agreement dated
February 18, 1982 and Amendment No. 1 dated May 18,
1982, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI
and SCS. (Designated in MISSISSIPPI's Form 10-K for the
year ended December 31, 1981, File No. 0-6849, as Exhibit
10(c)(2) and in GEORGIA's Form 10-K for the year ended
December 31, 1982, File No. 1-6468, as Exhibit 10(r)(3).)
(a) 33 - Amended and Restated Unit Power Sales Agreement dated May
19, 1982, Amendment No. 1 dated August 30, 1984 and
Amendment No. 2 dated October 30, 1987, between JEA and
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. (Designated
in GEORGIA's Form 10-K for the year
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ended December 31, 1982, File No. 1-6468, as Exhibit
10(s)(2), in SOUTHERN's Form 10-K for the year ended
December 31, 1984, File No. 1-3526, as Exhibit 10(r)(2)
and in GEORGIA's Form 10-K for the year ended December 31,
1990, File No. 1-6468 as Exhibit 10(s)(2).)
(a) 34 - Unit Power Sales Agreement dated July 19, 1988, between
FPC and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH
and SCS. (Designated in SAVANNAH's Form 10-K for the year
ended December 31, 1988, File No. 1-5072, as Exhibit
10(d).)
(a) 35 - Amended Unit Power Sales Agreement dated July 20, 1988,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in SAVANNAH's Form 10-K for
the year ended December 31, 1988, File No. 1-5072, as
Exhibit 10(e).)
(a) 36 - Amended Unit Power Sales Agreement dated August 17, 1988,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in SAVANNAH's Form 10-K for
the year ended December 31, 1988, File No. 1-5072, as
Exhibit 10(f).)
(a) 37 - Unit Power Sales Agreement dated December 8, 1990, between
Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in GEORGIA's Form 10-K for
the year ended December 31, 1990, File No. 1-6468, as
Exhibit 10(x).)
(a) 38 - The Southern Company Executive Stock Plan For the Southern
Electric System and the First Amendment thereto.
(Designated in Registration No. 33-30171 as Exhibit 4(c).)
(a) 39 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in GULF's Form 10-K for the
year ended December 31, 1991, File No. 0-2429, as Exhibit
10(1).)
(a) 40 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. (Designated in GULF's Form 10-K for the
year ended December 31, 1991, File No. 0-2429, as Exhibit
10(m).)
(a) 41 - Rocky Mountain Pumped Storage Hydroelectric Project
Ownership Participation Agreement dated November 18,
1988, between OPC and GEORGIA. (Designated in GEORGIA's
Form 10-K for the year ended December 31, 1988, File No.
1-6468, as Exhibit 10(x).)
(a) 42 - Rocky Mountain Pumped Storage Hydroelectric Project
Operating Agreement dated November 18, 1988, between
OPC and GEORGIA. (Designated in GEORGIA's Form 10-K for
the year ended December 31, 1988, File No. 1-6468, as
Exhibit 10(y).)
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(a) 43 - Purchase and Ownership Agreement for Joint Ownership
Interest in the James H. Miller, Jr. Steam Electric
Generating Plant Units One and Two dated November 18,
1988, between ALABAMA and AEC. (Designated in Form U-1,
File No. 70-7609, as Exhibit B-1.)
(a) 44 - Operating Agreement for Joint Ownership Interest in the
James H. Miller, Jr. Steam Electric Generating Plant
Units One and Two dated November 18, 1988, between ALABAMA
and AEC. (Designated in Form U-1, File No. 70-7609, as
Exhibit B-2.)
(a) 45 - Transmission Facilities Agreement dated February 25, 1982,
Amendment No. 1 dated May 12, 1982 and Amendment No. 2
dated December 6, 1983, between Gulf States and
MISSISSIPPI. (Designated in MISSISSIPPI's Form 10-K for
the year ended December 31, 1981, File No. 0-6849, as
Exhibit 10(f), in MISSISSIPPI's Form 10-K for the year
ended December 31, 1982, File No. 0-6849, as Exhibit
10(f)(2) and in MISSISSIPPI's Form 10-K for the year ended
December 31, 1983, File No. 0-6849, as Exhibit 10(f)(3).)
(a) 46 - Form of commitment agreement, Amendment No. 1 and
Amendment No. 2 with respect to SOUTHERN, ALABAMA,
GEORGIA and MISSISSIPPI revolving credits. (Designated in
Form U-1, File No. 70-7738, as Exhibit A-5 and in Form
U-1, File No. 70-7937, as A-5(b).)
(a) 47 - Block Power Sale Agreement between GEORGIA and OPC dated
as of November 12, 1990. (Designated in GEORGIA's Form
10-K for the year ended December 31, 1990, File No.
1-6468, as Exhibit 10(cc).)
(a) 48 - Coordination Services Agreement between GEORGIA and OPC
dated as of November 12, 1990. (Designated in GEORGIA's
Form 10-K for the year ended December 31, 1990, File No.
1-6468, as Exhibit 10(dd).)
*(a) 49 - Amended and Restated Nuclear Managing Board Agreement for
Plant Hatch and Plant Vogtle among GEORGIA, OPC, MEAG
and Dalton dated as of July 1, 1993.
(a) 50 - Integrated Transmission System Agreement, Power Sale and
Coordination Umbrella Agreement between GEORGIA and OPC
dated as of November 12, 1990. (Designated in GEORGIA's
Form 10-K for the year ended December 31, 1990, File No.
1-6468, as Exhibit 10(ff).)
(a) 51 - Revised and Restated Integrated Transmission System
Agreement between GEORGIA and Dalton dated as of
December 7, 1990. (Designated in GEORGIA's Form 10-K for
the year ended December 31, 1990, File No. 1-6468, as
Exhibit 10(gg).)
(a) 52 - Revised and Restated Integrated Transmission System
Agreement between GEORGIA and MEAG dated as of December
7, 1990. (Designated in GEORGIA's Form 10-K for the year
ended December 31, 1990, File No. 1-6468, as Exhibit
10(hh).)
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(a) 53 - Long Term Transmission Service Agreement between Entergy
Power, Inc. and ALABAMA, MISSISSIPPI and SCS.
(Designated in SOUTHERN's Form 10-K for the year ended
December 31, 1992, File No. 1-3526, as Exhibit 10(a)53.)
*(a) 54 - Amendment No. 4 to the Plant Robert W. Scherer Units
Number One and Two Purchase and Ownership Participation
Agreement dated as of December 31, 1990.
*(a) 55 - Amendment No. 2 to the Plant Robert W. Scherer Units
Number One and Two Operating Agreement dated as of
December 31, 1990.
*(a) 56 - Plant Scherer Managing Board Agreement dated as of
December 31, 1990 among GEORGIA, OPC, MEAG, Dalton,
GULF, FP&L and JEA.
*(a) 57 - Plant McIntosh Combustion Turbine Purchase and Ownership
Participation Agreement between GEORGIA and SAVANNAH
dated as of December 15, 1992.
*(a) 58 - Plant McIntosh Combustion Turbine Operating Agreement
between GEORGIA and SAVANNAH dated as of December 15,
1992.
*(a) 59 - Power Purchase Agreement dated as of December 3, 1993
between GEORGIA and FPC.
ALABAMA
(b) 1 - Indenture dated as of June 1, 1959, between SEGCO and
Citibank, N.A., as Trustee, and indentures supplemental
thereto through December 1, 1962. (Designated in
Registration No. 2-59843 as Exhibit 2(a)-8.)
(b) 2 - Service contracts dated as of January 1, 1984 and
Amendment No. 1 dated as of September 6, 1985, between
SCS and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and
SOUTHERN. See Exhibit 10(a)1 herein.
(b) 3 - Interchange contract dated October 28, 1988, effective
January 1, 1989, between ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)5 herein.
(b) 4 - Agreement dated as of January 27, 1959 and Amendment No.
1 dated as of October 27, 1982, among SEGCO, ALABAMA
and GEORGIA. See Exhibit 10(a)6 herein.
(b) 5 - Amended and Restated Unit Power Sales Agreement dated
February 18, 1982 and Amendment No. 1 dated May 18,
1982, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI
and SCS. See Exhibit 10(a)32 herein.
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(b) 6 - Amended and Restated Unit Power Sales Agreement dated May
19, 1982, Amendment No. 1, dated August 30, 1984 and
Amendment No. 2, dated October 30, 1987, between JEA and
ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit
10(a)33 herein.
(b) 7 - Unit Power Sales Agreement dated July 19, 1988, between
FPC and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH
and SCS. See Exhibit 10(a)34 herein.
(b) 8 - Amended Unit Power Sales Agreement dated July 20, 1988,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(b) 9 - Amended Unit Power Sales Agreement dated August 17, 1988,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(b) 10 - Unit Power Sales Agreement dated December 8, 1990,
between Tallahassee and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)37
herein.
(b) 11 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(b) 12 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(b) 13 - Firm Power Purchase Contract between ALABAMA and AMEA.
(Designated in Certificate of Notification, File No.
70-7212, as Exhibit B.)
(b) 14 - 1991 Firm Power Purchase Contract between ALABAMA and
AMEA. (Designated in Form U-1, File No. 70- 7873, as
Exhibit B-1.)
(b) 15 - Purchase and Ownership Agreement for Joint Ownership
Interest in the James H. Miller, Jr. Steam Electric
Generating Plant Units One and Two dated November 18,
1988, between ALABAMA and AEC. See Exhibit 10(a)43
herein.
(b) 16 - Operating Agreement for Joint Ownership Interest in the
James H. Miller, Jr. Steam Electric Generating Plant
Units One and Two dated November 18, 1988, between ALABAMA
and AEC. See Exhibit 10(a)44 herein.
(b) 17 - Form of commitment agreement, Amendment No. 1 and
Amendment No. 2 with respect to SOUTHERN, ALABAMA,
GEORGIA and MISSISSIPPI revolving credits. See Exhibit
10(a)46 herein.
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(b) 18 - Long Term Transmission Service Agreement between
Entergy Power, Inc. and ALABAMA, MISSISSIPPI and
SCS. See Exhibit 10(a)53 herein.
GEORGIA
(c) 1 - Indenture dated as of June 1, 1959, between
SEGCO and Citibank, N.A., as Trustee, and
indentures supplemental thereto through December
1, 1962. See Exhibit 10(b)1 herein.
(c) 2 - Service contracts dated as of January 1, 1984 and
Amendment No. 1 dated as of September 6, 1985,
between SCS and ALABAMA, GEORGIA, GULF, MISSISSIP
PI, SEGCO and SOUTHERN. See Exhibit 10(a)1
herein.
(c) 3 - Interchange contract dated October 28, 1988,
effective January 1, 1989, between ALABAMA,
GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)5 herein.
(c) 4 - Agreement dated as of January 27, 1959 and
Amendment No. 1 dated as of October 27, 1982,
among SEGCO, ALABAMA and GEORGIA. See Exhibit
10(a)6 herein.
(c) 5 - Joint Committee Agreement dated as of August 27,
1976, among GEORGIA, OPC, MEAG and Dalton. See
Exhibit 10(a)7 herein.
(c) 6 - Edwin I. Hatch Nuclear Plant Purchase and
Ownership Participation Agreement dated as of
January 6, 1975, between GEORGIA and OPC. See
Exhibit 10(a)8 herein.
(c) 7 - Edwin I. Hatch Nuclear Plant Operating Agreement
dated as of January 6, 1975, between GEORGIA and
OPC. See Exhibit 10(a)9 herein.
(c) 8 - Revised and Restated Integrated Transmission
System Agreement dated as of November 12, 1990,
between GEORGIA and OPC. See Exhibit 10(a)10
herein.
(c) 9 - Plant Hal Wansley Purchase and Ownership
Participation Agreement dated as of March 26,
1976, between GEORGIA and OPC. See Exhibit 10(a)
11 herein.
(c) 10 - Plant Hal Wansley Operating Agreement dated as of
March 26, 1976, between GEORGIA and OPC. See
Exhibit 10(a)12 herein.
(c) 11 - Edwin I. Hatch Nuclear Plant Purchase and
Ownership Participation Agreement dated as of
August 27, 1976, between GEORGIA, MEAG and
Dalton. See Exhibit 10(a)13 herein.
(c) 12 - Edwin I. Hatch Nuclear Plant Operating Agreement
dated as of August 27, 1976, between GEORGIA,
MEAG and Dalton. See Exhibit 10(a)14 herein.
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<PAGE> 419
(c) 13 - Alvin W. Vogtle Nuclear Units Number One and Two
Purchase and Ownership Participation Agreement
dated as of August 27, 1976 and Amendment No. 1
dated as of January 18, 1977, among GEORGIA, OPC,
MEAG and Dalton. See Exhibit 10(a)15 herein.
(c) 14 - Alvin W. Vogtle Nuclear Units Number One and Two
Operating Agreement dated as of August 27, 1976,
among GEORGIA, OPC, MEAG and Dalton. See Exhibit
10(a)16 herein.
(c) 15 - Alvin W. Vogtle Nuclear Units Number One and Two
Purchase, Amendment, Assignment and Assumption
Agreement dated as of November 16, 1983, between
GEORGIA and MEAG. See Exhibit 10(a)17 herein.
(c) 16 - Plant Hal Wansley Purchase and Ownership
Participation Agreement dated as of August 27,
1976, between GEORGIA and MEAG. See Exhibit
10(a)18 herein.
(c) 17 - Plant Hal Wansley Operating Agreement dated as
of August 27, 1976, between GEORGIA and MEAG. See
Exhibit 10(a)19 herein.
(c) 18 - Integrated Transmission System Agreement dated
as of August 27, 1976, between GEORGIA and Dalton.
See Exhibit 10(a)20 herein.
(c) 19 - Integrated Transmission System Agreement dated
as of August 27, 1976, between GEORGIA and MEAG.
See Exhibit 10(a)21 herein.
(c) 20 - Plant Hal Wansley Purchase and Ownership
Participation Agreement dated as of April 19,
1977, between GEORGIA and Dalton. See Exhibit
10(a)22 herein.
(c) 21 - Plant Hal Wansley Operating Agreement dated as of
April 19, 1977, between GEORGIA and Dalton. See
Exhibit 10(a)23 herein.
(c) 22 - Plant Robert W. Scherer Units Number One and Two
Purchase and Ownership Participation Agreement
dated as of May 15, 1980, Amendment No. 1 dated
as of December 30, 1985, Amendment No. 2 dated as
of July 1, 1986 and Amendment No. 3 dated as of
August 1, 1988, among GEORGIA, OPC, MEAG and
Dalton. See Exhibit 10(a)24 herein.
(c) 23 - Plant Robert W. Scherer Units Number One and Two
Operating Agreement dated as of May 15, 1980 and
Amendment No. 1 dated as of December 3, 1985,
among GEORGIA, OPC, MEAG and Dalton. See Exhibit
10(a)25 herein.
(c) 24 - Plant Robert W. Scherer Purchase, Sale and Option
Agreement dated as of May 15, 1980, between
GEORGIA and MEAG. See Exhibit 10(a)26 herein.
(c) 25 - Plant Robert W. Scherer Purchase and Sale
Agreement dated as of May 16, 1980, between
GEORGIA and Dalton. See Exhibit 10(a)27 herein.
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<PAGE> 420
(c) 26 - Plant Robert W. Scherer Unit Number Three
Purchase and Ownership Participation Agreement
dated as of March 1, 1984, Amendment No. 1 dated
as of July 1, 1986 and Amendment No. 2 dated as
of August 1, 1988, between GEORGIA and GULF. See
Exhibit 10(a)28 herein.
(c) 27 - Plant Robert W. Scherer Unit Number Three
Operating Agreement dated as of March 1, 1984,
between GEORGIA and GULF. See Exhibit 10(a)29
herein.
(c) 28 - Plant Robert W. Scherer Unit No. Four Amended and
Restated Purchase and Ownership Participation
Agreement by and among GEORGIA, FP&L and JEA
dated as of December 31, 1990. See Exhibit 10(a)
30 herein.
(c) 29 - Plant Robert W. Scherer Unit No. Four Operating
Agreement by and among GEORGIA, FP&L and JEA dated
as of December 31, 1990. See Exhibit 10(a)31
herein.
(c) 30 - Amended and Restated Unit Power Sales Agreement
dated February 18, 1982 and Amendment No. 1 dated
May 18, 1982, between FP&L and ALABAMA, GEORGIA,
GULF, MISSISSIPPI and SCS. See Exhibit 10(a)32
herein.
(c) 31 - Amended and Restated Unit Power Sales Agreement
dated May 19, 1982, Amendment No. 1, dated August
30, 1984 and Amendment No. 2 dated October 30,
1987, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI and SCS. See Exhibit 10(a)33 herein.
(c) 32 - Unit Power Sales Agreement dated July 19, 1988,
between FPC and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
34 herein.
(c) 33 - Amended Unit Power Sales Agreement dated July 20,
1988, between FP&L and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
35 herein.
(c) 34 - Amended Unit Power Sales Agreement dated August
17, 1988, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
36 herein.
(c) 35 - Unit Power Sales Agreement dated December 8,
1990, between Tallahassee and ALABAMA, GEORGIA,
GULF, MISSISSIPPI, SAVANNAH and SCS. See
Exhibit 10(a)37 herein.
*(c) 36 - Power Purchase Agreement dated as of December 3,
1993 between GEORGIA and FPC. See Exhibit 10(a)
59 herein.
(c) 37 - Transition Energy Agreement dated December 31,
1990, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
39 herein.
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<PAGE> 421
(c) 38 - Transition Energy Agreement dated December 31,
1990, between FP&L and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
40 herein.
(c) 39 - Rocky Mountain Pumped Storage Hydroelectric
Project Ownership Participation Agreement dated
November 18, 1988, between OPC and GEORGIA. See
Exhibit 10(a)41 herein.
(c) 40 - Rocky Mountain Pumped Storage Hydroelectric
Project Operating Agreement dated November 18,
1988, between OPC and GEORGIA. See Exhibit
10(a)42 herein.
(c) 41 - Form of commitment agreement, Amendment No. 1
and Amendment No. 2 with respect to SOUTHERN,
ALABAMA, GEORGIA and MISSISSIPPI revolving
credits. See Exhibit 10(a)46 herein.
(c) 42 - Block Power Sale Agreement between GEORGIA and
OPC dated as of November 12, 1990. See Exhibit
10(a)47 herein.
(c) 43 - Coordination Services Agreement between GEORGIA
and OPC dated as of November 12, 1990. See
Exhibit 10(a)48 herein.
*(c) 44 - Amended and Restated Nuclear Managing Board
Agreement for Plant Hatch and Plant Vogtle among
GEORGIA, OPC, MEAG and Dalton dated as of July 1,
1993. See Exhibit 10(a)49 herein.
(c) 45 - Integrated Transmission System Agreement, Power
Sale and Coordination Umbrella Agreement between
GEORGIA and OPC dated as of November 12, 1990.
See Exhibit 10(a)50 herein.
(c) 46 - Revised and Restated Integrated Transmission
System Agreement between GEORGIA and Dalton dated
as of December 7, 1990. See Exhibit 10(a)51
herein.
(c) 47 - Revised and Restated Integrated Transmission
System Agreement between GEORGIA and MEAG dated
as of December 7, 1990. See Exhibit 10(a)52
herein.
*(c) 48 - Amendment No. 4 to the Plant Robert W. Scherer
Units Number One and Two Purchase and Ownership
Participation Agreement dated as of December 31,
1990. See Exhibit 10(a)54 herein.
*(a) 49 - Amendment No. 2 to the Plant Robert W. Scherer
Units Number One and Two Operating Agreement dated
as of December 31, 1990. See Exhibit 10(a)55
herein.
*(c) 50 - Plant Scherer Managing Board Agreement dated as
of December 31, 1990 among GEORGIA, OPC, MEAG,
Dalton, GULF, FP&L and JEA. See Exhibit 10(a)56
herein.
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<PAGE> 422
*(c) 51 - Plant McIntosh Combustion Turbine Purchase and
Ownership Participation Agreement between GEORGIA
and SAVANNAH dated as of December 15, 1992. See
Exhibit 10(a)57 herein.
*(c) 52 - Plant McIntosh Combustion Turbine Operating
Agreement between GEORGIA and SAVANNAH dated as of
December 15, 1992. See Exhibit 10(a)58 herein.
GULF
(d) 1 - Service contracts dated as of January 1, 1984 and
Amendment No. 1 dated as of September 6, 1985,
between SCS and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SEGCO and SOUTHERN. See Exhibit
10(a)1 herein.
(d) 2 - Interchange contract dated October 28, 1988,
effective January 1, 1989, between ALABAMA,
GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)5 herein.
(d) 3 - Plant Robert W. Scherer Unit Number Three
Purchase and Ownership Participation Agreement
dated as of March 1, 1984, Amendment No. 1 dated
as of July 1, 1986 and Amendment No. 2 dated as
of August 1, 1988, between GEORGIA and GULF.
See Exhibit 10(a)28 herein.
(d) 4 - Plant Robert W. Scherer Unit Number Three
Operating Agreement dated as of March 1, 1984,
between GEORGIA and GULF. See Exhibit 10(a)29
herein.
(d) 5 - Amended and Restated Unit Power Sales Agreement
dated February 18, 1982 and Amendment No. 1 dated
May 18, 1982, between FP&L and ALABAMA, GEORGIA,
GULF, MISSISSIPPI and SCS. See Exhibit 10(a)32
herein.
(d) 6 - Amended and Restated Unit Power Sales Agreement
dated May 19, 1982, Amendment No. 1 dated August
30, 1984 and Amendment No. 2 dated October 30,
1987, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI and SCS. See Exhibit 10(a)33 herein.
(d) 7 - Unit Power Sales Agreement dated July 19, 1988,
between FPC and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
34 herein.
(d) 8 - Amended Unit Power Sales Agreement dated July 20,
1988, between FP&L and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
35 herein.
(d) 9 - Amended Unit Power Sales Agreement dated August
17, 1988, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
36 herein.
E-16
<PAGE> 423
(d) 10 - Agreement between GULF and AEC, effective August
1, 1985. (Designated in GULF's Form 10-K for the
year ended December 31, 1985, File No. 0-2429, as
Exhibit 10(g).)
(d) 11 - Unit Power Sales Agreement dated December 8,
1990, between Tallahassee and ALABAMA, GEORGIA,
GULF, MISSISSIPPI, SAVANNAH and SCS. See
Exhibit 10(a)37 herein.
(d) 12 - Transition Energy Agreement dated December 31,
1990, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
39 herein.
(d) 13 - Transition Energy Agreement dated December 31,
1990, between FP&L and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
40 herein.
MISSISSIPPI
(e) 1 - Service contracts dated as of January 1, 1984 and
Amendment No. 1 dated September 6, 1985, between
SCS and ALABAMA, GEORGIA, GULF, MISSISSIPPI,
SEGCO and SOUTHERN. See Exhibit 10(a)1 herein.
(e) 2 - Interchange contract dated October 28, 1988,
effective January 1, 1989, between ALABAMA,
GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)5 herein.
(e) 3 - Amended and Restated Unit Power Sales Agreement
dated February 18, 1982 and Amendment No. 1 dated
May 18, 1982, between FP&L and ALABAMA, GEORGIA,
GULF, MISSISSIPPI and SCS. See Exhibit 10(a)32
herein.
(e) 4 - Amended and Restated Unit Power Sales Agreement
dated May 19, 1982, Amendment No. 1 dated August
30, 1984, and Amendment No. 2 dated October 30,
1987, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI and SCS. See Exhibit 10(a)33 herein.
(e) 5 - Unit Power Sales Agreement dated July 19, 1988,
between FPC and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
34 herein.
(e) 6 - Amended Unit Power Sales Agreement dated July 20,
1988, between FP&L and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
35 herein.
(e) 7 - Amended Unit Power Sales Agreement dated August
17, 1988, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
36 herein.
E-17
<PAGE> 424
(e) 8 - Unit Power Sales Agreement dated December 8,
1990, between Tallahassee and ALABAMA, GEORGIA,
GULF, MISSISSIPPI, SAVANNAH and SCS. See
Exhibit 10(a)37 herein.
(e) 9 - Transition Energy Agreement dated December 31,
1990, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
39 herein.
(e) 10 - Transition Energy Agreement dated December 31,
1990, between FP&L and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
40 herein.
(e) 11 - Transmission Facilities Agreement dated February
25, 1982, Amendment No. 1 dated May 12, 1982 and
Amendment No. 2 dated December 6, 1983, between
Gulf States and MISSISSIPPI. See Exhibit 10(a)45
herein.
(e) 12 - Form of commitment agreement, Amendment No. 1 and
Amendment No. 2 with respect to SOUTHERN,
ALABAMA, GEORGIA and MISSISSIPPI revolving
credits. See Exhibit 10(a)46 herein.
(e) 13 - Long Term Transmission Service Agreement between
Entergy Power, Inc. and ALABAMA MISSISSIPPI and
SCS. See Exhibit 10(a)53 herein.
SAVANNAH
(f) 1 - Service contract dated as of March 3, 1988,
between SCS and SAVANNAH. See Exhibit 10(a)3
herein.
(f) 2 - Interchange contract dated October 28, 1988,
effective January 1, 1989, between ALABAMA,
GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
See Exhibit 10(a)5 herein.
(f) 3 - Unit Power Sales Agreement dated July 19, 1988,
between FPC and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
34 herein.
(f) 4 - Amended Unit Power Sales Agreement dated July 20,
1988, between FP&L and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
35 herein.
(f) 5 - Amended Unit Power Sales Agreement dated August
17, 1988, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
36 herein.
(f) 6 - Unit Power Sales Agreement dated December 8,
1990, between Tallahassee and ALABAMA, GEORGIA,
GULF, MISSISSIPPI, SAVANNAH and SCS. See
Exhibit 10(a)37 herein.
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<PAGE> 425
(f) 7 - Transition Energy Agreement dated December 31,
1990, between JEA and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
39 herein.
(f) 8 - Transition Energy Agreement dated December 31,
1990, between FP&L and ALABAMA, GEORGIA, GULF,
MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)
40 herein.
*(f) 9 - Plant McIntosh Combustion Turbine Purchase and
Ownership Participation Agreement between GEORGIA
and SAVANNAH dated as of December 15, 1992. See
Exhibit 10(a) 57 herein.
*(f) 10 - Plant McIntosh Combustion Turbine Operating
Agreement between GEORGIA and SAVANNAH dated
December 15, 1992. See Exhibit 10(a)58 herein.
(21) *SUBSIDIARIES OF REGISTRANTS - Contained herein at page IV-5.
(23) CONSENTS OF EXPERTS AND COUNSEL
SOUTHERN
*(a) - The consent of Arthur Andersen & Co. is contained
herein at page IV-6.
ALABAMA
*(b) - The consent of Arthur Andersen & Co. is contained
herein at page IV-7.
GEORGIA
*(c) - The consent of Arthur Andersen & Co. is contained
herein at page IV-8.
GULF
*(d) - The consent of Arthur Andersen & Co. is contained
herein at page IV-9.
MISSISSIPPI
*(e) - The consent of Arthur Andersen & Co. is contained
herein at page IV-10.
SAVANNAH
*(f) - The consent of Arthur Andersen & Co. is contained
herein at page IV-11.
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<PAGE> 426
(24) POWERS OF ATTORNEY AND RESOLUTIONS
SOUTHERN
*(a) - Power of Attorney and resolution.
ALABAMA
*(b) - Power of Attorney and resolution.
GEORGIA
*(c) - Power of Attorney and resolution.
GULF
*(d) - Power of Attorney and resolution.
MISSISSIPPI
*(e) - Power of Attorney and resolution.
SAVANNAH
*(f) - Power of Attorney and resolution.
E-20
<PAGE> 1
Exhibit 3(d)2
GULF POWER COMPANY
BY-LAWS
----------------
SECTION 1. The annual meeting of the stockholders of
the corporation for the election of directors and for the
transaction of such other corporate business as may properly
come before such meeting shall be held at the corporation's
office at Augusta, in the State of Maine, or at such other
place within or without the State of Maine as the Board of
Directors may determine, on the last Tuesday in June in each
year; provided, however, that the Board of Directors may fix an
earlier day for such annual meeting of stockholders in any
particular year; and provided further that, if the day fixed
for such annual meeting of stockholders is a legal holiday,
such meeting shall be held on the first day thereafter which is
not a legal holiday.
SECTION 2. Special meetings of the stockholders of
the corporation may be held at such time and at such place
within or without the State of Maine as may be determined by
the President or the Board of Directors or Executive Committee,
or stockholders holding one-fourth of the then outstanding
capital stock entitled to vote.
SECTION 3. Notice of the time, place and purpose of
every meeting of stockholders shall be mailed by the Secretary
or the officer performing his duties at least ten days before
the meeting to each stockholder of record entitled to vote, at
his post office address as shown by the records of the
corporation, but meetings may be held without notice if all
stockholders entitled to vote are present or if notice is
waived before or after the meeting by those not present. No
stockholder shall be entitled to notice of any meeting of
stockholders with respect to any shares registered in his name
after the date upon which notice of such meeting is required by
law or by these by-laws to have been mailed or otherwise given
to stockholders.
SECTION 4. Subject to the provisions of the articles
of incorporation, as amended, the holders of a majority of the
stock of the corporation entitled to vote, present in person or
by proxy, shall constitute a quorum, but less than a quorum
shall have power to adjourn.
At all meetings of stockholders, each stockholder
entitled to vote may vote and otherwise act either in person or
by proxy.
SECTION 5. The stock of the corporation shall be
transferable or assignable on the books of the corporation by
the holders in person or by attorney on the surrender of the
<PAGE> 2
- 2 -
certificates therefor duly endorsed. The certificates of stock
of the corporation shall be numbered and shall be entered in
the books of the corporation and registered as they are issued.
They shall exhibit the name of the registered holder and shall
certify the number of shares owned by him and shall be signed
by, or in the name of the corporation by, the President or a
Vice-President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary, and shall be sealed
with the corporate seal of the corporation. Where such
certificate is signed by a Transfer Agent or by a Transfer
Clerk acting on behalf of the corporation and by a Registrar,
the signature of any such President, Vice-President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary and the
seal of the corporation may be facsimile. In case any officer
or officers who shall have signed, or whose facsimile signature
or signatures shall have been used on, any such certificate or
certificates, shall cease to be such officer or officers of the
corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have
been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and
be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile
signature or signatures shall have been used thereon had not
ceased to be such officer or officers of the corporation and
the issuance and delivery of any such certificate or
certificates shall be conclusive evidence of such adoption.
The stock transfer books of the corporation may be
closed by order of the Board of Directors for such period, not
to exceed sixty days previous to any meeting of the
stockholders or previous to the payment of any dividend upon
the stock of the corporation, as the Board may determine,
during which time no transfer of stock upon the books of the
Corporation shall be made, and said books shall be re-opened
the day following the date fixed for such meeting or for the
payment of such dividend. If the stock transfer books of the
corporation are ordered closed by the Board of Directors, every
stockholder who appears of record at the time of closing said
books shall be entitled to vote at the meeting or to receive
the dividend on account of which the said books were ordered
closed. In lieu of providing for the closing of the stock
transfer books of the corporation, the Board of Directors may
fix a date not exceeding sixty days preceding the date of any
meeting of stockholders, or any dividend payment date, as the
record date for the determination of the stockholders entitled
to notice of and to vote at such meeting, or entitled to
receive such dividend, as the case may be. If the stock
transfer books of the corporation are not ordered closed by the
Board of Directors of if the Board of Directors does not fix a
date of record in lieu thereof, every stockholder who appears
of record on the date of a stockholders' meeting shall be
entitled to vote at such meeting and every stockholder who
appears of record on the date specified by the Board of
<PAGE> 3
- 3 -
Directors in their declaration of a dividend shall be entitled
to such dividend.
SECTION 6. Upon receipt by this corporation of
evidence, satisfactory to the Board of Directors, of the loss,
destruction or mutilation of any certificate of stock of this
corporation and, if required by the Board of Directors, upon
receipt of indemnity satisfactory to the Board of Directors and
upon surrender and cancellation of such certificate, if
mutilated, the Board of Directors may, if it so determines,
direct the officers of this corporation to execute and deliver
a new certificate of like tenor and for the same number of
shares of the same class of stock to be issued in lieu of such
lost, destroyed or mutilated certificate.
SECTION 7. The affairs of this corporation shall be
managed by a Board consisting of not less than six directors,
nor more than fifteen directors, their number to be fixed at
the annual or any special meeting of the stockholders, who
shall be elected annually by the stockholders entitled to vote,
to hold office until their successors are elected and qualify.
Directors need not be stockholders. A majority of the members
of the Board then in office shall constitute a quorum.
Vacancies in the Board of Directors may be filled by the Board
at any meeting, except that vacancies arising from the election
of fewer directors than the total number fixed shall be filled
at a meeting of the stockholders called for the purpose of
filling such vacancies, or by the Board of Directors under
special authorization from the stockholders. Any and all of
the directors may at any time be removed without cause assigned
by the vote of the holders of a majority in number of all of
the outstanding stock entitled to vote given at a meeting
called for the purpose of considering such action. The
foregoing provisions of this Section 7 relating to the election
of directors and to the filling of vacancies in the Board of
Directors shall be subject to the provisions of the Articles of
Incorporation, as amended.
Commencing April 14, 1965, a person being a full-time
executive employee of the corporation or its parent company or
any affiliated company when first elected a director of the
corporation (hereinafter sometimes referred to as an "employee-
director") shall not be eligible for election as a director
when he ceases to be an executive employee, whether by reason
of resignation, retirement or other cause; and a person not an
employee-director shall not be eligible for election as a
director of the corporation after his 70th birthday; provided,
however, that directors presently in office who have attained
age 70 shall be eligible to continue as advisory directors,
until, but not beyond, the annual meeting of this Board of
Directors in the year 1968.
Any employee-director who is not eligible for election
as a director by reason of the foregoing provisions shall be
<PAGE> 4
- 4 -
eligible for election and re-election by the Board of Directors
as an advisory director, upon the recommendation of the Chief
Executive Officer of the corporation, for a term ending at the
first meeting of the Board of Directors following the annual
meeting of stockholders next following such election. Any
person eligible for election as an advisory director must be
one whose services as such will be, in the opinion of the Board
of Directors, of value to the corporation. An advisory
director shall be entitled to notice of and to attend and
advise but not to vote at, meetings of the Board of Directors,
and of any committees thereof to which he shall be appointed,
nor shall he be counted in determining the existence of a
quorum, and for his services may be paid, in the discretion of
the Board of Directors, compensation and reimbursement of
expenses on the same basis as if he were a director.
SECTION 8. The annual meeting of the Board of
Directors shall be held as soon as practicable after the annual
meeting of the stockholders. Other meetings of the Board of
Directors shall be held at the times fixed by resolution of the
Board or upon call of the Chairman of the Board, the President
or a Vice-President or any person upon whom powers have
devolved pursuant to Section 12 hereof. The Secretary or
officer performing his duties shall give at least two days'
notice of all meetings of Directors, provided that a meeting
may be held without notice immediately after the annual
election of Directors, and notice need not be given of regular
meetings held at times fixed by resolution of the Board.
Meetings may be held at any time without notice if all the
Directors are present or if those not present waive notice
either before or after the meeting. Notice by mail or
telegraph to the usual business or residence address of the
director shall be sufficient. The purpose of special meetings
of the Board of Directors need not be stated in such notice
unless required by law and unless otherwise indicated in the
notice any and all business may be transacted at a special
meeting of the Board of Directors.
SECTION 9. The Board of Directors, as soon as may be
convenient after the election of directors in each year, may
appoint one of their number Chairman of the Board and shall
appoint one of their number President of the corporation, and
shall also appoint one or more Vice-presidents, a Secretary, a
Clerk and a Treasurer, none of whom need be members of the
Board, and shall, from time to time, appoint such other
officers as they may deem proper. The same person may be
appointed to more than one office. The term of office of all
officers shall be for one year and until their respective
successors are chosen and qualified, but any officer may be
removed from office at any time by the Board of Directors
without cause assigned. Vacancies in the offices shall be
filled by the Board of Directors.
SECTION 10. The Board of Directors, as soon as may be
<PAGE> 5
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after the election in each year, may appoint an executive
committee to consist of the President and such number of
directors as the Board may from time to time determine. Such
committee shall have and may exercise all of the powers of the
Board during the intervals between its meetings which may be
lawfully delegated, subject to such limitations as may be
provided by a resolution of the Board. The Board shall have
the power at any time to change the membership of such
committee and to fill vacancies in it. The executive committee
may make rules for the conduct of its business and may appoint
such committees and assistants as it may deem necessary. The
Board may, from time to time, determine by resolution the
number of members of such committee required to constitute a
quorum. The Board shall designate the Chairman of the
executive committee and the proceedings of the executive
committee shall from time to time be reported to the Board of
Directors.
SECTION 11. Unless otherwise designated as separate
offices by the Board of Directors, the President shall be the
Chief Executive Officer of the corporation; he shall preside at
all meetings of the stockholders and directors; he shall have
general supervision of the business of the corporation; shall
see that all orders and resolutions of the Board are carried
into effect, subject, however, to the rights of the directors
to delegate any specific powers, except such as may be by
statute exclusively conferred on the President, to any other
officer of the corporation. He shall, unless otherwise
ordered, execute bonds, deeds, mortgages, and other contracts,
and when required shall cause the seal of the corporation to be
affixed thereto and shall sign certificates of stock. He shall
be ex officio a member of all standing committees, and shall
submit to the stockholders at their annual meeting a report of
the year's business. Should the offices of President and Chief
Executive Officer be held by different persons, the above
duties shall be as delegated to each office by the Board of
Directors.
SECTION 12. Notwithstanding the provisions of Section
9 hereof, in the event of the absence or inability of the
President to act, the powers and duties of the President shall,
subject to the control of the Board of Directors, devolve
successively upon such other persons as shall have been
designated in a resolution adopted by the Board of Directors,
and in accordance with the order of succession set forth
therein.
SECTION 13. The Secretary shall attend all sessions
of the Board and record all votes and the minutes of all
proceedings in a book to be kept for that purpose; and shall
perform like duties for standing committees when required. He
shall give or cause to be given notice of all meetings of the
stockholders and the Board of Directors, and of standing
committees when required, and shall perform such other duties
<PAGE> 6
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as may be prescribed by the Board of Directors or the President
under whose supervision he shall act. He shall keep in safe
custody the seal of the Corporation, and when authorized, affix
the same to any instrument requiring a seal, and attest the
signatures thereof, when directed or required to do so.
SECTION 14. The Treasurer shall have the custody of
the corporate funds and securities, and shall keep full and
accurate accounts of receipts and disbursements in books
belonging to the corporation, and shall deposit all moneys and
other valuable effects in the name and to the credit of the
corporation, in such depositaries as may be designated by the
Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board, taking proper
vouchers for such disbursements, and shall render to the
President, and to the directors at the regular meetings of the
Board or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the
corporation. He shall give the corporation a bond for the
faithful performance of the duties of his office, and for the
restoration to the corporation in case of his death, resig-
nation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind, in
his possession or under his control belonging to the
corporation.
SECTION 15. It shall be the duty of the Controller to
supervise and be responsible for accounting transactions of the
corporation; to have charge of the installation and supervision
of all accounting and statistical records, the preparation of
all financial and statistical statements and reports, and the
accounting methods, systems and forms in use by all
departments; he shall perform such other duties as may be
assigned to him from time to time by the President.
SECTION 16. One or more Assistant Secretaries or
Assistant Treasurers or Assistant Controllers may be elected by
the Board or appointed by the President to hold office until
the next annual meeting of the Board of Directors and until
their successors are elected or appointed, but may be removed
at any time. They shall perform any or all of the duties of
the Secretary or Treasurer, or Controller as the case may be,
and such other duties as may be assigned to them from time to
time.
SECTION 17. The Clerk of the corporation shall be a
resident of Maine, and shall be sworn to the faithful
performance of his duties. He need not be a stockholder. He
shall keep a full and accurate record of all stockholders'
meetings, shall keep an office in said Augusta as required by
law, and shall have the custody of all books and papers
belonging to the corporation which are located in said office.
He shall receive as compensation for his services in acting as
proxy at annual meetings, keeping an office in Maine, preparing
<PAGE> 7
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records of annual meetings and furnishing the Secretary with
duplicate copies of same and of necessary blanks and forms at
proper times the sum of fifty dollars annually, payable in
advance. He shall receive a reasonable compensation for all
additional services. In the absence of the Clerk, a Clerk pro
tempore may be chosen, who shall be a resident of Maine, and
shall be duly sworn.
SECTION 18. In the case of the absence of any officer
of the corporation, or for any other reason that the Board may
deem sufficient, the Board may delegate the powers or duties of
such officers to any other officer or to any director, for the
time being.
SECTION 19. If the office of any director becomes
vacant by reason of death, resignation, retirement,
disqualification, removal from office, or otherwise, the
remaining directors then in office, even though less than a
quorum, by a majority vote may choose a successor or
successors, who shall hold office for the unexpired term in
respect of which such vacancy occurred; but vacancies in the
Board of Directors arising from the election of fewer directors
than the total number fixed shall be filled in the manner
prescribed by Section 7 thereof.
SECTION 20. The Board of Directors shall have power
to authorize the payment of compensation to the directors for
services to the corporation, including fees for attendance at
meetings of the Board of Directors, of the executive committee
and all other committees and to determine the amount of such
compensation and fees.
SECTION 21.
A. Indemnity
To the fullest extent permitted by law, the Company
shall indemnify each person made, or threatened to be made, a
party to any threatened, pending, or completed claim, action,
suit or proceeding, whether civil or criminal, administrative
or investigative, and whether by or in the right of the Company
or otherwise, by reason of the fact that such person, or such
person's testator or intestate, is or was a director, officer
or was an employee of the Company holding one or more
management positions through and inclusive of managers (but not
positions below the level of managers) (such positions being
hereinafter referred to as "Management Positions") or is or was
serving at the request of the Company as a director, officer,
employee, agent or trustee of another corporation, partnership,
joint venture, trust, employee benefit plan or other
enterprise, in any capacity at the request of the Company,
against all loss and expense actually or reasonably incurred by
him including, without limiting the generality of the
foregoing, judgments, fines, penalties, liabilities, sanctions,
<PAGE> 8
- 8 -
and amounts paid in settlement and attorneys fees and
disbursements actually and necessarily incurred by him in
defense of such action or proceeding, or any appeal therefrom.
The indemnification provided by this Section shall inure to the
benefit of the heirs, executors and administrators of such
person.
In any case in which a director, officer of the
Company or employee of the Company holding one or more
Management Positions requests indemnification with respect to
the defense of any such claim, action, suit or proceedings, the
Company may advance expenses (including attorney's fees)
incurred by such person prior to the final disposition of such
claim, action, suit or proceeding, as authorized by the Board
of Directors in the specific case, upon receipt of a written
undertaking by or on behalf of such person to repay amounts
advanced if it shall ultimately be determined that such person
was not entitled to be indemnified by the Company under this
Section or otherwise; provided, however, that the advancement
of such expenses shall not be deemed to be indemnification
unless and until it shall ultimately be determined that such
person is entitled to be indemnified by the Company. Such a
person claiming indemnification shall be entitled to
indemnification upon a determination that no judgment or other
final adjudication adverse to such person has established that
such person's acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to
the cause of action so adjudicated, or such person personally
obtained an economic benefit including a financial profit or
other advantage to which such person was not legally entitled.
Without limiting the generality of the foregoing provision, no
former, present or future director or officer of the Company or
employee of the Company holding one or more management
positions, or his heirs, executors or administrators, shall be
liable for any undertaking entered into by the Company or its
subsidiaries or affiliates as required by the Securities and
Exchange Commission pursuant to any rule or regulation of the
Securities and Exchange Commission now or hereafter in effect
or orders issued pursuant to the Public Utility Holding Company
Act of 1935, the Federal Power Act, or any undertaking entered
into by the Company due to environmental requirements including
all legally enforceable environmental compliance obligations
imposed by federal, state or local statute, regulation, permit,
judicial or administrative decree, order and judgment or other
similar means, or any undertaking entered into by the Company
pursuant to any approved Company compliance plan or any federal
or state or municipal ordinance which directly or indirectly
regulates the Company, or its parent by reason of their being
holding or investment companies, public utility companies,
public utility holding companies or subsidiaries of public
utility holding companies.
The foregoing rights shall not be exclusive of any
other rights to which any such director, officer or employee
<PAGE> 9
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may otherwise be entitled and shall be available whether or not
the director, officer or employee continues to be a director,
officer or employee at the time of incurring any such expenses
and liabilities.
If any word, clause or provision of the By-laws or any
indemnification made under this Section 21 shall for any reason
be determined to be invalid, the remaining provisions of the
By-Laws shall not otherwise be affected thereby but shall
remain in full force and effect. The masculine pronoun, as
used in the By-Laws, means the masculine and feminine wherever
applicable.
B. Insurance
The Company may purchase and maintain insurance on
behalf of any person described in Section 21 against any
liability or expense (including attorney fees) which may be
asserted against such person whether or not the Company would
have the power to indemnify such person against such liability
or expense under this Section 21 or otherwise.
SECTION 22. The Board of Directors are authorized to
select such depositaries as they shall deem proper for the
funds of the corporation. All checks and drafts against such
deposited funds shall be signed by such officers or such other
persons as may be specified by the Board of Directors.
SECTION 23. The corporate seal shall be circular in
form, and shall have inscribed thereon the name of the
corporation, followed by the word "Maine" and shall have the
word "Seal" inscribed in the center thereof.
SECTION 24. A director of this corporation shall not
be disqualified by his office from dealing or contracting with
the corporation, either as vendor, purchaser or otherwise, nor
shall any transaction or contract of this corporation be void
or voidable by reason of the fact that any director or any firm
of which any director is a member or any corporation of which
any director is a shareholder or director is in any way
interested in such transaction or shall be authorized, ratified
or approved either (a) by vote of a majority of a quorum of the
Board of Directors or the executive committee, without counting
in such majority or quorum any directors so interested or being
a member of a firm so interested or a shareholder or director
of a corporation so interested, or (b) by vote at a
stockholders' meeting of the holders of a majority of all the
outstanding shares of the stock of the corporation entitled to
vote or by a writing or writings signed by a majority of such
holders; nor shall any director be liable to account to the
corporation for any profit realized by him from or through any
transaction or contract of this corporation authorized,
ratified or approved as aforesaid, by reason of the fact that
he or any firm of which he is a member or any corporation of
<PAGE> 10
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which he is a shareholder or director was interested in such
transaction or contract. Nothing herein contained shall create
any liability in the events above described or prevent the
authorization, ratification or approval of such contracts or
transactions in any other manner provided by law.
SECTION 25. These by-laws may be altered or amended
(a) by a majority vote of the outstanding stock entitled to
vote at any annual meeting or upon notice at any special
meeting of stockholders, or (b) at any meeting of the Board of
Directors by a majority vote of the entire Board then in
office.
<PAGE> 11
I N D E X
---------
Section Page
------- ----
1. ANNUAL MEETING OF STOCKHOLDERS - LOCATION AND
DATE . . . . . . . . . . . . . . . . . . . . . 1
(The annual meeting of stockholders is
to be held at the office of the Corporation
in Augusta, Maine, or at such other place
within or without the State of Maine as
the Board of Directors may determine, on
the last Tuesday in June each year;
provided, however, that the Board of
Directors may fix an earlier day in any
year.)
2. SPECIAL MEETINGS OF STOCKHOLDERS - LOCATION
AND METHOD OF CALL . . . . . . . . . . . . . . 1
3. NOTICE OF MEETING OF STOCKHOLDERS - TIME, PLACE
AND PURPOSE . . . . . . . . . . . . . . . . . 1
(Notice of the time, place and purpose of
every meeting of stockholders shall be
mailed by the Secretary or the Officer
performing his duties at least ten days
before the meeting to each stockholder
of record entitled to vote.)
4. QUORUM . . . . . . . . . . . . . . . . . . . . . 1
5. STOCK. . . . . . . . . . . . . . . . . . . . . . 1
(a) Regulations governing issuance of
stock
(b) Dividends - Declaration, payment,
limitations and definitions
6. REPLACEMENT OF LOST, DESTROYED OR MUTILATED
CERTIFICATES . . . . . . . . . . . . . . . . . 3
7. ELECTION OF BOARD OF DIRECTORS - TOTAL NUMBER OF
DIRECTORS ALLOWED, AND NUMBER CONSTITUTING A
QUORUM . . . . . . . . . . . . . . . . . . . . 3
8. BOARD OF DIRECTORS' MEETINGS, ANNUAL AND OTHER -
NOTICES OF MEETINGS, ETC . . . . . . . . . . . 4
<PAGE> 12
9. APPOINTMENT AND TERM OF OFFICE . . . . . . . . . . 4
10. APPOINTMENT AND DUTIES OF EXECUTIVE COMMITTEE. . . 4
11. DUTIES AND POWERS OF THE PRESIDENT . . . . . . . . 5
12. SUCCESSION OF OFFICERS IN EVENT OF INABILITY OF
PRESIDENT TO ACT . . . . . . . . . . . . . . . . 5
13. DUTIES AND POWERS OF THE SECRETARY . . . . . . . . 5
14. DUTIES AND POWERS OF THE TREASURER . . . . . . . . 6
15. DUTIES AND POWER OF THE CONTROLLER . . . . . . . . 6
16. DUTIES AND POWERS OF ASSISTANT SECRETARIES,
ASSISTANT TREASURERS, AND ASSISTANT CONTROLLER . 6
17. QUALIFICATIONS, DUTIES AND POWERS OF THE CLERK . . 6
18. DELEGATION OF DUTIES AND POWERS BY THE BOARD OF
DIRECTORS . . . . . . . . . . . . . . . . . . . 7
19. SELECTION OF SUCCESSOR DIRECTORS TO FILL VACANCIES
BY REASON OF DEATH, RESIGNATION, ETC . . . . . . 7
20. POWER TO AUTHORIZE COMPENSATION FOR DIRECTORS. . . 7
21. INDEMNIFICATION. . . . . . . . . . . . . . . . . . 7
22. POWER TO SELECT DEPOSITARIES AND DESIGNATE
REQUIRED SIGNATURES. . . . . . . . . . . . . . . 9
23. CORPORATE SEAL - DESCRIPTION . . . . . . . . . . . 9
24. BUSINESS TRANSACTIONS BETWEEN CORPORATION AND ITS
DIRECTORS . . . . . . . . . . . . . . . . . . . 9
25. AMENDMENT TO BY-LAWS . . . . . . . . . . . . . . . 10
Exhibit 3(f)2
_________________________________________________
BY LAWS
of
Savannah Electric and Power Company
_________________________________________________
as Amended to February 16, 1994 <PAGE>
_____________________________________
BYLAWS
of
Savannah Electric and Power Company
_____________________________________
ARTICLE I
Name
The name of this Corporation shall be Savannah Electric and
Power Company.
ARTICLE II
Stockholders' Meeting
All meetings of the Stockholders shall be held at the
principal office of the Corporation in Savannah, Georgia, unless
some other place in Georgia is stated in the call.
ARTICLE III
Annual Meetings
The annual meeting of the Stockholders of this Corporation
shall be held on the third Tuesday in May in each year, if not a
legal holiday, and if a legal holiday, then on the next
succeeding Tuesday not a legal holiday. In the event that such
annual meeting is omitted by oversight or otherwise on the date
herein provided therefor, a subsequent meeting may be held in
place thereof, and any business transacted or elections held at
such meeting shall be as valid as if transacted or held at the
annual meeting. Such subsequent meeting shall be called in the
same manner and as provided for special Stockholders' meetings.
ARTICLE IV
Special Meetings
Special meetings of the Stockholders of this Corporation
shall be held whenever the Chairman of the Board, the President
or a Vice President, a majority of the Board of Directors, or the
holders of at least one-fourth (1/4) part in interest of the
capital stock issued and outstanding and entitled to vote thereat
shall make application therefor to the Secretary or an Assistant
Secretary, stating the time, place and purpose of the meeting
applied for. Special meetings of the Stockholders shall also be
held following the accrual of the rights of the Preferred Stock
of the Corporation, voting as a class, to elect the smallest
number of Directors of this Corporation necessary to constitute a
majority of the members of the Board of Directors, whenever
required to be held in accordance with the provisions of the
Charter of the Corporation and/or any resolution of the
Stockholders setting forth the powers, preferences, etc. of the
various classes of stock of the Corporation.
ARTICLE V
Notice of Stockholders' Meetings
Notice of all Stockholders' meetings, stating the time and
2
<PAGE>
place, and, in the case of special meetings, the objects for
which such meetings are called, shall be given by the Secretary
or an Assistant Secretary, by mail, to each Stockholder of record
entitled to vote at said meeting at his or her registered
address, at least ten (10) days prior to the date of the meeting,
and the person giving such notice shall make affidavit in
relation thereto; provided that notice of any such meeting shall
be deemed to be sufficiently given to any Stockholder who, while
the provisions of the Trading with the Enemy Act (Public Act No.
91 of the Sixty-fifth Congress of the United States of America,
as now or hereafter amended) shall be operative, shall appear
from the stock books to be or shall be known to the Corporation
to be an "enemy" or "ally of enemy" as defined in the said Act
and whose address appearing on such stock books is outside the
United States, or the mailing to whom of notice shall at the time
be prohibited by any other law of the United States of America or
by any executive order or regulation issued or promulgated by any
officer or agency of the United States of America (a) if, at
least ten (10) days prior to the date of the meeting, a copy of
the notice of the meeting shall be mailed to any person or agency
who by any such law, order or regulation shall have been duly
designated to receive such notice or duly designated or appointed
as custodian of the property of such Stockholder; or (b) if a
brief notice of such meeting, including, in the case of a special
meeting, either a brief statement of the objects for which such
meeting is called or a statement as to where there may be
obtained a copy of a written notice containing a statement of
such objects, shall be published by the Corporation at least
once, not less than ten (10) days before the meeting in a daily
newspaper published in the English language and of general
circulation in the City of Savannah, Georgia; provided further,
however, that notice of any Stockholders' meeting stating that an
increase of the stock or an issuance of bonds will be considered,
shall be published in a daily newspaper published in the English
language and of general circulation in the City of Savannah,
Georgia, once a week for four weeks prior to the time of holding
such meeting.
Any meeting at which all the Stockholders are present,
either in person or represented by proxy, or of which those not
present in person have waived notice in writing, shall be a legal
meeting for the transaction of business, notwithstanding that
notice has not been given as hereinbefore provided.
ARTICLE VI
Waiver of Notice
Notice of any Stockholders' meeting may be waived by any
Stockholder.
ARTICLE VII
Quorum
At any meeting of the Stockholders a majority in interest of
all the capital stock issued and outstanding and entitled to
3
<PAGE>
vote, represented by Stockholders of record in person or by
proxy, shall constitute a quorum, but a less interest may adjourn
any meeting from time to time, and the meeting may be held as
adjourned without further notice. When a quorum is present at
any meeting, a majority of the capital stock represented thereat
shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of law or of the
Charter of this Corporation or these Bylaws, a larger or
different vote is required, in which case such express provision
shall govern and control the decision of such question. The
provisions of this Article are subject to the provisions of the
Charter of the Company and/or any resolution of the Stockholders
setting forth the powers, preferences, etc., of the various
classes of stock of the Company.
ARTICLE VIII
Proxy and Voting
Stockholders of record may vote at any meeting either in
person or by proxy in writing, which shall be filed with the
Secretary of the meeting before being voted. The voting powers
of the respective classes of stock of the Company shall be as
provided in the Charter of the Company and/or any resolution of
the Stockholders setting forth the powers, preferences, etc., of
the various classes of stock of the Company.
ARTICLE IX
Board of Directors
A Board of not less than five nor more than fifteen
Directors shall be chosen by ballot at the Annual Meeting of the
Stockholders or at any meeting held in lieu thereof as
herein-before provided.
The number of Directors for each corporate year shall be
fixed by vote at the meeting when elected, but the Stockholders
may, at a special meeting called for the purpose during any such
year, increase or decrease (within the limits above specified)
the number of Directors as thus fixed and if necessary elect
Directors to complete the number so fixed. A majority of the
Directors shall be citizens and residents of Georgia. Each
Director shall serve until the next Annual Meeting of the
Stockholders and until his successor is duly elected and
qualified. Directors need not be Stockholders of the Corporation.
The provisions of this Article are subject to the provisions of
the Charter of the Company and/or any resolution of the
Stockholders setting forth the powers, preferences, etc., of the
various classes of stock of the Company.
ARTICLE X
Powers of Directors
The Board of Directors shall have the entire management of
the business of the Corporation. In the management and control
of the property, business and affairs of the Corporation, the
Board of Directors is hereby vested with all the powers possessed
4
<PAGE>
by the Corporation itself, so far as this delegation of authority
is not inconsistent with the laws of the State of Georgia, with
the Charter of the Corporation or with these Bylaws. The Board
of Directors shall have power to determine what constitutes net
earnings, profits and surplus, respectively, what amount shall be
reserved for working capital and for any other purposes, and what
amount shall be declared as dividends, and such determination by
the Board of Directors shall be final and conclusive.
ARTICLE XI
Executive and Other Committees
The Board of Directors may elect from their number an
Executive Committee of not less than three or more than seven
members, which Committee may exercise the powers of the Board of
Directors in the management of the business of the Corporation
when the Board is not in session. The Executive Committee shall
report its action to the Board of Directors for approval. The
Executive Committee may make rules for the holding and conduct of
its meetings and the keeping of the records thereof.
The Board of Directors may likewise elect or appoint from
their number other committees from time to time, the number
composing such committees and the powers conferred upon the same
to be determined by vote of the Board of Directors.
ARTICLE XII
Meetings
Regular meetings of the Board of Directors shall be held at
such places and at such times as the Board may by vote from time
to time determine, and if so determined no notice thereof need be
given. Special meetings of the Board of Directors may be held at
any time or place whenever called by the Chairman of the Board,
the President, a Vice President, the Secretary, an Assistant
Secretary, or five or more Directors, reasonable notice thereof
being given to each Director by the Secretary or an Assistant
Secretary or officer calling the meeting, or at any time without
formal notice provided all the Directors are present, or those
not present have waived notice thereof in writing. Such special
meetings shall be held at such times and places as the notice
thereof or waiver shall specify.
ARTICLE XIII
Quorum
A majority of the total number of members of the Board of
Directors as constituted for the time being, but not less than
three, shall constitute a quorum for the transaction of business,
but a less number may adjourn any meeting from time to time and
the same may be held as adjourned without further notice. When a
quorum is present at any meeting, a majority vote of the members
in attendance thereat shall decide any questions brought before
such meeting, except as otherwise provided by law, by the Charter
of this Corporation or by these Bylaws.
5
<PAGE>
ARTICLE XIV
Officers
The officers of this Corporation shall be a Chairman of the
Board, subject to Article XVII hereof, and a President, one or
more Vice Presidents, a Secretary and a Treasurer. All officers
shall be elected by the Board of Directors after its election by
the Stockholders, and a regular meeting may be held without
notice for this purpose immediately after the Annual Meeting of
the Stockholders and at the same place.
ARTICLE XV
Additional Officers and Agents
The Board of Directors at its discretion may appoint a
General Manager, one or more Assistant Treasurers and one or more
Assistant Secretaries, and such other officers or agents as it
may deem advisable and prescribe the duties thereof.
ARTICLE XVI
Eligibility of Officers
The Chairman of the Board, if any, and the President, shall
each be a Director of the Corporation. The Vice Presidents,
Secretary and Treasurer and such other officers as may be
appointed may be but need not be Directors of the Corporation.
The same person may hold the offices of Secretary and Treasurer.
ARTICLE XVII
Chairman of the Board
The Corporation may, in the discretion of the Board of
Directors, have a Chairman of the Board who, in such case, shall
be the chief executive officer of the Corporation and, as such,
shall have supervision of its policies, business, and affairs,
and such other powers and duties as are commonly incident to the
office of chief executive officer. He shall preside at the
meetings of the Board of Directors and may call meetings of the
Board of Directors and of any committee thereof, whenever he
deems it necessary and he shall call to order and act as chairman
of all meetings of the Stockholders of the Corporation. In
addition, he shall have such other powers and duties as the Board
of Directors shall designate from time to time. The Chairman of
the Board, unless some other person is thereunto specifically
authorized by vote of the Board of Directors, shall have power to
sign all bonds, deeds and contracts of the Corporation. Should
the Board of Directors determine not to have, or upon a vacancy
occurring in such office fail to elect, a Chairman of the Board,
such office shall cease to exist pending subsequent action by the
Board of Directors recreating such office.
ARTICLE XVIII
President
The President shall, subject to the supervision of the
Chairman of the Board, have the direction of and responsibility
for, the operations of the Corporation, and such other powers and
6
<PAGE>
duties as are commonly incident to that office. He shall also
have such other powers and duties as the Board of Directors shall
designate from time to time and, in the absence of the Chairman
of the Board, or should such office fail to exist, shall have the
powers and duties of the Chairman of the Board. The President or
a Vice President, unless some other person is thereunto
specifically authorized by vote of the Board of Directors, shall
have power to sign all certificates of stock, bonds, deeds and
contracts of the Corporation.
ARTICLE XIX
Vice Presidents
A Vice President shall perform the duties and have the
powers of the Chairman of the Board and the President during the
absence or disability of the Chairman of the Board (or the
nonexistence of said office) and the President and shall have
power to sign all certificates of stock, bonds, deeds and
contracts of the Corporation, and shall perform such other duties
and have such other powers as the Board of Directors shall from
time to time designate.
ARTICLE XX
Secretary
The Secretary shall be present at all meetings of the
Stockholders, of the Board of Directors and of the Executive
Committee, and shall keep accurate records of the proceedings at
such meetings in books provided for that purpose. He shall
perform all the duties commonly incident to his office and shall
perform such other duties and have such other powers as the Board
of Directors shall from time to time designate. In the absence
of the Secretary, an Assistant Secretary or a Secretary pro
tempore shall perform his duties. The Secretary, Assistant
Secretary or Secretary pro tempore shall be sworn.
ARTICLE XXI
Treasurer
The Treasurer, subject to the order of the Board of
Directors, shall have the care and custody of the money, funds,
valuable papers and documents of the Corporation (other than his
own bond, which shall be in the custody of the President), and
shall have and exercise under the supervision of the Board of
Directors, all the powers and duties commonly incident to his
office, and shall give bond in such form and with such sureties
as shall be required by the Board of Directors. He shall deposit
all funds of the Corporation in such bank or banks, trust company
or trust companies, or with such firm or firms doing a banking
business as the Board of Directors shall designate. He may
endorse for deposit or collection all checks, notes, et cetera,
payable to the Corporation or to its order, may accept drafts on
behalf of the Corporation, and shall, together with the President
or a Vice President, sign all certificates of stock. He shall
keep accurate books of account of the Corporation's transactions,
7
<PAGE>
which shall be the property of the Corporation, and, together
with all its property in his possession, shall be subject at all
times to the inspection and control of the Board of Directors.
The Treasurer shall hold his office during the pleasure of the
Board of Directors, and shall in every way be subject to their
orders.
All checks, notes, drafts or other obligations for the
payment of money shall be signed by the Treasurer (except as the
Board of Directors shall otherwise specifically order) and, with
the exception of checks for the payment of not exceeding $10,000
(which require one signature) and notes, shall be countersigned
as a condition to their validity by the Chairman of the Board or
the President or such other officer or agent as the Board of
Directors shall by resolution direct; notes shall be
countersigned as a condition to their validity only by such
officer or agent as the Board of Directors shall by resolution
direct. Checks for the total amount of any payroll may be drawn
in accordance with the foregoing provisions and deposited in a
special fund. Checks upon this fund may be drawn by such person
as the Treasurer shall designate, and need not be countersigned.
The Directors may appoint one or more Assistant Treasurers
with such powers and duties, including the powers and duties of
the Treasurer as herein stated, as to them shall seem best.
ARTICLE XXII
Removals
The Stockholders may, at any meeting called for the purpose,
by vote of a majority of the capital stock issued and
outstanding, remove any Director or other officer elected by them
and elect his successor. The Board of Directors may, by vote of
not less than a majority of the entire Board, remove from office
any officer or agent elected or appointed by them. The
provisions of this Article are subject to the provisions of the
Charter of the Company and/or any resolution of the Stockholders
setting forth the powers, preferences, etc., of the various
classes of stock of the Company.
ARTICLE XXIII
Vacancies
If the office of any Director or officer or agent, one or
more, becomes vacant by reason of death, resignation, removal,
disqualification or otherwise, the remaining Directors, although
less than a quorum, may, by a majority vote, choose a successor
or successors who shall hold office for the unexpired term, but
vacancies in the Board of Directors may be filled for the
unexpired term by the Stockholders at a meeting called for that
purpose, unless such vacancy shall have been filled by the
Directors. The provisions of this Article are subject to the
provisions of the Charter of the Company and/or any resolution of
the Stockholders setting forth the powers, preferences, etc., of
the various classes of stock of the Company.
8
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ARTICLE XXIV
Capital Stock
The amount of capital stock shall be as fixed in the Charter
of this Corporation or as the same may be increased or decreased
from time to time in accordance with the provisions of law.
ARTICLE XXV
Certificates of Stock
Every Stockholder shall be entitled to a certificate or
certificates of stock of the Company in form prescribed by the
Board of Directors, duly numbered and sealed with the corporate
seal of the Company, and setting forth the number and kind of
shares represented thereby to which each Stockholder is entitled.
Such certificates shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company. The Board of
Directors may also appoint one or more Transfer Agents and/or
Registrars for its stock of any class or classes and may require
stock certificates to be counter-signed and/or registered by one
or more of such Transfer Agents and/or Registrars. If
certificates of capital stock of the Company are signed by a
Transfer Agent or by a Registrar, the signature of the officers
of the Company and the seal of the Company thereon may be
facsimiles, engraved, printed or otherwise reproduced. Any
provisions of these Bylaws with reference to the signing and
sealing of stock certificates shall include, in cases above
permitted, such facsimiles. In case any officer or officers who
shall have signed, or whose facsimile signature or signatures
shall have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Company,
whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the
Company, such certificate or certificates may nevertheless be
adopted by the Board of Directors of the Company and be issued
and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such
officer or officers of the Company.
ARTICLE XXVI
Transfer of Stock
Shares of stock may be transferred by delivery of the
certificate, accompanied either by an assignment in writing on
the back of the certificate, or by a written power of attorney to
sell, assign and transfer the same, signed by the owner of the
certificate. No transfer shall affect the right of the
Corporation to pay any dividend due upon the stock, or to treat
the holder of record as the holder in fact until such transfer is
recorded upon the books of the Corporation or a new certificate
is issued to the person to whom it has been so transferred. It
shall be the duty of every Stockholder to notify the Corporation
of his post office address.
9
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ARTICLE XXVII
Record Dates
The Board of Directors or the Executive Committee may fix in
advance (a) a date, not less than ten (10) nor more than
forty-five (45) days preceding the date of any meeting of the
Stockholders, as a record date for the determination of
Stockholders entitled to notice of and to vote at any such
meeting or any adjournment thereof; (b) a date, not less than ten
(10) nor more than thirty (30) days prior to the date for the
payment of any dividend, or other distribution, or the date for
the allotment of rights, or the date when any change, conversion
or exchange of capital stock (including any exchange of stock
upon a merger, consolidation or sale of all, or substantially
all, of the assets of the Corporation) shall go into effect, as a
record date for the determination of the Stockholders entitled to
receive payment of any such dividend, or distribution, or to any
such allotment of rights, or to exercise the rights in respect of
any change, conversion or exchange of capital stock, as the case
may be; and (c) a date, not less than ten (10) nor more than
forty-five (45) days preceding the date for the taking of any
other lawful corporate action not covered by the foregoing, as a
record date for the determination of Stockholders entitled to act
thereon and/or receive the benefit thereof; notwithstanding, in
any such case, any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
ARTICLE XXVIII
Loss of Certificates
In case of the loss, mutilation or destruction of a
certificate of stock, a duplicate certificate may be issued
therefor upon such terms as the Board of Directors shall
prescribe.
ARTICLE XXIX
Seal
The seal of this Corporation shall consist of a flat faced
circular die with the words and figures "Savannah Electric and
Power Company Corporate Seal 1921 Georgia" cut or engraved
thereon.
ARTICLE XXX
Facsimile Signatures on Bonds and Debentures
The signatures of any officer of this Corporation executing
a corporate bond, debenture or other debt security of the
Corporation or attesting the corporate seal thereon, or upon any
interest coupons annexed to any such corporate bond, debenture or
other debt security of the Corporation, and the corporate seal
affixed to any such bond, debenture or other debt security of the
Corporation, may be facsimiles, engraved or printed, provided
that such bond, debenture or other debt security of the
Corporation is authenticated or countersigned with the manual
signature of an authorized officer of the corporate trustee
10
<PAGE>
designated by the indenture or other agreement under which said
security is issued or of an authenticating agent appointed by
such corporate trustee to act in its behalf or by a transfer
agent, or registered by a registrar, other than the Corporation
itself or an employee of the Corporation. In case any officer or
officers whose signature or signatures, whether manual or
facsimile, shall have been used on any corporate bond, debenture
or other debt security shall cease to be an officer or officers
of the Corporation for any reason before the same has been
delivered by the Corporation, such bond, debenture or other debt
security may nevertheless be issued and delivered as though the
person or persons whose signatures were used thereon had not
ceased to be such officer or officers.
ARTICLE XXXI
Indemnification and Related Matters
Each person who is or was a director or officer of the
Corporation or is or was an employee of the Corporation holding
one or more positions of management through and inclusive of
department managers (but not positions below the level of
department managers) (such positions being hereinafter referred
to as "Management Positions") and who was or is a party or was or
is threatened to be made a party to any threatened, pending or
completed claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Corporation or is
or was an employee of the Corporation holding one or more
Management Positions, or is or was serving at the request of the
Corporation as a director, officer, employee, agent or trustee of
another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, shall be indemnified by the
Corporation as a matter of right against any and all expenses
(including attorneys' fees) actually and reasonably incurred by
him and against any and all claims, judgments, fines, penalties,
liabilities and amounts paid in settlement actually incurred by
him in defense of such claim, action, suit or proceeding,
including appeals, to the full extent permitted by applicable
law. The indemnification provided by this Article shall inure to
the benefit of the heirs, executors and administrators of such
person.
Expenses (including attorneys' fees) incurred by a director
or officer of the Corporation or employee of the Corporation
holding one or more Management Positions with respect to the
defense of any such claim, action, suit or proceeding may be
advanced by the Corporation prior to the final disposition of
such claim, action, suit or proceeding, as authorized by the
Board of Directors in the specific case, upon receipt of an
undertaking by or on behalf of such person to repay such amount
unless it shall ultimately be determined that such person is
entitled to be indemnified by the Corporation under this Article
or otherwise; provided, however, that the advancement of such
expenses shall not be deemed to be indemnification unless and
11
<PAGE>
until it shall ultimately be determined that such person is
entitled to be indemnified by the Corporation.
The Corporation may purchase and maintain insurance at the
expense of the Corporation on behalf of any person who is or was
a director, officer, employee, or agent of the Corporation, or
any person who is or was serving at the request of the
Corporation as a director (or the equivalent), officer, employee,
agent or trustee of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise,
against any liability or expense (including attorneys' fees)
asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability or
expense under this Article or otherwise.
Without limiting the generality of the foregoing provisions,
no present or future director or officer of the Corporation, or
employee of the Corporation holding one or more Management
Positions, or his heirs, executors, or administrators, shall be
liable for any act, omission, step, or conduct taken or had in
good faith, or for any undertaking entered into by the
Corporation or its subsidiaries or affiliates which is required,
authorized, or approved by any order or orders issued pursuant to
the Public Utility Holding Company Act of 1935, the Federal Power
Act, or any undertaking entered into by the Corporation due to
environmental requirements including all legally enforceable
environmental compliance obligations imposed by federal, state or
local statute, regulation, permit, judicial or administrative
decree, order and judgment or other similar means, or any
undertaking entered into by the Corporation pursuant to any
approved compliance plan, or any federal or state statute or
municipal ordinance regulating the Corporation or its parent by
reason of their being holding or investment companies, public
utility companies, public utility holding companies, or
subsidiaries of public utility holding companies. In any action,
suit, or proceeding based on any act, omission, step, or conduct,
as in this paragraph described, the provisions hereof shall be
brought to the attention of the court. In the event that the
foregoing provisions of this paragraph are found by the court not
to constitute a valid defense on the grounds of not being
applicable to the particular class of plaintiff, each such
director and officer, or employee holding a Management Position,
and his heirs, executors, and administrators, shall be reimbursed
for, or indemnified against, all expenses and liabilities
incurred by him or imposed on him, in connection with, or arising
out of, any such action, suit, or proceeding based on any act,
omission, step, or conduct taken or had in good faith as in this
paragraph described. Such expenses and liabilities shall
include, but shall not be limited to, judgments, court costs, and
attorneys' fees.
The foregoing rights shall not be exclusive of any other
rights to which any such director or officer or employee may
otherwise be entitled and shall be available whether or not the
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director or officer or employee continues to be a director or
officer or employee at the time of incurring any such expenses
and liabilities.
If any word, clause or provision of the Bylaws or any
indemnification made under this Article shall for any reason be
determined to be invalid, the provisions of the Bylaws shall not
otherwise be affected thereby but shall remain in full force and
effect. The masculine pronoun, as used in the Bylaws, means the
masculine and feminine wherever applicable.
ARTICLE XXXII
Amendments
These Bylaws may be amended, added to, altered or repealed,
at any annual or special meeting of the Corporation, by vote in
either case of a majority of the capital stock issued and
outstanding and entitled to vote thereat, provided notice of the
proposed amendment, addition, alteration or repeal is given in
the notice of said meeting.
###
13 <PAGE>
Exhibit 10(a)49
AMENDED AND RESTATED NUCLEAR MANAGING BOARD AGREEMENT
AMONG
GEORGIA POWER COMPANY
OGLETHORPE POWER CORPORATION
MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA
AND
CITY OF DALTON, GEORGIA
DATED AS OF JULY 1, 1993
<PAGE>
TABLE OF CONTENTS
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.0 Definitions . . . . . . . . . . . . . . . . . . . 4
1.1 "Agency Functions" . . . . . . . . . . . . . . . . 4
1.2 "Agreement" . . . . . . . . . . . . . . . . . . . 5
1.3 "Dalton" . . . . . . . . . . . . . . . . . . . . . 5
1.4 "Each Plant" . . . . . . . . . . . . . . . . . . . 5
1.5 "Fuel Budget" . . . . . . . . . . . . . . . . . . 5
1.6 "Fuel Plan" . . . . . . . . . . . . . . . . . . . 5
1.7 "Fuel Services" . . . . . . . . . . . . . . . . . 5
1.8 "Governmental Authority" . . . . . . . . . . . . . 6
1.9 "GPC" . . . . . . . . . . . . . . . . . . . . . . 6
1.10 "Joint Committee Agreement" . . . . . . . . . . . 6
1.11 "Legal Requirements" . . . . . . . . . . . . . . . 6
1.12 "Major Contract" . . . . . . . . . . . . . . . . . 7
1.13 "MEAG" . . . . . . . . . . . . . . . . . . . . . . 8
1.14 "New Investment Budget" . . . . . . . . . . . . . 8
1.15 "New Investment Services" . . . . . . . . . . . . 8
1.16 "NRC" . . . . . . . . . . . . . . . . . . . . . . 9
1.17 "Nuclear Interface Procedure" . . . . . . . . . . 9
1.18 "Nuclear Managing Board", "Managing Board" or
"Board". . . . . . . . . . . . . . . . . . . . . . 9
1.19 "Nuclear Operating Agreement" . . . . . . . . . . 9
1.20 "Nuclear Operating Services" . . . . . . . . . . . 9
1.21 "Nuclear Services Agreement" . . . . . . . . . . . 10
i
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1.22 "Nuclear Services Contractor" . . . . . . . . . . 10
1.23 "Nuclear Support Services" . . . . . . . . . . . . 10
1.24 "OEMC" . . . . . . . . . . . . . . . . . . . . . . 10
1.25 "Oglethorpe" . . . . . . . . . . . . . . . . . . . 10
1.26 "Operating Agent" . . . . . . . . . . . . . . . . 11
1.27 "Operation and Maintenance Budget" . . . . . . . . 11
1.28 "Operation and Maintenance Services" . . . . . . . 11
1.29 "Participant" or "Participants" . . . . . . . . . 12
1.30 "Participants' Agent" . . . . . . . . . . . . . . 12
1.31 "Participation Agreements" . . . . . . . . . . . . 12
1.32 "Plant Hatch" . . . . . . . . . . . . . . . . . . 13
1.33 "Plant Vogtle" . . . . . . . . . . . . . . . . . . 14
1.34 "Prudent Utility Practice" . . . . . . . . . . . . 14
1.35 "Requisite Owner Action" . . . . . . . . . . . . . 14
1.36 "Services Plan" . . . . . . . . . . . . . . . . . 15
1.37 "Southern Electric System" . . . . . . . . . . . . 15
1.38 "Southern Nuclear" . . . . . . . . . . . . . . . . 15
1.39 "Southern Services" . . . . . . . . . . . . . . . 16
1.40 "Strategic Plan" . . . . . . . . . . . . . . . . . 16
1.41 "The Southern Company" . . . . . . . . . . . . . . 16
1.42 "Undivided Ownership Interest" . . . . . . . . . . 16
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.0 Nuclear Managing Board . . . . . . . . . . . . . . 16
2.1 Establishment and Members of the Nuclear Managing
Board. . . . . . . . . . . . . . . . . . . . . . . 16
ii
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2.2 Authority of the Board . . . . . . . . . . . . . . 17
2.3 Functions of the Board . . . . . . . . . . . . . . 17
2.4 Actions of the Board . . . . . . . . . . . . . . . 24
2.5 Chairman of the Board . . . . . . . . . . . . . . 24
2.6 Duties of the Chairman of the Board . . . . . . . 25
2.7 Minutes of Meetings . . . . . . . . . . . . . . . 27
2.8 Expenses . . . . . . . . . . . . . . . . . . . . . 28
2.9 Procedures . . . . . . . . . . . . . . . . . . . . 28
2.10 Attendees at Meetings . . . . . . . . . . . . . . 28
2.11 Delegation of Authority . . . . . . . . . . . . . 29
2.12 Subcommittees . . . . . . . . . . . . . . . . . . 29
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.0 Responsibilities of the Participants' Agent . . . 29
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.0 Strategic Plans and Budgets . . . . . . . . . . . 31
4.1 Strategic Plans . . . . . . . . . . . . . . . . . 32
4.2 Fuel Plan . . . . . . . . . . . . . . . . . . . . 36
4.3 Operation and Maintenance Budget . . . . . . . . . 37
4.4 New Investment Budget . . . . . . . . . . . . . . 37
4.5 Fuel Budget . . . . . . . . . . . . . . . . . . . 38
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.0 Information and Access . . . . . . . . . . . . . . 39
5.1 Information to Be Provided to the Participants . . 39
iii
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5.2 Access to Plant Hatch and Plant Vogtle . . . . . . 48
5.3 Management Audits . . . . . . . . . . . . . . . . 53
5.4 Cost Audits . . . . . . . . . . . . . . . . . . . 54
5.5 Civil Penalties and Meetings . . . . . . . . . . . 55
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.0 Recovery of Costs . . . . . . . . . . . . . . . . 55
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.0 Relation To Existing Agreements . . . . . . . . . 56
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . 60
8.0 Term, Termination, and Effective Date . . . . . . 60
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.0 Miscellaneous . . . . . . . . . . . . . . . . . . 61
9.1 Required Approvals . . . . . . . . . . . . . . . . 61
9.2 Further Assurances . . . . . . . . . . . . . . . . 61
9.3 Governing Law . . . . . . . . . . . . . . . . . . 61
9.4 Notice . . . . . . . . . . . . . . . . . . . . . . 61
9.5 Section Headings Not To Affect Meaning . . . . . . 63
9.6 Time of Essence . . . . . . . . . . . . . . . . . 63
9.7 Amendments . . . . . . . . . . . . . . . . . . . . 63
9.8 Successors and Assigns . . . . . . . . . . . . . . 63
9.9 Counterparts . . . . . . . . . . . . . . . . . . . 63
iv
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9.10 Computation of Percentage Undivided Ownership
Interest . . . . . . . . . . . . . . . . . . . . . 63
9.11 Several Agreements . . . . . . . . . . . . . . . . 64
9.12 Confidentiality . . . . . . . . . . . . . . . . . 64
9.13 Effect on Joint Committee Agreement . . . . . . . 65
9.14 Arbitration . . . . . . . . . . . . . . . . . . . 65
9.15 Accounting Methodology . . . . . . . . . . . . . . 71
EXECUTIONS
v
<PAGE>
AMENDED AND RESTATED NUCLEAR MANAGING BOARD AGREEMENT
FOR
PLANT HATCH AND PLANT VOGTLE
THIS AMENDED AND RESTATED NUCLEAR MANAGING BOARD AGREEMENT
FOR PLANT HATCH AND PLANT VOGTLE is made and entered into as of
July 1, 1993 among GEORGIA POWER COMPANY, a corporation organized
and existing under the laws of the State of Georgia; OGLETHORPE
POWER CORPORATION, an electric membership corporation organized
and existing under Title 46 of the Official Code of Georgia
Annotated; the MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA, a public
corporation and an instrumentality of the State of Georgia; and
the CITY OF DALTON, a municipal political subdivision of the
State of Georgia, acting by and through its Board of Water, Light
and Sinking Fund Commissioners (hereinafter collectively called
the "Participants" and individually sometimes called
"Participant").
W I T N E S S E T H:
WHEREAS, the Participants have previously entered into the
Participation Agreements identified in Section 1.31 hereof
concerning Plant Hatch and Plant Vogtle pursuant to which
Oglethorpe, MEAG and Dalton have irrevocably appointed GPC as
their agent in connection with the planning, licensing, design,
construction, acquisition, completion, management, control,
operation, maintenance, renewal, addition, replacement and
disposal for Plant Hatch and Plant Vogtle (hereinafter the
"Agency Functions"); and
<PAGE>
WHEREAS, the Participants have also previously entered into
the Joint Committee Agreement, dated as of August 27, 1976, for
the purpose of establishing a Joint Committee to coordinate steps
taken to implement and administer the agreements identified in
Attachment A to the Joint Committee Agreement including, among
others, the Participation Agreements; and
WHEREAS, the Participants have also previously entered into
the Nuclear Managing Board Agreement, dated as of November 12,
1990, which among other things established a Nuclear Managing
Board to coordinate the implementation and administration of the
Participation Agreements in lieu of the Joint Committee; and
WHEREAS, GPC and Southern Nuclear, an affiliate of GPC, have
entered into the Nuclear Services Agreement, dated as of October
31, 1991, pursuant to which Southern Nuclear, as the Nuclear
Services Contractor, agreed to provide Nuclear Support Services
to GPC, which agreement was approved by the Nuclear Managing
Board on the conditions that (i) GPC acknowledge that its
contract with Southern Nuclear was a subcontract only and would
not relieve GPC of any of its responsibilities to the
Participants; (ii) GPC would continue to be responsible for its
Agency Functions including, without limitation, the management,
control, operation and maintenance of Plant Hatch and Plant
Vogtle pursuant to the applicable Operating Licenses and
Participation Agreements and shall be responsible for the
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<PAGE>
performance of the Nuclear Services Contractor; and (iii) the
Nuclear Services Contractor shall become obligated to comply with
the applicable terms and conditions of the Nuclear Managing Board
Agreement; and
WHEREAS, GPC has proposed, subject to all Legal
Requirements, to enter into the Nuclear Operating Agreement for
Plant Hatch and Plant Vogtle with Southern Nuclear, pursuant to
which Southern Nuclear will become the Operating Agent and
responsible for the operation and maintenance and the
decommissioning of Plant Hatch and Plant Vogtle as the agent of
GPC at such time as the NRC has authorized Southern Nuclear to
operate and maintain Each Plant. Such proposal of GPC (a)
contemplates that at the time that Southern Nuclear becomes the
Operating Agent, the Nuclear Services Agreement will be
terminated and (b) is made on the conditions that (i) GPC
acknowledges that the Nuclear Operating Agreement is a
subcontract only and does not relieve GPC of any of its
responsibilities to the Participants; (ii) GPC shall continue to
be responsible to the Participants for its Agency Functions,
including, without limitation, the operation and maintenance and
the decommissioning of Plant Hatch and Plant Vogtle pursuant to
the Participation Agreements and shall be responsible for the
performance of the Operating Agent; and (iii) the Operating Agent
shall be obligated to comply with the applicable terms of this
Amended and Restated Nuclear Managing Board Agreement; and
3
<PAGE>
WHEREAS, the other Participants are willing to accept the
foregoing proposal made by GPC upon the stated conditions
thereof; and
WHEREAS, the Participants now desire to enter into the
Amended and Restated Nuclear Managing Board Agreement in order to
implement the foregoing proposal of GPC upon the stated
conditions thereof and to provide that the Board shall have the
authority to administer the Nuclear Operating Agreement in the
manner hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the
mutual undertakings stated herein, the parties hereto intending
to be legally bound do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.0 Definitions. As used herein, the following terms and
phrases shall have, respectively, the following meanings:
1.1 "Agency Functions" means the functions of the
Participants' Agent described in the first recital of this
Agreement.
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1.2 "Agreement" shall mean the Amended and Restated
Nuclear Managing Board Agreement unless the text clearly
indicates otherwise.
1.3 "Dalton" shall mean the City of Dalton, Georgia,
acting by and through its Board of Water, Light and Sinking Fund
Commissioners, and their respective successors and assignees.
1.4 "Each Plant" shall mean and refer to, respectively,
Plant Hatch and Plant Vogtle individually; provided, that should
activities concerning Plant Hatch or Plant Vogtle be undertaken
with respect to one unit of such plant individually, the phrase
Each Plant means and refers to that unit and related common
facilities.
1.5 "Fuel Budget" shall mean the budget described in
Section 4.5 hereof.
1.6 "Fuel Plan" shall mean the plan described in Section
4.2 hereof.
1.7 "Fuel Services" shall mean work related to supplying
and managing the nuclear fuel for Each Plant including, without
limitation, planning, procurement, contract administration, fuel
cycle design, fuel core and assembly design, fuel quality
assurance, nuclear materials management and all activities
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relating to procurement, conversion, enrichment, fabrication,
transportation, installation, monitoring, repairing, storage,
reprocessing and disposal of uranium, nuclear fuel, related
materials and waste products.
1.8 "Governmental Authority" shall mean any local, state,
regional or federal legislative, regulatory, administrative,
legal, judicial, or executive agency, commission, department or
other entity, and any person acting on behalf of any such entity.
1.9 "GPC" shall mean Georgia Power Company, a corporation
organized and existing under the laws of the State of Georgia,
and its successors and assigns.
1.10 "Joint Committee Agreement" shall mean the Joint
Committee Agreement among GPC, OEMC, MEAG and Dalton, dated as of
August 27, 1976, as amended.
1.11 "Legal Requirements" shall mean all laws, codes,
ordinances, orders, judgments, decrees, injunctions, licenses,
rules, permits, approvals, written agreements, regulations and
requirements of or issued by every Governmental Authority having
jurisdiction over the matter in question, whether federal,
regional, state or local, which may be applicable to the
Operating Agent or any of the Participants, or to Plant Hatch or
to Plant Vogtle or any of the real or personal property
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comprising Plant Hatch or Plant Vogtle, or to Nuclear Operating
Services, or to Nuclear Support Services, or the use, occupancy,
possession, operation, maintenance, construction,
decommissioning, acquisition, installation, alteration,
replacement, reconstruction or disposal of Each Plant or any part
thereof.
1.12 "Major Contract" shall mean (i) any contract for the
procurement of a firm supply (excluding any options) of natural
or enriched uranium (U3O8 or UF6) from foreign or domestic sources
over a term of greater than five years and in an aggregate amount
of greater than $50 million, (ii) any contract for the
procurement from domestic or foreign sources of uranium
enrichment services or fuel fabrication services (which may or
may not include fuel core design services) over a term of greater
than five years and in an aggregate amount of greater than $50
million, (iii) any contract for the procurement of major items of
equipment (e.g., steam generators or reactor coolant pumps) in an
amount of greater than $30 million for any single item of
equipment, (iv) any contract for the procurement of outage
services over a term of greater than five years and in an
aggregate amount of greater than $50 million, or (v) any contract
which will require the expenditure by Southern Nuclear (including
any charges associated with a termination of such contract by
Southern Nuclear without cause) in an amount of $50 million in
any one year or an aggregate amount of $100 million; provided,
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however, that if any contract permits the Operating Agent to
cancel such contract on less than one year's advance notice, and
the Operating Agent is not obligated to pay a fee or charge for
the exercise of such cancellation alone, then the term of such
contract for purposes of determining whether such contract is a
Major Contract shall be the minimum term which could result if
the Operating Agent were to exercise such cancellation right.
1.13 "MEAG" shall mean the Municipal Electric Authority of
Georgia, a public corporation and an instrumentality of the State
of Georgia, and its successors and assigns.
1.14 "New Investment Budget" shall mean the budget
described in Section 4.4 hereof.
1.15 "New Investment Services" shall mean work undertaken
with respect to Each Plant that relates to the planning, design,
licensing, acquisition, construction, completion, renewal,
improvement, addition, replacement, repair, retirement,
enlargement or modification of any Unit of Property as described
in the Retirement Unit Manual of the Southern Electric System,
including any amendments thereof as may from time to time be
appropriate or necessary to comply with Legal Requirements, under
circumstances where expenditures for such work are to be
capitalized in accordance with the Electric Plant Instructions of
the Uniform System of Accounts prescribed for Class A and B
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Public Utilities and Licensees by the Federal Energy Regulatory
Commission.
1.16 "NRC" shall mean the United States Nuclear Regulatory
Commission or any successor agency authorized to regulate and
license utilization facilities pursuant to the Atomic Energy Act
of 1954 as amended.
1.17 "Nuclear Interface Procedure" shall have the meaning
assigned in Section 2.6 of the Nuclear Operating Agreement.
1.18 "Nuclear Managing Board", "Managing Board" or "Board"
shall mean the board established pursuant to Section 2.1 of this
Agreement.
1.19 "Nuclear Operating Agreement" shall mean that certain
Nuclear Operating Agreement Between Georgia Power Company and
Southern Nuclear Operating Company, Inc., dated as of the date
hereof, for the procurement of Nuclear Operating Services for the
operation and maintenance of Plant Hatch and Plant Vogtle as it
may be amended from time to time.
1.20 "Nuclear Operating Services" shall mean New Investment
Services, Fuel Services, and Operation and Maintenance Services
with respect to Each Plant.
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1.21 "Nuclear Services Agreement" shall mean that certain
Nuclear Services Agreement Between Southern Nuclear Operating
Company, Inc. and Georgia Power Company, dated as of October 31,
1991, for the procurement of Nuclear Support Services in support
of the operation and maintenance of Plant Hatch and Plant Vogtle
which agreement shall be terminated on the effective date of the
Nuclear Operating Agreement in accordance with Section 9.2 of the
Nuclear Operating Agreement.
1.22 "Nuclear Services Contractor" shall mean the entity
who shall provide Nuclear Support Services pursuant to the
Nuclear Services Agreement.
1.23 "Nuclear Support Services" shall mean those services
to be performed by the Nuclear Services Contractor for the
Operating Agent in accordance with the Nuclear Services
Agreement. Nuclear Support Services shall not include any
activity which is required by the NRC operating licenses to be
performed directly by the licensee.
1.24 "OEMC" shall mean the Oglethorpe Electric Membership
Corporation, now known as Oglethorpe Power Corporation.
1.25 "Oglethorpe" shall mean Oglethorpe Power Corporation
(An Electric Membership Generation & Transmission Corporation),
an electric membership corporation organized and existing under
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Title 46 of the Official Code of Georgia Annotated, and its
successors or assigns.
1.26 "Operating Agent" shall mean the entity licensed by
the NRC to operate and maintain Plant Hatch and Plant Vogtle.
1.27 "Operation and Maintenance Budget" shall mean the
budget described in Section 4.3 hereof.
1.28 "Operation and Maintenance Services" shall mean work
for the Participants relating to the possession, management,
control, start up, operation, availability, production of energy,
maintenance, modification, shutdown, retirements, and
decommissioning, including, but not limited to, any planning,
design, engineering, labor, procurement of materials and
supplies, materials management, quality assurance, training,
security, environmental protection, and handling of any source
material, special nuclear material or by-product material
together with maintaining or obtaining licenses and regulatory
approvals related thereto, governmental affairs or regulatory
relationships, and all other activity that is not included in or
performed as New Investment Services or Fuel Services, but which
is required for the operation and maintenance of Each Plant or
that may be required to comply with Legal Requirements.
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1.29 "Participant" or "Participants" shall mean any, some
or all of the owners, each of which, as of the effective date of
this Agreement, owns an Undivided Ownership Interest in Plant
Hatch and Plant Vogtle in the following proportions:
Participant Plant Hatch Plant Vogtle
GPC 50.1% 45.7%
Oglethorpe 30.0% 30.0%
MEAG 17.7% 22.7%
Dalton 2.2% 1.6%
1.30 "Participants' Agent" shall mean GPC acting on its own
behalf and as agent for the other Participants in accordance with
the Participation Agreements or any successor to that role
appointed pursuant to the applicable Participation Agreements.
1.31 "Participation Agreements" shall mean the following
construction, purchase and ownership, and operating contracts
concerning Plant Hatch and Plant Vogtle:
The Edwin I. Hatch Nuclear Plant Purchase and
Ownership Participation Agreement between GPC and OEMC,
dated as of January 6, 1975, as heretofore or hereafter
amended;
The Edwin I. Hatch Nuclear Plant Agreement of
Construction between GPC and MEAG, dated as of August 27,
1976, as heretofore or hereafter amended;
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The Edwin I. Hatch Nuclear Plant Purchase and
Ownership Participation Agreement between GPC and MEAG,
dated August 27, 1976;
The Edwin I. Hatch Nuclear Plant Purchase and
Ownership Participation Agreement, dated as of August 27,
1976, between GPC and Dalton, as heretofore or hereafter
amended;
The Edwin I. Hatch Nuclear Plant Agreement of
Construction, dated as of August 27, 1976, between GPC and
Dalton, as heretofore or hereafter amended;
The Alvin W. Vogtle Nuclear Units Numbers One and Two
Purchase and Ownership Participation Agreement among GPC,
OEMC, MEAG and Dalton, dated as of August 27, 1976, as
heretofore or hereafter amended;
The Alvin W. Vogtle Nuclear Units Numbers One and
Two Purchase, Amendment, Assignment and Assumption
Agreement between GPC and MEAG, dated as of
November 16, 1983, as amended by Amendment Number One
thereto dated as of April 9, 1985 as heretofore or
hereafter amended;
The Edwin I. Hatch Nuclear Plant Operating Agreement
between GPC and OEMC, dated as of January 6, 1975, as
heretofore or hereafter amended;
The Edwin I. Hatch Nuclear Plant Operating Agreement
between GPC and Dalton, dated as of August 27, 1976, as
heretofore or hereafter amended;
The Edwin I. Hatch Nuclear Plant Operating Agreement
between GPC and MEAG, dated as of August 27, 1976, as
heretofore or hereafter amended; and
The Alvin W. Vogtle Nuclear Units Numbers One and Two
Operating Agreement, dated as of August 27, 1976, among GPC,
OEMC, MEAG and Dalton as heretofore or hereafter amended.
1.32 "Plant Hatch" shall mean the Edwin I. Hatch Nuclear
Plant, Units 1 and 2, as described more fully in paragraph one
and Exhibits B1 and B2 of that certain Edwin I. Hatch Nuclear
Plant Purchase and Ownership Participation Agreement between
Oglethorpe and GPC dated as of January 6, 1975.
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1.33 "Plant Vogtle" shall mean the Alvin W. Vogtle Nuclear
Plant, Units 1 and 2, as described more fully in paragraph one
and Exhibits A1 and A2 of that certain Alvin W. Vogtle Nuclear
Units One and Two Purchase and Ownership Agreement, dated as of
August 27, 1976, as amended, including any descriptions forwarded
to the Participants pursuant to Section 4(g) of that agreement.
1.34 "Prudent Utility Practice" shall mean at a particular
time any of the practices, methods and acts engaged in or
approved by a significant portion of the electric utility
industry prior to such time, or any of the practices, methods and
acts which, in the exercise of reasonable judgment in light of
the facts known at the time the decision was made, could have
been expected to accomplish the desired result at the lowest
reasonable cost consistent with good business practices,
reliability, safety and expedition. "Prudent Utility Practice"
is not intended to be limited to the optimum practice, method or
act to the exclusion of all others, but rather to be a spectrum
of possible practices, methods or acts having due regard for,
among other things, manufacturers' warranties and the
requirements of governmental agencies of competent jurisdiction.
1.35 "Requisite Owner Action" shall mean the written
approval or disapproval, as the case may be, by those
Participants which collectively own Undivided Ownership Interests
in the aggregate proportion of not less than eighty-five percent
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(except as otherwise provided in Section 9.10 hereof), which
written approval or disapproval may be signified by the
signatures of the members of the Nuclear Managing Board who
represent such Participants and are not precluded in
participating or taking action pursuant to Section 9.10 hereof to
any resolution or motion acted upon by the Board pursuant to
Section 2, or by approval of the minutes of any Board meeting.
The failure to obtain any approval by Requisite Owner Action in
any instance where such approval is required by the terms of this
Agreement shall constitute disapproval.
1.36 "Services Plan" shall have the meaning assigned in
Section 2.6 of the Nuclear Operating Agreement.
1.37 "Southern Electric System" shall mean the electric
utility operating company subsidiaries of The Southern Company
and Southern Services, collectively.
1.38 "Southern Nuclear" shall mean Southern Nuclear
Operating Company, Inc., a corporation, organized and existing
under the laws of the State of Delaware, and its successors and
assigns.
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1.39 "Southern Services" shall mean Southern Company
Services, Inc., a corporation organized and existing under the
laws of the State of Alabama, and its successors and assigns.
1.40 "Strategic Plan" shall mean the plan containing the
information described in Section 4.1 hereof.
1.41 "The Southern Company" shall mean The Southern
Company, a corporation organized and existing under the laws of
the State of Delaware, the subsidiaries of which include, but are
not limited to, GPC, Southern Nuclear and Southern Services.
1.42 "Undivided Ownership Interest" shall mean the interest
each Participant owns as a tenant in common with the other
Participants in Each Plant.
ARTICLE II
2.0 Nuclear Managing Board.
2.1 Establishment and Members of the Nuclear Managing
Board. There has been established a Nuclear Managing Board,
which consists of a member and an alternate designated by each
Participant. As of the effective date of this Agreement, the
Board shall have the authorities, powers, and functions
hereinafter provided. Each Participant having given written
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notice of its designated member and alternate to all other
Participants, each Participant may change its designated member
or alternate effective upon delivery of written notice of such
change to the other Participants.
Each member of the Board shall be authorized to represent
the Participant which appointed him or her and shall have the
authority to obligate such Participant as hereinafter provided or
as may otherwise be granted by such Participant in writing, a
copy of which writing shall be furnished to all other members of
the Board. In the event any member of the Board is unable to
attend any meeting of the Board, the designated alternate for
such member shall have the full power and authority of such
member to act for and obligate the Participant which such member
represents.
2.2 Authority of the Board. The Nuclear Managing Board
shall have all authority and power necessary to perform the
functions delegated to it by Section 2.3 hereof and any other
authority explicitly delegated to it by this Agreement. Such
authority shall be exercised by the Board in the manner as
hereinafter provided in this Agreement.
2.3 Functions of the Board. The Nuclear Managing Board
shall perform the following functions:
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2.3.1 Implement and administer the Participation
Agreements in accordance with the terms of
such agreements, respectively.
2.3.2 Administer the previously approved Nuclear
Services Agreement and administer the Nuclear
Operating Agreement, which the Managing Board
has approved. Approve by Requisite Owner
Action i) any amendment of either of such
agreements and any other contract between the
Participants' Agent and Southern Nuclear
whereby Southern Nuclear performs Nuclear
Operating Services for and on behalf of the
Participants' Agent and all changes to any
such contract, and ii) a consent by the
Participants' Agent to any assignment made
pursuant to Section 11.3 of the Nuclear
Operating Agreement; provided that approval
of any of the foregoing which is necessary to
comply with Legal Requirements shall not be
unreasonably withheld.
2.3.3 Review and provide input to the Operating
Agent prior to execution of (and the
Participants may audit from time to time
pursuant to Section 5.4 hereof) any of the
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following agreements and any amendments
thereof, provided that the Operating Agent
shall have full authority to execute such
agreements or amendments in its sole
discretion after giving consideration to any
comments of the Managing Board or any member
thereof:
1) All Services Plans between Southern
Nuclear and the Participants' Agent;
2) Except as to any agreement for which
Managing Board approval is required
hereunder, any agreement between
Southern Nuclear and any entity with
which it is affiliated (as defined by
the Public Utility Holding Company Act
of 1935, as amended, or regulations
promulgated thereunder) entered into
after the effective date of the Nuclear
Operating Agreement. Southern Nuclear
shall give timely notice to each
Participant of the initiation of any
proceeding before the U. S. Securities
and Exchange Commission for the purpose
of reviewing amendments to existing
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contracts or any new contract between
Southern Nuclear and any of its
affiliates and shall not contest the
standing of any Participant to intervene
in any such proceeding.
2.3.4 Approve by Requisite Owner Action the
following actions or functions of the
Operating Agent.
1) The execution after the effective date
of the Nuclear Operating Agreement of
any Major Contract; provided, however,
that if approval by Requisite Owner
Action is not obtained after any such
Major Contract has been submitted to the
Nuclear Managing Board, then any
Participant may request that such Major
Contract be submitted to the chief
executive officers (CEOs) of the
Participants for resolution by Requisite
Owner Action.
2) The taking of any action by the
Operating Agent with respect to the
sale, lease or disposal of any real or
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personal property owned individually or
jointly by any or all of the
Participants; provided, however, that
Board approval shall not be required
before the Operating Agent takes any
action to replace any facilities,
equipment or materials with facilities,
equipment or materials, as the case may
be, of like kind and of value at least
equal to that of the replaced
facilities, equipment or materials; and
provided further that this Section
2.3.4(2) shall not apply to actions
taken pursuant to (a) NRC regulations
respecting decommissioning (i.e., 10
C.F.R. Sections 50.75 or 50.82, or any
successor regulations thereto), or (b) a
decision to retire either or both units
of Each Plant made in accordance with
the Participation Agreements. Nothing
in this Section 2.3.4(2) shall be
construed as an authorization by the
Managing Board for the Operating Agent
to take any action inconsistent with
plans and budgets adopted in accordance
with Article IV hereof.
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2.3.5 Conduct or undertake such studies,
investigations or audits which the Board
determines are appropriate or useful in
carrying out its responsibilities or
functions. The Board may employ independent
consultants or utilize the personnel or other
resources of any Participant for such
studies, investigations or audits. The costs
of such studies, investigations or audits
allocable to Each Plant shall be borne by the
Participants in the proportion of their
respective ownership shares of such plant.
2.3.6 Review and approve, disapprove or revise and
approve the Strategic Plan, the Fuel Plan,
the Operation and Maintenance Budget, the New
Investment Budget and the Fuel Budget to be
submitted annually by the Operating Agent,
all pursuant to Sections 4.0 through 4.5
hereof.
2.3.7 Perform those functions described in Sections
4.0, 4.1, 4.3, 4.4, 4.5, 5.1, 5.2, 9.14, and
9.15 hereof.
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2.3.8 Approve any change from the existing plant
basis of allocation of costs in the Southern
Nuclear Cost Allocation Manual by Requisite
Owner Action; provided, however, that
approval of changes caused by Legal
Requirements shall not be unreasonably
withheld.
2.3.9 Approve the decommissioning plan for Each
Plant, filed by the Operating Agent with the
NRC, pursuant to 10 C.F.R. Section 50.75(f) or 10
C.F.R. Section 50.82, or any successor NRC
regulation or pursuant to any other Legal
Requirements, by Requisite Owner Action;
provided, however, that approval of a
decommissioning plan that meets Legal
Requirements shall not be unreasonably
withheld.
2.3.10 Approve by Requisite Owner Action the Nuclear
Interface Procedure whereby GPC or any other
affiliate of Southern Nuclear will provide
support services as shall be described in
written Services Plans, which shall be
subject to Board review and input pursuant to
Section 2.3.3 hereof.
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2.3.11 Perform such other functions as the
Participants may in writing delegate to the
Board.
2.4 Actions of the Board. In performing the functions
described in Section 2.3 hereof, the Nuclear Managing Board shall
act by unanimous vote of all members not ineligible to
participate in any action pursuant to Section 9.10 hereof except
as otherwise provided (i) in Sections 2.3.2, 2.3.3, 2.3.4, 2.3.8,
2.3.9, 2.3.10, 4.0, 4.1, 4.3, 4.4 and 4.5 hereof or (ii) by any
of the Participation Agreements, or (iii) any other written
agreements as may hereinafter be entered into by all of the
Participants.
2.5 Chairman of the Board. So long as GPC is the
Operating Agent, the member of the Nuclear Managing Board
representing GPC shall be the Chairman of the Board. In the
event GPC is not the Operating Agent, then the Chairman of the
Board shall be a member of the Board elected by a majority of the
members of the Board for a term of twelve consecutive months. On
the expiration of such term, the succeeding Chairman of the Board
shall be a member of the Board elected by a majority vote of the
members of the Board. There shall be no restriction upon the
number of terms to which any member of the Board may be elected
to serve as Chairman; provided that no member or no member and
his or her predecessor representing a single Participant shall be
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eligible for election as Chairman for more than two successive
terms without the consent of all members of the Board.
2.6 Duties of the Chairman of the Board. The Chairman of
the Nuclear Managing Board shall have the following duties:
2.6.1 Schedule meetings of the Board at such time
and place as the Chairman may determine but
not less frequently than once every two
months unless all members of the Board shall
otherwise agree. With the consent of all
members, any meeting of the Board may be
conducted by telephone conference and any
members of the Board may participate in any
meeting by telephone.
2.6.2 Provide notice to all other members of the
Board of each scheduled Board meeting thirty
days in advance of such meeting except in
emergencies or unless all members consent to
any shorter notice.
2.6.3 Provide all other members of the Board with a
copy of each resolution or motion which the
Chairman or any other member proposes to
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submit to the Board for action at any meeting
of the Board at least five business days
prior to such meeting, provided such time
requirement may be waived by the unanimous
vote of all Board members at such meeting.
2.6.4 Preside at each Board meeting and conduct all
Board meetings in accordance with the
procedures and rules established in
accordance with Section 2.9 hereof.
2.6.5 Establish the agenda for each Board meeting,
including such items or matters as the
Chairman shall deem appropriate or as may be
requested by any other member of the Board.
2.6.6 Notify all members of the Board of the agenda
for each meeting as much in advance of such
meeting as may be possible, but in any event
not less than five business days before such
meeting.
2.6.7 Appoint a secretary for the Board who shall
(i) prepare a draft of the minutes of each
Board meeting and deliver or mail a copy of
such draft minutes to each member of the
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Board within five business days after the
close of each meeting of Board and (ii) take
custody of and maintain the records of all
Board meetings.
2.7 Minutes of Meetings. The minutes of each Board
meeting shall record the following:
2.7.1 The date, time and place of the meeting;
2.7.2 The agenda of the meeting and the items or
matters discussed;
2.7.3 The resolutions and motions approved, actions
approved, agreements reached and decisions
made by the Board, including the votes of the
members of the Board on each of such
resolutions, motions, actions, agreements and
decisions;
2.7.4 The date, time and place of the next meeting
of the Board to be scheduled.
Provided, (1) the minutes of any meeting of the Board shall not
include any position advanced by any member on any matter which
was not adopted by the Board at such meeting for any reason, and
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(2) any written resolution or motion respecting a budget or
Strategic Plan submitted to and approved by the Board shall be
immediately effective and binding upon the Participants when the
requisite number of members have affixed their signatures to such
resolution or motion. At the next succeeding regular meeting at
which each Participant is represented, the members of the Board
in attendance shall consider the minutes of the preceding regular
or called meeting and if they are found in order, shall signify
approval of the minutes by affixing their signatures to same.
2.8 Expenses. Each Participant shall be responsible for
the personal expenses of its member and alternate of the Nuclear
Managing Board at any Board meeting. General meeting expenses
shall be the responsibility of the Participant whose member is
serving as Chairman at the time the meeting is held. All other
expenses necessary in the performance of the Board functions
shall be allocated and paid as determined by the Board.
2.9 Procedures. The Nuclear Managing Board shall develop
and adopt and from time to time modify manuals or procedures as
may be appropriate for the conduct of its meetings and the
performance of its functions.
2.10 Attendees at Meetings. Attendance at meetings of the
Nuclear Managing Board shall not be limited to members of the
Board, but the Participants recognize the practical necessity of
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limiting the participation of attendees at any Board meeting who
are not members to those who are expected to take an active part
on the agenda for such meeting. Subject to Legal Requirements,
the Chairman, on his own motion or at the request of any member
may conduct any portion of any meeting in executive session at
which attendance may be restricted to members or their respective
alternates and persons invited by the Chairman.
2.11 Delegation of Authority. The Nuclear Managing Board
shall not delegate its authority to others.
2.12 Subcommittees. The Nuclear Managing Board shall have
the authority to appoint and charge subcommittees to study and
make recommendations on any subject. The purpose, charge and
duty of each subcommittee so appointed shall not exist for more
than one year unless reappointed by the Board.
ARTICLE III
3.0 Responsibilities of the Participants' Agent. GPC
shall continue to be the Participants' Agent and responsible for
its Agency Functions under the Participation Agreements for so
long as they shall remain in effect or until GPC has been removed
as the Participants' Agent pursuant to the terms of such
agreements.
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Additionally, until the Nuclear Operating Agreement shall
become effective, GPC shall continue to be the Operating Agent of
Each Plant and in that capacity shall be obligated to operate and
maintain Each Plant in accordance with the Participation
Agreements and all Legal Requirements and shall comply with the
terms hereof, and shall be responsible for the performance of the
Nuclear Services Contractor.
At such time as the Nuclear Operating Agreement shall become
effective, GPC (i) shall cease to be and Southern Nuclear shall
become the Operating Agent of Each Plant, but GPC shall continue
to be the Participants' Agent, and (ii) shall become responsible
for the performance of Southern Nuclear as the Operating Agent of
Each Plant in accordance with this Agreement and the
Participation Agreements and all Legal Requirements.
Upon request from any member of the Board, the Participants'
Agent shall advise the Board if additional amounts or scope of
coverage of nuclear decontamination and property damage insurance
are available to an individual Participant beyond that obtained
by the Participants' Agent for Each Plant pursuant to the
Participation Agreements; and, at the request of any
Participant's member of the Board, the Participants' Agent shall
obtain such additional amount or greater scope of coverage for
such Participant as may be requested and available; provided that
any increase in cost, including without limitation premiums or
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retrospective premium calls, arising from such additional amount
or greater scope of coverage shall be for the account of such
Participant.
ARTICLE IV
PLANS AND BUDGETS
4.0 Strategic Plans and Budgets. By February 1 of each
year, each Participant may provide to the Operating Agent input
to be used in the formulation of the subsequent year's Strategic
Plan and budgets. Strategic Plans, Fuel Plans and budgets shall
be prepared and shall be submitted by the Operating Agent to the
Nuclear Managing Board as provided in Sections 4.1 through 4.5
below. Plans and budgets shall conform to the requirements and
guidelines stated in Appendix "A" attached hereto and made a part
hereof and any revisions of such appendix as may be approved by
the Board. Within 30 days after submittal, each Strategic Plan,
Fuel Plan, Operation and Maintenance Budget, New Investment
Budget, and Fuel Budget shall be approved, or revised and
approved, by Requisite Owner Action or disapproved by the Board.
In the event that the Board disapproves any plan or budget
(except when such disapproval is by Requisite Owner Action)
within thirty days after submittal, then the item(s) in dispute
respecting any plan or budget shall be submitted to the chief
executive officers (CEOs) of the Participants for resolution. A
Review Group may be appointed by the Board to review all sides of
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the items in dispute and make a presentation to the CEOs
concerning various viewpoints and aspects of such items in
dispute. If the CEOs are unable to resolve any item in dispute
by Requisite Owner Action within thirty days after submittal to
the CEOs, then such unresolved item in dispute shall be resolved
by the Participants' Agent in a manner consistent with Prudent
Utility Practice and all other elements of such plan or budget
shall be deemed approved by the Board and binding on the
Participants.
4.1 Strategic Plans. A Strategic Plan for Each Plant
consisting of six elements described in Sections 4.1.1 through
4.1.6 shall be submitted by the Operating Agent to the Nuclear
Managing Board by May 15 of each year. The Board may, by
Requisite Owner Action, separately approve or disapprove
individual projects which are classified as planned improvement
projects pursuant to Section 4.1.4 below, but shall otherwise
approve or disapprove each Strategic Plan in its entirety. In
the event the Board shall by Requisite Owner Action disapprove
any Strategic Plan in its entirety, the Operating Agent shall as
promptly as possible, submit a revised Strategic Plan to the
Board for approval or disapproval. In the event the Board shall
by Requisite Owner Action disapprove separately one or more
planned improvement projects of any Strategic Plan, the Operating
Agent may submit to the Board for approval or disapproval a
revision of such Strategic Plan with adjustments in any other
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element that may be affected by the deletion of such disapproved
planned improvement projects. The six elements of each Strategic
Plan are described in the following Sections 4.1.1 through 4.1.6.
4.1.1 Five-year Operating and Planned Outage
Schedule. This schedule shall identify
the scheduled operating cycles and
planned outages for refueling,
maintenance and other work during the
succeeding five years. The schedule
shall describe in reasonable detail the
time and duration of each planned outage
and the maintenance and other work
planned to be performed during such
outage.
4.1.2 Availability and Performance Goals.
This section shall contain overall
performance goals which have been
established for Each Plant, including,
without limitation, goals relating to
unit availability.
4.1.3 Planned Mandatory Projects. A mandatory
project is any project with a total
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estimated cost in excess of one million
dollars or such greater amount as the
Board may establish, including any
modification, addition or program, which
is needed in order to support normal
operations (including, without
limitation, facilities for spent fuel
storage) in accordance with Prudent
Utility Practice or in order to comply
with regulatory or safety requirements.
The associated schedule and estimated
annual funding requirements shall be
included.
4.1.4 Planned Improvement Projects. An
improvement project is any project with
a total estimated cost in excess of one
million dollars or such greater amount
as the Board may establish, including
any modification, addition, or program,
which is not mandatory as defined in
Section 4.1.3 hereof. Examples of such
projects include efforts to improve
plant performance or conditions such as
improved plant capacity or efficiency,
enhanced working conditions, and
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appearance. The associated schedule and
estimated annual funding requirements
shall be included.
4.1.5 Authorized Level of Staffing. This
section shall provide the current
authorized number of permanent staff
positions in the organizations of the
Operating Agent and of the Nuclear
Services Contractor which are assigned
to Each Plant. Such number of positions
shall be broken down by functional areas
(e.g., operations, maintenance,
administrative, technical, corporate
support), shall include positions which
are located either on-site or off-site,
and shall include all positions
regardless of the actual employer. This
section shall also show any planned
changes in such authorized number of
positions over the succeeding five
years.
4.1.6 Low Level Radioactive Waste Disposal.
This section shall provide information
respecting plans for disposal or
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reduction, or both, of low level
radioactive wastes generated at Each
Plant, including any plans for onsite
disposal.
4.2 Fuel Plan. A ten year Fuel Plan for Plant Hatch and
Plant Vogtle shall be submitted to the Nuclear Managing Board by
September 15 of each year. Each Fuel Plan shall describe in
reasonable detail each action or contemplated action and payment
and the dates thereof, core usage and design burn up, estimated
fueling dates and the energy expected to be generated by each
unit for each fuel period of the Fuel Plan, a cash flow analysis
of forecasted expenditures and credits for each Participant for
each major component of the fuel cycle by years, and cash flow by
months for the first five years. Each Fuel Plan will also
provide the following information with respect to the spent fuel
at Each Plant: the existing spent fuel storage capacity; the
current spent fuel inventory; the projected date when the spent
fuel storage capacity will be fully utilized; the projected dates
when shipments of spent fuel for disposal will commence; and the
projected date when additional spent fuel storage capacity may
have to be provided.
4.3 Operation and Maintenance Budget. By August 15 of
each year, the Operating Agent shall submit to the Nuclear
Managing Board a written Operation and Maintenance Budget
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estimate of the costs of Operation and Maintenance Services for
Each Plant for the next calendar year, with a forecast of budget
requirements for the succeeding four calendar years. Such budget
estimate and forecast shall be based on the Strategic Plan unless
the Operating Agent determines that deviations from the Strategic
Plan are appropriate, in which case, the Operating Agent shall
identify such deviations to the Managing Board. The Board may,
by Requisite Owner Action, approve or disapprove each budget in
its entirety. In the event the Board shall by Requisite Owner
Action disapprove an entire budget, the Operating Agent shall as
promptly as possible, submit a revised budget to the Board for
approval or disapproval. Each budget shall be supported by
detail reasonably adequate for the purpose of review by the
Board.
4.4 New Investment Budget. By August 15 of each year, the
Operating Agent shall submit to the Nuclear Managing Board a
written New Investment Budget estimate of the cost of New
Investment Services for Each Plant for the next calendar year,
with a forecast of budget requirements for the succeeding four
calendar years. Such budget estimate and forecast shall be based
on the Strategic Plan unless the Operating Agent determines that
deviations from the Strategic Plan are appropriate, in which
case, the Operating Agent shall identify such deviations to the
Managing Board. The Board may, by Requisite Owner Action,
approve or disapprove each budget in its entirety. In the event
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the Board shall by Requisite Owner Action disapprove an entire
budget, the Operating Agent shall as promptly as possible, submit
a revised budget to the Board for approval or disapproval. Each
budget shall be supported by detail reasonably adequate for the
purpose of review by the Board.
4.5 Fuel Budget. By August 15 of each year, the Operating
Agent shall submit to the Nuclear Managing Board a written Fuel
Budget estimate of the costs of Fuel Services for Each Plant for
the next calendar year, with a forecast of budget requirements
for the succeeding four calendar years. The Board may, by
Requisite Owner Action, approve or disapprove each budget in its
entirety. In the event the Board shall by Requisite Owner Action
disapprove an entire budget, the Operating Agent shall as
promptly as possible, submit a revised budget to the Board for
approval or disapproval. Each budget shall be supported by
detail reasonably adequate for the purpose of review by the
Board.
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ARTICLE V
INFORMATION
5.0 Information and Access. The Participants' Agent shall
furnish or cause to be furnished information, access to
information and access to Plant Hatch and Plant Vogtle and the
offices of the Operating Agent and the Nuclear Services
Contractor as follows:
5.1 Information to Be Provided to the Participants. Three
categories of information, i.e., Formal Routine, Formal
Non-routine, and Informal, shall be provided to each member of
the Nuclear Managing Board or to the Participants in the manner
indicated below:
5.1.1 Formal Routine Information. In addition to
the Strategic Plan and budget information
provided routinely pursuant to Article IV,
information in this category includes:
1) Energy Estimate - By August 15 of each
year, the Participants' Agent will
furnish a written energy estimate for
Each Plant projecting the estimated
generation for each unit during the
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succeeding five calendar years, using
the best available data at the time.
2) Plant Performance Data - At the time of
submittal of each Strategic Plan, the
Operating Agent will also furnish a
comparison of the performance of Each
Plant relative to other plants using
performance indicators, including,
without limitation, the unit cost of
generation, in common use in the nuclear
industry or as may be specified by the
Nuclear Managing Board.
3) Plant Budget Reports - The Operating
Agent will furnish monthly data showing
actual costs for Operation and
Maintenance Services, New Investment
Services, and Fuel Services with
comparisons to the respective budgets
for such services. This report will
normally be provided by the end of the
succeeding month.
4) Plant Specific Strategic Plan Reports
At least bimonthly, the Operating Agent
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will furnish data showing actual
performance for each unit at Each Plant
compared to goals contained in the
Strategic Plan for Each Plant.
5) INPO Evaluations and Assessments - The
Operating Agent will make available for
review by the representatives of each
Participant copies of evaluations and
assessments of Each Plant by the
Institute of Nuclear Power Operations
("INPO").
6) NRC and INPO Meetings - Each member of
the Board will be notified by the
Operating Agent and appropriate
representatives of each Participant may
attend executive exit meetings of INPO
and the NRC as observers. Attendance by
Participant representatives as observers
at other NRC & INPO meetings with the
Operating Agent will be permitted unless
(i) such attendance is contrary to the
policies of NRC or INPO, or (ii) the
management of the Operating Agent
requests that Participant
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<PAGE>
representatives not attend in which
event any Participant may invoke the
procedures specified in Section 5.2.3
hereof.
7) Audit Reports - The Operating Agent will
make available for review by the
Participants copies of financial or
accounting reports concerning Each Plant
containing the results of audits by or
for GPC, Southern Nuclear, Southern
Services or any affiliate of The
Southern Company, for any Participant or
its affiliates, or by any regulatory
agency.
8) Correspondence to and from NRC - The
Operating Agent shall furnish to any
member of the Board at his or her
request copies of all correspondence to
and from the NRC concerning Plant Hatch
or Plant Vogtle.
9) Meetings with the Board - In order to
assure that the members of the Board are
informed as to the status of operations
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at Each Plant, an officer of the
Operating Agent, together with any
employees or consultants of the
Operating Agent as such officer may
designate, shall attend each meeting of
the Board. At such meetings the
Operating Agent shall present
information concerning plant
performance, the status and condition of
Each Plant, including review of the
problem status reports, and new capital
projects, to convey an overview of Each
Plant and its operations and to address
items on the agenda for the meeting of
the Board. The Operating Agent will
inform the Board of events which are
affecting or may affect the availability
of any unit at Each Plant.
10) Responses to Participant Inquiries - In
addition to the obligations of the
Operating Agent to provide the
information and access as explicitly
required herein, the Operating Agent
will respond to reasonable written
requests from any Participant for
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information not otherwise provided
pursuant to this Agreement regarding
Nuclear Operating Services for Each
Plant. The Operating Agent will
designate a person to be responsible for
being responsive to inquiries from the
Participants.
11) Incentive Compensation Plan - Operating
Agent shall provide to each member of
the Board a copy of the incentive
compensation plan for its employees
described in Section 2.7.1 of the
Nuclear Operating Agreement and, with
respect to each amendment or revision of
such plan, Operating Agent shall
consider any comments as may be offered
by the Board or such member respecting
such plan, but shall have full authority
to implement such plan when in its sole
discretion it decides it is appropriate
to do so.
Notwithstanding any other provision of this Agreement, the
Operating Agent shall not provide copies of or access to
Safeguards Information, as defined in 10 CFR Section 73.2, to any
44 <PAGE>
member of the Board, or to any Participant or its employees,
agents or contractors unless the Operating Agent is reasonably
assured that the provision of such copies or access will not
violate 10 CFR Section 73.21 and the person receiving such copies or
access can and will comply with paragraphs (b) through (i) of 10
CFR Section 73.21. Information supplied to any member under this
Agreement shall not be used in any manner that (a) would
compromise any part of the safeguards plan for Each Plant, or (b)
would be in contravention of applicable governmental regulations.
Information requested by a Participant may not be refused on the
grounds that a vendor, contractor or consultant claims such
information to be proprietary if such Participant agrees to
execute an agreement satisfactory to any such vendor, contractor
or consultant to protect such information from unwarranted
disclosure.
5.1.2 Formal Non-routine Information. Information
in this category which is time sensitive and
shall be promptly provided by the Operating
Agent to the Participants includes:
information on work disruptions or stoppages,
and Notices of an Unusual Event, Alert, Site
Area Emergency, or General Emergency (as such
terms are defined in the emergency plan for
Each Plant). The Operating Agent shall also
inform the Participants and the dispatcher of
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the power and energy generated by Each Plant
as soon as practical, or in accordance with
guidelines acceptable to the Nuclear Managing
Board, after the occurrence at Each Plant of
any unplanned outage of a unit, any
significant extension of a planned unit
outage, any unplanned reduction in the
capacity of a unit for an extended period, or
any event or regulatory action which may
substantially affect the operation of Each
Plant. Information in this category also
includes informal reports concerning events
which the Operating Agent believes may result
in public interest or may lead to inquiries
to Participants by members of the public, and
news releases issued by the Participants'
Agent, the Operating Agent or the Nuclear
Services Contractor.
Southern Nuclear shall inform the Nuclear
Managing Board of any plan to change the
organizational structure of Southern Nuclear
to the extent that such change in any way
effects the Southern Nuclear personnel who
are dedicated to Each Plant and will consider
any comments made by the Board, or any member
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<PAGE>
of the Board, respecting such plans, but
shall have full authority to implement such
plans when in its sole discretion it decides
it is appropriate to do so.
Southern Nuclear shall also inform the
Managing Board of any plans to replace (1)
the individual occupying the position of
General Manager of Each Plant on the
effective date of the Nuclear Operating
Agreement, and the successors of such
replacement, and (2) any Southern Nuclear
officer having responsibility, on the
effective date of the Nuclear Operating
Agreement, for only Plant Hatch, only Plant
Vogtle, or only Plants Hatch and Vogtle, and
the successors of such replacement. The
Managing Board shall review and the Board, or
any member of the Board, may provide input to
Southern Nuclear prior to the replacement of
such individuals and shall be afforded
access, on request, to Southern Nuclear's
chief executive and senior nuclear operations
officers and the Board of Directors or any of
them; provided, however, that Southern
Nuclear shall have full authority, in its
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<PAGE>
sole discretion, to make such replacements as
it deems appropriate following such review,
input and access by the Board; and provided
further that such review, input and access
shall not be required with respect to any
replacement made on a temporary or interim
basis to fill any vacancy which arises as a
result of any occurrence (e.g., injury,
promotion, dismissal or resignation).
5.1.3 Informal Information. Information in this
category includes informal communications
between representatives of any Participant
and the Operating Agent's employees of a
general nature and access by such
representatives to routine reports and
records on plant operations and conditions
that are normally readily available at Each
Plant.
5.2 Access to Plant Hatch and Plant Vogtle.
5.2.1 Each Participant shall be given the
opportunity to have a reasonable number of
representatives located at Each Plant ("Site
Representatives") for the purpose of
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observing and reporting to such Participant
on plant conditions and activities.
Reasonable office space and facilities will
be made available to such Site
Representatives. If a Participant elects to
place representatives on site, such
Participant will re-evaluate periodically the
need for such onsite representation, and if
the Participant determines that there is no
longer a need for such onsite representation,
the Participant will suspend its onsite
representation.
5.2.2 It is a mutual objective of the parties to
create and maintain a harmonious working
environment so that plant management
attention is not diverted from the
responsibilities of safe and efficient
operations of the plant. Since a Participant
can unilaterally exercise its right to have a
reasonable number of Site Representatives at
Each Plant, it shall be the duty of any
Participant that exercises such right to
assure that each of its Site Representatives
shall cooperate fully with plant management
in achieving such mutual objective. In the
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event that plant management reasonably
considers that the conduct of any Site
Representative is not conducive to achieving
such mutual objective, the Operating Agent
may bring such matters to the attention of
the management of the Participant which has
designated such Site Representative and
request that appropriate measures be taken by
such Participant to achieve such mutual
objective. The management of such
Participant in response to any such request
shall thereupon take such measures, including
at its discretion replacement of such Site
Representative, as it deems appropriate to
achieve such mutual objective. If issues of
a continuing nature arise involving any Site
Representative, the Managing Board will
review the circumstances and make
recommendations as appropriate to the Site
Representative's Participant or to the
Operating Agent.
5.2.3 As a matter of professional respect and
courtesy, and in order to promote good
relations with the personnel on site, Site
Representatives of any Participant will be
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invited to attend educational, professional
and recreational functions at Each Plant. In
order to assure that they are kept informed
about management activities, Site
Representatives will be provided copies of
daily, weekly and monthly reports on plant
operations that are routinely distributed to
all plant management level personnel. Upon
initial assignment, a new Site Representative
will be invited by the plant manager to
attend as an observer, one of each type of
routine management meetings, except those
devoted to personnel matters and staff
working meetings involving conflict
resolution activities where Site
Representative presence would be obviously
inappropriate that may be held on site,
including without limitation meetings of any
oversight group such as the Plant Review
Board, Independent Safety Engineering Group,
Safety Review Board and ALARA Committee.
Thereafter, such Site Representative may
attend any meeting other than (i) such
personnel or conflict resolving meetings, and
(ii) any other meetings that the General
Manager at Each Plant or his senior
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<PAGE>
management shall reasonably request such Site
Representative not attend. If the management
of the Participant represented by Site
Representatives disagrees that the closure of
meetings or types of meetings was reasonable,
then the management of such Participant may
request the management of the Operating Agent
to review the matter. If the management of
the Operating Agent concludes that the
closure of such meetings was not based on
reasonable grounds, the Participant's Site
Representative shall be permitted to attend
such meetings. If the management of the
Operating Agent concludes that the closure
was reasonable, and the management of such
Participant still disagrees, the matter may
be referred to the Managing Board for review
and recommendations.
5.2.4 Any Participant shall have the additional
right to have its representatives and guests
visit Each Plant, with prior approval of the
Operating Agent, to tour the facilities and
observe plant activities; provided that such
visit and tour will not interfere with the
operation of the plant, plant safety, or
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security. Such representatives and guests
shall comply with all applicable rules and
regulations in effect at the plant whether
imposed by Governmental Authority or by the
Operating Agent.
5.3 Management Audits. Each Participant shall have the
right to conduct management audits, at its own cost, of the
performance of the Participants' Agent, the Operating Agent and
the Nuclear Services Contractor either by such Participant's own
officers and employees or by its duly authorized agents or
representatives, including without limitation any auditor
utilized by such Participant, or any nationally recognized
accounting firm designated by such Participant or by the
Administrator of the Rural Electrification Administration. The
Participants' Agent, the Operating Agent and the Nuclear Services
Contractor shall cooperate with such Participant in the conduct
of such audits and, subject to the applicable regulations of the
NRC and the requirements of vendors, give such Participant's
representatives reasonable access to all contracts, records, and
other documents relating to Each Plant. Following any such
management audit, the Participants' Agent, the Operating Agent or
the Nuclear Services Contractor shall respond to the findings of
such audit if requested to do so by such Participant. Management
audits by individual Participants shall be coordinated and
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<PAGE>
scheduled through the Participants' Agent so as to minimize the
number of audits required.
5.4 Cost Audits. In addition to the right to conduct
management audits pursuant to Section 5.3 hereof, each
Participant shall have the right to conduct, at its own expense,
audits of the costs of Agency Functions, Operation and
Maintenance Services, New Investment Services and Fuel Services
and any other costs charged to and paid by such Participant. To
enable each Participant to conduct such audits, the Participants'
Agent, the Operating Agent and the Nuclear Services Contractor
will provide, during normal business hours and subject to
conditions consistent with the conduct by the Participants'
Agent, the Operating Agent and the Nuclear Services Contractor of
their respective responsibilities, any Participant, its officers,
employees, agents or representatives, including without
limitation any auditor utilized by such Participant, or any
nationally recognized accounting firm designated by such
Participant or by the Administrator of the Rural Electrification
Administration, with access to books, records, and other
documents of the Participants' Agent, the Operating Agent and the
Nuclear Services Contractor related to their respective
performance (including, without limitation, all Services Plans,
the Nuclear Interface Procedure and agreements between Southern
Nuclear and any of its affiliates, and any amendments to the
foregoing) and, upon such Participant's reasonable request,
54
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copies thereof, which set forth (a) costs applicable to Operation
and Maintenance Services, New Investment Services, Fuel Services,
and other costs for Each Plant to the extent necessary to enable
the auditors of such Participant to verify that the costs have
been properly billed to the Participants' Agent or to such
Participant pursuant to the provisions of applicable agreements,
and (b) matters relating to the design, construction and
operation and retirement of Each Plant in proceedings before any
Governmental Authority having jurisdiction.
5.5 Civil Penalties and Meetings. In each case when a
civil penalty is assessed against the Operating Agent, the
Operating Agent shall provide the members of the Nuclear Managing
Board with a description of the violation, the root cause
determination of the violation, and the corrective action taken
and to be taken to avoid repeat violations. The Board upon its
request will be provided the opportunity to meet with the
Operating Agent's chief executive and senior nuclear operations
officers, the Board of Directors or both. The Operating Agent
will provide for the Board to meet on the Board's request with
the Board of Directors of the Nuclear Services Contractor.
ARTICLE VI
6.0 Recovery of Costs. Any costs incurred by Southern
Nuclear as the Operating Agent that would have been recoverable
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<PAGE>
from the Participants by GPC under any applicable Participation
Agreement shall be recoverable from the Participants subject to
the rights of the Participants under such agreement to audit and
contest such costs incurred by Southern Nuclear and all remedies
provided therein shall be available in the event any Participant
shall default in the payment of such costs.
ARTICLE VII
7.0 Relation To Existing Agreements. This Agreement, the
Nuclear Services Agreement and the Nuclear Operating Agreement
are not intended to nor do they modify, amend, or terminate any
of the Participation Agreements and do not otherwise alter or
impact rights and obligations of the Participants under any such
agreements, including, without limitation, the obligations to
make payments; the remedies for defaults; the authority and
obligation to insure Each Plant; the authority to establish
levels of output, to schedule and meter output; entitlements to
output; authority to establish retirement dates for Each Plant;
authority to repair (following substantial damage or
destruction), replace or make additions to Each Plant; the
authority to salvage, dispose and decommission Each Plant; the
property rights established by the applicable Participation
Agreements; and GPC's responsibility and authority as agent of
the Participants under such agreements. Specifically, nothing in
this Agreement or the Nuclear Services Agreement or the Nuclear
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Operating Agreement or any other contract between GPC and
Southern Nuclear shall be construed or applied to impair GPC's
capacity to carry out its Agency Functions or to diminish or add
to (i) the liabilities of GPC, or (ii) the remedies of OPC, MEAG
and Dalton or any of them established by any of the several
Participation Agreements. Therefore, the acts or omissions of
employees of Southern Nuclear, including without limitation acts
or omissions which constitute a breach of the Nuclear Services
Agreement or the Nuclear Operating Agreement, as the case may be,
shall be deemed to be, and treated as though they were, acts and
omissions of employees of GPC and subject to (i) the same
defenses which GPC would have under applicable laws respecting
acts and omissions of its employees, and (ii) the same defenses
as GPC may have or remedies that OPC, MEAG or Dalton have under
the Participation Agreements that would have been applicable if
such acts or omissions had been performed by employees of GPC.
Nevertheless, so long as they are in effect, the audit,
observation and information provisions herein and the budget and
plan review and approval procedures contained herein shall
supersede the equivalent provisions of and procedures established
by the Participation Agreements. Accordingly, the Participants
agree that the provisions hereof supersede the following sections
of the following agreements:
1) Edwin I. Hatch Nuclear Plant Agreement of Construction
dated as of August 27, 1976 between GPC and MEAG, as
heretofore amended: Sections 2(h), 2(n), 3(c) and 3(f);
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2) Alvin W. Vogtle Nuclear Units Numbers One and Two
Purchase and Ownership , Participation Agreement dated
as of August 27, 1976 among GPC, OEMC, MEAG and Dalton,
as heretofore amended: Sections 4(d), 5(e), and 9(m);
3) Alvin W. Vogtle Nuclear Units Numbers One and Two
Operating Agreement dated as of August 27, 1976 among
GPC, OEMC, MEAG and Dalton, as heretofore or hereafter
amended: Sections 3(c) (other than the last sentence
thereof) 3(e), 3(k), 4(e), and 7(n).
For as long as they are in effect, the provisions herein
respecting Fuel Plans and Fuel Budgets, qualify and take
precedence over The Edwin I. Hatch Nuclear Plant Purchase and
Ownership Participation Agreement, dated as of January 6, 1975,
between GPC and OEMC, as heretofore amended: Section 5(i). For
as long as they are in effect, the provisions herein respecting
agreements and contracts between the Participants' Agent and the
Nuclear Services Contractor and between the Participants' Agent
and the Operating Agent qualify and take precedence over the
following:
The Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement, dated as of January 6, 1975,
between GPC and OEMC, as heretofore amended: Section
5(c) insofar as it authorizes GPC to contract with
itself or any of its affiliates;
The Edwin I. Hatch Nuclear Plant Operating Agreement, dated
as of January 6, 1975, between GPC and OEMC, as heretofore,
amended: Section l(d) insofar as it authorized GPC to
contract with itself or any of its affiliates;
The Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement between Georgia Power Company and
Municipal Electric Authority of Georgia dated as of August
27, 1976 as heretofore amended: Section 5(c) insofar as it
authorizes GPC to contract with itself or any of its
affiliates;
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The Edwin I. Hatch Nuclear Plant Operating Agreement between
Georgia Power Company and Municipal Electric Authority of
Georgia, dated as of August 27, 1976 as heretofore amended:
Section l(d) insofar as it authorizes GPC to contract with
itself or any of its affiliates;
The Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement between Georgia Power Company and
City of Dalton, Georgia dated as of August 27, 1976 as
heretofore amended: Section 5(c) insofar as it authorizes
GPC to contract with itself or any of its affiliates;
The Edwin I. Hatch Nuclear Plant Operating Agreement between
Georgia Power Company and City of Dalton, Georgia dated as
of August 27, 1976 as heretofore amended: Section i(d)
insofar as it authorizes GPC to contract with itself or any
of its affiliates;
The Alvin W. Vogtle Nuclear Unit Numbers One and Two
Purchase and Ownership Participation Agreement, dated as of
August 27, 1976, among GPC, OEMC, MEAG and Dalton, as
heretofore amended: Section 4(b)(v); and
The Alvin W. Vogtle Nuclear Units Numbers One and Two
Operating Agreement, dated as of August 27, 1976, among GPC,
OEMC, MEAG and Dalton, as heretofore amended: Section 2(b).
No portion of any costs paid by GPC to the Nuclear Services
Contractor pursuant to the indemnification provision of the
Nuclear Services Agreement or to the Operating Agent pursuant to
the Nuclear Operating Agreement as a result of a judgment of any
court with competent jurisdiction against the Nuclear Services
Contractor or the Operating Agent, as the case may be, for any
breach of its no adverse distinction obligations under the
Nuclear Services Agreement or the Nuclear Operating Agreement,
respectively, shall be recoverable from OPC, MEAG and Dalton.
No portion of any payment made by GPC to Southern Nuclear
for costs incurred by Southern Nuclear for participation in
industry groups shall be payable by OPC, MEAG or Dalton unless
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such participation costs when incurred were reasonably expected
to yield a present or future benefit, whether direct, indirect,
general or specific, to Plant Hatch or Plant Vogtle, or both.
ARTICLE VIII
8.0 Term, Termination, and Effective Date. Subject to
Section 9.1 hereof, this Amended and Restated Nuclear Managing
Board Agreement shall become effective upon the issuance by the
NRC of amendments to the operating licenses for Each Plant in
order to add Southern Nuclear to such licenses and to designate
Southern Nuclear as the exclusive operating licensee of Each
Plant and, unless terminated earlier as provided herein, shall
end on June 28, 2014; provided, however, that the term of this
Agreement shall be extended after June 28, 2014, from year to
year in a fashion coextensive with the continuation of Agency
Functions under any of the applicable Participation Agreements
and any successor agreements.
This Agreement shall be in full force and effect until the
expiration of its term as set forth above or until:
1) it has been superseded by a subsequent agreement; or
2) any Participant gives the other Participants ten years
advance written notice of its desire to terminate this Agreement,
but no such termination shall be effective before July 1, 2009;
or
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3) upon termination of the Participation Agreements, if
prior to June 28, 2014.
ARTICLE IX
9.0 Miscellaneous.
9.1 Required Approvals. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall have no force and
effect until (i) it is approved by the Administrator of the Rural
Electrification Administration unless such Administrator rules
that his approval is not required by law; and (ii) it is approved
by the Trustee under each MEAG bond resolution pursuant to which
MEAG's interests in Each Plant has been financed.
9.2 Further Assurances. From time to time the
Participants will execute such instruments, upon the request of
another Participant, as may be necessary or appropriate to carry
out the intent of this Agreement.
9.3 Governing Law. The validity, interpretation, and
performance of this Agreement and each of its provisions shall be
governed by the laws of the State of Georgia.
9.4 Notice. Any notice, request, consent or other
communication permitted or required by this Agreement shall be in
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writing and shall be deemed given when deposited in the United
States Mail, first class postage prepaid, and if given to GPC
shall be addressed to:
Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: President
and if given to Oglethorpe shall be addressed to:
Oglethorpe Power Corporation
2100 East Exchange Place
P.O. Box 1349
Tucker, Georgia 30085-1349
Attention: President and Chief
Executive Officer
and if given to MEAG shall be addressed to:
Municipal Electric Authority of Georgia
1470 Riveredge Parkway, N.W.
Atlanta, Georgia 30328
Attention: President and General Manager
and if given to Dalton shall be addressed to:
The City of Dalton, Georgia
P.O. Box 869
Dalton, Georgia 30720
Attention: Chairman, Utilities
Commission
and if given to Southern Nuclear shall be addressed to:
Southern Nuclear Operating Company, Inc.
P. O. Box 1299
40 Inverness Center Parkway
Birmingham, Alabama 35201
Attention: President
unless a different address shall have been designated by the
respective Participant by notice in writing.
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9.5 Section Headings Not To Affect Meaning. The
descriptive headings of the various Sections of this Agreement
have been inserted for convenience of reference only and shall in
no way modify or restrict any of the terms and provisions
thereof.
9.6 Time of Essence. Time is of the essence of this
Agreement.
9.7 Amendments. This Agreement may be amended by and only
by a written instrument duly executed by each of the
Participants.
9.8 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon each of the Participants and
its respective successors and assigns.
9.9 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute
one and the same instrument.
9.10 Computation of Percentage Undivided Ownership
Interest. Except as may be provided by any Participation
Agreement and notwithstanding any other provision of this
Agreement, whenever, pursuant to any provision of the Agreement,
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any action is required to be agreed to or taken by the Nuclear
Managing Board or the Participants as to Each Plant (i) only
those Participants not in default in the payment of any amounts
(together with interest, if appropriate) required under any
provisions of any applicable Participation Agreement at the time
such action is to be agreed to or taken shall have the right to
participate in such agreement or the taking of such action, and
(ii) wherever it is provided in this Agreement for approval or
disapproval by Requisite Owner Action, the approval or
disapproval, as the case may be, of those Participants not in
default which collectively own Undivided Ownership Interests in
the aggregate proportion of not less than 85 percent of the sum
of the Undivided Ownership Interests of all non-defaulting
Participants shall be required.
9.11 Several Agreements. Notwithstanding anything to the
contrary set forth herein, the agreements and obligations of the
Participants set forth in this Agreement shall be the several,
not the joint, agreements and obligations of the Participants.
9.12 Confidentiality. Realizing that publication of
information furnished hereunder by one Participant to the others
may detrimentally affect the furnishing Participant, the
Participants pledge to each other to keep confidential all such
information furnished and bearing the legend "Proprietary
Information" except with the written consent of the furnishing
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Participant or except when otherwise required by Governmental
Authorities, including without limitation the Rural
Electrification Administration, having appropriate jurisdiction.
In the furtherance of this understanding, the receiving
Participant shall obtain, and provide to the furnishing party, a
written pledge to this effect from non-member employees, agents
and other representatives to whom such data is disclosed and, if
such non-member is not a full-time, salaried employee of a
Participant, from such non-member's employer. At the specific
request of the other party, the disclosing party will endeavor to
secure the agreement of such Governmental Authority to maintain
specified portions of such information in confidence. Public
dissemination of information by the furnishing Participant before
or after it is furnished shall constitute a termination of the
confidentiality requirement as to that specific information.
9.13 Effect on Joint Committee Agreement. As of the
effective date of this Agreement and while this Agreement is in
effect, this Agreement shall supersede the Joint Committee
Agreement, as amended, with respect to all matters affecting
Plant Hatch or Plant Vogtle.
9.14 Arbitration. In the event a dispute arises among the
Participants with respect to the implementation of this Agreement
and the members of the Nuclear Managing Board and the chief
executive officers of the respective Participants cannot agree
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upon a solution, then any Participant may at its option call for
the submittal of any such dispute to non-binding arbitration in
accordance with the following procedures:
9.14.1 The Participant calling for arbitration shall
give written notice to all other
Participants, setting forth in such notice in
adequate detail the nature of the dispute,
the amount or amounts, if any, involved in
such dispute, and the recommendation sought
by such arbitration proceedings, and, within
twenty days from receipt of such notice, any
other Participant may, by written response to
the first Participant and all other
Participants, submit its statement of the
matter at issue and set forth in adequate
detail additional related matters or issues
to be arbitrated. Thereafter, the
Participant first submitting its notice of
the matter at issue shall have ten days in
which to submit a written rebuttal statement,
copies of which shall be given to all other
Participants. Within forty days following
delivery of the written notice pursuant to
Section 9.14.1 hereof, the Nuclear Managing
Board shall meet for the purpose of selecting
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arbitrators. Each member of the Board shall
designate one arbitrator (hereinafter
"Designated Arbitrator"). The Designated
Arbitrators shall meet within twenty days
following their designation and shall select
an additional independent arbitrator
(hereinafter the "Independent Arbitrator").
If the Designated Arbitrators shall fail to
select an Independent Arbitrator within said
twenty day period, then the Designated
Arbitrators shall request from the American
Arbitration Association (or a similar
organization if the American Arbitration
Association should not at the time exist) a
list of arbitrators who are qualified and
eligible to serve as hereinafter provided.
The Designated Arbitrators selected by the
Participants shall take turns striking names
from the list of arbitrators furnished by the
American Arbitration Association, and the
last name remaining on said list shall be the
Independent Arbitrator. The Independent
Arbitrator shall be a person skilled and
experienced in the field which gives rise to
the dispute, and no person shall be eligible
for appointment as the Independent Arbitrator
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who is an officer, employee, or agent of any
of the parties or any affiliate of any of the
parties to the dispute or is otherwise
interested in the matter to be arbitrated.
9.14.2 Except as otherwise provided in this Section
9.14, the arbitration shall be governed by
the rules and practice of the American
Arbitration Association (or the rules and
practice of a similar organization if the
American Arbitration Association should not
at that time exist) from time to time in
force, except that if such rules and
practice, as modified herein, shall conflict
with state or Federal law then in force which
are specifically applicable to such
arbitration proceedings, such law shall
govern.
9.14.3 The arbitrators shall hear evidence submitted
by the respective Participants and the
Independent Arbitrator may call for
additional information, which additional
information shall be furnished by the
Participant having such information. The
recommendation of the arbitrators respecting
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the dispute shall be determined by the
Independent Arbitrator with the concurrence
of not less than one of the Designated
Arbitrators if there are only two of them or
two of the Designated Arbitrators if there
are more than two of them.
9.14.4 The recommendation of the arbitrators shall
not be binding upon the Nuclear Managing
Board or the Participants, nor shall the
participation of any member of the Board or
any Participant in the arbitration be deemed
to constitute a waiver of any right,
authority, obligation or remedy of such
Participant, under this Agreement or any
Participation Agreement.
9.14.5 Costs incurred by all of the arbitrators in
conduct of any arbitration and the
compensation paid to the Independent
Arbitrator shall be paid as follows:
1) In the event the recommendations of the
Independent Arbitrator are adverse to
the Participant or Participants that
initiated the arbitration then all of
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such costs and compensation shall be
paid by such Participant or
Participants; provided that if two or
more Participants have joined in the
initiation of such arbitration, they
shall share in the payment of such costs
and compensation as they shall agree.
2) In the event the recommendations of the
Independent Arbitrator are favorable to
the Participant or Participants that
initiated the arbitration, then each of
the Participants that would be affected
by the implementation of such
recommendations shall pay a
proportionate share of such costs equal
to its joint ownership share in Each
Plant divided by sum of the joint
ownership shares in Each Plant of all
Participants that are so affected.
9.14.6 All costs incurred by any Participant in
participating in any arbitration shall be
borne and paid by such Participant without
recourse against any other Participant,
except in the event that the Independent
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Arbitrator shall find that any claim of the
Participant or Participants that initiated
such claim was frivolous or totally without
merit, then such initiating Participant or
Participants shall reimburse each other
Participant for its costs reasonably incurred
in its defense against such claim.
9.14.7 No arbitration shall delay performance in
accordance with the Nuclear Operating
Agreement, any Participation Agreement, this
Agreement or any successor agreements with
respect to Plant Hatch or Plant Vogtle, or
otherwise affect rights arising under any
such agreements.
9.15 Accounting Methodology. The agreements reached by the
Joint Committee, as reflected in (i) the minutes of the Joint
Committee meetings held on August 2, 1984, respecting the
methodology for computing GPC's A&G expenses, and on April 18,
1983 and April 15, 1985, respecting the 180-Day Rule, (ii) the
minutes of the Joint Subcommittee for Finance and Accounting
meeting held November 13, 1986, respecting billing methodology
for nuclear fines, (iii) the minutes of the Joint Subcommittee
for Power Generation meeting on February 27, 1988, respecting
Joint Owners Revenue Allocations and Plant Hatch inventory
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accounting methodology, (iv) the January 18, 1990, revision to
the A&G methodology, (v) the May 8, 1979, Compromise and
Settlement Agreement between GPC and MEAG, and (vi) the minutes
of the Joint Subcommittee for Finance and Accounting meeting on
February 12, 1991, respecting A&G methodology, all of which shall
remain in effect insofar as they apply to Plant Hatch or Plant
Vogtle until such time as such agreements shall be amended,
modified or revoked by the Board, or by GPC and the effected
Participants, as appropriate.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers and their respective seals to be affixed as of the day
and year first above written.
GEORGIA POWER COMPANY
By:________________________
Attest: Its:_______________________
_______________________
Secretary
OGLETHORPE POWER CORPORATION
By:________________________
Attest: Its:_______________________
_______________________
Secretary
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MUNICIPAL ELECTRIC AUTHORITY OF
GEORGIA
By:________________________
Attest: Its:_______________________
_______________________
Secretary
CITY OF DALTON, GEORGIA
By:________________________
Attest: Its:_______________________
_______________________
Clerk
BOARD OF WATER, LIGHT AND SINKING
FUND COMMISSIONERS
By:________________________
Attest: Its:_______________________
_______________________
Clerk
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<PAGE>
APPENDIX "A"
STANDARDIZED GUIDELINES FOR MAINTENANCE
AND REFUELING OUTAGE SCHEDULES
On or before August 15 of each calendar year, the Operating
Agent shall prepare and submit to each Participant a written
scheduled outage plan for each unit of Each Plant to be used in
the Fuel Optimization and Evaluation System process for the
ensuing five calendar years.
Each plan shall describe in reasonable detail the estimated
time and duration of each outage.
Should any major changes be made to the maintenance and
refueling schedules within a calendar year, the Operating Agent
shall provide each Participant with a revised schedule.
STANDARDIZED GUIDELINES FOR
ENERGY ESTIMATES BY UNIT
On or before August 15 of each calendar year, the Operating
Agent shall prepare and submit to each Participant a written
energy estimate for each unit of Each Plant as currently
presented in the energy budget. This energy estimate shall be
for the ensuing five calendar years for such units. The energy
estimate shall project the estimated operating level of each unit
during such period based on economic dispatch. The estimate will
be developed utilizing the best available data at the time.
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STANDARDIZED GUIDELINES FOR OPERATION
AND MAINTENANCE BUDGET
On or before August 15 of each calendar year, the Operating
Agent shall prepare and submit to each Participant a written
budget estimate of the costs of Operation and Maintenance
Services (other than fuel) anticipated to be incurred for the
ensuing five calendar years for each unit of Each Plant. Each
budget estimate shall contain those expected costs which are
anticipated to be chargeable, under the terms of one or more of
the Participation Agreements, to such units including outage
costs. Each budget also shall separately identify those costs
which are anticipated to be incurred by Southern Nuclear pursuant
to agreements with any of its affiliates. Each budget estimate
to be submitted under this subsection shall be based on
information reasonably available.
Each budget shall be supported by detail reasonably adequate
for the purpose of each party's review thereof and shall be
formatted such that for the next calendar year each month's
estimated costs are listed by applicable FERC account numbers.
In addition, a report on materials and supplies purchases
should be provided for the next calendar year.
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STANDARDIZED GUIDELINES FOR NEW INVESTMENT BUDGETS
On or before August 15 of each calendar year, the Operating
Agent shall prepare and submit to each Participant of such
jointly-owned plants and associated switchyards a written budget
estimate of the costs of New Investment Services (other than
nuclear fuel) anticipated to be incurred during the next calendar
year at such plant. Also to be included in the New Investment
Budget estimate are any associated projects which may be charged
to a Participant on the basis of its ownership pursuant to one or
more of the Participation Agreements. This budget estimate is to
consist of project expenditure ("PE") sheets for each project and
a FERC distribution table for each PE. For the five-year
forecast period, a summary of estimates of capital expenditures
and retirements will be provided.
Each budget estimate to be submitted under this subsection
shall be based on information reasonably available. Each budget
estimate shall be supported by detail reasonably adequate for the
purpose of each party's review thereof. The budget shall be
formatted such that each month's estimated costs are listed by
applicable FERC account number.
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STANDARDIZED GUIDELINES FOR FUEL PLANS
On or before September 15 of each calendar year, the
Operating Agent shall prepare and submit to each of the
Participants a ten-year fuel management plan for each unit of
Each Plant. Each Fuel Plan shall describe in reasonable detail
each action or contemplated action and payment and the dates
thereof, core usage and design burnup, estimated fueling dates
and the energy expected to be generated by each unit for each
fuel period of the Fuel Plan, a cash flow analysis of forecasted
expenditures and credits for each Participant for each major
component of the fuel cycle by years, for the ten-year period
covered by the Fuel Plan, and cash flow by months for the first
five years of such ten-year plan period. The Operating Agent may
amend the Fuel Plan from time to time as it deems appropriate and
shall deliver to each of the Participants a copy of such amended
Fuel Plan.
A narrative of expected activity for the ensuing calendar
year at Plants Hatch and Vogtle should be provided.
77 <PAGE>
Exhibit 10(a)54
AMENDMENT NUMBER FOUR, DATED AS OF DECEMBER 31, 1990,
TO THE PLANT ROBERT W. SCHERER UNITS NUMBER ONE AND TWO
PURCHASE AND OWNERSHIP PARTICIPATION AGREEMENT
among
GEORGIA POWER COMPANY, OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION),
MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA and
CITY OF DALTON, GEORGIA
<PAGE>
AMENDMENT NUMBER FOUR
TO THE PLANT ROBERT W. SCHERER UNITS NUMBER ONE AND TWO
PURCHASE AND OWNERSHIP PARTICIPATION AGREEMENT
TABLE OF CONTENTS
Section No. Page
1. Certain Definitions . . . . . . . . . . . . . . . . . . 2
2. Amendment to Section 1 . . . . . . . . . . . . . . . . . 2
3. Amendment to Section 3(c) . . . . . . . . . . . . . . . 13
4. Amendment to Section 5(e) . . . . . . . . . . . . . . . 14
5. Amendment to Section 5(f) . . . . . . . . . . . . . . . 14
6. Amendment to Section 5(g) . . . . . . . . . . . . . . . 14
7. Amendment to Section 5(h) . . . . . . . . . . . . . . . 14
8. Amendment to Section 5(i) . . . . . . . . . . . . . . . 15
9. Amendment to Section 5(j) . . . . . . . . . . . . . . . 16
10. Amendment to Section 5(k) . . . . . . . . . . . . . . . 17
11. Amendment to Section 5(n) . . . . . . . . . . . . . . . 22
12. Amendment to Section 5(p) . . . . . . . . . . . . . . . 33
13. Amendment to Section 6(g) . . . . . . . . . . . . . . . 44
14. Amendment to Section 9 . . . . . . . . . . . . . . . . . 45
15. Amendment to Section 10(a) . . . . . . . . . . . . . . . 49
16. Effectiveness of this Amendment . . . . . . . . . . . . 49
17. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 49
EXHIBITS
I. Existing Contracts
APPENDIX
A. Capital Budget
<PAGE>
THIS AMENDMENT, dated as of December 31, 1990, is by and
among Georgia Power Company ("GPC"), a corporation organized and
existing under the laws of the State of Georgia, OGLETHORPE POWER
CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION
CORPORATION), an electric membership corporation organized and
existing under the laws of the State of Georgia ("OPC"), the
MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA, a public corporation and
an instrumentality of the State of Georgia ("MEAG"), and the CITY
OF DALTON, GEORGIA, an incorporated municipality in the State of
Georgia acting by and through its Board of Water, Light and
Sinking Fund Commissioners ("Dalton"), and is Amendment Number
Four to that certain Plant Robert W. Scherer Units Numbers One
and Two Purchase and Ownership Participation Agreement, dated as
of May 15, 1980 (as previously amended, the "Ownership
Agreement"), among GPC, OPC, MEAG and Dalton.
W I T N E S S E T H:
A. The Participants have previously entered into the
Ownership Agreement and have previously entered into the
Operating Agreement providing, among other things, for GPC to
have sole authority to arrange for and acquire all fossil fuel
for the Units and for all Participants and Additional Unit
Participants to participate in the Plant Scherer Coal Stockpile.
<PAGE>
B. The Participants mutually desire to provide that certain
Participants and Additional Unit Participants may elect to
maintain separate coal stockpiles for accounting and other
purposes and for purposes of payment of Separate Coal Stockpile
Costs and to provide for such Participants and Additional Unit
Participants to procure coal for use in connection with their
undivided ownership interests in the Units and the Additional
Units.
NOW, THEREFORE, in consideration of the promises and the
mutual agreements herein set forth, the Participants, intending
to be mutually bound among themselves and to the Additional Unit
Participants, hereby agree and amend the Ownership Agreement as
follows:
1. Certain Definitions. Capitalized terms and
phrases used and not otherwise defined in this Amendment shall
have the respective meanings assigned to them by the Ownership
Agreement, the Operating Agreement, or both, unless the context
or use clearly indicates otherwise. All rules of interpretation,
construction, or both, set forth in the Ownership Agreement shall
apply with equal force and effect to this Amendment.
2. Amendment to Section 1 of the Ownership Agreement.
(a) Section 1(h) of the Ownership Agreement is hereby
amended to delete the words "a 50% undivided ownership
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interest in the Plant Scherer Coal Stockpile (provided,
however, that from and after any contribution to the Plant
Scherer Coal Stockpile pursuant to clause (i) or (ii) of
Section 5(p) hereof, only that portion of the Plant Scherer
Coal Stockpile that is owned by the owners of undivided
ownership interests in Unit No. 2 pursuant to clause (iii)
of Section 5(p) hereof shall constitute a part of Scherer
Unit No. 2)".
(b) Section 1(i) of the Ownership Agreement is hereby
amended to delete the words "fuel (including a 50% undivided
interest in the Plant Scherer Coal Stockpile)" and
"provided, however, that from and after any contribution to
the Plant Scherer Coal Stockpile pursuant to clause (i) or
(ii) of Section 5(p) hereof, only that portion of the Plant
Scherer Coal Stockpile that is owned by the owners of
undivided ownership interests in Unit No. 1 pursuant to
clause (iii) of Section 5(p) hereof shall constitute a part
of Scherer Unit No. 1".
(c) Section 1 of the Ownership Agreement is hereby
amended by adding the following to the end thereof:
(s) COMMON COAL STOCKPILE. "Common Coal Stockpile" shall
refer to that portion of the Plant Scherer Coal Stockpile
attributable to the ownership interests of the Common Coal
Stockpile Participants from time to time pursuant to Section 5(p)
of this Ownership Agreement.
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<PAGE>
(t) COMMON COAL STOCKPILE COSTS. "Common Coal Stockpile
Costs" shall mean all costs incurred by GPC on its own behalf and
as agent for the other Common Coal Stockpile Participants (or by
a Common Procurement Participant in connection with any contract
for fuel entered into in accordance with the provisions of
Section 2(c)(i) of the Operating Agreement) that are allocable to
the acquisition, processing, transportation, delivering,
handling, storage, accounting, analysis, measurement and disposal
of coal for the Common Coal Stockpile, including, without
limitation, any advance payments in connection therewith, less
credits related to such costs applied as appropriate, and
including, without limitation, that portion of administrative and
general expenses which is properly and reasonably allocable to
acquisition and management of coal for the Common Coal Stockpile
and for which the incurring party has not been otherwise
reimbursed by the other Common Coal Stockpile Participants.
Common Coal Stockpile Costs shall not include Other Fuel Costs,
Separate Coal Stockpile Costs and amortization of the Plant
Scherer initial fossil fuel supply, (including, without
limitation, unrecoverable base coal).
(u) COMMON COAL STOCKPILE PARTICIPANTS. "Common Coal
Stockpile Participants" shall mean such Participants and
Additional Unit Participants as are participating in the Common
Coal Stockpile from time to time pursuant to Section 5(p) of this
Ownership Agreement.
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(v) COMMON PROCUREMENT. "Common Procurement" shall have
the meaning assigned in Section 5(n)(i) of this Ownership
Agreement.
(w) COMMON PROCUREMENT PARTICIPANT. "Common Procurement
Participant" shall mean, initially, the Common Coal Stockpile
Participants and each Separate Coal Stockpile Participant (i)
which has not exercised its rights under Section 2(c)(iii) of
the Operating Agreement, Section 3(c), SEPARATE FUEL PROCUREMENT,
of the Unit Three Operating Agreement or Section 3(c), SEPARATE
FUEL PROCUREMENT, of the Unit Four Operating Agreement, (ii)
which has not otherwise been found by a vote of a majority of the
Pro Forma Ownership Interest in Plant Scherer of the then Common
Procurement Participants (excluding the Pro Forma Ownership
Interest in Plant Scherer of the Common Procurement Participant
under consideration), to have violated the policies and rules for
Common Procurement Participants established from time to time by
the Plant Scherer Managing Board or (iii) which has been
reestablished as a Common Procurement Participant pursuant to
Section 5(n) hereof.
(x) CO-OWNERS' CONSENTS. "Co-Owners' Consents" shall mean
those certain Consents, Amendments, and Assumptions Nos. 1-4
dated December 30, 1985 among GPC, OPC, MEAG, Dalton, Gulf Power
Company, and Wilmington Trust Company and NationsBank of Georgia,
N.A. (as successor to William J. Wade) as Owner Trustees, and
those certain Amendment to Consents, Amendments, and Assumptions
Nos. 1-4 dated August 16, 1993, among GPC, OPC, MEAG, Dalton,
5
<PAGE>
Gulf Power Company, Jacksonville Electric Authority and Florida
Power & Light Company and Wilmington Trust Company and
NationsBank of Georgia, as Owner Trustees.
(y) FERC. The "FERC" shall mean the Federal Energy
Regulatory Commission or any entity succeeding to the powers and
functions thereof.
(z) GEORGIA INTEGRATED TRANSMISSION SYSTEM. "Georgia
Integrated Transmission System" shall mean the integrated
transmission system owned by GPC, OPC, MEAG and Dalton and
established and operated pursuant to those certain Agreements
between GPC and OPC dated as of January 6, 1975 and June 9, 1986,
those certain Agreements between GPC and MEAG dated as of August
27, 1976, and those certain Agreements between GPC and Dalton
dated as of August 27, 1976, as any one or more of those
Agreements may be amended, modified, revised, restated or
superseded from time to time, or any successor transmission
system thereto.
(aa) Governmental Authority. "Governmental Authority"
shall mean any local, state, regional or federal administrative,
legal, judicial, or executive agency, court, commission,
department or other entity, but excluding any agency, commission,
department or other such entity acting in its capacity as lender,
guarantor, mortgagee and excluding any Participant or Additional
Unit Participant.
(ab) LESSOR. "Lessor" shall have the meaning assigned in
the Co-Owners' Consents.
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(ac) LESSOR POSSESSION DATE. "Lessor Possession Date" shall
have the meaning assigned in the Co-Owners' Consents.
(ad) OPERATING AGREEMENT. "Operating Agreement" shall refer
to the Plant Robert W. Scherer Units Numbers One and Two
Operating Agreement, dated as of May 15, 1980, among GPC, OPC,
MEAG and Dalton, as amended as of December 31, 1985 and as of
December 31, 1990.
(ae) OPERATING COSTS. "Operating Costs" shall mean the
aggregate of Scherer Unit No. 1 Operating Costs, Scherer Unit No.
2 Operating Costs and Common Facilities Operating Costs, but
shall not include Common Coal Stockpile Costs, Separate Coal
Stockpile Costs and Other Fuel Costs nor any costs and expenses
attributable to the Additional Units nor any costs and expenses
in connection with the improvement of the land described in
Exhibit G of this Ownership Agreement or in connection with the
operation, maintenance, care, abandonment or removal of any
improvements thereto (whether or not completed). "Scherer Unit
No. 1 Operating Costs, "Scherer Unit No. 2 Operating Costs," and
"Common Facilities Operating Costs" shall mean, respectively, all
costs and expenses incurred by GPC on its own behalf and as agent
for the other Participants in respect of the management, control,
operation or maintenance of (i) Scherer Unit No. 1, in the case
of Scherer Unit No. 1 Operating Costs, (ii) Scherer Unit No. 2,
in the case of Scherer Unit No. 2 Operating Costs, and (iii) the
Plant Scherer Common Facilities, in the case of Common Facilities
Operating Costs, in each case including without limitation that
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<PAGE>
portion of administrative and general expenses incurred by GPC
which is properly and reasonably allocable to Scherer Unit No. 1,
Scherer Unit No. 2, and the Plant Scherer Common Facilities,
respectively, for which GPC has not been otherwise reimbursed by
the other Participants, and which are properly recordable in
accordance with the Operating Expense Instructions and in
appropriate accounts as set forth in the Uniform System of
Accounts.
(af) OTHER FUEL COSTS. "Other Fuel Costs" shall mean all
costs and expenses, other than Common Coal Stockpile Costs and
Separate Coal Stockpile Costs, incurred by GPC on its own behalf
and as agent for the other Participants and Additional Unit
Participants that are allocable to the acquisition, processing,
transportation, delivering, handling, storage, accounting,
analysis, measurement and disposal of fossil materials required
for Plant Scherer, including, without limitation, any advance
payments in connection therewith, less credits related to such
costs applied as appropriate, and including, without limitation,
that portion of administrative and general expenses which is
properly and reasonably allocable to acquisition and management
of fossil fuel (other than coal for the Common Coal Stockpile and
the Separate Coal Stockpiles) for Plant Scherer. Other Fuel
Costs shall not include Common Coal Stockpile Costs, Separate
Coal Stockpile Costs and amortization of the Plant Scherer
initial fossil fuel supply (including, without limitation
unrecoverable base coal).
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(ag) OWNER TRUSTEE. "Owner Trustee" shall have the meaning
assigned in the Co-Owners' Consents.
(ah) OWNER TRUSTEE'S COAL SUPPLY. "Owner Trustee's Coal
Supply" shall have the meaning assigned in Section 9(x) of this
Ownership Agreement.
(ai) OWNERSHIP AGREEMENT. "Ownership Agreement" shall refer
to the Plant Robert W. Scherer Units Numbers One and Two Purchase
and Ownership Agreement, dated as of May 15, 1980, among GPC,
OPC, MEAG and Dalton, as amended as of December 30, 1985, July 1,
1986, August 1, 1988 and as of December 31, 1990.
(aj) PLANT SCHERER MANAGING BOARD AGREEMENT. The "Plant
Scherer Managing Board Agreement" shall mean the Plant Scherer
Managing Board Agreement, dated as of the date hereof, by and
among the Participants and the Additional Unit Participants as
such agreement may be amended from time to time.
(ak) PLANT SCHERER PARTICIPATION AGREEMENTS. "Plant
Scherer Participation Agreements" shall mean this Ownership
Agreement, the Operating Agreement, the Unit Three Ownership
Agreement, the Unit Three Operating Agreement, the Unit Four
Ownership Agreement, the Unit Four Operating Agreement, the Co-
Owners' Consents and the Plant Scherer Managing Board Agreement.
(al) PRO FORMA OWNERSHIP INTEREST IN PLANT SCHERER. "Pro
Forma Ownership Interest in Plant Scherer" shall mean for each
Participant and Additional Unit Participant the percentage
obtained by dividing by four the sum of (A) such Participant's or
Additional Unit Participant's percentage undivided ownership
9
<PAGE>
interest, if any, in Scherer Unit No. 1, plus (B) its percentage
undivided ownership interest, if any, in Scherer Unit No. 2, plus
(C) its percentage undivided ownership interest, if any, in
Scherer Unit No. 3, plus (D) its percentage undivided ownership
interest, if any, in Scherer Unit No. 4.
(am) SEPARATE COAL PROCUREMENT. "Separate Coal
Procurement" shall mean the procurement of coal pursuant to the
standards and procedures set forth under Section 2(c)(iii) of the
Operating Agreement.
(an) SEPARATE COAL STOCKPILE. "Separate Coal Stockpile"
shall have the meaning assigned in Section 5(p) of this Ownership
Agreement.
(ao) SEPARATE COAL STOCKPILE COSTS. "Separate Coal
Stockpile Costs" shall mean with respect to each Separate Coal
Stockpile Participant all costs incurred by GPC as agent for such
Separate Coal Stockpile Participant or by a Common Procurement
Participant in connection with any contract for fuel entered into
in accordance with the provisions of Section 2(c)(i) of the
Operating Agreement that are allocable to the acquisition,
processing, transportation, delivering, handling, storage,
accounting, analysis, measurement and disposal of coal for such
Separate Coal Stockpile Participant, including, without
limitation, all costs incurred by GPC in administering fuel and
transportation contracts entered into by such Separate Coal
Stockpile Participant pursuant to any one or more of Sections
5(n) or 5(p) of this Ownership Agreement or Section 2(c)(iii) of
10
<PAGE>
the Operating Agreement, and including any advance payments in
connection therewith, less credits related to such costs applied
as appropriate, and including that portion of administrative and
general expenses which is properly and reasonably allocable to
acquisition and management of coal for such Separate Coal
Stockpile Participant's Separate Coal Stockpile and for which the
incurring party has not otherwise been reimbursed. Separate Coal
Stockpile Costs shall not include Common Coal Stockpile Costs,
Other Fuel Costs and amortization of the Plant Scherer initial
fossil fuel supply, including, without limitation, unrecoverable
base coal.
(ap) SEPARATE COAL STOCKPILE PARTICIPANT. "Separate Coal
Stockpile Participant" shall mean the Participants and Additional
Unit Participants making an election to discontinue participation
in the Common Coal Stockpile pursuant to Section 5(p) hereof or
pursuant to the applicable provisions of the other Plant Scherer
Participation Agreements, or which has otherwise entered into an
agreement with GPC to become a Separate Coal Stockpile
Participant pursuant to subsection (vii) of Section 5(p) of this
Ownership Agreement. Such Participants and Additional Unit
Participants are referred to individually as a "Separate Coal
Stockpile Participant" and collectively as "Separate Coal
Stockpile Participants".
(aq) SEPARATE PROCUREMENT PARTICIPANT. "Separate
Procurement Participant" shall mean each Separate Coal Stockpile
Participant (i) which has exercised its rights under Section
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<PAGE>
2(c)(iii) of the Operating Agreement; Section 3(c), SEPARATE FUEL
PROCUREMENT, of the Unit Three Operating Agreement; or Section
3(c), SEPARATE FUEL PROCUREMENT, of the Unit Four Operating
Agreement or (ii) which has been found by a vote of a majority of
the Pro Forma Ownership Interest in Plant Scherer of the Common
Procurement Participants (excluding the Pro Forma Ownership
Interest in Plant Scherer of the Common Procurement Participant
under consideration) to have violated the policies and rules for
Common Procurement Participants established from time to time by
the Plant Scherer Managing Board and which has not been
reestablished as a Common Procurement Participant pursuant to
Section 5(n) of this Ownership Agreement.
(ar) SPOT COAL. "Spot Coal" shall mean all coal purchased
for the Common Coal Stockpile or any Separate Coal Stockpile
under an arrangement of acquisition for a period of less than one
year, or some other period agreed to by the written approval or
consent of those members of the Plant Scherer Managing Board
which collectively own at least a 76% Pro Forma Ownership
Interest in Plant Scherer.
(as) UNIFORM SYSTEM OF ACCOUNTS. The "Uniform System of
Accounts" shall mean the FERC Uniform System of Accounts
prescribed for Public Utilities and Licensees subject to the
provisions of the Federal Power Act, as the same now exist or may
be hereafter amended by the FERC.
(at) UNIT FOUR OPERATING AGREEMENT. "Unit Four Operating
Agreement" shall refer to the Plant Robert W. Scherer Unit Number
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Four Operating Agreement, dated as of December 31, 1990, among
GPC, FPL, and JEA as the same may be amended from time to time.
(au) UNIT FOUR OWNERSHIP AGREEMENT. "Unit Four Ownership
Agreement" shall refer to the Plant Robert W. Scherer Unit Number
Four Amended and Restated Ownership Agreement, dated as of
December 31, 1990, among GPC, FPL, and JEA as the same may be
amended from time to time.
(av) UNIT THREE OPERATING AGREEMENT. "Unit Three Operating
Agreement" shall refer to the Plant Robert W. Scherer Unit Number
Three Amended and Restated Operating Agreement, between GPC and
Gulf, dated as of December 31, 1990.
(aw) UNIT THREE OWNERSHIP AGREEMENT. "Unit Three Ownership
Agreement" shall refer to the Plant Robert W. Scherer Unit Number
Three Amended and Restated Ownership Agreement, between GPC and
Gulf, dated as of December 31, 1990."
3. Amendment to Section 3(c) of the Ownership
Agreement. Section 3(c) of the Ownership Agreement is hereby
amended to add the following language to the definition of
"Common Facility Cost of Construction" contained therein. In
subsection (ii) of the definition, insert the language "prior to
the completion of Plant Scherer" directly after the phrase "all
amounts paid to SCSI in respect of engineering design services
related to Plant Scherer."
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4. Amendment to Section 5(e) of the Ownership
Agreement. Section 5(e) of the Ownership Agreement is hereby
amended by adding the following at the end of such Section 5(e).
"Notwithstanding the foregoing provisions of this
Section 5(e) with respect to information to be provided by GPC
and applicable times and dates, the matters set forth in Appendix
A attached hereto, as the same may be revised from time to time
by agreement among all of the Participants and GPC as agent for
the Participants, shall govern and control any such conflicting
or contrary provisions of this Section 5(e)."
5. Amendment to Section 5(f) of the Ownership
Agreement. Section 5(f) of the Ownership Agreement is hereby
amended to delete the words "Fuel Costs" throughout and to
substitute the words "Common Coal Stockpile Costs, Separate Coal
Stockpile Costs and Other Fuel Costs" therefor.
6. Amendment to Section 5(g) of the Ownership
Agreement. Section 5(g) of the Ownership Agreement is hereby
amended to delete the words "and Fuel Costs" throughout and to
substitute the words "Common Coal Stockpile Costs, Separate Coal
Stockpile Costs and Other Fuel Costs" therefor.
7. Amendment to Section 5(h) of the Ownership
Agreement. The first sentence of Section 5(h) of the Ownership
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<PAGE>
Agreement is hereby amended to delete the words "and Fuel Costs"
and to substitute the words "Common Coal Stockpile Costs (which
shall be available only to the Common Coal Stockpile
Participants), Separate Coal Stockpile Costs (which shall be
available only to each Separate Coal Stockpile Participant with
respect to its Separate Coal Stockpile Costs) and Other Fuel
Costs" therefor.
8. Amendment to Section 5(i) of the Ownership
Agreement. Section 5(i) of the Ownership Agreement is hereby
amended as follows:
(a) The second sentence of Section 5(i)(iii) of the
Ownership Agreement is hereby amended to delete the words
"Fuel Costs" and to substitute the words "Common Coal
Stockpile Costs or Separate Coal Stockpile Costs, as the
case may be, Other Fuel Costs" therefor.
(b) The second sentence of Section 5(i)(iv)(1) of the
Ownership Agreement is hereby amended to delete the words
"Fuel Costs" and to substitute the words "Common Coal
Stockpile Costs or Separate Coal Stockpile Costs, as the
case may be, Other Fuel Costs" therefor.
(c) The second sentence of Section 5(i)(iv)(2) of the
Ownership Agreement is hereby amended to delete the words
15
<PAGE>
"Fuel Costs" and to substitute the words "Common Coal
Stockpile Costs or Separate Coal Stockpile Costs, as the
case may be, and Other Fuel Costs" therefor.
(d) The first sentence of Section 5(i)(ix) of the
Ownership Agreement is hereby amended to delete the words
"and Fuel Costs" and to substitute the words "Common Coal
Stockpile Costs, Separate Coal Stockpile Costs and Other
Fuel Costs" therefor.
(e) The third sentence of Section 5(i)(xii) of the
Ownership Agreement is hereby amended to delete the words
"Fuel Costs, or both," and to substitute the words "Common
Coal Stockpile Costs, Separate Coal Stockpile Costs and
Other Fuel Costs" therefor.
9. Amendment to Section 5(j) of the Ownership
Agreement. Section 5(j) of the Ownership Agreement is hereby
amended as follows:
(a) To delete the words "and Fuel Costs" throughout and
to substitute the words "Common Coal Stockpile Costs,
Separate Coal Stockpile Costs and Other Fuel Costs"
therefor.
(b) To add the following at the end thereof:
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<PAGE>
"Provided, however, in no event shall the
provisions of this Section 5(j) apply to any proposed
sale of an undivided ownership interest in either or
both of the Additional Units."
10. Amendment to Section 5(k) of the Ownership
Agreement. Section 5(k) of the Ownership Agreement is hereby
amended by deleting such Section 5(k) in its entirety and by
substituting, in lieu thereof, the following:
(k) Damage or Destruction. Subject to the receipt of all
requisite approvals of any Governmental Authority having
jurisdiction:
(i) Decision to Repair or Reconstruct the Units.
In the event the Units (each of which Scherer Unit No. 1 and
Scherer Unit No. 2 are defined to include a 50% undivided
ownership interest in the Unit Common Facilities) or any
portion thereof are damaged or destroyed, and the cost of
repairs or reconstruction is estimated to be fully covered
by the aggregate amount of insurance coverage procured and
maintained by the agent on behalf of the Participants (and
for this purpose neither the existence nor the amount of any
deductibles shall be taken into account in determining the
aggregate amount of insurance coverage) covering such
repairs or reconstruction, then, unless Participants owning
at least in an aggregate 75% undivided ownership interest in
17
<PAGE>
the Units, including MEAG, so long as MEAG owns at least a
15.1% undivided ownership interest in the Units, determine
not to repair or reconstruct the Units, the Units shall be
repaired or reconstructed.
(ii) Decision not to Repair or Reconstruct the
Units. In the event the Units (each of which Scherer Unit
No. 1 and Scherer Unit No. 2 are defined to include a 50%
undivided ownership interest in the Unit Common Facilities)
or any portion thereof are damaged or destroyed, and the
cost of repairs or reconstruction is estimated to be more
than the aggregate amount of insurance coverage procured and
maintained by the agent on behalf of the Participants (and
for this purpose neither the existence nor the amount of any
deductibles shall be taken into account in determining the
aggregate amount of insurance coverage) covering such
repairs or reconstruction, then, unless Participants owning
at least in an aggregate 75% undivided ownership interest in
the Units, including MEAG, so long as MEAG owns at least a
15.1% undivided ownership interest in the Units, determine
to repair or reconstruct the Units, the Units shall not be
repaired or reconstructed.
(iii) Incomplete Identity of Ownership or
Different Undivided Ownership Interests in Unit No. 1 and
Unit No. 2. Notwithstanding the foregoing voting
provisions, at such times as (a) there is not complete
identity of ownership between the Participants which own
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<PAGE>
undivided ownership interests in Unit No. 1 and the
Participants which own undivided ownership interests in Unit
No. 2, or (b) a Participant owns a percentage undivided
ownership interest in Unit No. 1 which is different from
such Participant's percentage undivided ownership interest
in Unit No. 2 (or owns an undivided ownership interest in
either, but not both, of Unit No. 1 and Unit No. 2) a
decision not to repair or reconstruct Unit No. 1 shall be
made by Participants owning not less than an aggregate 75%
undivided ownership interest in Unit No. 1, including MEAG,
so long as MEAG owns at least a 15.1% undivided ownership
interest in Unit No. 1, a decision not to repair or
reconstruct Unit No. 2 shall be made by Participants owning
not less than an aggregate 75% undivided ownership interest
in Unit No. 2, including MEAG, so long as MEAG owns at least
a 15.1% undivided ownership interest in Unit No. 2.
(iv) Decision to Repair or Reconstruct the Plant
Scherer Common Facilities. In the event the Plant Scherer
Common Facilities or any portion thereof are damaged or
destroyed, and the cost of repairs or reconstruction is
estimated to be fully covered by the aggregate amount of
insurance coverage procured and maintained by the agent on
behalf of the Participants and Additional Unit Participants
(and for this purpose neither the existence nor the amount
of any deductibles shall be taken into account in
determining the aggregate amount of insurance coverage)
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<PAGE>
covering such repairs or reconstruction, then, unless
Participants and Additional Unit Participants owning at
least an aggregate 76% undivided ownership interest in the
Plant Scherer Common Facilities, including MEAG, so long as
MEAG owns at least a 15.1% undivided ownership interest in
the Plant Scherer Common Facilities determine not to repair
or reconstruct the Plant Scherer Common Facilities, the
Plant Scherer Common Facilities shall be repaired or
reconstructed.
(v) Decision not to Repair or Reconstruct the
Plant Scherer Common Facilities. In the event the Plant
Scherer Common Facilities or any portion thereof are damaged
or destroyed, and the cost of repairs or reconstruction is
estimated to be more than the aggregate amount of insurance
coverage procured and maintained by the agent on behalf of
the Participants and Additional Unit Participants (and for
this purpose neither the existence nor the amount of any
deductibles shall be taken into account in determining the
aggregate amount of insurance coverage) covering such
repairs or reconstruction, then, unless Participants and
Additional Unit Participants owning at least an aggregate
76% undivided ownership interest in the Plant Scherer Common
Facilities, including MEAG, so long as MEAG owns at least a
15.1% undivided ownership interest in the Plant Scherer
Common Facilities determine to repair or reconstruct the
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<PAGE>
Plant Scherer Common Facilities, the Plant Scherer Common
Facilities shall not be repaired or reconstructed.
(vi) Reimbursement of the Repairing or
Reconstructing Participants and Additional Unit
Participants. If as a result of the preceding subsections
(i) through (v), Scherer Unit No. 1, Scherer Unit No. 2, the
Unit Common Facilities, the Plant Scherer Common Facilities
or any combination of them are not to be repaired or
reconstructed but one or more Participants or Additional
Unit Participants desire the repair or reconstruction
thereof, Scherer Unit No. 1, Scherer Unit No. 2, the Unit
Common Facilities, the Plant Scherer Common Facilities or
any combination thereof, as the case may be, shall be
repaired or reconstructed; provided, however, that the
Participants or Additional Unit Participants desiring to
repair or reconstruct the Scherer Unit No. 1, Scherer Unit
No. 2, the Unit Common Facilities, or the Plant Scherer
Common Facilities, as the case may be, shall bear the full
cost of such repair or reconstruction (after taking into
account available insurance proceeds of such Participants
and Additional Unit Participants); and provided further,
that if any other Participant or Additional Unit Participant
should thereafter desire to obtain its entitlement of energy
from its Unit or Additional Unit but would not have been
able to obtain such entitlement but for the repairs or
reconstruction effected pursuant to this paragraph (vi),
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<PAGE>
such other Participant or Additional Unit Participant shall
reimburse the repairing or reconstructing Participants and
Additional Unit Participants their pro rata share of the net
book value of the costs of such repairs or reconstruction,
including the cost of capital actually incurred, of such
repairing or reconstructing Participant or Additional Unit
Participant. Except as otherwise agreed to by the
Participants and Additional Unit Participants, the
Participants may not repair or reconstruct the Additional
Units or the Additional Unit Common Facilities and the
Additional Unit Participants may not repair or reconstruct
the Units or the Unit Common Facilities."
11. Amendment to Section 5(n) of the Ownership
Agreement. Section 5(n) of the Ownership Agreement is hereby
amended by deleting such Section 5(n) in its entirety and
substituting, in lieu thereof, the following:
(n) Fossil Fuel.
(i) (A) Coal and Transportation Procurement by
GPC - Initiation Until Receipt of Offers. Subject to
the provisions of Section 4(c) of this Agreement and
the provisions of Sections 2(c) and 4(c) of the
Operating Agreement, GPC, on its own behalf and as
agent for the other Participants, shall have sole
authority to and shall arrange for and acquire all
22
<PAGE>
fossil fuel and fuel transportation for the Units
consistent with such policies and procedures with
respect thereto as may be adopted from time to time by
the Plant Scherer Managing Board and shall have sole
authority to administer all fuel and fuel
transportation standards for fossil fuel for the Units
consistent with such standards with respect thereto as
may be adopted from time to time by the Plant Scherer
Managing Board. GPC, on its own behalf and as agent
for the other Participants and Additional Unit
Participants, shall procure coal and transportation
from time to time for the Common Coal Stockpile and for
each of the Separate Coal Stockpile Participants which
is at such time a Common Procurement Participant. At
such times as GPC deems it appropriate to procure coal
or transportation for the Common Coal Stockpile, GPC
shall consult with each of the Separate Coal Stockpile
Participants which are then Common Procurement
Participants to determine their procurement
requirements for their Separate Coal Stockpiles and to
determine the procurement strategy desired by each of
the Common Procurement Participants. At any other time
a Separate Coal Stockpile Participant which at such
time is also a Common Procurement Participant may
request that GPC commence a coal or transportation
procurement for the requirements of such Separate Coal
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Stockpile Participant's Separate Coal Stockpile, and
GPC likewise shall consult with the other Separate Coal
Stockpile Participants which are then Common
Procurement Participants to determine their procurement
requirements for their Separate Coal Stockpiles and to
determine the procurement strategy desired by each of
the other Common Procurement Participants. In each
case, GPC, on its own behalf and as agent for the other
Common Coal Stockpile Participants and for the Separate
Coal Stockpile Participants which are then Common
Procurement Participants expressing a desire to
participate in such Common Procurement, shall use its
reasonable best efforts to develop a procurement
strategy to accommodate the requirements and
procurement strategies of GPC for the Common Coal
Stockpile and of the Separate Coal Stockpile
Participants which are then Common Procurement
Participants expressing a desire to participate in such
Common Procurement; provided, however, that GPC shall
not be required to accommodate the requirements or
procurement strategy of any Separate Coal Stockpile
Participant which is a Common Procurement Participant
that is incompatible with the guidelines with respect
to Common Procurement adopted from time to time by the
Plant Scherer Managing Board or which is incompatible
with the requirements or procurement strategy desired
24
<PAGE>
by the Common Procurement Participants initiating the
Common Procurement. GPC, on its own behalf and as
agent for the other Common Coal Stockpile Participants
and for the Separate Coal Stockpile Participants which
are then Common Procurement Participants electing to
participate in such Common Procurement, shall then
initiate a Common Procurement in an effort to obtain
offers from coal vendors to sell coal, offers from
transporters to provide transportation, or both
(individually, an "Offer" and collectively, "Offers")
to meet the requirements and procurement strategy of
GPC for the Common Coal Stockpile and of each of the
Separate Coal Stockpile Participants which are Common
Procurement Participants electing to participate in
such Common Procurement for its Separate Coal
Stockpile.
(B) Coal and Transportation Procurement by
GPC - After Receipt of Offers. Upon receipt of one or
more Offers, GPC, on its own behalf and as agent for
the other Participants and Additional Unit
Participants, shall offer the Separate Coal Stockpile
Participants which are Common Procurement Participants
electing to participate in such Common Procurement the
opportunity to participate in each such Offer. If two
or more of such Common Procurement Participants
(including, without limitation, GPC on behalf of the
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<PAGE>
Common Coal Stockpile) elect to participate in any
particular Offer, GPC, as agent for the Common Coal
Stockpile and each Separate Coal Stockpile Participant
which is a Common Procurement Participant shall have
the right to participate in such Offer up to the
proportion that such Common Procurement Participant's
Pro Forma Ownership Interest in Plant Scherer bears to
the aggregate of the Pro Forma Ownership Interests in
Plant Scherer of all Common Procurement Participants
electing to participate in such Offer, and for such
purpose, in computing GPC's Pro Forma Ownership
Interest in Plant Scherer there shall be added to GPC's
Pro Forma Ownership Interest in Plant Scherer the Pro
Forma Ownership Interest in Plant Scherer of the other
Participants and Additional Unit Participants which are
then Common Coal Stockpile Participants. If GPC, as
agent for the Common Coal Stockpile, or any of the
Separate Coal Stockpile Participants which are Common
Procurement Participants elect to participate in any
such Offer on a timely basis, GPC will negotiate with
the supplier of such Offer in an effort to develop
final contract terms and conditions satisfactory to
GPC, as agent for the Common Coal Stockpile, and the
Separate Coal Stockpile Participants which are Common
Procurement Participants electing to participate in
such Offer, and GPC, as agent for the Common Coal
26
<PAGE>
Stockpile, and each participating Separate Coal
Stockpile Participant which is a Common Procurement
Participant shall enter into a separate contract with
such supplier, which contract for such Separate Coal
Stockpile Participant shall provide that GPC shall be
the exclusive agent on behalf of such Separate Coal
Stockpile Participant for the administration of such
contract upon such terms and conditions as are
satisfactory to GPC; provided, however, that except as
otherwise set forth herein and in the Operating
Agreement, such Separate Coal Stockpile Participant
shall have sole authority, subject to the policies and
procedures adopted or revised from time to time by the
Plant Scherer Managing Board, to make or direct major
economic decisions which are not administrative in
nature, including, without limitation, to extend,
terminate or renegotiate the contract or exercise
options thereunder and to sue the supplier. GPC makes
no representation or warranty that any Common
Procurement effort will satisfy either the requirements
or the procurement strategy of any Participant or
Additional Unit Participant, and GPC shall have no
liability to any Participant or Additional Unit
Participant in these regards.
(C) Separate Procurement. Upon (i) exercise by
any Separate Coal Stockpile Participant of a Separate
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Procurement under Section 2(c)(iii) of the Operating
Agreement or (ii) violation by any Separate Coal
Stockpile Participant, which has been found by a vote
of a majority of the Pro Forma Ownership Interest in
Plant Scherer of the Common Procurement Participants
(excluding the Pro Forma Ownership Interest in Plant
Scherer of the Common Procurement Participant under
consideration), of any policy or rule for Common
Procurement Participants established from time to time
by the Plant Scherer Managing Board, such Separate Coal
Stockpile Participant shall immediately cease to be a
Common Procurement Participant, and GPC shall have no
obligation to procure coal or transportation on behalf
of such Separate Coal Stockpile Participant other than
for Spot Coal. The remaining Common Procurement
Participants owning in the aggregate more than 50% Pro
Forma Ownership Interest in Plant Scherer out of the
total Pro Forma Ownership Interest in Plant Scherer of
the then remaining Common Procurement Participants may
vote to reestablish such Separate Coal Stockpile
Participant's status as a Common Procurement
Participant. Otherwise, GPC shall have no obligation
to procure coal or transportation on behalf of any
Separate Coal Stockpile Participant which has ceased to
be a Common Procurement Participant, other than for
Spot Coal. A Separate Procurement Participant shall
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<PAGE>
have no right to receive or review any information
relating to any Common Procurement effort or any Offers
or contracts resulting from a Common Procurement effort
except as may otherwise be provided in subsection
(i)(E) of this Section 5(n) relating to Spot Coal.
(D) Review of Offers. Any Common Procurement
Participant that initiates a Common Procurement and any
Common Procurement Participant (other than GPC as
agent) that elects to review information relating to
any Offer shall pay that portion of the costs of the
Common Procurement resulting in such Offer in the
proportion that such Common Procurement Participant's
Pro Forma Ownership Interest in Plant Scherer bears to
the aggregate of the Pro Forma Ownership Interests in
Plant Scherer of the Common Procurement Participants
participating in such Common Procurement or reviewing
any information relating to any Offer, whether or not
such Common Procurement Participant elects to
participate in any such Offer and all other Common
Procurement Participants electing to participate in any
such Offer (which shall include the Common Coal
Stockpile Participants if GPC, as agent for the Common
Coal Stockpile, elects to participate in such Offer)
shall each pay a portion of such costs computed on the
same basis. Upon request, GPC shall inform a Separate
Coal Stockpile Participant which is a Common
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<PAGE>
Procurement Participant that did not initiate the
subject Common Procurement of the approximate cost to
review the information pertaining to the Offer. No
Participant or Additional Unit Participant shall use
any information furnished to it by or on behalf of GPC,
or any other Common Procurement Participant concerning
any such Offers in a manner to prejudice the efforts of
GPC and the other Common Procurement Participants in
any Common Procurement effort. As to any particular
information such prohibition shall terminate two years
following the date such information was received by
such Participant or Additional Unit Participant.
(E) Spot Coal Procurement. Notwithstanding the
foregoing provisions of this Section 5(n), the
provisions of Section 5(p) of this Agreement and the
provisions of Section 2(c) of the Operating Agreement,
GPC shall be the exclusive agent to act on behalf of
itself and all other Participants and Additional Unit
Participants for the procurement, transportation and
delivery of Spot Coal. All Offers to sell Spot Coal
shall be made available to GPC on its own behalf and on
behalf of the other then Common Coal Stockpile
Participants, and to each Separate Coal Stockpile
Participant (whether or not such Separate Coal
Stockpile Participant is then a Common Procurement
Participant) on the same basis that an Offer under a
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Common Procurement is made available to the Common
Procurement Participants. GPC shall remain a Common
Procurement Participant (both as buyer and seller) so
long as there remains one or more other Common
Procurement Participants.
(ii) Each Participant and each Additional Unit
Participant shall have the right to make whatever financial
arrangements it may desire, whether by lease, security
transaction or otherwise, for the discharge of its fossil
fuel payment obligations so long as such arrangements do not
adversely affect the rights of the other Participants and
Additional Unit Participants.
(iii) Except as otherwise agreed by the Common Coal
Stockpile Participants or as otherwise provided in Sections
3(b) and 3(d) of the Operating Agreement, the Common Coal
Stockpile Participants shall pay Common Coal Stockpile Costs
and shall own coal in the Common Coal Stockpile in
proportion to their respective undivided ownership interests
in the Common Coal Stockpile.
(iv) Except as otherwise agreed to by the Participants
and Additional Unit Participants or as otherwise provided in
Section 3(b) and 3(d) of the Operating Agreement, each
Separate Coal Stockpile Participant shall pay all Separate
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<PAGE>
Coal Stockpile Costs which are properly and reasonably
allocable to such Separate Coal Stockpile Participant's
Separate Coal Stockpile, determined in accordance with GPC's
standard accounting practices, which shall comply with the
Uniform System of Accounts in effect from time to time
except as provided in subsection (viii) of Section 5(p)
hereof.
(v) Except as otherwise agreed to by the Participants
and Additional Unit Participants or as otherwise provided in
Section 3(b) and 3(d) of the Operating Agreement, the
Participants and Additional Unit Participants shall pay
Other Fuel Costs and shall own fossil fuel (other than coal
allocated to the Common Coal Stockpile and to the Separate
Coal Stockpiles) in proportion to their respective Pro Forma
Ownership Interest in Plant Scherer.
(vi)(A) If on or prior to 30 days following OPC's
receipt of approval of this Amendment from the Administrator
of the Rural Electrification Administration, any Participant
or Additional Unit Participant exercises its election to
become a Separate Coal Stockpile Participant, then within
six months following the date of the first election by a
Separate Coal Stockpile Participant, or (B) if earlier with
respect to Section 3(e)(viii) of the Unit Four Operating
Agreement GPC shall develop written procedures for Separate
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<PAGE>
Coal Procurement and Common Procurement and shall submit
such procedures to the Plant Scherer Managing Board which
shall adopt such procedures by vote of Participants and
Additional Unit Participants owning at least an aggregate
85% Pro Forma Ownership Interest in Plant Scherer within two
months of submission or which shall revise such procedures,
such revisions to be approved by Participants and Additional
Unit Participants owning at least an aggregate 85% Pro Forma
Ownership Interest in Plant Scherer. In the absence of such
adoption or approval of revisions within two months of
submission, the procedures submitted by GPC shall go into
effect as the procedures adopted by the Plant Scherer
Managing Board and may be revised thereafter only by
approval of such revisions by Participants and Additional
Unit Participants owning at least an aggregate 76% Pro Forma
Ownership Interest in Plant Scherer."
12. Amendment to Section 5(p) of the Ownership
Agreement.
Section 5(p) of the Ownership Agreement is hereby amended by
deleting such Section 5(p) in its entirety and by substituting,
in lieu thereof, the following:
33
<PAGE>
"(p) Common Coal Stockpile and Separate Coal
Stockpiles.
(i) In order to provide for the ownership by the
Participants and the Additional Unit Participants of
interests in a Common Coal Stockpile and to provide for
the sharing among the Participants and Additional Unit
Participants of Common Coal Stockpile Costs, the
Participants agree that initially, all Participants and
all Additional Unit Participants shall participate in
the Common Coal Stockpile.
GPC shall cause an adjustment to be made to the
account of each Common Coal Stockpile Participant (A)
so that the quantity of coal in the Common Coal
Stockpile shall thereafter be allocated to the Common
Coal Stockpile Participants according to such Common
Coal Stockpile Participant's percentage undivided
ownership interest in the Common Coal Stockpile as set
forth in the following sentence, and (B) so that the
average cost per ton or, following a division of the
Plant Scherer Coal Stockpile into the Common Coal
Stockpile and one or more Separate Coal Stockpiles
pursuant to Section 5(p)(iii) of this Agreement, the
average cost per British Thermal Unit ("Btu") of the
coal in the Common Coal Stockpile is the same for each
Common Coal Stockpile Participant, with appropriate
charges and credits to be made to the accounts of such
34
<PAGE>
Common Coal Stockpile Participants, all in accordance
with GPC's standard accounting practices which shall
comply with the Uniform System of Accounts in effect
from time to time except as provided in subsection
(viii) of Section 5(p) hereof. Following each such
allocation, each Common Coal Stockpile Participant
shall own a percentage undivided ownership interest in
the Common Coal Stockpile in the proportion that such
Common Coal Stockpile Participant's Pro Forma Ownership
Interest in Plant Scherer bears to the aggregate of all
Common Coal Stockpile Participants' Pro Forma Ownership
Interest in Plant Scherer.
(ii) All Common Coal Stockpile Costs incurred in
connection with the Common Coal Stockpile shall be
allocated among the Common Coal Stockpile Participants
at the time such Common Coal Stockpile Costs are
incurred in the same respective percentages of each
Common Coal Stockpile Participant's undivided ownership
interest from time to time in the Common Coal Stockpile
at that particular time and, subject to the provisions
of Sections 3(b) and 3(d) of the Operating Agreement,
the Common Coal Stockpile Costs shall be paid as
provided in Sections 5(f) and 5(n) of this Agreement;
provided, however, that at the end of each calendar
month, GPC shall cause an adjustment to be made among
the Common Coal Stockpile Participants in accordance
35
<PAGE>
with the amount of coal (or, following a division of
the Plant Scherer Coal Stockpile into the Common Coal
Stockpile and one or more Separate Coal Stockpiles
pursuant to Section 5(p)(iii) of this Agreement, the
amount of Btus) actually consumed by each of the Common
Coal Stockpile Participant's undivided ownership
interest in each of the Units and each of the
Additional Units, all in accordance with GPC's standard
accounting practices which shall comply with the
Uniform System of Accounts in effect from time to time
except as provided in subsection (viii) of Section 5(p)
hereof.
All Other Fuel Costs incurred in connection with
the Units and the Additional Units shall be allocated
among the Participants and Additional Unit Participants
at the time such Other Fuel Costs are incurred in the
same respective percentages of each Participant's and
Additional Unit Participant's Pro Forma Ownership
Interest in Plant Scherer at that particular time, and
the Other Fuel Costs shall be paid as provided in
Sections 5(f) and 5(n) of this Agreement; provided,
however, that at the end of each calendar month, GPC
shall cause an adjustment to be made among the
Participants and Additional Unit Participants in
accordance with the amount of fuel (other than coal)
actually consumed by each of the Participants and
36
<PAGE>
Additional Unit Participants all in accordance with
GPC's standard accounting practices which shall comply
with the Uniform System of Accounts in effect from time
to time except as provided in subsection (viii) of
Section 5(p) hereof.
(iii) Each Participant (other than GPC) and each
Additional Unit Participant (other than GPC) may elect
to discontinue participation in the Common Coal
Stockpile by delivery of written notice to GPC of such
election not later than 30 days following OPC's receipt
of approval of this Amendment from the Administrator of
the Rural Electrification Administration. Within six
months following the date of the first election by a
Separate Coal Stockpile Participant, GPC, as agent for
the other Participants and other Additional Unit
Participants, shall cause an adjustment to be made to
the Common Coal Stockpile and to the account of each
Separate Coal Stockpile Participant so that (A) the
quantity of coal allocated to the Common Coal Stockpile
will equal the percentage undivided ownership interests
of the remaining Common Coal Stockpile Participants and
so that the quantity of coal allocated to each Separate
Coal Stockpile Participant's account will equal its
percentage undivided ownership interest in the Common
Coal Stockpile at the time such adjustment is made, and
(B) the average cost per ton and average cost per Btu
37
<PAGE>
for the Common Coal Stockpile and for each Separate
Coal Stockpile are the same. GPC shall notify each of
the Participants and Additional Unit Participants
immediately after such an adjustment has been made of
(l) the quantity of coal in the Common Coal Stockpile
and in each Separate Coal Stockpile and (2) the average
cost per ton and average cost per Btu for the Common
Coal Stockpile and for each Separate Coal Stockpile.
Thereafter, each Separate Coal Stockpile Participant
shall be entitled only to use coal available in its
Separate Coal Stockpile account for the operation of
its undivided ownership interests in the Units and the
Additional Units, and the remaining Common Coal
Stockpile Participants shall be entitled to use only
coal available in the account of the Common Coal
Stockpile for the operation of their undivided
ownership interests in the Units and the Additional
Units. Except as otherwise provided in subsection (ii)
of this Section 5(p), no Participant or Additional Unit
Participant shall be required to sell or otherwise
supply coal to any other Participant or Additional Unit
Participant; however, GPC, on its own behalf and as
agent for the other Common Coal Stockpile Participants,
and each Separate Coal Stockpile Participant may buy,
sell, trade or otherwise supply coal in the Plant
Scherer Coal Stockpile from their respective accounts
38
<PAGE>
to one another upon such terms as they may agree and
upon prior written notice to GPC; provided, however,
that all offers to sell coal by a Common Procurement
Participant must be offered to all of the Common
Procurement Participants on the same basis as an Offer
under a Common Procurement. There shall be allocated
to each Separate Coal Stockpile Participant's account a
portion of subsequent deliveries and associated costs
(including, without limitation, "buy-out" costs, if
any) from coal contracts identified in Exhibit I hereto
(the "Existing Contracts") existing on September 1,
1990 equal to such Separate Coal Stockpile
Participant's Pro Forma Ownership Interest in Plant
Scherer, and there shall be allocated to each Separate
Coal Stockpile Participant's account all coal procured
on behalf of such Separate Coal Stockpile Participant
by GPC pursuant to Section 5(n) of this Agreement or
procured by such Separate Coal Stockpile Participant
pursuant to Section 2(c)(iii) of the Operating
Agreement; provided, however, that there shall not be
added to any Separate Coal Stockpile Participant's
Account any additional quantities of coal from Existing
Contracts, over and above the deliveries called for
from the Existing Contracts, as a result of amendments
or modifications to the Existing Contracts after
September 1, 1990 without the approval of the Plant
39
<PAGE>
Scherer Managing Board by vote of Participants and
Additional Unit Participants owning an aggregate of at
least 85% Pro Forma Ownership Interests in Plant
Scherer. GPC shall account for all coal allocated to
the account of each Separate Coal Stockpile Participant
and for coal consumed by such Separate Coal Stockpile
Participant's undivided ownership interests in the
Units and the Additional Units, all in accordance with
GPC's standard accounting practices which shall comply
with the Uniform System of Accounts in effect from time
to time except as provided in subsection (viii) of
Section 5(p) hereof. No Separate Coal Stockpile
Participant nor any purchaser of an undivided ownership
interest in the Units or the Additional Units from a
Separate Coal Stockpile Participant may elect to become
a Common Coal Stockpile Participant without the written
consent of a majority of the Pro Forma Ownership
Interest in Plant Scherer of the then remaining Common
Coal Stockpile Participants, including, without
limitation, GPC so long as GPC is a Participant or
Additional Unit Participant.
(iv) Except as otherwise provided in subsection
(vi) of this Section 5(p), unless otherwise agreed to
by Participants and Additional Unit Participants owning
in the aggregate at least an 85% Pro Forma Ownership
Interest in Plant Scherer, the Participants recognize
40
<PAGE>
and agree, as among themselves and for the benefit of
the Additional Unit Participants, that the division of
the Common Coal Stockpile and each Separate Coal
Stockpile is for the purposes only of accounting,
payment and settlement of costs and entitlement to use;
that there will be no physical separation of coal at
Plant Scherer among the Common Coal Stockpile and the
Separate Coal Stockpiles and that the Common Coal
Stockpile and the Separate Coal Stockpiles will be
physically combined and commingled into one common coal
stockpile at Plant Scherer; and that existing coal and
future deliveries of coal at Plant Scherer allocated
among the Common Coal Stockpile and the Separate Coal
Stockpiles will all be physically commingled and may be
used for the operation of the undivided ownership
interests of any Participant or Additional Unit
Participant so long as the account of such Participant
or Additional Unit Participant demonstrates that there
is sufficient coal credited to its account for such
operation. Nothing in this Agreement or the Operating
Agreement shall preclude Participants and Additional
Unit Participants owning in the aggregate at least an
85% Pro Forma Ownership Interest in Plant Scherer from
agreeing, upon such terms and conditions as they may
agree to, to physically separate the Plant Scherer Coal
Stockpile.
41
<PAGE>
(v) All discrepancies between the book inventory
and the physical inventory of the Plant Scherer Coal
Stockpile shall be charged or credited, as appropriate,
among the Common Coal Stockpile and the Separate Coal
Stockpiles and to the respective accounts of each
Participant and each Additional Unit Participant in
accordance with the amount of coal actually consumed by
the undivided ownership interests of each Participant
and each Additional Unit Participant during the
physical inventory period to which such discrepancy
relates, all as determined in accordance with GPC's
standard accounting practices which shall comply with
the Uniform System of Accounts in effect from time to
time except as provided in subsection (viii) of Section
5(p) hereof.
(vi) In the event GPC should be removed as agent
for the Participants with respect to the Units, the
Plant Scherer Common Facilities or both, the Additional
Unit Participants shall have the right at any time
thereafter, by vote of whatever percentage such
Additional Unit Participants may agree to, not to
utilize the Plant Scherer Coal Stockpile, the Common
Coal Stockpile, or both, and, in such event, none of
the other provisions contained in this Section 5(p)
shall thereafter apply to the Additional Units or the
Additional Unit Participants; provided, however, that
42
<PAGE>
the Additional Unit Participants shall not be released
from paying Common Coal Stockpile Costs and Separate
Coal Stockpile Costs for which such Additional Unit
Participants are otherwise obligated under this Section
5(p).
(vii) GPC and each of the other Common Coal
Stockpile Participants or any purchaser of an undivided
ownership interest in the Units or the Additional Units
may enter into whatever other arrangements GPC and such
other Common Coal Stockpile Participant (or purchaser)
may agree to with respect to such Common Coal Stockpile
Participant's (or purchaser's) ownership interest in
the Common Coal Stockpile, including, without
limitation, the creation of further Separate Coal
Stockpiles without requiring the consent of any other
Participant or Additional Unit Participant, so long as
such arrangement provides for Common Coal Stockpile
Costs to be paid as contemplated by this Agreement.
(viii)(A) If on or prior to 30 days following
OPC's receipt of approval of this Amendment from the
Administrator of the Rural Electrification
Administration, any Participant or Additional Unit
Participant exercises its election to become a Separate
Coal Stockpile Participant, then within six months
following the date of the first election by a Separate
Coal Stockpile Participant, or (B) if earlier with
43
<PAGE>
respect to Section 6(i)(viii) of the Unit Four
Ownership Agreement, GPC shall develop written
procedures for Separate Coal Stockpile accounting and
Common Coal Stockpile accounting and shall submit such
procedures to the Plant Scherer Managing Board which
shall adopt such procedures by vote of Participants and
Additional Unit Participants owning at least an
aggregate 85% Pro Forma Ownership Interest in Plant
Scherer within two months of submission or which shall
revise such procedures, such revisions to be approved
by Participants and Additional Unit Participants owning
at least an aggregate 85% Pro Forma Ownership Interest
in Plant Scherer. In the absence of such adoption or
approval of revisions within two months of submission,
the procedures submitted by GPC shall go into effect as
the procedures adopted by the Plant Scherer Managing
Board and may be revised thereafter only by approval of
such revisions by Participants and Additional Unit
Participants owning at least an aggregate 76% Pro Forma
Ownership Interest in Plant Scherer."
13. Amendment to Section 6(g) of the Ownership
Agreement. The first sentence of the second paragraph of Section
6(g) of the Ownership Agreement is hereby amended to delete the
words "and Fuel Costs" and to substitute the words "Common Coal
44
<PAGE>
Stockpile Costs, Separate Coal Stockpile Costs, and Other Fuel
Costs" therefor.
14. Amendment to Section 9 of the Ownership Agreement.
(a) The second sentence of Section 9(u) of the
Ownership Agreement is hereby amended to delete the words "Fuel
Costs" and to substitute "Common Coal Stockpile Costs, additional
Separate Coal Stockpile Costs, additional Other Fuel Costs"
therefor.
(b) Section 9 of the Ownership Agreement is hereby
amended by adding the following new subsection (x) to the end of
such Section 9 as follows:
"(x) Lessor in Possession. In the event that
there occurs a Lessor Possession Date, the Owner Trustee, or
any successor to the Owner Trustee's interest in Scherer
Unit No. 2, shall become immediately and automatically a
Common Coal Stockpile Participant, a Common Dispatch
Participant and a Common Procurement Participant for all
purposes under this Agreement and under the Operating
Agreement. The parties hereto acknowledge that Section 3.1
of the Co-Owners' Consents requires the Owner Trustee to
purchase from OPC, and OPC to sell to Owner Trustee, within
120 days after the Lessor Possession Date an amount of coal
with a million Btu value equal to X (the "Owner Trustee's
Coal Supply"). The amount of coal to be purchased and sold
45
<PAGE>
as the Owner Trustee's Coal Supply will be determined by the
formula, X = (OT/Y) x Z where:
"OT" is equal to the Owner Trustee's Pro Forma
Ownership Interest in Plant Scherer;
"Y" is equal to the aggregate of the Pro Forma
Ownership Interests in Plant Scherer of the then Common
Coal Stockpile Participants other than the Owner
Trustee (and for this purpose, if there are no Common
Coal Stockpile Participants at such time, Y shall be
equal to GPC's Pro Forma Ownership Interest in Plant
Scherer); and
"Z" is equal to the total number of million Btu's in
the Common Coal Stockpile (and for this purpose, if
there is no Common Coal Stockpile at such time, Z shall
be equal to the number of million Btus in GPC's
Separate Coal Stockpile);
provided, however, if the result of the foregoing
calculation would be X = 0, then the Owner Trustee's Coal
Supply shall be (and X shall be) equal to the Million Btus
in OPC's Separate Coal Stockpile at such time multiplied by
a fraction the numerator of which shall be the Owner
Trustee's percentage undivided ownership interest in Unit
No. 2, and the denominator of which shall be OPC's aggregate
46
<PAGE>
percentage undivided leasehold and ownership interest in
each of Unit No. 1, Unit No. 2, Unit No. 3 and Unit No. 4
immediately prior to the Lessor Possession Date. If upon a
Lessor Possession Date, OPC's coal supply attributable to
its interest in Scherer Unit No. 2 is in a Separate Coal
Stockpile, the Owner Trustee's Coal Supply shall be
calculated as of such Lessor Possession Date and shall
immediately and automatically be added to and become a part
of the Common Coal Stockpile and shall be accounted for as
having been contributed at the then average price per
Million Btu of the Common Coal Stockpile. If upon such
Lessor Possession Date there are no other Common Coal
Stockpile Participants with respect to Scherer Unit No. 2,
GPC's coal supply attributable to its interest in Scherer
Unit No. 2 shall immediately and automatically be added to
and become a part of the Common Coal Stockpile. From and
after such Lessor Possession Date, the Owner Trustee shall
be a Participant and shall be entitled and subject to the
rights and obligations thereof, and the Owner Trustee (and
GPC as agent for the Owner Trustee) shall be entitled to use
such coal contributed to the Common Coal Stockpile for the
benefit of the Owner Trustee even though the purchase and
sale of such coal has not been consummated, and from and
after such Lessor Possession Date, the Owner Trustee (and
its successors and assigns) shall pay its proportionate
share of Common Coal Stockpile Costs and Other Fuel Costs.
47
<PAGE>
Notwithstanding the foregoing provisions of this Section
9(x), if at such Lessor Possession Date either (i) GPC is no
longer a Participant or an Additional Unit Participant, or (ii)
GPC has been removed as agent for the Units, and the Additional
Unit Participants have discontinued using the Plant Scherer Coal
Stockpile; and there is no longer a Common Coal Stockpile for the
Units, then the Owner Trustee shall be a Separate Coal Stockpile
Participant, the Owner Trustee's Coal Supply shall be equal to
OPC's Separate Coal Stockpile as of such Lessor Possession Date
multiplied by a fraction, the numerator of which shall be the
Owner Trustee's percentage undivided ownership interest in Unit
No. 2, and the denominator of which shall be OPC's aggregate
percentage undivided leasehold and ownership interest in each of
Unit No. 1, Unit No. 2, Unit No. 3 and Unit No. 4 immediately
prior to the Lessor Possession Date, and the Owner Trustee shall
pay its proportionate share of Separate Coal Stockpile Costs and
Other Fuel Costs. OPC hereby agrees to indemnify and hold
harmless the other Participants and the Additional Unit
Participants (including, without limitation, GPC, as agent,
whether it then is or is not a Participant or an Additional Unit
Participant) from and against any and all loss, cost, expense or
damage (including, without limitation, attorneys' fees and
expenses, Cost of Construction, Operating Costs, Separate Coal
Stockpile Costs, Common Coal Stockpile Costs or Other Fuel Costs)
resulting directly or indirectly from the operation of this
subsection, such Lessor's assumption of possession, or both."
48
<PAGE>
15. Amendment to Section 10(a) of the Ownership
Agreement. Section 10(a) of the Ownership Agreement is hereby
amended to delete the last sentence of such Section 10(a).
16. Effectiveness of this Amendment. Neither this
Amendment nor any of the obligations of the parties hereto shall
be effective until the receipt of all requisite approvals,
including, without limitation, the approval of the Securities and
Exchange Commission under the Public Utility Holding Company Act
of 1935, the written approval of the Administrator of the Rural
Electrification Administration and the approval of all other
persons and entities having a right to approve or consent to an
amendment to the Ownership Agreement, but upon receipt of such
approvals this Amendment and the obligations of the parties
hereto shall be effective. The parties hereto agree to use their
respective best efforts to expeditiously obtain all such
requisite approvals.
17. Miscellaneous. Any and all notices, requests,
certificates and other instruments executed and delivered after
the execution and delivery of this Amendment may refer to the
Ownership Agreement without making specific reference to this
Amendment, but nevertheless all such references shall be deemed
to include this Amendment unless the context shall otherwise
require.
49
<PAGE>
This Amendment shall be construed in connection with and as
a part of the Ownership Agreement, and all terms, conditions and
covenants contained in the Ownership Agreement, except as herein
modified, shall be and remain in full force and effect, and the
parties hereto agree that they are bound by the terms and
conditions of the Ownership Agreement as amended hereby.
This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original
but altogether one and the same instrument.
[This space intentionally left blank.]
50
<PAGE>
IN WITNESS WHEREOF, the undersigned Parties hereto have duly
executed this Amendment under seal as of the date first above
written.
Signed, sealed and delivered GEORGIA POWER COMPANY
in the presence of:
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Title:________________________
Attest: ______________________
Name:_________________________
Title:________________________
(CORPORATE SEAL)
Signed, sealed and delivered OGLETHORPE POWER CORPORATION
in the presence of: (AN ELECTRIC MEMBERSHIP
GENERATION & TRANSMISSION
CORPORATION)
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Title:________________________
Attest: ______________________
Name:________________________
Title:_______________________
(CORPORATE SEAL)
[Signatures continued on next page]
51
<PAGE>
[Signatures continued from previous page]
Signed, sealed and delivered MUNICIPAL ELECTRIC AUTHORITY
in the presence of: OF GEORGIA
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Its: _________________________
Attest: ______________________
Name:_________________________
Its:__________________________
(OFFICIAL SEAL)
Signed, sealed and delivered CITY OF DALTON, GEORGIA
in the presence of:
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Its:__________________________
Attest: ______________________
Name:_________________________
Its:__________________________
(OFFICIAL SEAL)
Signed, sealed and delivered BOARD OF WATER, LIGHT AND
in the presence of: SINKING FUND COMMISSIONERS
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Its:__________________________
Attest: ______________________
Name:_________________________
Its:__________________________
(OFFICIAL SEAL)
52
<PAGE>
EXHIBIT I
EXISTING CONTRACTS
The following is a listing of the coal purchase contracts in
existence on September 1, 1990.
1. That certain contract effective on March 31, 1977 among
Shell Mining Company, A.T. Massey Coal Company, Inc., Marrowbone
Development Company and Georgia Power Company as amended on
January 3, 1977, September 25, 1979, March 23, 1982, January 28,
1983, December 6, 1983, January 12, 1984, February 19, 1985,
September 9, 1985, December 11, 1985, December 18, 1985, March
10, 1987, April 16, 1987, October 30, 1987, November 10, 1987,
January 31, 1989, April 18, 1989, April 23, 1990, May 30, 1990,
and the undated "Agreement To Provide For the Extension Of
Negotiations Between GPC and Shell Mining Company."
2. That certain contract effective December 1, 1987 among Delta
Coals Equity Company, Inc., Humphreys Enterprises, Inc., Greater
Wise, Inc., Red River Coal Company, Inc., Pardee Coal Company,
Inc., Delta Coals, Inc., and Georgia Power Company as amended on
November 6, 1987 (Notice of Assignment), November 6, 1987 (Notice
of Designation of Agent), November 23, 1987 (Response to Notice
of Assignment), June 17, 1988, April 7, 1989, and July 24, 1990.
3. That certain contract effective July 1, 1989 between Mingo
Logan Coal Company and Georgia Power Company as amended on
August 21, 1990.
<PAGE>
APPENDIX A
TO OWNERSHIP AGREEMENT
CAPITAL BUDGET
By August 15 of each calendar year, GPC shall use its
reasonable best efforts to provide to each Participant a written
budget estimate of capital costs anticipated to be incurred for
the five-year budget period for Scherer Unit No. 1 and Scherer
Unit No. 2. Each budget estimate shall be based on information
reasonably available. Also to be included in the capital budget
are any projects which may be charged to a Participant on the
basis of its ownership pursuant to the Ownership Agreement. This
budget estimate is to consist of project estimate sheets for each
project. For the five-year budget period, a summary of estimates
of capital expenditures and retirements will be provided, the
first year by month and the remaining four years by annual total.
The date for giving GPC written notice of approval or
disapproval of such capital budget estimate shall be September 15
and the date for submission by the Participants of alternative
capital budget estimates shall be October 15. All approvals,
disapprovals and submissions of alternative capital budgets shall
be by the percentages specified in Section 5(e) of the Ownership
Agreement.
Each budget estimate and final budget estimate shall be in a
format such that for the next calendar year each month's
estimated costs are listed by reference to the applicable Uniform
System of Accounts account number. In addition, each budget
<PAGE>
estimate and final budget estimate shall be in a format showing
expected amounts that the Participant will be billed.
Section 5.1 and Appendix A of the Plant Scherer Managing
Board Agreement dated as of December 31, 1990, as amended from
time to time, shall govern and control any conflicting or
contrary provisions of the Ownership Agreement with regard to
capital budgets for the Plant Scherer Common Facilities. <PAGE>
Exhibit 10(a)55
AMENDMENT NUMBER TWO, DATED AS OF DECEMBER 31, 1990,
TO THE PLANT ROBERT W. SCHERER UNITS NUMBERS ONE AND TWO
OPERATING AGREEMENT
among
GEORGIA POWER COMPANY, OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION),
MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA and
CITY OF DALTON, GEORGIA
<PAGE>
AMENDMENT NUMBER TWO
TO THE PLANT ROBERT W. SCHERER UNITS NUMBERS ONE AND TWO
OPERATING AGREEMENT
TABLE OF CONTENTS
Section No. Page
1. Certain Definitions . . . . . . . . . . . . . . . . 2
2. Amendment to Create Section 7 . . . . . . . . . . . 2
3. Amendment to Section 2(c) . . . . . . . . . . . . . 13
4. Amendment to Section 3(b) . . . . . . . . . . . . . 25
5. Amendment to Section 3(c) . . . . . . . . . . . . . 35
6. Amendment to Section 3(d) . . . . . . . . . . . . . 36
7. Amendment to Section 3(e) . . . . . . . . . . . . . 37
8. Amendment to Section 3(g) . . . . . . . . . . . . . 38
9. Amendment to Section 3(h) . . . . . . . . . . . . . 38
10. Amendment to Section 3(j) . . . . . . . . . . . . . 39
11. Amendment to Section 3(k) . . . . . . . . . . . . . 42
12. Amendment to Section 4 . . . . . . . . . . . . . . 42
13. Amendment to Section 6(q) . . . . . . . . . . . . . 43
14. Effectiveness of this Amendment . . . . . . . . . . 43
15. Miscellaneous . . . . . . . . . . . . . . . . . . . 43
APPENDICES
A. Operating Budget; Maintenance Schedule; Fuel Plan and
Scheduling and Dispatching Budget
B. Plant Scherer Operations and Maintenance Expenses
<PAGE>
THIS AMENDMENT, dated as of December 31, 1990, is by and
among GEORGIA POWER COMPANY ("GPC"), a corporation organized and
existing under the laws of the State of Georgia, OGLETHORPE POWER
CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION
CORPORATION), an electric membership corporation organized and
existing under the laws of the State of Georgia ("OPC"), the
MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA, a public corporation and
an instrumentality of the State of Georgia ("MEAG"), and the CITY
OF DALTON, GEORGIA, an incorporated municipality in the State of
Georgia acting by and through its Board of Water, Light and
Sinking Fund Commissioners ("Dalton"), and is Amendment Number
Two to that certain Plant Robert W. Scherer Units Numbers One and
Two Operating Agreement, dated as of May 15, 1980 (as previously
amended, the "Operating Agreement"), among GPC, OPC, MEAG and
Dalton.
W I T N E S S E T H:
A. The Participants have previously entered into the
Operating Agreement and have previously entered into the
Ownership Agreement providing, among other things, for fuel
procurement by Participants other than GPC as agent for the other
Participants and for scheduling and dispatching of the Units.
B. The Participants mutually desire to alter and modify
certain provisions of the Operating Agreement relating to fuel
<PAGE>
procurement and relating to scheduling and dispatching of the
Units.
NOW, THEREFORE, in consideration of the promises and the
mutual agreements herein set forth, the Participants, intending
to be mutually bound among themselves and to the Additional Unit
Participants, hereby agree and amend the Operating Agreement as
follows:
1. Certain Definitions. Capitalized terms and phrases
used and not otherwise defined in this Amendment shall have the
respective meanings assigned to them by the Ownership Agreement,
the Operating Agreement, or both, unless the context or use
clearly indicates otherwise. All rules of interpretation,
construction, or both, set forth in the Operating Agreement shall
apply with equal force and effect to this Amendment.
2. Amendment to Create Section 7 of the Operating
Agreement. Section 7 of the Operating agreement hereby reads as
follows:
"7. Certain Definitions.
(a) APPLICABLE ACCOUNTING PERIOD. "Applicable Accounting
Period" shall mean that period of operation which occasioned the
need to incur the particular Operating Cost incurred. Depending
on the particular Operating Cost involved, such period may be a
2
<PAGE>
month, a calendar year or a longer period. For example, for
planned, periodic maintenance of the Units, the Applicable
Accounting Period shall be the time since the last planned
maintenance outage during which the same or similar maintenance
was last conducted. If such a period cannot be readily
determined for a particular Operating Cost, then the Applicable
Accounting Period shall be the most recent 12 calendar months.
(b) COMMON COAL STOCKPILE. "Common Coal Stockpile" shall
refer to that portion of the Plant Scherer Coal Stockpile
attributable to the ownership interests of the Common Coal
Stockpile Participants from time to time pursuant to Section 5(p)
of the Ownership Agreement.
(c) COMMON COAL STOCKPILE COSTS. "Common Coal Stockpile
Costs" shall mean all costs incurred by GPC on its own behalf and
as agent for the other Common Coal Stockpile Participants (or by
a Common Procurement Participant in connection with any contract
for fuel entered into in accordance with the provisions of
Section 2(c)(i) of this Operating Agreement) that are allocable
to the acquisition, processing, transportation, delivering,
handling, storage, accounting, analysis, measurement and disposal
of coal for the Common Coal Stockpile, including, without
limitation, any advance payments in connection therewith, less
credits related to such costs applied as appropriate, and
including, without limitation, that portion of administrative and
general expenses which is properly and reasonably allocable to
acquisition and management of coal for the Common Coal Stockpile
3
<PAGE>
and for which the incurring party has not been otherwise
reimbursed by the other Common Coal Stockpile Participants.
Common Coal Stockpile Costs shall not include Other Fuel Costs,
Separate Coal Stockpile Costs and amortization of the Plant
Scherer initial fossil fuel supply (including, without
limitation, unrecoverable base coal).
(d) COMMON COAL STOCKPILE PARTICIPANTS. "Common Coal
Stockpile Participants" shall mean such Participants and
Additional Unit Participants as are participating in the Common
Coal Stockpile from time to time pursuant to Section 5(p) of the
Ownership Agreement.
(e) COMMON DISPATCH PARTICIPANT. "Common Dispatch
Participant" shall mean those Participants which are not Separate
Dispatch Participants.
(f) COMMITTING PARTICIPANTS. "Committing Participants"
shall have the meaning assigned in Section 3(b)(iii) of this
Operating Agreement.
(g) COMMON PROCUREMENT. "Common Procurement" shall have
the meaning assigned in Section 5(n)(i) of the Ownership
Agreement.
(h) COMMON PROCUREMENT PARTICIPANT. "Common Procurement
Participant" shall mean, initially, the Common Coal Stockpile
Participants and each Separate Coal Stockpile Participant (i)
which has not exercised its rights under Section 2(c)(iii) of
this Operating Agreement, Section 3(c), SEPARATE FUEL
PROCUREMENT, of the Unit Three Operating Agreement or Section
4
<PAGE>
3(c), SEPARATE FUEL PROCUREMENT, of the Unit Four Operating
Agreement, (ii) which has not otherwise been found by a vote of a
majority of the Pro Forma Ownership Interest in Plant Scherer of
the then Common Procurement Participants (excluding the Pro Forma
Ownership Interest in Plant Scherer of the Common Procurement
Participant under consideration), to have violated the policies
and rules for Common Procurement Participants established from
time to time by the Plant Scherer Managing Board or (iii) which
has been reestablished as a Common Procurement Participant
pursuant to Section 5(n) of the Ownership Agreement.
(i) CO-OWNERS' CONSENTS. "Co-Owners' Consents" shall mean
those certain Consents, Amendments, and Assumptions Nos. 1-4
dated December 30, 1985 among GPC, OPC, MEAG, Dalton, Gulf Power
Company, and Wilmington Trust Company and NationsBank of Georgia,
N.A. (as successor to William J. Wade) as Owner Trustees, and
those certain Amendment to Consents, Amendments, and Assumptions
Nos. 1-4 dated August 16, 1993, among GPC, OPC, MEAG, Dalton,
Gulf Power Company, Jacksonville Electric Authority and Florida
Power & Light Company and Wilmington Trust Company and
NationsBank of Georgia, N.A., as Owner Trustees.
(j) FERC. The "FERC" shall mean the Federal Energy
Regulatory Commission or any entity succeeding to the powers and
functions thereof.
(k) GEORGIA INTEGRATED TRANSMISSION SYSTEM. "Georgia
Integrated Transmission System" shall mean the integrated
transmission system owned by GPC, OPC, MEAG and Dalton and
5
<PAGE>
established and operated pursuant to those certain Agreements
between GPC and OPC dated as of January 6, 1975 and June 9, 1986,
those certain Agreements between GPC and MEAG dated as of August
27, 1976, and those certain Agreements between GPC and Dalton
dated as of August 27, 1976, as any one or more of those
Agreements may be amended, modified, revised, restated or
superseded from time to time, or any successor transmission
system thereto.
(l) NONCOMMITTING PARTICIPANTS. "Noncommitting
Participants" shall mean as of any particular time, those
Participants which at such time are not Committing Participants
pursuant to Section 3(b)(iii) of this Operating Agreement.
(m) OPERATING AGREEMENT. "Operating Agreement" shall refer
to the Plant Robert W. Scherer Units Numbers One and Two
Operating Agreement, dated as of May 15, 1980, among GPC, OPC,
MEAG and Dalton, as amended as of December 31, 1985 and as of
December 31, 1990.
(n) OPERATING COSTS. "Operating Costs" shall mean the
aggregate of Scherer Unit No. 1 Operating Costs, Scherer Unit No.
2 Operating Costs and Common Facilities Operating Costs, but
shall not include Common Coal Stockpile Costs, Separate Coal
Stockpile Costs and Other Fuel Costs or any costs and expenses
attributable to the Additional Units or any costs and expenses
in connection with the improvement of the land described in
Exhibit G of the Ownership Agreement or in connection with the
operation, maintenance, care, abandonment or removal of any
6
<PAGE>
improvements thereto (whether or not completed). "Scherer Unit
No. 1 Operating Costs," "Scherer Unit No. 2 Operating Costs," and
"Common Facilities Operating Costs" shall mean, respectively, all
costs and expenses incurred by GPC on its own behalf and as agent
for the other Participants in respect of the management, control,
operation or maintenance of (i) Scherer Unit No. 1, in the case
of Scherer Unit No. 1 Operating Costs, (ii) Scherer Unit No. 2,
in the case of Scherer Unit No. 2 Operating Costs, and (iii) the
Plant Scherer Common Facilities, in the case of Common Facilities
Operating Costs, in each case including without limitation that
portion of administrative and general expenses incurred by GPC
which is properly and reasonably allocable to Scherer Unit No. 1,
Scherer Unit No. 2, and the Plant Scherer Common Facilities,
respectively, for which GPC has not been otherwise reimbursed by
the other Participants, and which are properly recordable in
accordance with the Operating Expense Instructions and in
appropriate accounts as set forth in the Uniform System of
Accounts.
(o) OTHER FUEL COSTS. "Other Fuel Costs" shall mean all
costs and expenses, other than Common Coal Stockpile Costs and
Separate Coal Stockpile Costs, incurred by GPC on its own behalf
and as agent for the other Participants and Additional Unit
Participants that are allocable to the acquisition, processing,
transportation, delivering, handling, storage, accounting,
analysis, measurement and disposal of fossil materials required
for Plant Scherer, including, without limitation, any advance
7
<PAGE>
payments in connection therewith, less credits related to such
costs applied as appropriate, and including, without limitation,
that portion of administrative and general expenses which is
properly and reasonably allocable to acquisition and management
of fossil fuel (other than coal for the Common Coal Stockpile and
the Separate Coal Stockpiles) for Plant Scherer. Other Fuel
Costs shall not include Common Coal Stockpile Costs, Separate
Coal Stockpile Costs and amortization of the Plant Scherer
initial fossil fuel supply (including, without limitation,
unrecoverable base coal).
(p) OWNERSHIP AGREEMENT. "Ownership Agreement" shall refer
to the Plant Robert W. Scherer Units Numbers One and Two Purchase
and Ownership Agreement, dated as of May 15, 1980, among GPC,
OPC, MEAG and Dalton, as amended as of December 30, 1985, July 1,
1986, August 1, 1988 and as of December 31, 1990.
(q) PLANT SCHERER MANAGING BOARD AGREEMENT. The "Plant
Scherer Managing Board Agreement" shall mean the Plant Scherer
Managing Board Agreement, dated as of the date hereof, by and
among the Participants and the Additional Unit Participants as
such agreement may be amended from time to time.
(r) PLANT SCHERER PARTICIPATION AGREEMENTS. "Plant Scherer
Participation Agreements" shall mean the Ownership Agreement,
this Operating Agreement, the Unit Three Ownership Agreement, the
Unit Three Operating Agreement, the Unit Four Ownership
Agreement, the Unit Four Operating Agreement, the Co-Owners'
Consents and the Plant Scherer Managing Board Agreement.
8
<PAGE>
(s) PRO FORMA OWNERSHIP INTEREST IN PLANT SCHERER. "Pro
Forma Ownership Interest in Plant Scherer" shall mean for each
Participant and Additional Unit Participant the percentage
obtained by dividing by four the sum of (A) such Participant's or
Additional Unit Participant's percentage undivided ownership
interest, if any, in Scherer Unit No. 1, plus (B) its percentage
undivided ownership interest, if any, in Scherer Unit No. 2, plus
(C) its percentage undivided ownership interest, if any, in
Scherer Unit No. 3, plus (D) its percentage undivided ownership
interest, if any, in Scherer Unit No. 4.
(t) SEPARATE COAL PROCUREMENT. "Separate Coal Procurement"
shall mean the procurement of coal pursuant to the standards and
procedures set forth under Section 2(c)(iii) of this Operating
Agreement.
(u) SEPARATE COAL STOCKPILE. "Separate Coal Stockpile"
shall have the meaning assigned in Section 5(p) of the Ownership
Agreement.
(v) SEPARATE COAL STOCKPILE COSTS. "Separate Coal
Stockpile Costs" shall mean with respect to each Separate Coal
Stockpile Participant all costs incurred by GPC as agent for such
Separate Coal Stockpile Participant or by a Common Procurement
Participant in connection with any contract for fuel entered into
in accordance with the provisions of Section 2(c)(i) of this
Operating Agreement that are allocable to the acquisition,
processing, transportation, delivering, handling, storage,
accounting, analysis, measurement and disposal of coal for such
9
<PAGE>
Separate Coal Stockpile Participant, including, without
limitation, all costs incurred by GPC in administering fuel and
transportation contracts entered into by such Separate Coal
Stockpile Participant pursuant to any one or more of Sections
5(n) or 5(p) of the Ownership Agreement or Section 2(c)(iii) of
this Operating Agreement, and including any advance payments in
connection therewith, less credits related to such costs applied
as appropriate, and including that portion of administrative and
general expenses which is properly and reasonably allocable to
acquisition and management of coal for such Separate Coal
Stockpile Participant's Separate Coal Stockpile and for which the
incurring party has not otherwise been reimbursed. Separate Coal
Stockpile Costs shall not include Common Coal Stockpile Costs,
Other Fuel Costs and amortization of the Plant Scherer initial
fossil fuel supply, including, without limitation, unrecoverable
base coal.
(w) SEPARATE COAL STOCKPILE PARTICIPANT. "Separate Coal
Stockpile Participant" shall mean the Participants and Additional
Unit Participants making an election to discontinue participation
in the Common Coal Stockpile pursuant to Section 5(p) of the
Ownership Agreement or pursuant to the applicable provisions of
the other Plant Scherer Participation Agreements, or which has
otherwise entered into an agreement with GPC to become a Separate
Coal Stockpile Participant pursuant to subsection (vii) of
Section 5(p) of the Ownership Agreement. Such Participants and
Additional Unit Participants are referred to individually as a
10
<PAGE>
"Separate Coal Stockpile Participant" and collectively as
"Separate Coal Stockpile Participants".
(x) SEPARATE DISPATCH PARTICIPANT. "Separate Dispatch
Participant" shall mean those Participants which have become
Separate Coal Stockpile Participants pursuant to the provisions
of 5(p) of the Ownership Agreement and exercise separate dispatch
rights under Section 3(b)(iii) of this Operating Agreement.
(y) SEPARATE PROCUREMENT PARTICIPANT. "Separate
Procurement Participant" shall mean each Separate Coal Stockpile
Participant (i) which has exercised its rights under Section
2(c)(iii) of this Operating Agreement; Section 3(c), SEPARATE
FUEL PROCUREMENT, of the Unit Three Operating Agreement; or
Section 3(c), SEPARATE FUEL PROCUREMENT, of the Unit Four
Operating Agreement or (ii) which has been found by a vote of a
majority of the Pro Forma Ownership Interest in Plant Scherer of
the Common Procurement Participants (excluding the Pro Forma
Ownership Interest in Plant Scherer of the Common Procurement
Participant under consideration) to have violated the policies
and rules for Common Procurement Participants established from
time to time by the Plant Scherer Managing Board and which has
not been reestablished as a Common Procurement Participant
pursuant to Section 5(n) of the Ownership Agreement.
(z) SPOT COAL. "Spot Coal" shall mean all coal purchased
for the Common Coal Stockpile or any Separate Coal Stockpile
under an arrangement of acquisition for a period of less than one
year, or some other period agreed to by the written approval or
11
<PAGE>
consent of those members of the Plant Scherer Managing Board
which collectively own at least a 76% Pro Forma Ownership
Interest in Plant Scherer.
(aa) UNIFORM SYSTEM OF ACCOUNTS. The "Uniform System of
Accounts" shall mean the FERC Uniform System of Accounts
prescribed for Public Utilities and Licensees subject to the
provisions of the Federal Power Act, as the same now exist or may
be hereafter amended by the FERC.
(bb) UNIT FOUR OPERATING AGREEMENT. "Unit Four Operating
Agreement" shall refer to the Plant Robert W. Scherer Unit Number
Four Operating Agreement, dated as of December 31, 1990, among
GPC, FPL, and JEA as the same may be amended from time to time.
(ac) UNIT FOUR OWNERSHIP AGREEMENT. "Unit Four Ownership
Agreement" shall refer to the Plant Robert W. Scherer Unit Number
Four Amended and Restated Ownership Agreement, dated as of
December 31, 1990, among GPC, FPL, and JEA as the same may be
amended from time to time.
(ad) UNIT THREE OPERATING AGREEMENT. "Unit Three Operating
Agreement" shall refer to the Plant Robert W. Scherer Unit Number
Three Amended and Restated Operating Agreement, between GPC and
Gulf, dated as of December 31, 1990.
(ae) UNIT THREE OWNERSHIP AGREEMENT. "Unit Three Ownership
Agreement" shall refer to the Plant Robert W. Scherer Unit Number
Three Amended and Restated Ownership Agreement between GPC and
Gulf, dated as of December 31, 1990."
12
<PAGE>
3. Amendment to Section 2(c) of the Operating Agreement.
Section 2(c) of the Operating Agreement is hereby amended as
follows:
(a) Sections 2(c)(i) and 2(c)(ii) are hereby amended in
entirety to read as follows:
"(i) Common Procurement by Common Procurement
Participants. In the event that any Common Procurement
Participant (other than GPC as agent hereunder for the other
Common Procurement Participants) should be able to locate
and arrange for a source of coal for the Common Procurement
Participants and (A) the total cost per Btu of such coal,
including, without limitation, all brokerage,
transportation, handling, testing and storage charges, is
equal to or lower than that of the coal which GPC would be
able to procure for the Common Procurement Participants for
the same period of time; (B) the quality and characteristics
of such coal are in all respects equal to or better than and
compatible with those of the other coal being utilized or to
be utilized for the Common Coal Stockpile during the period
of such contract, and such coal is in all respects
compatible with the Units and the Additional Units and will
enable the Units and Additional Units to operate at their
normal operational levels in compliance with all
governmental regulations applying thereto; (C) trans-
13
<PAGE>
portation for such coal can be arranged which is at least as
reliable as transportation which would be available for the
other sources of coal for the Common Coal Stockpile for the
same period of time, and such transportation is compatible
with the transportation and coal delivery facilities of the
Units and Additional Units; (D) all parties materially
associated with the supply of such coal, including, without
limitation, the vendor, broker, mine operator and
transporter, are at least as reliable and technically and
financially qualified as those with whom GPC would be able
to contract for the other coal for the Common Coal Stockpile
during the same period of time; (E) procurement of such coal
would not interfere with, diminish any benefits of or
replicate any other coal arrangement which GPC has procured
for or entered into for the Common Procurement Participants
(or, if such Common Procurement Participant is a Common Coal
Stockpile Participant, which GPC has procured for or entered
into for the Common Coal Stockpile), including, without
limitation, any options or rights for renewals or extensions
of contracts, and would not interfere with, diminish any
benefits of or replicate any transportation arrangements,
agreements or tariffs; (F) procurement of such coal would
not increase or diminish the level of coal supply in the
Common Coal Stockpile determined by GPC to be the
appropriate level therefor; and (G) the vendor of such coal
is willing to enter into a contract or contracts with GPC
14
<PAGE>
and such of the Separate Coal Stockpile Participants
desiring to participate in such coal supply arrangement on
terms and conditions no less favorable to the Common
Procurement Participants than those then being bargained for
by GPC; then GPC, on its own behalf and as agent for the
other Common Procurement Participants, shall offer such coal
supply arrangement to the Common Procurement Participants in
accordance with the provisions of Section 5(n) of the
Ownership Agreement. If GPC, on its own behalf and on behalf
of the other Common Coal Stockpile Participants, or if a
Separate Coal Stockpile Participant for its own account,
shall enter into one or more contracts for such coal supply,
then GPC shall thereafter exclusively administer such
contract and all transportation arrangements associated
therewith, and all costs and benefits of such coal supply
arrangement shall be shared pursuant to the other provisions
of this Agreement and of the Ownership Agreement. No
Participant or Additional Unit Participant (other than GPC
or a Separate Coal Stockpile Participant for its own
account) shall enter into any arrangement or agreement with
respect to the procurement of coal pursuant to this
subsection (i) of Section 2(c), and any Participant or
Additional Unit Participant (other than GPC or a Separate
Coal Stockpile Participant for its own account) which shall
enter into any such arrangement or agreement (or which is
charged in any suit, action or other proceeding with having
15
<PAGE>
done so) shall indemnify the other Participants and
Additional Unit Participants for all costs, expenses, judg-
ments and penalties associated therewith and incurred by
them, including, without limitation, all legal fees incurred
in connection with any suit, action or other proceeding.
(ii) Special Procurement for Financial and Legal
Reasons. Any Common Dispatch Participant which has an
opportunity to procure or participate in a fuel supply
arrangement which meets all of the conditions specified in
clauses (B) through (F) of Section 2(c)(i) above, but for
which such Common Dispatch Participant cannot, because of
legal restrictions, obtain beneficial financing if the
economic benefits, if any, of such fuel supply arrangement
are shared with the other Participants and Additional Unit
Participants, shall be permitted to supply, solely for its
own account, up to its proportionate share of the fuel
requirements for the Units, the Additional Units, or both,
from such fuel supply arrangement, upon the following
conditions:
(A) Prior to entering into such fuel supply
arrangement, such Common Dispatch Participant must
demonstrate that such arrangement complies with the
provisions of this Section 2(c)(ii) and must
demonstrate the feasibility of an accounting procedure
16
<PAGE>
for such proposed fuel supply arrangement which is
compatible with the fuel accounting, billing and
adjustment procedures provided for in this Agreement
and the Ownership Agreement and which is satisfactory
to the other Participants and Additional Unit
Participants;
(B) The Common Dispatch Participant proposing
to participate in such fuel supply arrangement must
give GPC written notice of its intention to supply part
or all of its proportionate share of the fuel
requirements for the Units, the Additional Units, or
both, the period of time for which it proposes to
supply such requirements and the percentage of its
proportionate share of such requirements which it
proposes to provide, at least three years prior to the
date of the first contemplated delivery of fuel from
such fuel supply arrangement;
(C) The Common Dispatch Participant giving
notice of its intention to participate in such fuel
supply arrangement must thereafter give GPC written
notice of any subsequent change in such percentage of
its proportionate share of such requirements which it
proposes to supply or in the period of time for which
it proposes to supply such requirements at least two
17
<PAGE>
years prior to the date of the first delivery of fuel
originally contemplated from such fuel supply
arrangement; and
(D) At least one year prior to the first
scheduled delivery of fuel from any such arrangement,
the Common Dispatch Participant proposing to
participate in the arrangement shall enter into a
valid, binding and enforceable contract for such fuel
consistent with the demonstrations and notices provided
for in (A), (B) and (C) above and providing by its
terms for GPC (or any successor agent hereunder) to be
solely responsible for all administration with respect
thereto, including coordination with the mine operator,
scheduling of deliveries, transportation arrangements,
testing and enforcement.
Any Common Dispatch Participant which gives any such notice
of intention to supply fuel shall indemnify the other
Participants and Additional Unit Participants for any and all
damages, costs and expenses which result, directly or indirectly,
from any such notice of intention or change notice, from any such
fuel supply arrangement or from the failure of supply of fuel as
contemplated in such notices or arrangement.
18
<PAGE>
If, at any time, any one or more deliveries of fuel from any
such fuel supply arrangement fail in any respect to satisfy the
requirements as to quality and characteristics specified in
clause (B) of Section 2(c)(i) above, fail to comply with any
material provision of a contract governing such fuel supply
arrangements or are incompatible with the Units (or any
Additional Unit to be served by the Plant Scherer Coal Stockpile)
or any governmental regulations applying thereto, then GPC may
decline to use the fuel from any such delivery, may order a
suspension of any further deliveries from such fuel supply
arrangement until receipt of adequate assurances satisfactory to
it that all future deliveries of fuel will conform to the
delivery schedules and to all of the other requirements of the
Plant Scherer Coal Stockpile, the Units and the Additional Units,
as the case may be, and may take any other action and exercise
any other rights which may be permitted by law or by the
provisions of any contracts with respect to such fuel supply
arrangement.
GPC shall not be liable to any other Participant or
Additional Unit Participant for any actions taken by it under
this Section 2(c)(ii), and the Common Dispatch Participant
participating in any such fuel supply arrangement shall indemnify
and hold GPC and the other Participants and the Additional Unit
Participants harmless from and against any and all costs,
expenses, claims, judgments and fines, including legal fees
19
<PAGE>
incurred in defense of any lawsuit or other proceeding, as a
result of any such action taken by GPC, except that GPC shall not
be so indemnified and held harmless from the payment of legal
fees incurred in defense of any lawsuit brought by a Common
Dispatch Participant proposing to participate in such arrangement
seeking specific performance or injunctive relief against GPC to
reverse GPC's determination that such a proposed arrangement does
not comply with the terms and conditions of this Section
2(c)(ii).
Upon the exercise by any Common Dispatch Participant of a
special procurement under this Section 2(c)(ii), GPC shall have
no obligation to procure coal or transportation for that portion
of such Common Dispatch Participant's supply which is provided
from such procurement under this Section 2(c)(ii)."
(b) To add the following new subsection (iii) to the end
thereof:
"(iii) Separate Procurement by Separate Procurement
Participants - Generally. Any Separate Coal Stockpile
Participant shall be permitted to supply, solely for its own
account and solely for its Separate Coal Stockpile, its coal
requirements for its undivided ownership interests in the
Units, the Additional Units, or both, upon the following
conditions:
20
<PAGE>
(A) Prior to entering into each coal supply
arrangement, such Separate Coal Stockpile Participant
must demonstrate that such arrangement complies with
the provisions of this Section 2(c)(iii) and must
demonstrate (1) that the proposed coal to be procured
meets or exceeds the quality and compatibility
standards set by GPC, as approved or revised from time
to time by the Plant Scherer Managing Board, and will
enable the Units and the Additional Units to operate at
their normal operational levels in compliance with all
governmental regulations applying thereto; (2) that
transportation for such coal can be arranged by such
Separate Coal Stockpile Participant which is compatible
with the transportation and fuel delivery facilities at
Plant Scherer; and (3) all parties associated with the
supply of such coal, including, without limitation, the
vendor, broker, mine operator and transporter are
reliable and technically and financially qualified.
Within six months following the date of the first
election by a Separate Coal Stockpile Participant to
discontinue participation in the Common Coal Stockpile,
GPC shall develop written guidelines setting forth
standards and procedures for compliance by a Separate
Coal Stockpile Participant with the provisions of this
Section 2(c)(iii)(A), including, without limitation,
standards relating to the operational characteristics
21
<PAGE>
of the Units and the Additional Units and setting forth
the standard contract terms and provisions referred to
in Section 2(c)(iii)(B) and shall submit such
guidelines to the Plant Scherer Managing Board which
shall adopt such guidelines by vote of Participants and
Additional Unit Participants owning at least an
aggregate 85% Pro Forma Ownership Interest in Plant
Scherer within two months of submission or which shall
revise such guidelines, such revisions to be approved
by Participants and Additional Unit Participants owning
at least an aggregate 85% Pro Forma Ownership Interest
in Plant Scherer. In the absence of such adoption or
approval of revisions within two months of submission,
the guidelines submitted by GPC shall go into effect as
the guidelines of the Plant Scherer Managing Board and
may be revised thereafter only by approval of such
revisions by Participants and Additional Unit
Participants owning at least an aggregate 76% Pro Forma
Ownership Interest in Plant Scherer.
(B) At least 90 days prior to the first scheduled
delivery of coal from any such arrangement, the
Separate Coal Stockpile Participant proposing to
participate in the arrangement shall give GPC written
notice of its intent to enter into such coal supply
arrangement, shall make the demonstrations set forth in
(A) above to the reasonable satisfaction of GPC, as
22
<PAGE>
agent, and, thereafter shall enter into a valid,
binding and enforceable contract for such coal
containing such standard terms and conditions as are
required by the Plant Scherer Managing Board guidelines
(other than price, quantity, and duration), which
contract shall be consistent with the demonstrations
provided for in (A) above and providing by its terms
for GPC (or any successor agent hereunder) to have sole
authority for all administration with respect thereto,
including, without limitation, coordination with the
mine operator, scheduling of deliveries, transportation
arrangements and testing; provided, however, that
except as otherwise set forth herein, the Separate Coal
Stockpile Participant shall have sole authority,
subject to the policies and procedures adopted or
revised from time to time by the Plant Scherer Managing
Board, to make or direct major economic decisions which
are not administrative in nature, including, without
limitation, to extend, terminate or renegotiate the
contract or exercise options thereunder and to sue the
supplier.
Except as set forth in Section 5(n) of the Ownership
Agreement, GPC shall have no obligation to purchase, arrange for
or contract for the purchase of coal for any Separate Coal
Stockpile Participant.
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<PAGE>
If, at any time, any one or more deliveries of coal from any
such coal supply arrangement fail in any respect to satisfy the
requirements as to quality and characteristics specified in
clause (A) above, fail to comply with any material provision of a
contract governing such coal supply arrangements or are
incompatible with the Units or the Additional Units or any
governmental regulations applying thereto, then, in accordance
with such guidelines as may be adopted or revised from time to
time by the Plant Scherer Managing Board, GPC may decline to use
the coal from any such delivery, may order a suspension of any
further deliveries from such coal supply arrangement until
receipt of adequate assurances satisfactory to it that all future
deliveries of coal will conform to the delivery schedules and to
all of the other requirements of the Plant Scherer Coal
Stockpile, the Units and the Additional Units, as the case may
be, and may take any other action and exercise any other rights
which may be permitted by law or by the provisions of any
contracts with respect to such coal supply arrangement.
GPC shall not be liable to any other Participant or
Additional Unit Participant (except as otherwise set forth in
Section 3(c)(ii) of the Unit Four Operating Agreement with
respect to the Scherer Unit No. 4 Participants) for any actions
taken by it under this Section 2(c)(iii), and the Separate
Procurement Participant participating in any such coal supply
arrangement shall indemnify and hold GPC and the other
Participants and the Additional Unit Participants harmless from
24
<PAGE>
and against any and all costs, expenses, claims, judgments and
fines, including, without limitation, legal fees incurred in
defense of any lawsuit or other proceeding, as a result of any
such action taken by GPC, except that GPC shall not be so
indemnified and held harmless from the payment of legal fees
incurred in defense of any lawsuit brought by a Separate
Procurement Participant proposing to participate in such
arrangement seeking specific performance or injunctive relief
against GPC to reverse GPC's determination that such a proposed
arrangement does not comply with the terms and conditions of this
Section 2(c)(iii)."
4. Amendment to Section 3(b) of the Operating Agreement.
Section 3(b) of the Operating Agreement is hereby amended by
deleting such Section 3(b) in its entirety and, in lieu thereof,
substituting the following:
"(b) Scheduling and Dispatching.
(i) Subject to the further provisions of this
Section 3(b), GPC, on its own behalf and as agent for
the other Participants shall have sole authority for
the scheduling and dispatching of the output of each of
Scherer Unit No. 1 and Scherer Unit No. 2 and shall
schedule and dispatch such outputs on a continuous
economic dispatch basis, to the extent each such unit
is capable of such dispatch, in accordance with GPC's
25
<PAGE>
standard scheduling and dispatching procedures to
serve, in part, the electric capacity and energy load
within the State of Georgia. GPC shall give to the
other Common Dispatch Participants written notification
of the estimated operating level of the Units as set
forth in Appendix A attached hereto, as the same may be
revised from time to time with respect to such
information by agreement among all of the Common
Dispatch Participants and GPC as agent for the Common
Dispatch Participants.
(ii) Any Common Dispatch Participant having an
undivided ownership interest in Scherer Unit No. 1,
Scherer Unit No. 2, or both, shall have the right to
request and receive during such calendar year energy on
an hourly basis from either of Scherer Unit No. 1 or
Scherer Unit No. 2 or both in excess of its
proportionate share of the energy generated by such
unit operating on an economic dispatch basis, up to a
maximum of such Participant's proportionate share of
the energy which could be generated by such unit
operating at its maximum practicable capability at any
given time, if (1) such Participant, gives GPC such
advance notice as is reasonably acceptable to GPC of
its desire to receive such additional energy from such
unit and the amount of such additional energy and such
increased generation can be reasonably accommodated
26
<PAGE>
within GPC's scheduling and dispatching procedures; and
(2) such Participant agrees to be responsible, as of
the date of such notice, for any and all additional
costs resulting from such increased generation of
energy, including all prepayments in connection with
the acquisition of coal and other fuel, whether or not
it requires or takes the additional energy during such
calendar year and whether or not any additional energy
is generated.
(iii) Subject to the provisions of Section
3(b)(iv) of this Agreement, commencing within six
months following the date of the first election by a
Separate Coal Stockpile Participant to discontinue
participation in the Common Coal Stockpile, GPC shall
use its reasonable best efforts to dispatch the
undivided ownership interests of each Separate Dispatch
Participant in Scherer Unit No. 1 and Scherer Unit No.
2 to match the schedules provided by such Separate
Dispatch Participant. Except as provided for in
Section 3(b)(iv) or in the third paragraph of this
Section 3(b)(iii), GPC shall have no right to dispatch
the undivided ownership interests in Scherer Unit No.
1, Scherer Unit No. 2, or both, of the Separate
Dispatch Participants on any basis or for any purpose
other than to match the schedules provided by such
Separate Dispatch Participants. The Separate Dispatch
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<PAGE>
Participants having undivided ownership interests in
Scherer Unit No. 1, Scherer Unit No. 2, or both, and
GPC agree to develop software and to install any
equipment at Scherer Unit No. 1 and Scherer Unit No. 2
which GPC and such Separate Dispatch Participants deem
reasonable and necessary for the separate scheduling
and dispatching of the undivided ownership interests of
the Separate Dispatch Participants in Scherer Unit No.
1 and Scherer Unit No. 2. The costs associated with
procuring, developing, installing and operating such
equipment and software shall be borne solely by the
Separate Dispatch Participants having undivided
ownership interests in the Units, and each such
Separate Dispatch Participant shall pay that portion of
such costs in the proportion that its undivided
ownership interest in the Units bears to the aggregate
of undivided ownership interests of Separate Dispatch
Participants in the Units.
GPC and the Separate Dispatch Participants having
undivided ownership interests in Scherer Unit No. 1,
Scherer Unit No. 2, or both, shall establish mutually
agreeable notification procedures for the startup and
shutdown of Scherer Unit No. 1 and Scherer Unit No. 2
as part of the separate dispatch procedures which shall
be subject to approval by the Plant Scherer Managing
Board by vote of Participants owning at least an
28
<PAGE>
aggregate 75% undivided ownership interest in the
Units, including MEAG, so long as MEAG owns at a least
15.1% undivided ownership interest in the Units and
upon failure to secure such approval, such notification
procedures shall be those proposed by GPC. Such
procedures shall consider, among other things,
operational characteristics of Scherer Unit No. 1 and
Scherer Unit No. 2 as well as factors affecting the
operation of Scherer Unit No. 1 and Scherer Unit No. 2
as a component of Plant Scherer integrated with the
Georgia Integrated Transmission System.
Either GPC, on its own behalf and as agent for the
other Common Dispatch Participants, or any Separate
Dispatch Participant having undivided ownership
interests in Scherer Unit No. 1, Scherer Unit No. 2, or
both, may commit such of Scherer Unit No. 1, Scherer
Unit No. 2, or both, in which it has an undivided
ownership interest, when available, for start-up. The
Participant or Participants committing a Unit for
start-up shall pay and be solely responsible for all
costs associated with the start-up of the Unit and
bringing operations of the Unit to minimum operating
levels, including, without limitation, start-up fuel
and personnel costs, with each such Committing
Participant being responsible for a portion of such
costs in the proportion that its undivided ownership
29
<PAGE>
interest in the committed Unit bears to the aggregate
of the undivided ownership interests of the Committing
Participants in the committed Unit. For this purpose,
if GPC commits Scherer Unit No. 1, Scherer Unit No. 2,
or both, for start-up, all Common Dispatch Participants
having an undivided ownership interest in Scherer Unit
No. 1 or Scherer Unit No. 2 shall be deemed Committing
Participants. If one or more of the Committing
Participants desire to shutdown Scherer Unit No. 1 or
Scherer Unit No. 2 and one or more Committing
Participant desires to maintain the commitment of such
Unit, then the Committing Participant or Participants
desiring to maintain the commitment may do so and shall
be responsible for all costs associated therewith.
During any period of commitment of Scherer Unit
No. 1, Scherer Unit No. 2, or both, by Committing
Participants, if another Participant or Participants
having the right to schedule or dispatch output from
the committed Unit or Units does so, then such
Participant or Participants shall become Committing
Participants and shall pay or reimburse the preexisting
Committing Participants for that portion of the costs
associated with start-up of the Unit and bringing
operations of the Unit to minimum operating levels for
which the preexisting Committing Participants were
liable pursuant to the third paragraph of this Section
30
<PAGE>
3(b)(iii), which is properly and reasonably allocable
to each new Committing Participant, all in accordance
with GPC's standard operating and accounting procedures
which shall be submitted for approval to the Plant
Scherer Managing Board by vote of Participants owning
at least an aggregate 75% undivided ownership interest
in the Units, including MEAG, so long as MEAG owns at
least a 15.1% undivided ownership interest in the
Units, and upon failure to secure such approval, such
operating and accounting procedures shall be those
proposed by GPC. Each Separate Dispatch Participant
shall be responsible for any and all costs resulting
from its operation of Scherer Unit No. 1, Scherer Unit
No. 2, or both.
(iv) It is recognized by the Participants that
the operation of the Georgia Integrated Transmission
System under both normal and abnormal conditions can be
impacted by the operation of Scherer Unit No. 1 and
Scherer Unit No. 2, and it is further recognized that
the operation of Scherer Unit No. 1, Scherer Unit No. 2
and the remainder of Plant Scherer, including, without
limitation, maintenance of voltage regulation and
electrical and mechanical stability, can be impacted by
the operation of the Georgia Integrated Transmission
System. The Participants agree that GPC, as agent,
shall have the right to take such actions relating to
31
<PAGE>
the operation or shutdown of the Participants'
undivided ownership interests in the Units as are
reasonable for the safe and reliable operation of
Scherer Unit No. 1, Scherer Unit No. 2, the remainder
of Plant Scherer and the Georgia Integrated
Transmission System.
The Participants recognize and agree that (1) GPC
shall have sole authority to control the reactive power
output of Scherer Unit No. 1 and Scherer Unit No. 2 in
order to control voltage at the Plant Scherer step-up
substation and auxiliary electric systems, maintain
reasonable voltage profiles on the Georgia Integrated
Transmission System, and provide reactive power to the
system, and (2) GPC may take actions to override the
dispatch of the Participants' undivided ownership
interests in Scherer Unit No. 1, Scherer Unit No. 2, or
both, including, without limitation, startup or
shutdown of Scherer Unit No. 1, Scherer Unit No. 2, or
both, in the event GPC reasonably determines that such
action is necessary or appropriate to maintain
reliability and integrity of Scherer Unit No. 1,
Scherer Unit No. 2, the remainder of Plant Scherer, the
Georgia Integrated Transmission System or any
combination of them. GPC shall notify each Participant
having an undivided ownership interest in Scherer Unit
No. 1, Scherer Unit No. 2, or both, as soon as
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<PAGE>
reasonably practicable when such actions or similar
actions with respect to the Additional Units are
necessary. Procedures for such notification shall be
included in the dispatch procedures to be developed by
GPC and submitted to the Plant Scherer Managing Board
for approval by the Participants by vote of
Participants owning at least an aggregate 75% undivided
ownership interest in the Units, including MEAG, so
long as MEAG owns at least a 15.1% undivided ownership
interest in the Units, and upon failure to secure such
approval, such notification procedures shall be those
proposed by GPC.
All costs for any additional energy produced by
operation of the Participants' undivided ownership
interests in Scherer Unit No. 1, Scherer Unit No. 2, or
both, pursuant to the foregoing provisions of this
Section 3(b)(iv), shall be borne by the Participants in
proportion to their undivided ownership interests in
the Units and the Participants will be entitled to such
additional energy in the same proportions whether or
not any such Participant requires or can utilize such
additional energy.
The rights granted GPC pursuant to this Section
3(b)(iv) shall remain in full force and effect even if
GPC is removed as agent for the Units, the Unit Common
Facilities, the Plant Scherer Common Facilities, the
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<PAGE>
Plant Scherer Coal Stockpile, or any combination
thereof.
(v) The Participants agree that GPC shall have no
obligation to generate energy which cannot be
transmitted either due to transmission restrictions or
lack of necessary transmission arrangements.
(vi) The Participants recognize that GPC, as
operating agent for the Participants and Additional
Unit Participants, has various contractual obligations
under the Plant Scherer Participation Agreements
respecting operation and maintenance of Plant Scherer.
The Participants agree that, in discharging its
contractual obligations, GPC may take reasonable
actions to resolve conflicts involving its various
contractual obligations. In circumstances where GPC
becomes aware of a conflict in its contractual
obligations under the Plant Scherer Participation
Agreements and GPC reasonably believes the conflict is
material and is likely to have a significant, on-going
impact on one or more Participants or Additional Unit
Participants, GPC shall notify the Plant Scherer
Managing Board of the conflict and of GPC's proposed
action to resolve the conflict. The Plant Scherer
Managing Board shall approve such action by vote of
Participants and Additional Unit Participants owning at
least an aggregate of 76% Pro Forma Ownership Interest
34
<PAGE>
in Plant Scherer. In the absence of such approval
within 30 days from the date GPC's proposal was
submitted to the Plant Scherer Managing Board, GPC
shall be authorized to take the action it proposed to
resolve the reported conflict, and such action may be
repeated as necessary until such time as GPC proposes a
different action to the Managing Board or the Managing
Board approves an alternative action consistent with
the procedures set forth in Section 7.1, RESOLUTION OF
CONFLICTING CONTRACTUAL OBLIGATIONS FOR GPC, AS AGENT,
of the Plant Scherer Managing Board Agreement.
(vii) For the purpose of this Section 3(b), the
capacity associated with a Participant's undivided
ownership interest in the Units shall include, in the
case of GPC, the capacity purchased by GPC from time to
time pursuant to Sections 3(g) and 3(h) of this
Agreement, and shall exclude, in the case of MEAG and
OPC, the capacity sold by MEAG and OPC, respectively
from time to time, pursuant to Sections 3(g) and 3(h)
of this Agreement."
5. Amendment to Section 3(c) of the Operating Agreement.
Section 3(c) of the Operating Agreement is hereby amended by
adding the following at the end of such Section 3(c):
"Notwithstanding the foregoing provisions of this
Section 3(c), with respect to information provided by GPC
35
<PAGE>
and applicable times and dates, the matters set forth in
Appendix A attached hereto relating to fuel plans, as the
same may be revised from time to time by agreement among all
of the Participants and GPC as agent for the Participants,
shall govern and control any such conflicting or contrary
provisions of this Section 3(c)."
6. Amendment to Section 3(d) of the Operating Agreement.
Section 3(d) of the Operating Agreement is hereby amended in its
entirety to read as follows:
"(d) Common Coal Stockpile Costs, Separate Coal Stockpile
Costs, and Other Fuel Costs.
(i) Each Participant which is at any given time a
Common Coal Stockpile Participant shall own an
undivided ownership interest in the Common Coal
Stockpile, and shall be responsible for the payment of
Common Coal Stockpile Costs in the proportions set
forth in Sections 5(n)(iii) and 5(p) of the Ownership
Agreement. Each Participant which is at any given time
a Separate Coal Stockpile Participant shall own the
coal allocated to its account and shall be responsible
for payment of Separate Coal Stockpile Costs pursuant
to Sections 5(n)(iv) and 5(p) of the Ownership
Agreement. Each Participant shall own other fossil
36
<PAGE>
fuel and shall be responsible for payment of Other Fuel
Costs for the Units in proportion to its percentage
undivided ownership interest from time to time in the
Units. Not later than 120 days prior to the beginning
of each calendar year, GPC shall deliver to the other
Participants an estimate of the Common Coal Stockpile
Costs or Separate Coal Stockpile Costs, as the case may
be, and Other Fuel Costs to be paid by each Participant
for such calendar year;
(ii) For each calendar year, GPC shall keep an
hourly record of the kilowatt-hours of energy delivered
to each Participant from each of Scherer Unit No. 1 and
Scherer Unit No. 2 and shall report such amounts each
month along with the cumulative amount of energy
delivered to each Participant since the beginning of
that calendar year."
7. Amendment to Section 3(e) of the Operating Agreement.
Section 3(e) of the Operating Agreement is hereby amended by
adding the following sentence after the third sentence of such
Section 3(e):
"Notwithstanding the foregoing provisions of this
Section 3(e), with respect to information to be provided by
GPC and applicable times and dates, the matters set forth in
Appendix A attached hereto relating to maintenance
37
<PAGE>
schedules, as the same may be revised from time to time by
agreement among all of the Participants and GPC as agent for
the Participants, shall govern and control any such
conflicting or contrary provisions of this Section 3(e)."
8. Amendment to Section 3(g) of the Operating Agreement.
Section 3(g) of the Operating Agreement is hereby amended as
follows:
(a) The first sentence of the second paragraph of
Section 3(g)(i) of the Operating Agreement is hereby amended
to delete the words "Fuel Costs" and to substitute the words
"Common Coal Stockpile Costs or Separate Coal Stockpile
Costs, as the case may be, and Other Fuel Costs" therefor.
(b) The first sentence of Section 3(g)(ii)(C) of the
Operating Agreement is hereby amended to delete the words "a
Fuel Cost" and to substitute the words "a Common Coal
Stockpile Cost, a Separate Coal Stockpile Cost, or an Other
Fuel Cost" therefor.
9. Amendment to Section 3(h) of the Operating Agreement.
The first sentence of the second paragraph of Section 3(h)(iii)
of the Operating Agreement is hereby amended to delete the words
"Fuel Costs" and to substitute the words "Common Coal Stockpile
38
<PAGE>
Costs or Separate Coal Stockpile Cost, as the case may be, and
Other Fuel Costs" therefor.
10. Amendment to Section 3(j) of the Operating Agreement.
Section 3(j) of the Operating Agreement is hereby amended by
deleting such Section 3(j) in its entirety and, in lieu thereof,
substituting the following:
"(j) Sharing of Costs - General. The Participants
shall be responsible for payment of Cost of Construction in
accordance with the provisions of the Ownership Agreement,
and the Participants shall be responsible for the payment of
Separate Coal Stockpile Costs, Common Coal Stockpile Costs
and Other Fuel Costs in accordance with the provisions of
Sections 3(d), 3(g) and 3(h) of this Agreement and Sections
5(f), 5(n) and 5(p) of the Ownership Agreement.
Except as otherwise provided in this Section 3, each
Participant shall be responsible for the payment of its
respective share of all Operating Costs. Each Participant's
respective share of such Operating Costs, to the extent
feasible, shall be equivalent to the proportion that the
output of energy from its undivided ownership interest in
the Units bears to the total output of energy from the Units
during the Applicable Accounting Period; provided, however,
that if there is no output of energy from the Units during
the Applicable Accounting Period, each Participant's
39
<PAGE>
respective share of such Operating Costs shall be equivalent
to its respective percentage undivided ownership interest
during such accounting period in the Units, and, for those
Operating Costs which cannot be feasibly allocated based on
the Participant's output of energy from their respective
undivided ownership interests in the Units, each
Participant's respective share of such Operating Costs shall
be equivalent to its respective percentage undivided
ownership interest in the Units during such accounting
period. Such Operating Costs incurred in connection with
either or both of the Units, Operating Costs incurred in
connection with the Unit Common Facilities and Common
Facilities Operating Costs shall be allocated as provided in
Appendix "B" attached hereto and incorporated herein by
reference, as the same may be revised from time to time by
(1) with respect to Operating Costs incurred in connection
with any one or more of Scherer Unit No. 1, Scherer Unit No.
2 and the Unit Common Facilities, by approval of all of the
Participants, and (2) with respect to Common Facilities
Operating Costs, by approval of all of the Participants and
Additional Unit Participants.
It is the absolute intent of the Participants to
share all items of cost, obligation and liability
incurred in connection with the Units and the Plant
Scherer Common Facilities (other than the financing of
each participant's respective undivided ownership
40
<PAGE>
interest in the Units and the Plant Scherer Common
Facilities), and not otherwise expressly provided for,
in the proportion equivalent to each Participant's
undivided ownership interest in the Units.
Notwithstanding the foregoing provisions of this
Section 3(j) or any other provision of this Agreement, in
the event any Participant sells to any other person
(including, without limitation, a Participant) any undivided
ownership interest in the Units or any portion thereof in
accordance with the provisions of Section 5(j) of the
Ownership Agreement (other than a sale or conveyance as
security for an indebtedness or in connection with the
financing of pollution control facilities), such selling
Participant's rights and obligations hereunder as a
Participant and co-owner of the Units and the Plant Scherer
Common Facilities, including the obligation to make payments
of the Operating Costs, Common Coal Stockpile Costs,
Separate Coal Stockpile Costs, Other Fuel Costs and any
other costs to be shared by the Participants hereunder,
shall be reduced to the extent of such costs attributable to
the undivided ownership interest so sold, and all
Participants shall look solely to such purchaser for payment
of the corresponding portion of the Operating Costs, Common
Coal Stockpile Costs, Separate Coal Stockpile Costs, Other
Fuel Costs and other costs to be shared by the Participants
hereunder; provided, however, that no such sale shall
41
<PAGE>
relieve any Participant from its obligations under Sections
3(g) and 3(h) hereof."
11. Amendment to Section 3(k) of the Operating Agreement.
Section 3(k) of the Operating Agreement is hereby amended by
adding the following at the end of such Section 3(k):
"Notwithstanding the foregoing provisions of this
Section 3(k) with respect to the information to be provided
by GPC and applicable times and dates, the matters set forth
in Appendix A attached hereto relating to operating budgets,
as the same may be revised from time to time by agreement
among all of the Participants and GPC as agent for the
Participants, shall govern and control any such conflicting
or contrary provisions of this Section 3(k)."
12. Amendment to Section 4 of the Operating Agreement.
The first sentence of Section 4(e) of the Operating Agreement is
hereby amended to delete the words "and Fuel Costs" and to
substitute the words "Common Coal Stockpile Costs (which shall be
made available only to Common Coal Stockpile Participants),
Separate Coal Stockpile Costs (which shall be made available to
each Separate Coal Stockpile Participant with respect to its
Separate Coal Stockpile) and Other Fuel Costs" therefor.
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<PAGE>
13. Amendment to Section 6(q) of the Operating Agreement.
The second sentence of Section 6(q) of the Operating Agreement is
hereby amended to delete the words "Fuel Costs" and to substitute
the words "Common Coal Stockpile Costs, additional Separate Coal
Stockpile Costs, additional Other Fuel Costs" therefor.
14. Effectiveness of this Amendment. Neither this
Amendment nor any of the obligations of the parties hereto shall
be effective until the receipt of all requisite approvals,
including, without limitation, the approval of the Securities and
Exchange Commission ("SEC") under the Public Utility Holding
Company Act of 1935, the written approval of the Administrator of
the Rural Electrification Administration and the approval of all
other persons and entities having a right to approve or consent
to an amendment to the Operating Agreement, but upon receipt of
such approvals this Amendment and the obligations of the parties
hereto shall be effective. The parties hereby agree to use their
respective best efforts to expeditiously obtain all such
requisite approvals.
15. Miscellaneous. Any and all notices, requests,
certificates and other instruments executed and delivered after
the execution and delivery of this Amendment may refer to the
Operating Agreement without making specific reference to this
Amendment, but nevertheless all such references shall be deemed
43
<PAGE>
to include this Amendment unless the context shall otherwise
require.
This Amendment shall be construed in connection with and as
a part of the Operating Agreement, and all terms, conditions and
covenants contained in the Operating Agreement, except as herein
modified, shall be and remain in full force and effect, and the
parties hereto agree that they are bound by the terms and
conditions of the Operating Agreement as amended hereby.
This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original
but altogether one and the same instrument.
[This space intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned Parties hereto have duly
executed this Amendment under seal as of the date first above
written.
Signed, sealed and delivered GEORGIA POWER COMPANY
in the presence of:
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Title:________________________
Attest: ______________________
Name:_________________________
Title:________________________
(CORPORATE SEAL)
Signed, sealed and delivered OGLETHORPE POWER CORPORATION
in the presence of: (AN ELECTRIC MEMBERSHIP
GENERATION & TRANSMISSION
CORPORATION)
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Title:________________________
Attest: ______________________
Name:________________________
Title:_______________________
(CORPORATE SEAL)
[Signatures continued on next page]
45
<PAGE>
[Signatures continued from previous page]
Signed, sealed and delivered MUNICIPAL ELECTRIC AUTHORITY
in the presence of: OF GEORGIA
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Its: _________________________
Attest: ______________________
Name:_________________________
Its:__________________________
(OFFICIAL SEAL)
Signed, sealed and delivered CITY OF DALTON, GEORGIA
in the presence of:
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Its:__________________________
Attest: ______________________
Name:_________________________
Its:__________________________
(OFFICIAL SEAL)
Signed, sealed and delivered BOARD OF WATER, LIGHT AND
in the presence of: SINKING FUND COMMISSIONERS
______________________________ By: __________________________
______________________________ Name:_________________________
Notary Public Its:__________________________
Attest: ______________________
Name:_________________________
Its:__________________________
(OFFICIAL SEAL)
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APPENDIX A
TO OPERATING AGREEMENT
OPERATING BUDGET, MAINTENANCE SCHEDULE,
FUEL PLAN AND SCHEDULING AND DISPATCHING BUDGET
Operating Budget
By August 15 of each calendar year, GPC shall use its
reasonable best efforts to provide each Participant a written
budget estimate of Operating Costs including, without limitation,
scheduled outage costs (by month for the following year and in
summary fashion for the succeeding four years) anticipated to be
incurred for the five-year budget period for Scherer Unit No. 1
and Scherer Unit No. 2. Each operating budget estimate shall be
based on information reasonably available.
The date for giving GPC written notice of approval or
disapproval of such operating budget estimate shall be September
15 and the date for submission by the Participants of alternative
operating budget estimates shall be October 15. All approvals,
disapprovals and submissions of alternative operating budgets
shall be by the percentages specified in Section 3(k) of the
Operating Agreement.
Each budget estimate and final budget estimate shall be in a
format such that each month's estimated costs are listed by
reference to the applicable Uniform System of Accounts account
number. In addition, each budget estimate and final budget
estimate shall be in a format showing expected amounts that the
Participant will be billed. Finally, a report on materials and
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supplies purchased during the preceding calendar year shall be
provided along with the operating budget estimate.
Section 5.1 and Appendix A of the Plant Scherer Managing
Board Agreement dated as of December 31, 1990, as amended from
time to time, shall govern and control any conflicting or
contrary provisions of the Operating Agreement with regard to
operating budgets for the Plant Scherer Common Facilities.
Maintenance Schedules
In formulating the plan to be submitted to the Participants,
GPC shall consider any comments submitted by the Participants to
GPC prior to August 1 of each year, and GPC shall use its
reasonable best efforts to minimize any period during which the
Units are scheduled to be out of service for maintenance at the
same time.
On or before August 15 of each calendar year, GPC shall use
its reasonable best efforts to provide to each Participant a
written scheduled outage plan for Scherer Unit No. 1 and Scherer
Unit No. 2. Should any major changes be made to the maintenance
schedule within a calendar year, GPC shall use its reasonable
best efforts to provide each Participant with a revised schedule.
A Common Dispatch Participant shall receive maintenance
schedules for the territory.
Fuel Plan
48
<PAGE>
The parties as of this particular time choose to utilize the
provisions set forth in Section 3(c) of the Operating Agreement,
as the same may be revised from time to time as provided therein,
such revisions to be set forth in this Appendix.
Scheduling and Dispatching Budget (Energy Budget)
On or before August 15 of each calendar year, GPC shall use
its reasonable best efforts to provide to each Common Dispatch
Participant a written budget estimate of the estimated operating
levels of Scherer Unit No. 1 and Scherer Unit No. 2 based upon
the anticipated economic dispatch of such Units for the five-year
budget period. Each budget estimate shall be based on
information reasonably available.
49
<PAGE>
APPENDIX B
TO OPERATING AGREEMENT
OPERATIONS AND MAINTENANCE COSTS
Operation and Maintenance costs at Plant Scherer are
accumulated by Location Code by FERC account. The Location
Codes, what they represent and the allocation basis are:
Location 8010 - General to Steam - 25% to Location 8100
(as such percentage may change from time to time based on the
nameplate capacity of GPC's total fossil steam)
Location 8100 - General to Scherer - 25% to each Unit
Location 8101 - Unit 1 Specific - 100% to Unit 1
Location 8102 - Unit 2 Specific - 100% to Unit 2
Location 8103 - Unit 3 Specific - 100% to Unit 3
Location 8104 - Unit 4 Specific - 100% to Unit 4
Location 8107 - Unique to Units 1&2 - 50% to Unit 1
50% to Unit 2
Location 8108 - Unique to Units 3&4 - 50% to Unit 3
50% to Unit 4
Location 8109 - Common Facilities - allocation to Units
based on 12-month generation
The component systems that make up each of these location codes
are listed in Pages 3 through 7 of Appendix B. The source document
for this listing was the 1989 Plant Scherer Continuing Property
Records (CPR). The CPR can be tied back to the Plant Scherer
Retirement Unit Manual. When construction is complete, the
various work orders are unitized into retirement units and then
grouped into schedule numbers. The schedule numbers which compose
a larger system are grouped to a major system for purposes of this
listing. This listing is intended to be a high level summary of
the items included in each location.
Within each Location Code are the various FERC Accounts:
Steam Power Generation - operation
FERC 500 - Operations Supervision and Engineering
FERC 501 - Fuel Handling
FERC 502 - Steam Expenses (Boiler)
FERC 505 - Electric Expenses (Turbine)
FERC 506 - Miscellaneous Steam Power Expenses
FERC 507 - Steam Power Generation Rents
Steam Power Generation - Maintenance
FERC 510 - Maintenance Supervision and Engineering
FERC 511 - Maintenance of Structures
FERC 512 - Maintenance of Boiler Plant
FERC 513 - Maintenance of Electric Plant (Turbine)
FERC 514 - Maintenance of Miscellaneous Steam Plant
50
<PAGE>
After the allocation process is complete, all operations and
maintenance costs become a part of the Unit Specific Locations,
but still retain their FERC account identity.
For the purposes of allocating costs, all FERC accounts other
than Operations and Maintenance on the Boiler and Turbine (FERC's
502, 505, 512, and 513) are designated as fixed costs to be
allocated based upon the respective undivided ownership interests
in Scherer Units 1 and 2. The Operations and Maintenance on
Boiler and Turbine costs shall be between labor and nonlabor.
All labor, both straight time and overtime, shall be designated as
fixed costs. All other costs charged to these FERC Accounts (502,
505, 512, 513) shall be considered variable, and allocated to
owner based on relative generation during the "applicable
accounting period". A flowchart of this information is attached
hereto.
51
<PAGE>
Plant Scherer Common Facilities
These facilities are classified as part of Plant Scherer
Common Facilities and their O&M costs vary with generation. O&M
costs incurred in the operation and maintenance of these
facilities shall be allocated to the individual units based on the
most recent 12-month generation or in appropriate cases, a
different applicable accounting period generation of the unit as a
percent of the total Plant Scherer generation for the same period.
Permanent Railroad System
Chemical Waste Treatment Control House
Coal Handling Equipment Buildings and System
Treated Water System
Ash Handling System
52
<PAGE>
Plant Scherer Common Facilities
These facilities are classified as part of Plant Scherer
common Facilities, but their O&M costs do not vary with
generation. Therefore, O&M costs incurred in the operation and
maintenance of these facilities shall be allocated to the
individual units based on the nameplate capacity of 818 MW per
unit (1/4 to each unit).
Raceway Systems - Equipment and Buildings
Site Grounding System
Plant Welding System
Hydrogen House
River Pumping System
Well Pump House
Lifting System - Turbine Room Cranes
Lube Oil Building Storage and Transfer Facilities
Potable Water System
Fire Protection System and Tanks
Distribution System - To Header
Auxiliary Boiler System Startup
Site Improvements
Service Bay
Maintenance Building
Warehouse
Service Water System
Visitors Center
Security Building
Sewage Treatment Facility
Environmental Monitoring Facility
Utility Trench
Nitrogen Storage Building
Nitrogen System
Lake Juliette
Retention and Ash Disposal Pond
Recreation Facilities
Intrasite Communication
Settling and Storage Pond
Plant Service Facilities
Service Building
Fee Simple Land
500kv Switchyard Facilities
53
<PAGE>
Facilities Common to Units 1 and 2
These facilities are classified as common to Scherer Units
No. 1 and No. 2, or "Cost Unique to 1 and 2" and their O&M costs
do not vary with generation. O&M costs incurred in the operation
and maintenance of these facilities shall be allocated to Scherer
Unit No. 1 and No. 2 based on nameplate capacity of 818 MW per
unit (1/2 to each unit).
Waste Water Treatment Facilities
Scherer Unit No. 1 and No. 2 Coal Handling-Building Equipment
and System
Treated Water System
Filtered Water System
Chemical Wash System Chemical Cleaning Header
Site Maintenance and Improvements
Emergency Generating Building
Raceway System Site
Collection System
Ground System
Fee Simple Land
Scherer Unit No. 1 and No. 2 Railroad System
Scherer Unit No. 1 and No. 2 Fire Protection System
Scherer Unit No. 1 and No. 2 Ash Handling Facility
Scherer Unit No. 1 and No. 2 Service Water System
Cooling Water Chlorination House and System
Fuel Oil Facilities
Fuel Storage Facilities
Stack
54
<PAGE>
Facilities Common to Units 3 and 4
These facilities are classified as common to Scherer Units
No. 3 and No. 4, or "Cost Unique to 3 and 4" and their O&M costs
do not vary with generation. O&M costs incurred in the operation
and maintenance of these facilities shall be allocated to Scherer
Unit No. 3 and No. 4 based on nameplate capacity of 818 NW per
unit (1/2 to each unit).
Waste Water Treatment Facilities
Scherer Unit No. 3 and No. 4 Coal Handling-Building Equipment
and System
Treated Water System
Filtered Water System
Chemical Wash System Chemical Cleaning Header
Site Maintenance and Improvements
Emergency Generating Building
Raceway System Site
Collection System
Ground System
Fee Simple Land
Scherer Unit No. 3 and No. 4 Railroad System
Scherer Unit No. 3 and No. 4 Fire Protection System
Scherer Unit No. 3 and No. 4 Ash Handling Facility
Scherer Unit No. 3 and No. 4 Service Water System
Cooling Water Chlorination House and System
Fuel Oil Facilities
Fuel Storage Facilities
Stack
55
<PAGE>
Plant Scherer Unit Specific Facilities
These facilities are classified as specific to the particular
unit. O&M costs associated with these facilities are charged
directly to the specific unit.
Site Fire Protection System
Roof Pressurizing System
Boiler Duct System
Boiler Water Circulating
System
Pulverizes
Oil Handling and Firing
System
Plant Welding System
Draft System
Induced Draft
Main Turbine Steam System
Extraction Steam System
Vent and Drain System
Condensate System
Turbine Generator System
Cooling Water Passageways
Cooling Water Pumps and
Drives
Cooling Water Chlorination
System
Cooling Tower
Storage Tanks Distribution
System
Raceway System
Ground System
Generator Bus System
Cathodic Protection System
Sluice Water System
Site Improvements
Service Air Systems
Sewage Treatment Facilities
Coal Handling System
Instrument/Control System
Turbine Building
Water Analysis System
Chemical Wash System
Metering Control System
Computer Systems-Electrical
Local Racks and Panels
DC Power Systems
Emergency Generator Systems
56
<PAGE>
AC Distribution Systems
Intrasite Communications
Plant Service Facilities
Steam Generator Building
Service Water System
Fee Simple Land
Control House
Precipitator Control House
Boiler Enclosure
Air Heaters
Step-up Substation
500kv Switchyard Facilities
57 <PAGE>
Exhibit 10(a)56
PLANT SCHERER MANAGING BOARD AGREEMENT
AMONG
GEORGIA POWER COMPANY,
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION),
MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA,
CITY OF DALTON, GEORGIA,
GULF POWER COMPANY,
FLORIDA POWER & LIGHT COMPANY
AND
JACKSONVILLE ELECTRIC AUTHORITY
DATED AS OF DECEMBER 31, 1990
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS . . . . . . . . . . . 4
1.1 Additional Units . . . . . . . . . . . . . . . . . 4
1.2 Additional Unit Common Facilities . . . . . . . . 4
1.3 Additional Unit Participant . . . . . . . . . . . 4
1.4 Agency Functions . . . . . . . . . . . . . . . . . 4
1.5 Agent . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Business Day . . . . . . . . . . . . . . . . . . . 5
1.7 Capital Budget . . . . . . . . . . . . . . . . . . 5
1.8 Common Facilities Agency Functions . . . . . . . . 5
1.9 Common Facilities Agent . . . . . . . . . . . . . 6
1.10 Common Facility Cost of Construction . . . . . . . 6
1.11 Common Procurement . . . . . . . . . . . . . . . . 6
1.12 Common Procurement Participant . . . . . . . . . . 6
1.13 Co-Owners' Consents . . . . . . . . . . . . . . . 6
1.14 Cost of Construction . . . . . . . . . . . . . . . 7
1.15 Each Unit . . . . . . . . . . . . . . . . . . . . 7
1.16 FERC . . . . . . . . . . . . . . . . . . . . . . . 7
1.17 Governmental Authority . . . . . . . . . . . . . . 7
1.18 Legal Requirements . . . . . . . . . . . . . . . . 8
1.19 Operating Budget . . . . . . . . . . . . . . . . . 8
1.20 Operating Costs . . . . . . . . . . . . . . . . . 8
1.21 Owner . . . . . . . . . . . . . . . . . . . . . . 9
1.22 Participant . . . . . . . . . . . . . . . . . . . 9
1.23 Participation Agreements . . . . . . . . . . . . . 9
1.24 Plant Scherer . . . . . . . . . . . . . . . . . . 9
1.25 Plant Scherer Coal Stockpile . . . . . . . . . . . 10
1.26 Plant Scherer Common Facilities . . . . . . . . . 10
1.27 Plant Scherer Common Facilities Site . . . . . . . 10
1.28 Plant Scherer Managing Board . . . . . . . . . . . 10
1.29 Pro Forma Ownership Interest in Plant Scherer . . 10
1.30 Prudent Utility Practice . . . . . . . . . . . . . 11
1.31 Requisite Additional Units Owner Approval . . . . 11
1.32 Requisite Owner Approval . . . . . . . . . . . . . 12
1.33 Requisite Owner Fuel Approval . . . . . . . . . . 12
1.34 Requisite Units Owner Approval . . . . . . . . . . 13
1.35 Scherer Unit No. 1 . . . . . . . . . . . . . . . . 13
1.36 Scherer Unit No. 2 . . . . . . . . . . . . . . . . 13
1.37 Scherer Unit No. 3 . . . . . . . . . . . . . . . . 13
1.38 Scherer Unit No. 4 . . . . . . . . . . . . . . . . 14
1.39 Separate Coal Procurement . . . . . . . . . . . . 14
1.40 Separate Coal Stockpile . . . . . . . . . . . . . 14
1.41 Separate Coal Stockpile Participants . . . . . . . 14
1.42 Separate Procurement Participants . . . . . . . . 14
1.43 Spot Coal . . . . . . . . . . . . . . . . . . . . 14
1.44 Uniform System of Accounts . . . . . . . . . . . . 15
1.45 Unit Common Facilities . . . . . . . . . . . . . . 15
1.46 Unit Four Participation Agreements . . . . . . . . 15
1.47 Unit Three Participation Agreements . . . . . . . 15
1.48 Units . . . . . . . . . . . . . . . . . . . . . . 16
1.49 Units Participation Agreements . . . . . . . . . . 16
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<PAGE>
ARTICLE 2
PLANT SCHERER MANAGING BOARD . . . . . . . 17
2.1 Establishment and Members of the Plant Scherer
Managing Board . . . . . . . . . . . . . . . . . . 17
2.2 Authority of the Board . . . . . . . . . . . . . . 18
2.3 Functions of the Board . . . . . . . . . . . . . . 19
2.4 Chairman of the Board . . . . . . . . . . . . . . . 20
2.5 Duties of the Chairman of the Board . . . . . . . . 21
2.6 Minutes of Meetings . . . . . . . . . . . . . . . . 23
2.7 Expenses . . . . . . . . . . . . . . . . . . . . . 24
2.8 Procedures . . . . . . . . . . . . . . . . . . . . 25
2.9 Attendees at Meetings . . . . . . . . . . . . . . . 25
2.10 Delegation of Authority . . . . . . . . . . . . . . 25
2.11 Committees . . . . . . . . . . . . . . . . . . . . 25
2.12 Abstention . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 3
RESPONSIBILITIES OF THE COMMON FACILITIES AGENT . . 26
ARTICLE 4
INFORMATION . . . . . . . . . . . 27
4.1 Information and Access . . . . . . . . . . . . . . 27
4.2 Information to be Provided to the Owners . . . . . 27
ARTICLE 5
VOTING ISSUES ADDRESSED BY CURRENT
PARTICIPATION AGREEMENTS . . . . . . . . 30
5.1 Capital Budgets and Operating Budgets for the
Plant Scherer Common Facilities . . . . . . . . . . 30
5.2 Damage or Destruction of the Plant Scherer Common
Facilities . . . . . . . . . . . . . . . . . . . . 33
5.3 Disposal (including Retirement and Salvage) of the
Plant Scherer Common Facilities . . . . . . . . . . 33
5.4 Removal of GPC as Common Facilities Agent . . . . . 34
ARTICLE 6
VOTING ISSUES CONCERNING FUEL MATTERS . . . . . 34
6.1 Separate Procurement . . . . . . . . . . . . . . . 34
6.2 Common Procurement . . . . . . . . . . . . . . . . 35
6.3 Switch to an Alternative Fuel Source; Physical
Separation of the Plant Scherer Coal Stockpile . . 37
6.4 Amendment, Modification, or Termination of
Existing Coal Contracts . . . . . . . . . . . . . . 38
6.5 Resolution of Incompatible Procurement Strategies . 38
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<PAGE>
6.6 Qualifications of Parties Associated with Separate
Procurement . . . . . . . . . . . . . . . . . . . . 39
6.7 Coal Contract and Transportation Administration if
GPC is Removed as Agent for any Unit . . . . . . . 39
ARTICLE 7
OTHER ISSUES REQUIRING MANAGING BOARD APPROVAL . . 40
7.1 Resolution of Conflicting Contractual Obligations
for GPC as Agent . . . . . . . . . . . . . . . . . 40
7.2 Insurance Procurement by Owners . . . . . . . . . . 41
7.3 Allocation of Insurance Proceeds . . . . . . . . . 42
7.4 Managing Board Jurisdiction Over Additional
Matters . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 8
UNIT AND UNIT COMMON FACILITIES ISSUES . . . . 44
8.1 Capital Budgets and Operating Budgets for the Unit
Common Facilities . . . . . . . . . . . . . . . . . 44
8.2 Damage or Destruction of the Unit Common
Facilities . . . . . . . . . . . . . . . . . . . . 47
8.3 Disposal (including Retirement and Salvage) of the
Unit Common Facilities . . . . . . . . . . . . . . 47
8.4 Separate Dispatch Procedures . . . . . . . . . . . 47
ARTICLE 9
ADDITIONAL UNIT COMMON FACILITIES ISSUES . . . . 49
9.1 Capital Budgets and Operating Budgets for the
Additional Unit Common Facilities . . . . . . . . . 49
9.2 Damage or Destruction of the Additional Unit
Common Facilities . . . . . . . . . . . . . . . . . 52
9.3 Disposal (including Retirement and Salvage) of the
Additional Unit Common Facilities . . . . . . . . . 52
9.4 Removal of GPC as Additional Unit Common
Facilities Agent . . . . . . . . . . . . . . . . . 52
9.5 Information to be provided to the Additional Unit
Participants . . . . . . . . . . . . . . . . . . . 52
ARTICLE 10
RECOVERY OF COSTS . . . . . . . . . . 53
ARTICLE 11
RELATION TO EXISTING AGREEMENTS . . . . . . 53
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<PAGE>
ARTICLE 12
EFFECTIVE DATE AND TERMINATION . . . . . . 55
ARTICLE 13
MISCELLANEOUS . . . . . . . . . . . 55
13.1 Required Approvals . . . . . . . . . . . . . . . 55
13.2 Further Assurances . . . . . . . . . . . . . . . 55
13.3 Governing Law . . . . . . . . . . . . . . . . . . 55
13.4 Notice . . . . . . . . . . . . . . . . . . . . . 56
13.5 Section Headings Not To Affect Meaning . . . . . 58
13.6 Time of Essence . . . . . . . . . . . . . . . . . 58
13.7 Amendments . . . . . . . . . . . . . . . . . . . 58
13.8 Successors and Assigns . . . . . . . . . . . . . 58
13.9 Counterparts . . . . . . . . . . . . . . . . . . 58
13.10 Computation of Percentage Undivided Ownership
Interest . . . . . . . . . . . . . . . . . . . . . 58
13.11 Several Agreements . . . . . . . . . . . . . . . 59
13.12 Confidentiality . . . . . . . . . . . . . . . . . 59
APPENDICES
Appendix A Guidelines for Capital Budgets and Operating
Budgets for Plant Scherer
EXHIBITS
Exhibit A Existing Contracts
Exhibit B Joint Committee Procedures
Exhibit C Operating Costs Allocation
- iv -
<PAGE>
PLANT SCHERER MANAGING BOARD AGREEMENT
THIS PLANT SCHERER MANAGING BOARD AGREEMENT ("Agreement") is
made and entered into as of December 31, 1990, among GEORGIA
POWER COMPANY, a corporation organized and existing under the
laws of the State of Georgia ("GPC" or "Georgia"); OGLETHORPE
POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION &
TRANSMISSION CORPORATION), an electric membership corporation
organized and existing under Title 46 of the Official Code of
Georgia Annotated ("OPC"); the MUNICIPAL ELECTRIC AUTHORITY OF
GEORGIA, a public corporation and an instrumentality of the State
of Georgia ("MEAG"); the CITY OF DALTON, a municipal political
subdivision of the State of Georgia, acting by and through its
Board of Water, Light and Sinking Fund Commissioners ("Dalton");
GULF POWER COMPANY, a corporation organized and existing under
the laws of the State of Maine ("Gulf"); FLORIDA POWER & LIGHT
COMPANY, a corporation organized and existing under the laws of
the State of Florida ("FPL"); and JACKSONVILLE ELECTRIC
AUTHORITY, a body corporate and politic and an independent agency
of the City of Jacksonville, Florida, organized and existing
under the laws of the State of Florida ("JEA").
WITNESSETH:
WHEREAS, OPC, GPC, MEAG and Dalton have previously entered
into the Units Participation Agreements concerning the Units, the
Unit Common Facilities, the Plant Scherer Common Facilities and
the Plant Scherer Coal Stockpile pursuant and subject to which
OPC, MEAG and Dalton have irrevocably appointed GPC as their
- 1 -
<PAGE>
Agent in connection with the planning, licensing, design,
construction, acquisition, completion, management, control,
operation, maintenance, renewal, addition, replacement,
modification and disposal for the Units, the Unit Common
Facilities, the Plant Scherer Common Facilities and the Plant
Scherer Coal Stockpile;
WHEREAS, GPC and Gulf have previously entered into the Unit
Three Participation Agreements concerning Scherer Unit No. 3, the
Additional Unit Common Facilities, the Plant Scherer Common
Facilities and the Plant Scherer Coal Stockpile pursuant and
subject to which Gulf has irrevocably appointed GPC as its Agent
in connection with the planning, licensing, design, construction,
acquisition, completion, management, control, operation,
maintenance, renewal, addition, replacement, modification and
disposal of Scherer Unit No. 3, the Additional Unit Common
Facilities, the Plant Scherer Common Facilities and the Plant
Scherer Coal Stockpile;
WHEREAS, GPC, FPL and JEA have entered into the Unit Four
Participation Agreements dated as of the date hereof, concerning
Scherer Unit No. 4, the Additional Unit Common Facilities, the
Plant Scherer Common Facilities and the Plant Scherer Coal
Stockpile pursuant and subject to which FPL and JEA irrevocably
appoint GPC as their Agent in connection with the planning,
licensing, design, construction, acquisition, completion,
management, control, operation, maintenance, renewal, addition,
replacement, modification and disposal of Scherer Unit No. 4, the
- 2 -
- 2 -
<PAGE>
Additional Unit Common Facilities, the Plant Scherer Common
Facilities and the Plant Scherer Coal Stockpile; and
WHEREAS, the Participants and Additional Unit Participants
now desire to provide for and establish a Plant Scherer Managing
Board (i) to coordinate the implementation and administration of
the Agency Functions with respect to the Plant Scherer Common
Facilities, (ii) to establish standards, rules and policies for
fuel and fuel procurement, (iii) for the Participants to
coordinate the implementation and administration of the Agency
Functions with respect to the Units and the Unit Common
Facilities, (iv) for the Additional Unit Participants to
coordinate the implementation and administration of the Agency
Functions with respect to the Additional Units and the Additional
Unit Common Facilities and (v) to perform the functions
hereinafter provided.
NOW THEREFORE, in consideration of the promises and the
mutual undertakings stated herein, the parties hereto intending
to be legally bound do hereby agree as follows:
- 3 -
- 3 -
<PAGE>
ARTICLE 1
DEFINITIONS
As used herein, the following terms and phrases shall have,
respectively, the following meanings:
1.1 Additional Units. "Additional Units" shall consist of
Scherer Unit No. 3 and Scherer Unit No. 4, each of which is an
Additional Unit.
1.2 Additional Unit Common Facilities. "Additional Unit
Common Facilities" shall have the meaning assigned in the
relevant provisions of the respective Participation Agreements.
1.3 Additional Unit Participant. "Additional Unit
Participant" and "Additional Unit Participants" shall have the
meaning assigned in the relevant provisions of the respective
Participation Agreements.
1.4 Agency Functions. "Agency Functions" shall mean those
activities which the Agent shall undertake on behalf of the
Participants and Additional Unit Participants, as the case may
be, and which relate to the planning, licensing, design,
construction, acquisition, completion, management, control,
operation, maintenance, renewal, addition, replacement,
modification and disposal of the Units, the Unit Common
Facilities, the Additional Units, the Additional Unit Common
Facilities, the Plant Scherer Common Facilities, and the Plant
- 4 -
- 4 -
<PAGE>
Scherer Coal Stockpile, as the case may be, under the
Participation Agreements.
1.5 Agent. "Agent" shall mean GPC or its successors, with
respect to its rights and obligations in the performance of the
Agency Functions.
1.6 Business Day. "Business Day" shall be any Monday,
Tuesday, Wednesday, Thursday or Friday other than a day which has
been established by law or required by executive order as a
holiday for any commercial banking institution in the State of
Florida or the State of Georgia.
1.7 Capital Budget. "Capital Budget" shall have the
meaning assigned in the relevant provisions of the respective
Participation Agreements.
1.8 Common Facilities Agency Functions. "Common
Facilities Agency Functions" shall mean the Agency Functions with
respect to the Unit Common Facilities, the Additional Unit Common
Facilities, the Plant Scherer Common Facilities or the Plant
Scherer Coal Stockpile.
1.9 Common Facilities Agent. "Common Facilities Agent"
shall mean GPC or its successor, (i) acting on its own behalf for
so long as GPC (or its successor as Agent) continues to own an
undivided ownership interest in the Plant Scherer Common
- 5 -
- 5 -
<PAGE>
Facilities and (ii) as Agent for the other Owners in the
performance of the Common Facilities Agency Functions.
1.10 Common Facility Cost of Construction. "Common
Facility Cost of Construction" shall have the meaning assigned
in the relevant provisions of the respective Participation
Agreements.
1.11 Common Procurement. "Common Procurement" shall have
the meaning assigned in the relevant provisions of the respective
Participation Agreements.
1.12 Common Procurement Participant. "Common Procurement
Participant" shall have the meaning assigned in the relevant
provisions of the respective Participation Agreements.
1.13 Co-Owners' Consents. "Co-Owners' Consents" shall mean
those certain Consents, Amendments, and Assumptions Nos. 1-4
dated December 30, 1985 among GPC, OPC, MEAG, Dalton, Gulf Power
Company, and Wilmington Trust Company and NationsBank of Georgia,
N.A. (as successor to William J. Wade) as Owner Trustees, and
those certain Amendment to Consents, Amendments, and Assumptions
Nos. 1-4 dated August 16, 1993 among GPC, OPC, MEAG, Dalton, Gulf
Power Company, Jacksonville Electric Authority and Florida Power
& Light Company and Wilmington Trust Company and NationsBank of
Georgia, as Owner Trustees.
- 6 -
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<PAGE>
1.14 Cost of Construction. "Cost of Construction" shall
have the meaning assigned in the relevant provisions of the
respective Participation Agreements.
1.15 Each Unit. "Each Unit" shall mean and refer to,
respectively, the Units, the Unit Common Facilities, Scherer Unit
No. 3, Scherer Unit No. 4 and the Additional Unit Common
Facilities.
1.16 FERC. The "FERC" shall be defined as the Federal
Energy Regulatory Commission or any entity succeeding to the
powers and functions thereof.
1.17 Governmental Authority. "Governmental Authority"
shall mean any local, state, regional or federal administrative,
legal, judicial, or executive agency, court, commission,
department or other entity, but excluding any agency, commission,
department or other such entity acting in its capacity as lender,
guarantor, mortgagee and excluding any Participant or Additional
Unit Participant.
1.18 Legal Requirements. "Legal Requirements" shall mean
all laws, codes, ordinances, orders, judgments, decrees,
injunctions, licenses, rules, permits, approvals, regulations and
requirements of every Governmental Authority having jurisdiction
over the matter in question, whether federal, state or local,
which may be applicable to any Agent or any of the Participants
or Additional Unit Participants, as required by the context in
- 7 -
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which used, or to Each Unit, the Plant Scherer Common Facilities
or the Plant Scherer Coal Stockpile, or to the use, manner of
use, occupancy, possession, operation, maintenance, management,
control, construction, acquisition, installation, alteration,
improvement, addition, renewal, modification, replacement,
repair, reconstruction or disposal of Each Unit, the Plant
Scherer Common Facilities, the Plant Scherer Coal Stockpile, or
any part thereof.
1.19 Operating Budget. "Operating Budget" shall have the
meaning assigned in the relevant provisions of the respective
Participation Agreements.
1.20 Operating Costs. "Operating Costs" shall have the
meaning assigned in the relevant provisions of the respective
Participation Agreements. Operating Costs shall be allocated
among and between the Units, the Unit Common Facilities, the
Additional Units, the Additional Unit Common Facilities and the
Plant Scherer Common Facilities as described in Exhibit C
attached hereto and incorporated herein by reference.
1.21 Owner. "Owner" shall mean, individually, any owner of
an undivided ownership interest in Plant Scherer; and "Owners"
shall mean all of them.
1.22 Participant. "Participant" and "Participants" shall
refer individually or collectively, as the case may be, to GPC,
OPC, MEAG, and Dalton (in their capacities as Owners of the
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Units) and to any transferee or assignee of any of them of an
interest in the Units pursuant to the Units Participation
Agreements, provided, however, such references shall only refer
to an entity for so long as said entity is an owner of any of the
Units.
1.23 Participation Agreements. "Participation Agreements"
shall mean collectively the Units Participation Agreements, the
Unit Three Participation Agreements and the Unit Four
Participation Agreements.
1.24 Plant Scherer. "Plant Scherer" shall have the meaning
assigned in the relevant provisions of the respective
Participation Agreements.
1.25 Plant Scherer Coal Stockpile. "Plant Scherer Coal
Stockpile" shall have the meaning assigned in the relevant
provisions of the respective Participation Agreements.
1.26 Plant Scherer Common Facilities. "Plant Scherer
Common Facilities" shall have the meaning assigned in the
relevant provisions of the Participation Agreements.
1.27 Plant Scherer Common Facilities Site. "Plant Scherer
Common Facilities Site" shall have the meaning assigned in the
relevant provisions of the respective Participation Agreements.
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1.28 Plant Scherer Managing Board. "Plant Scherer Managing
Board", "Managing Board" or "Board" shall mean the board
established pursuant to Section 2.1 of this Agreement.
1.29 Pro Forma Ownership Interest in Plant Scherer. "Pro
Forma Ownership Interest in Plant Scherer" shall mean for each
Participant and Additional Unit Participant the percentage
obtained by dividing by four (i) the sum of (A) such
Participant's or Additional Unit Participant's percentage
undivided ownership interest, if any, in Scherer Unit No. 1, plus
(B) its percentage undivided ownership interest, if any, in
Scherer Unit No. 2, plus (C) its percentage undivided ownership
interest, if any, in Scherer Unit No. 3, plus (D) its percentage
undivided ownership interest, if any, in Scherer Unit No. 4.
1.30 Prudent Utility Practice. "Prudent Utility Practice"
at a particular time shall mean any of the practices, methods and
acts engaged in or approved by a significant portion of the
electric utility industry prior to such time, or any of the
practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result
at the lowest reasonable cost consistent with good business
practices, reliability, safety and expedition. "Prudent Utility
Practice" is not intended to be limited to the optimum practice,
method or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts having due regard
for, among other things, manufacturers' warranties and the
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requirements of Governmental Authorities of competent
jurisdiction and the requirements of the Participation
Agreements.
1.31 Requisite Additional Units Owner Approval. "Requisite
Additional Units Owner Approval" shall mean the written approval
or consent by those Owners who collectively own at least an
aggregate 51% of the undivided ownership interest in the
Additional Unit Common Facilities, which written approval or
consent may be signified by the signatures of the members of the
Plant Scherer Managing Board who represent such Owners and are
not precluded in participating or taking action pursuant to
Section 13.10 hereof respecting any resolution or motion acted
upon by the Board pursuant to this Agreement or the approval of
the minutes of any Board meeting.
1.32 Requisite Owner Approval. "Requisite Owner Approval"
shall mean the written approval or consent by those Owners who
collectively hold at least 76% of the undivided ownership
interest in the Units and Additional Units, which written
approval or consent may be signified by the signatures of the
members of the Plant Scherer Managing Board who represent such
Owners and are not precluded in participating or taking action
pursuant to Section 13.10 hereof respecting any resolution or
motion acted upon by the Board pursuant to this Agreement or the
approval of the minutes of any Board meeting.
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1.33 Requisite Owner Fuel Approval. "Requisite Owner Fuel
Approval" shall mean the written approval or consent by those
Owners who collectively hold at least 85% of the undivided
ownership interest in the Units and Additional Units, which
written approval or consent may be signified by the signatures of
the members of the Plant Scherer Managing Board who represent
such Owners and are not precluded in participating or taking
action pursuant to Section 13.10 hereof respecting any resolution
or motion acted upon by the Board pursuant to this Agreement or
the approval of the minutes of any Board meeting.
1.34 Requisite Units Owner Approval. "Requisite Units
Owner Approval" shall mean the written approval or consent by
those Owners who collectively hold at least an aggregate 75% of
the undivided ownership interest in the Units, including MEAG so
long as MEAG owns at least a 15.1% undivided ownership interest
in the Plant Scherer Common Facilities, which written approval or
consent may be signified by the signatures of the members of the
Plant Scherer Managing Board who represent such Owners and are
not precluded in participating or taking action pursuant to
Section 13.10 hereof respecting any resolution or motion acted
upon by the Board pursuant to this Agreement or the approval of
the minutes of any Board meeting.
1.35 Scherer Unit No. 1. "Scherer Unit No. 1" shall have
the meaning assigned in the relevant provisions of the respective
Participation Agreements.
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1.36 Scherer Unit No. 2. "Scherer Unit No. 2" shall have
the meaning assigned in the relevant provisions of the respective
Participation Agreements.
1.37 Scherer Unit No. 3. "Scherer Unit No. 3" shall have
the meaning assigned in the relevant provisions of the respective
Participation Agreements.
1.38 Scherer Unit No. 4. "Scherer Unit No. 4" shall have
the meaning assigned in the relevant provisions of the respective
Participation Agreements.
1.39 Separate Coal Procurement. "Separate Coal
Procurement" shall have the meaning assigned in the relevant
provisions of the respective Participation Agreements.
1.40 Separate Coal Stockpile. "Separate Coal Stockpile"
shall have the meaning assigned in the relevant provisions of the
respective Participation Agreements.
1.41 Separate Coal Stockpile Participants. "Separate Coal
Stockpile Participants" shall have the meaning assigned in the
relevant provisions of the respective Participation Agreements.
1.42 Separate Procurement Participants. "Separate
Procurement Participants" shall have the meaning assigned in the
relevant provisions of the respective Participation Agreements.
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1.43 Spot Coal. "Spot Coal" shall mean all coal purchased
for the Common Coal Stockpile and the Separate Coal Stockpiles
which is acquired under an arrangement of acquisition for a
period of less than one year, or some other period agreed to by
Requisite Owner Approval pursuant to this Agreement.
1.44 Uniform System of Accounts. The "Uniform System of
Accounts" shall mean the FERC Uniform System of Accounts
prescribed for Public Utilities and Licensees subject to the
provisions of the Federal Power Act, as the same now exist or may
be hereafter amended by the FERC.
1.45 Unit Common Facilities. "Unit Common Facilities"
shall have the meaning assigned in the relevant provisions of the
respective Participation Agreements.
1.46 Unit Four Participation Agreements. "Unit Four
Participation Agreements" shall mean the following purchase and
ownership and operating contracts concerning Scherer Unit No. 4:
Plant Robert W. Scherer Unit Number Four Amended and
Restated Purchase and Ownership Participation Agreement
among GPC, FPL and JEA, dated as of December 31, 1990,
as amended;
Plant Robert W. Scherer Unit Number Four Substation
Purchase Agreement among GPC, FPL and JEA, dated
December 31, 1990; and
Plant Robert W. Scherer Unit Number Four Operating
Agreement among GPC, FPL and JEA, dated as of December
31, 1990, as amended.
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1.47 Unit Three Participation Agreements. "Unit Three
Participation Agreements" shall mean the following purchase and
ownership and operating contracts concerning Scherer Unit No. 3:
Amended and Restated Plant Robert W. Scherer Unit
Number Three Purchase and Ownership Participation
Agreement among GPC and Gulf, dated as of December 31,
1990; and
Amended and Restated Plant Robert W. Scherer Unit
Number Three Operating Agreement among GPC and Gulf,
dated as of December 31, 1990;
1.48 Units. "Units" shall consist of Scherer Unit No. 1
and Scherer Unit No. 2, each of which is a Unit.
1.49 Units Participation Agreements. "Units Participation
Agreements" shall mean the following purchase and ownership and
operating contracts concerning the Units:
Plant Robert W. Scherer Units Numbers One and Two
Purchase and Ownership Participation Agreement among
GPC, OPC, MEAG and Dalton, dated as of May 15, 1980;
Plant Robert W. Scherer Units Numbers One and Two
Operating Agreement among Georgia, OPC, MEAG and
Dalton, dated as of May 15, 1980;
Amendment to Plant Robert W. Scherer Units Numbers One
and Two Purchase and Ownership Participation Agreement
among GPC, OPC, MEAG and Dalton, dated as of December
30, 1985;
Amendment to Plant Robert W. Scherer Units One and Two
Operating Agreement among GPC, OPC, MEAG and Dalton,
dated as of December 30, 1985;
Amendment Number Two to the Plant Robert W. Scherer
Units Numbers One and Two Purchase and Ownership
Participation Agreement and Amendment Number One to
Plant Robert W. Scherer Unit Number Three Purchase and
Ownership Participation Agreement, dated as of July 1,
1986;
Amendment Number Three to the Plant Robert W. Scherer
Units Numbers One and Two Purchase and Ownership
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Participation Agreement and Amendment Number Two to
Plant Robert W. Scherer Unit Number Three Purchase and
Ownership Participation Agreement, dated as of August
1, 1988;
Amendment Number Four to the Plant Robert W. Scherer
Units Numbers One and Two Purchase and Ownership
Participation Agreement, dated as of December 31, 1990;
Amendment Number Two to the Plant Robert W. Scherer
Units Numbers One and Two Operating Agreement dated as
of December 31, 1990; and
The Consents, Amendments and Assumptions Nos. 1-4,
dated December 30, 1985 among GPC, OPC, MEAG, Dalton,
Gulf Power Company and Wilmington Trust Company and
NationsBank of Georgia, N.A. (as successor to
William J. Wade) as Owner Trustees.
Amendment to Consents, Amendments and Assumptions Nos.
1-4 dated August 16, 1993, among, GPC, OPC, MEAG,
Dalton, Gulf Power Company, Jacksonville Electric
Authority and Florida Power & Light Company and
Wilmington Trust Company and NationsBank of Georgia,
N.A., as Owner Trustees.
ARTICLE 2
PLANT SCHERER MANAGING BOARD
2.1 Establishment and Members of the Plant Scherer Managing
Board. As of the effective date of this Agreement there shall be
established a Plant Scherer Managing Board, which shall consist
of a member and an alternate designated by each Owner. The Board
shall have the authorities, powers, and functions hereinafter
provided. Each Owner shall within 30 days after the effective
date of this Agreement give written notice of its designated
member and alternate to the Common Facilities Agent which shall
distribute a consolidated list of such members and alternates to
all Owners, within five Business Days thereafter. Each Owner may
change its designated member or alternate by giving written
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notice of the change to the Common Facilities Agent which shall
promptly distribute a revised consolidated list to all Owners.
Each member of the Board shall be authorized to represent
the Owners which appointed him or her and shall have the
authority to obligate such Owner. In the event any member of the
Board is unable to attend any meeting of the Board, the
designated alternate for such member shall have the full power
and authority of such member to act for and obligate the Owner
which such member represents or if any member is to represent
another Owner, he shall provide an affidavit to such effect
stating the scope and term of such representation.
If an Owner has contracted with a third party to transfer
one or more undivided ownership interests in one or more of the
Units, the Additional Units, or both, such Owner may also
contract with such third party that it will not vote under this
Agreement with respect to the undivided ownership interest or
interests contracted to be transferred in a manner with which
such third party disagrees or such Owner will vote as directed by
such third party with respect to the undivided ownership interest
or interests to be transferred. Such Owner may otherwise vote as
it chooses with respect to its undivided ownership interests not
contracted to be transferred. Provided, however, such Owner
contracting with such third party shall notify the other Owners
when such Owner votes or does not vote at the direction of such
third party.
2.2 Authority of the Board. The Plant Scherer Managing
Board shall have all authority and power necessary to perform the
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functions delegated to it by Section 2.3 hereof and any other
functions explicitly delegated to it by this Agreement or the
Participation Agreements. Such authority and power shall be
exercised by the Board in the manner as hereinafter provided in
this Agreement. Those functions that solely relate to the Units
or the Unit Common Facilities, on the one hand, or to the
Additional Units or the Additional Unit Common Facilities, on the
other, shall be voted by Requisite Units Owner Approval or
Requisite Additional Units Owner Approval, respectively.
2.3 Functions of the Board. The Plant Scherer Managing
Board shall perform the following functions:
2.3.1 By Requisite Owner Approval, conduct or
undertake such studies, investigations or audits which the
Board determines are appropriate or useful in carrying out
its responsibilities or functions. By Requisite Owner
Approval, the Board may employ independent consultants or
utilize the personnel or other resources of the Common
Facilities Agent or any Owner for such studies,
investigations or audits. The costs of such studies,
investigations or audits shall be borne by the Owners in the
proportion of their respective undivided ownership interest
in the Plant Scherer Common Facilities.
2.3.2 By Requisite Owner Approval, review and
approve, disapprove or revise and approve the Capital
Budgets and Operating Budgets with respect to the Plant
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Scherer Common Facilities to be submitted annually (or more
often upon revision by the Common Facilities Agent) by the
Common Facilities Agent, all pursuant to Article 5.1 hereof.
2.3.3 Perform those functions described in Articles
4, 5, 6, 7, 8 and 9 hereof by such percentage votes as are
set forth therein.
2.4 Chairman of the Board. So long as GPC is an Owner and
is the Common Facilities Agent, the member of the Plant Scherer
Managing Board representing GPC shall be the Chairman of the
Board. In the event GPC is not an Owner and the Common Facilities
Agent, then the Chairman of the Board shall be a member of the
Board elected, by members of the Board representing in the
aggregate at least a majority of the undivided ownership
interests in the Units and Additional Units, for a term of twelve
consecutive months or until his successor is elected. In the
event of the death, disability, or resignation of the Chairman of
the Board prior to the expiration of such term or on the
expiration of such term, the succeeding Chairman of the Board
shall be a member of the Board elected, by members representing
in the aggregate at least a majority of the undivided ownership
interests in the Units and Additional Units, for a term of twelve
consecutive months or until his successor is elected. There
shall be no restriction upon the number of terms to which any
member of the Board may be elected to serve as Chairman of the
Board.
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2.5 Duties of the Chairman of the Board. The Chairman of
the Managing Board shall have the following duties:
2.5.1 Schedule meetings of the Board at such time
and place as the Chairman of the Board may determine but (1)
not less frequently than once every three months unless all
members of the Board shall otherwise agree and (2) not less
frequently than reasonably required to consider and vote on
any alternative proposal pursuant to Articles 5, 6, 7, 8 or
9 of this Agreement within the required time period for such
vote if requested by any member in writing to the Chairman.
Any meeting of the Board may be conducted by telephone
conference and any members of the Board may participate in
any meeting by telephone. All members of the Board shall
have the right to vote on all resolutions and motions by
proxy.
2.5.2 Provide notice to all other members of the
Board of each scheduled Board meeting at least 30 calendar
days in advance of such meeting except (1) in emergencies,
(2) as required for meetings under clause (2) of Section
2.5.1 or (3) unless all members consent to a shorter notice.
The attendance of a member of the Board at a Board meeting
is a waiver of such notice, unless such member's attendance
is to protest the holding of the meeting.
2.5.3 Provide all other members of the Board with a
copy of each resolution or motion which the Chairman of the
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Board or any other member proposes to submit to the Board
for action at any Board meeting at least five Business Days
prior to such meeting or such shorter time as may be
reasonably required for any meeting called pursuant to
clauses (1), (2) or (3) under Section 2.5.2; provided such
time requirement may be waived by Requisite Owner Approval.
2.5.4 Preside at each Board meeting and conduct all
Board meetings in accordance with the procedures and rules
established in accordance with Section 2.8 hereof.
2.5.5 Establish the agenda for each Board meeting,
including such items or matters as the Chairman of the Board
shall deem appropriate and such items or matters as may be
requested by any other member of the Board.
2.5.6 Notify all members of the Board of the agenda
for each meeting as much in advance of such meeting as may
be possible, but in any event not less than five Business
Days before such meeting.
2.5.7 Appoint a secretary for the Board who need
not be a member of the Board and who shall (i) prepare a
draft of the minutes for each Board meeting and deliver or
mail a copy of such draft minutes to each member of the
Board within five Business Days after the close of each
Board meeting and (ii) take custody of and maintain the
records of all Board meetings.
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2.6 Minutes of Meetings. The minutes of each Board meeting
shall record the following:
2.6.1 The date, time and place of the meeting;
2.6.2 The agenda of the meeting and the items or
matters discussed;
2.6.3 The resolutions and motions approved, actions
approved, agreements reached and decisions made by the
Board, including the votes of the members of the Board on
each of such resolutions, motions, actions, agreements and
decisions; and
2.6.4 The date, time and place of the next meeting
of the Board to be scheduled;
provided, however, that (1) the minutes of any meeting of the
Board shall not include any position advanced by any member on
any matter which was not adopted by the Board at such meeting for
any reason, and (2) the effectiveness of any action taken by the
Board to approve any matter shall be immediate upon such action
being taken (unless a specific effective date is part of the
approved resolution) and shall not be deferred until approval of
the minutes reflecting such action or approval. At the next
succeeding regular meeting at which each Owner has an opportunity
to be represented, the members of the Board in attendance shall
consider the minutes of the preceding regular or called meeting
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and if they are found in order, shall signify approval of the
minutes by affixing their signatures to same.
The minutes of each Board Meeting shall be kept in a
central, permanent repository. The secretary shall give notice
to all members of the Board of the location of such repository
and provide all members of the Board access to the minutes of all
meetings and shall provide copies of such minutes to each of the
Owners.
2.7 Expenses. Each Owner shall be responsible for the
personal expenses of its member and alternate of the Managing
Board at any Board meeting. General meeting expenses and all
other expenses necessary in the performance of the Board
functions shall be allocated and paid as determined by the Board.
2.8 Procedures. By Requisite Owner Approval, the Managing
Board shall develop and adopt and, from time to time, modify
procedures as may be appropriate for the conduct of its meetings
and the performance of its functions, including any general
procedures for allocating Board expenses pursuant to Section 2.7.
2.9 Attendees at Meetings. Attendance at meetings of the
Managing Board shall not be limited to members of the Board, but
the Owners recognize the practical necessity of limiting the
participation of attendees at any Board meeting who are not
members to those who are expected to take an active part on the
agenda for such meeting. Subject to Legal Requirements, the
Chairman of the Board, on his own motion or at the request of any
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member may conduct any portion of any meeting in executive
session at which attendance may be restricted to members or their
respective alternates (including their counsel) and persons
invited by the Chairman of the Board.
2.10 Delegation of Authority. The Managing Board shall not
delegate its authority to others.
2.11 Committees. The Managing Board shall have the
authority to appoint and charge committees to study and make
recommendations on any subject concerning the (1) Plant Scherer
Common Facilities by Requisite Owner Approval, (2) the Unit
Common Facilities by Requisite Units Owner Approval, (3) the
Additional Unit Common Facilities by Requisite Additional Units
Owner Approval or (4) the Plant Scherer Coal Stockpile by
Requisite Owner Approval. The purpose, charge and duty of each
committee so appointed shall not exist for more than one year
unless reappointed by the Board by the same approval set forth in
this Section 2.11.
2.12 Abstention. Any Owner, in its sole discretion, may
abstain from voting on any issue presented to the Managing Board.
ARTICLE 3
RESPONSIBILITIES OF THE COMMON FACILITIES AGENT
GPC shall continue to be the Common Facilities Agent and
shall continue to perform the Common Facilities Agency Functions
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subject to the provisions of the Participation Agreements and
pursuant to the provisions of this Agreement.
ARTICLE 4
INFORMATION
4.1 Information and Access. The Common Facilities Agent
shall furnish or cause to be furnished information, access to
information and access to Plant Scherer and the offices of the
Common Facilities Agent in accordance with this Article 4.
4.2 Information to be Provided to the Owners. The Common
Facilities Agent shall provide information to each member of the
Managing Board in the manner indicated below:
4.2.1 Formal Routine Information. In addition to
the Capital Budget and Operating Budget provided routinely
pursuant to Articles 5, 8 and 9, the Common Facilities Agent
will also furnish:
4.2.1.1 Plant Budget Reports. The Common
Facilities Agent will furnish to each member of the
Managing Board monthly information showing actual
Operating Costs and Cost of Construction for each month
with comparisons to the respective Operating Budget and
Capital Budget. This report will normally be provided
by the end of the succeeding month.
4.2.1.2 Audit Reports. The Common Facilities
Agent will make available for review by the Owners
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copies of financial or accounting reports concerning
the Plant Scherer Common Facilities and the Plant
Scherer Coal Stockpile containing the results of audits
which are otherwise in the public domain.
4.2.1.3 Meetings with the Board. In order to
assure that the members of the Board are informed as to
the status of operations at Plant Scherer, a management
employee of the Common Facilities Agent responsible for
the operation of Plant Scherer shall meet with the
Board at its request. At such meetings the Common
Facilities Agent shall present information concerning
plant performance and the status and condition of the
Plant Scherer Common Facilities, and the Plant Scherer
Coal Stockpile, including review of any problems,
status reports and new capital property, and shall
present an overview of Plant Scherer and its operations
and address items on the agenda for the meeting of the
Board. The Common Facilities Agent will inform the
Board of material events and conditions which are
affecting or may reasonably be expected to affect the
availability, status and condition or which would
result in a material increase in costs associated with
the Plant Scherer Common Facilities or the Plant
Scherer Coal Stockpile, and of changes in the senior
management of Plant Scherer.
4.2.1.4 Responses to Owner Inquiries. In
addition to the obligations of the Common Facilities
Agent to provide the information and access as
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explicitly required herein, the Common Facilities Agent
will respond to reasonable written requests from any
Owner for information not otherwise provided pursuant
to this Agreement regarding the Plant Scherer Common
Facilities, and, any additional costs associated with
the gathering and furnishing of such information shall
be paid by the Owner(s) requesting the same. The
Common Facilities Agent shall within 30 days after the
effective date hereof designate a person to be
responsible for being responsive and providing
reasonably adequate and complete information to
inquiries from the Owners.
4.2.2 Formal Non-routine Information. Information
which is time sensitive, including information on plant
trips, power reductions, work disruptions or stoppages,
deratings of any Unit or Additional Unit, failures of major
equipment, and emergencies at Plant Scherer shall be
provided as soon as practicable by the Common Facilities
Agent to the Owners. Information in this category also
includes informal reports concerning events which the Common
Facilities Agent believes may result in public interest or
may lead to inquiries to Owners by members of the public,
and news releases with respect to Plant Scherer issued by
the Common Facilities Agent.
4.2.3 Informal Information. The Common Facilities
Agent shall provide the authorized representatives of each
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Owner with reasonable access to the Common Facilities
Agent's Plant Scherer management employees for informal
communications of a general nature and with access to
routine reports and records on plant operations and
conditions that are normally readily available.
ARTICLE 5
VOTING ISSUES ADDRESSED BY CURRENT
PARTICIPATION AGREEMENTS
5.1 Capital Budgets and Operating Budgets for the Plant
Scherer Common Facilities. By the date set forth therefor in
Appendix A of each year, each Owner may provide the Common
Facilities Agent information to be used in the formulation of the
subsequent year's Capital Budget and Operating Budget for the
Plant Scherer Common Facilities. Such budgets shall conform to
the requirements and guidelines stated in Appendix A attached
hereto and any revisions of such appendix as may be approved by
the Board by Requisite Owner Approval and agreed to by the Common
Facilities Agent. By the date set forth therefor in Appendix A
of each year, the Capital Budget and the Operating Budget shall
be approved or disapproved, each in its entirety, by the Board by
Requisite Owner Approval, which shall include MEAG so long as
MEAG owns at least a 15.1% undivided ownership interest in the
Plant Scherer Common Facilities. If the Capital Budget or
Operating Budget is disapproved, the Board shall then have until
the date set forth therefor in Appendix A to adopt by Requisite
Owner Approval, which shall include MEAG so long as MEAG owns at
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least a 15.1% undivided ownership interest in the Plant Scherer
Common Facilities, a revised Capital Budget or Operating Budget
which shall comply with Prudent Utility Practice and Legal
Requirements. In the event that the Board is unable to approve
any budget by Requisite Owner Approval, which shall include MEAG
so long as MEAG owns at least a 15.1% undivided ownership
interest in the Plant Scherer Common Facilities, by the date set
forth therefor in Appendix A, then the budget to be utilized
shall be the one submitted by the Common Facilities Agent, and
such budget shall be deemed approved by the Board and binding on
the Owners.
The Operating Budget, the Capital Budget, or both, for each
calendar year shall be revised as deemed necessary by the Common
Facilities Agent to reflect changed conditions in such calendar
year, and promptly upon any such revision, the Common Facilities
Agent shall provide to each of the other Owners a revised
Operating Budget, Capital Budget, or both, as the case may be.
Each revised Operating Budget, Capital Budget, or both, shall
include Operating Costs, Cost of Construction, or both, as the
case may be, incurred by the Common Facilities Agent in the
operation and maintenance or replacement, modification, addition,
renewal, completion or disposal of the Plant Scherer Common
Facilities prior to the time such revised Operating Budget or
Capital Budget becomes effective but not included in prior
Operating Budgets or Capital Budgets, as the case may be, and
shall be supported by detail reasonably adequate for the purpose
of each Owner's reasonable review thereof, as described in
Appendix A. Any such revised Operating Budget, Capital Budget,
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or both, shall be approved or disapproved, and if disapproved, an
alternative revised Operating Budget, Capital Budget, or both,
adopted or otherwise chosen for utilization, all in accordance
with the procedure set forth in this Section 5.1, except that
such approval or disapproval and submission of alternative
revisions must be completed by the Board by Requisite Owner
Approval, which shall include MEAG so long as MEAG owns at least
a 15.1% undivided ownership interest in the Plant Scherer Common
Facilities, within 15 days of the Owners' receipt of the proposed
revisions from the Common Facilities Agent.
All budgets for Plant Scherer and each component thereof
shall be established and approved so as to permit each
Participant and each Additional Unit Participant to obtain its
desired energy output entitlement from its owned capacity at
Plant Scherer. The Common Facilities Agent shall attempt to
manage, control, operate and maintain the Plant Scherer Common
Facilities in accordance with the then current Operating Budget
and attempt to replace, modify, add, renew, complete and dispose
of the Plant Scherer Common Facilities in accordance with the
then current Capital Budget and the schedules of expenditures
contained therein. Notwithstanding the foregoing, the Common
Facilities Agent makes no representation, warranty or promise of
any kind as to the accuracy of any estimate contained in an
Operating Budget or Capital Budget or in a revised Operating
Budget or revised Capital Budget or that any such attempt
referred to in the preceding sentence will be successful, and in
no event shall the Common Facilities Agent have any liability to
any of the Owners in these regards.
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5.2 Damage or Destruction of the Plant Scherer Common
Facilities. Determinations concerning damage and destruction of
the Plant Scherer Common Facilities shall be made by the
Participants and Additional Unit Participants who are members of
the Plant Scherer Managing Board in accordance with the relevant
provisions of the respective Participation Agreements.
5.3 Disposal (including Retirement and Salvage) of the
Plant Scherer Common Facilities. The Common Facilities Agent
shall have sole authority and responsibility with respect to the
disposal (including retirement and salvaging) of all or any part
of the Plant Scherer Common Facilities and the Plant Scherer Coal
Stockpile; provided, however, that any action taken with respect
thereto shall require the consent of the Managing Board by
Requisite Owner Approval, including MEAG, so long as MEAG owns at
least a 15.1% undivided ownership interest in the Plant Scherer
Common Facilities.
5.4 Removal of GPC as Common Facilities Agent. The removal
of GPC as Common Facilities Agent and the appointment of a
successor for the Common Facilities Agency Functions shall
require Requisite Owner Approval of the Managing Board, including
MEAG, so long as MEAG owns at least a 15.1% undivided ownership
interest in the Plant Scherer Common Facilities, and the same
shall be carried out only for the violations set forth in and in
accordance with all of the applicable provisions of the
Participation Agreements.
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ARTICLE 6
VOTING ISSUES CONCERNING FUEL MATTERS
6.1 Separate Procurement. The Participation Agreements
provide that each Separate Coal Stockpile Participant may become
a Separate Procurement Participant and make its own arrangements
for coal procurement in accordance with the applicable provisions
of the Participation Agreements. The Owners recognize that coal
procured by any Owner will affect the Plant Scherer Coal
Stockpile. Accordingly, by and pursuant to the terms established
by the Participation Agreements, the Common Facilities Agent
shall prepare and submit to the Plant Scherer Managing Board coal
procurement policies, coal quality standards, and coal accounting
procedures governing separate procurement of coal for Plant
Scherer ("Separate Procurement Procedures"). The Separate
Procurement Procedures shall be approved or revised and approved
by Requisite Owner Fuel Approval within 60 days after such
Separate Procurement Procedures have been submitted to the Plant
Scherer Managing Board by the Common Facilities Agent. In the
absence of such adoption or approval of revisions within such 60
day period, the Separate Procurement Procedures proposed by the
Common Facilities Agent shall immediately go into effect as the
Separate Procurement Procedures of the Plant Scherer Managing
Board and may be revised thereafter only by approval of such
revisions by Requisite Owner Approval.
6.2 Common Procurement. The Participation Agreements
provide that the Common Facilities Agent shall procure coal for
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such Owners as are, from time to time, Common Procurement
Participants and Spot Coal for all Owners. The Owners recognize
that such coal will affect the Plant Scherer Coal Stockpile.
Accordingly, by and pursuant to the terms established by the
Participation Agreements, the Common Facilities Agent shall
prepare and submit to the Plant Scherer Managing Board coal
procurement policies, coal quality standards, and coal accounting
procedures governing common procurement of coal for Plant Scherer
("Common Procurement Procedures"). The Common Procurement
Procedures shall be approved or revised and approved by Requisite
Owner Fuel Approval, within 60 days after such Common Procurement
Procedures have been submitted to the Plant Scherer Managing
Board by the Common Facilities Agent. In the absence of such
adoption or approval of revisions within such 60 day period, the
Common Procurement Procedures proposed by the Common Facilities
Agent shall immediately go into effect as the Common Procurement
Procedures of the Plant Scherer Managing Board and may be revised
thereafter only by approval of such revisions by Requisite Owner
Approval. Upon (i) exercise by any Separate Coal Stockpile
Participant of a Separate Coal Procurement or (ii) violation by
any Separate Coal Stockpile Participant, which has been found by
the then remaining Common Procurement Participants owning in the
aggregate more than 50% Pro Forma Ownership Interest in Plant
Scherer out of the total Pro Forma Ownership Interest in Plant
Scherer of the then remaining Common Procurement Participants
(without taking into account for such purpose in either the
numerator or the denominator the Pro Forma Ownership Interest in
Plant Scherer of the Owner under consideration) of any of the
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Common Procurement Procedures, such Owner shall immediately cease
to be a Common Procurement Participant, and GPC, as Common
Facilities Agent, shall have no obligation to procure coal or
transportation on behalf of such Owner, other than for Spot Coal.
The remaining Common Procurement Participants owning in the
aggregate more than 50% Pro Forma Ownership Interest in Plant
Scherer of the then remaining Common Procurement Participants may
vote to reestablish such Owner's status as a Common Procurement
Participant. The Separate Procurement Procedures and Common
Procurement Procedures shall be generally consistent and to the
extent possible shall contain the same coal quality standards and
coal accounting procedures.
6.3 Switch to an Alternative Fuel Source; Physical
Separation of the Plant Scherer Coal Stockpile. Notwithstanding
the foregoing, any Owner may submit to the Plant Scherer Managing
Board a request to change the Separate Procurement Procedures and
the Common Procurement Procedures to provide for the change from
an existing coal source to a type of coal which under Prudent
Utility Practice should not be commingled with the coal
comprising the Plant Scherer Coal Stockpile or to physically
separate the Plant Scherer Coal Stockpile to accommodate both
such coal sources at Plant Scherer. Such a request shall be
subject to approval by the Plant Scherer Managing Board by
Requisite Owner Fuel Approval and upon such terms and conditions
as may be approved by Requisite Owner Fuel Approval.
In the event that any Owner brings a proposal to the
Managing Board with respect to a complete switch from an existing
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coal source to a type of coal which under Prudent Utility
Practice should not be commingled with the coal comprising the
Plant Scherer Coal Stockpile so that only the new coal source is
to be used in the Plant Scherer Coal Stockpile and, as a result,
"buy-out" costs would be incurred by the Owners in connection
with existing coal contracts, then such proposed action would
require approval of the Managing Board by Requisite Owner Fuel
Approval.
6.4 Amendment, Modification, or Termination of Existing
Coal Contracts. The Plant Scherer Managing Board shall approve
or disapprove any amendment, modification (including, without
limitation, deliveries of additional quantities of coal), or
termination of coal contracts identified in Exhibit A hereto (the
"EXISTING CONTRACTS") by Requisite Owner Fuel Approval.
6.5 Resolution of Incompatible Procurement Strategies. In
the event that a procurement strategy submitted to GPC by a
Separate Coal Stockpile Participant for its Separate Coal
Stockpile is incompatible with the procurement strategy desired
by the Common Procurement Participants initiating a Common
Procurement, GPC as Common Facilities Agent shall notify the
Plant Scherer Managing Board of the conflict and of GPC's
proposed action to resolve it. The Managing Board shall approve
or disapprove such action by Requisite Owner Approval. In the
absence of such approval within 30 days from the date GPC's
proposal was submitted to the Plant Scherer Managing Board, GPC
as Common Facilities Agent shall be authorized to take the action
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it proposed to resolve the reported conflict, and such action may
be repeated as necessary until such time as GPC as Common
Facilities Agent proposes a different action to the Managing
Board or the Managing Board approves an alternative action
consistent with the procedures set forth in this Section 6.5.
6.6 Qualifications of Parties Associated with Separate
Procurement. In the event of a disagreement between GPC as
Common Facilities Agent and any Separate Procurement Participant
as to whether any party associated with a proposed separate
procurement (including, without limitation, the vendor, broker,
mine operator and transporter) is reliable and technically and
financially qualified, GPC as Common Facilities Agent or such
Separate Procurement Participant may submit such dispute to the
Plant Scherer Managing Board. Such party shall not be considered
reliable and technically and financially qualified unless the
Plant Scherer Managing Board, by Requisite Owner Approval,
determines that such party is reliable and technically and
financially qualified. The standards employed to determine
whether such party is reliable, and technically and financially
qualified shall be no stricter in regards to the parties
associated with Separate Coal Procurement than in regards to
parties associated with Common Procurement.
6.7 Coal Contract and Transportation Administration if GPC
is Removed as Agent for any Unit. In the event that GPC is
removed as Agent for any Unit, GPC will continue to procure coal
and administer transportation for the Plant Scherer Coal
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Stockpile as Common Facilities Agent. GPC will perform the
Common Facilities Agency Functions of coal procurement and fuel
transportation unless removed as Common Facilities Agent, for one
or more of the reasons set forth in the Participation Agreements,
by Requisite Owner Approval, including MEAG, so long as MEAG owns
at least a 15.1% undivided ownership interest in the Plant
Scherer Common Facilities, such removal to be in accordance with
all of the applicable provisions of the Participation Agreements.
ARTICLE 7
OTHER ISSUES REQUIRING MANAGING BOARD APPROVAL
7.1 Resolution of Conflicting Contractual Obligations for
GPC as Agent. The Owners recognize that GPC, as Agent for the
Participants and Additional Unit Participants, has various
contractual obligations under the Participation Agreements
respecting GPC's performance of the Agency Functions for Plant
Scherer and the various components thereof. The Participants and
Additional Unit Participants agree that, in discharging its
contractual obligations, GPC may take reasonable actions to
resolve conflicts involving its various contractual obligations.
In circumstances where GPC becomes aware of a conflict in its
contractual obligations under the Participation Agreements and
GPC in its capacity as Agent reasonably believes the conflict is
material and is likely to have a significant, on-going impact on
one or more Participants or Additional Unit Participants, GPC
shall notify the Plant Scherer Managing Board of the conflict and
of GPC's proposed action to resolve the conflict. The Plant
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Scherer Managing Board shall approve such action by Requisite
Owner Approval. In the absence of such approval within 30 days
from the date GPC's proposal was submitted to the Plant Scherer
Managing Board, GPC shall be authorized to take the action it
proposed to resolve the reported conflict, and such action may be
repeated as necessary until such time as GPC proposes a different
action to the Managing Board or the Managing Board approves an
alternative action consistent with the procedures set forth in
this Section 7.1. Insofar as practicable, the Participation
Agreements and this Agreement shall be construed and interpreted
to be harmonious and consistent each with the other and among all
of them.
7.2 Insurance Procurement by Owners. In the event that any
Owner can procure insurance for Plant Scherer with substantially
the same coverage, policy limits and deductibles with a
financially sound insurer as that maintained by GPC as Agent for
the Owners, but at significantly less cost to the Owners, the
Owner may submit a request to the Managing Board to allow such
Owner to procure insurance on behalf of all Owners. The Owners
may procure such insurance and no longer pay any cost of
insurance maintained by GPC with respect to Plant Scherer if such
request is approved by written approval or consent of those
Owners who collectively hold at least an 85% undivided ownership
interest in the Plant Scherer Common Facilities.
7.3 Allocation of Insurance Proceeds. The Plant Scherer
Managing Board may adopt rules, policies and procedures, by
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written approval or consent of those Owners who collectively hold
at least an 85% undivided ownership interest in the Plant Scherer
Common Facilities, for allocation of insurance proceeds among
Owners in those situations where deductible amounts and available
proceeds do not fully cover a casualty or loss with respect to
more than one of the Units, the Additional Units, the Unit Common
Facilities, the Additional Unit Common Facilities, the Plant
Scherer Common Facilities and the Plant Scherer Coal Stockpile or
to any other third party claim; provided, however, that the Plant
Scherer Managing Board shall not adopt any rules, policies and
procedures which would deprive any Owner of insurance proceeds to
which it would otherwise have been entitled, without that Owner's
specific consent to such rules, policies and procedures. In the
event the Plant Scherer Managing Board does not adopt rules,
policies or procedures pursuant to the first sentence of this
Section 7.3, then insurance proceeds shall be allocated among the
Owners in proportion to their undivided ownership interest in the
property suffering the casualty or loss for which the insurance
proceeds were received.
7.4 Managing Board Jurisdiction Over Additional Matters.
The Plant Scherer Managing Board shall have jurisdiction over the
matters expressly granted to it by this Agreement. The Common
Facilities Agent or any Owner may submit a request that the Plant
Scherer Managing Board be granted jurisdiction over other matters
concerning Plant Scherer (other than matters that relate solely
to a specific unit), and the Plant Scherer Managing Board shall
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gain jurisdiction over such matters which are approved by
Requisite Owner Approval.
Additional matters not expressly provided for in this
Agreement which the Plant Scherer Managing Board has gained
jurisdiction over as provided for in this section shall be
governed by the following requisite approvals:
(i) With respect to additional matters affecting the Plant
Scherer Common Facilities and the Plant Scherer Coal
Stockpile, Requisite Owner Approval shall be required;
and
(ii) With respect to additional matters that solely relate
to Unit Common Facilities or Additional Unit Common
Facilities, a Requisite Units Owner Approval or a
Requisite Additional Units Owner Approval, as the case
may be, shall be required.
Notwithstanding the foregoing paragraphs of this Section
7.4, (A) in no event shall the Plant Scherer Managing Board take
any action or make any determination which could increase the
obligations, duties or responsibilities of GPC as Agent or as
Common Facilities Agent for the Owners (or any of them), which
could limit or impair the authority of GPC as Agent or as Common
Facilities Agent for the Owners (or any of them) under any of the
Participation Agreements or which could add to the risks or
liability of or the costs and expenses (unless reimbursed by the
Participants and Additional Unit Participants) to be incurred by
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GPC as Agent or as Common Facilities Agent for the Owners (or any
of them) without GPC's prior written consent in each instance;
and (B) in no event shall the Plant Scherer Managing Board assert
jurisdiction over additional matters under this Section 7.4 or
take action with respect to any such additional matter in a
manner which would adversely impair any Owner's voting rights
under any Participation Agreement to which it is a party without
such Owner's prior written consent in each instance.
ARTICLE 8
UNIT AND UNIT COMMON FACILITIES ISSUES
8.1 Capital Budgets and Operating Budgets for the Unit
Common Facilities. By the date set forth therefor in Appendix A
of each year, each Participant may provide the Common Facilities
Agent information to be used in the formulation of the subsequent
year's Capital Budget and Operating Budget for the Unit Common
Facilities. Such budgets shall conform to the requirements and
guidelines stated in Appendix A attached hereto and any revisions
of such appendix as it applies to the Unit Common Facilities as
may be approved by the Board by Requisite Units Owner Approval
and agreed to by the Common Facilities Agent. By the date set
forth therefor in Appendix A of each year, the Capital Budget and
the Operating Budget for the Unit Common Facilities shall be
approved or disapproved, each in its entirety, by the Board by
Requisite Units Owner Approval. If the Capital Budget or
Operating Budget is disapproved, the Board shall then have until
the date set forth therefor in Appendix A to adopt by Requisite
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Units Owner Approval a revised Capital Budget or Operating Budget
which shall comply with Prudent Utility Practice and Legal
Requirements. In the event that the Board is unable to approve
any budget by Requisite Units Owner Approval by the date set
forth therefor in Appendix A, then the budget to be utilized
shall be the one submitted by the Common Facilities Agent, and
such budget shall be deemed approved by the Board and binding on
the Participants.
The Operating Budget, the Capital Budget, or both, with
respect to Unit Common Facilities, for each calendar year shall
be revised as deemed necessary by the Common Facilities Agent to
reflect changed conditions in such calendar year, and promptly
upon any such revision, the Common Facilities Agent shall provide
to each of the other Participants a revised Operating Budget,
Capital Budget, or both, as the case may be. Each revised
Operating Budget, Capital Budget, or both, shall include
Operating Costs, Cost of Construction, or both, as the case may
be, incurred by the Common Facilities Agent in the operation and
maintenance or replacement, modification, addition, renewal,
completion or disposal of the Unit Common Facilities prior to the
time such revised Operating Budget or Capital Budget becomes
effective but not included in prior Operating Budgets or Capital
Budgets, as the case may be, and shall be supported by detail
reasonably adequate for the purpose of each Participant's
reasonable review thereof, as described in Appendix A. Any such
revised Operating Budget, Capital Budget, or both, shall be
approved or disapproved, and if disapproved, an alternative
revised Operating Budget, Capital Budget, or both, adopted or
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otherwise chosen for utilization, all in accordance with the
procedure set forth in this Section 8.1, except that such
approval or disapproval and submission of alternative revisions
must be completed by the board by Requisite Units Owner Approval
within 15 business days of the Participants' receipt of the
proposed revisions from the Common Facilities Agent.
All budgets for Plant Scherer and each component thereof
shall be established and approved so as to permit each
Participant and each Additional Unit Participant to obtain its
desired energy output entitlement from its owned capacity at
Plant Scherer. The Common Facilities Agent shall attempt to
manage, control, operate and maintain the Unit Common Facilities
in accordance with the then current Operating Budget and attempt
to replace, modify, add, renew, complete and dispose of the Unit
Common Facilities in accordance with the then current Capital
Budget and the schedules of expenditures contained therein.
Notwithstanding the foregoing, the Common Facilities Agent makes
no representation, warranty or promise of any kind as to the
accuracy of any estimate contained in an Operating Budget or
Capital Budget or in a revised Operating Budget or revised
Capital Budget or that any such attempt referred to in the
preceding sentence will be successful, and in no event shall the
Common Facilities Agent have any liability to any of the other
Participants in these regards.
8.2 Damage or Destruction of the Unit Common Facilities.
The Participants who are members of the Plant Scherer
Managing Board shall vote in accordance with the relevant
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provisions of the respective Participation Agreements concerning
the damage and destruction of the Unit Common Facilities.
8.3 Disposal (including Retirement and Salvage) of the Unit
Common Facilities. The Common Facilities Agent shall have sole
authority and responsibility with respect to the disposal
(including retirement and salvaging) of all or any part of the
Unit Common Facilities; provided, however, that any action taken
with respect thereto shall require the consent of the Managing
Board by Requisite Units Owner Approval.
8.4 Separate Dispatch Procedures. The Units Participation
Agreements provide that certain Separate Coal Stockpile
Participants may become Separate Dispatch Participants and that
GPC will use its reasonable best efforts to dispatch the
undivided ownership interests of each Separate Dispatch
Participant in Scherer Unit No. 1 and Scherer Unit No. 2 to match
the schedules provided by such Separate Dispatch Participant.
Accordingly, by and pursuant to the terms established by the
Units Participation Agreements, GPC shall prepare and submit to
the Plant Scherer Managing Board startup and shutdown notice,
operating and accounting procedures governing the separate
dispatch of undivided ownership interests in Scherer Unit No. 1
and Scherer Unit No. 2 ("Unit No. 1 and Unit No. 2 Separate
Dispatch Procedures"). The Unit No. 1 and Unit No. 2 Separate
Dispatch Procedures shall be approved or revised and approved by
Requisite Units Owner Approval within 60 days after such Unit No.
1 and Unit No. 2 Separate Dispatch Procedures have been submitted
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to the Plant Scherer Managing Board by GPC. In the absence of
such adoption or approval of revisions within such 60 day period,
the Unit No. 1 and Unit No. 2 Separate Dispatch Procedures
proposed by GPC shall immediately go into effect as the Unit No.
1 and Unit No. 2 Separate Dispatch Procedures of the Plant
Scherer Managing Board and may be revised thereafter only by
approval of such revisions by Requisite Units Owner Approval."
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ARTICLE 9
ADDITIONAL UNIT COMMON FACILITIES ISSUES
9.1 Capital Budgets and Operating Budgets for the
Additional Unit Common Facilities. By the date set forth
therefor in Appendix A of each year, each Additional Unit
Participant may provide the Common Facilities Agent information
to be used in the formulation of the subsequent year's Capital
Budget and Operating Budget for the Additional Unit Common
Facilities. Such budgets shall conform to the requirements and
guidelines stated in Appendix A attached hereto and any revisions
of such appendix as it applies to the Additional Unit Common
Facilities, as may be approved by the Board by Requisite
Additional Units Owner Approval and agreed to by the Common
Facilities Agent. By the date set forth therefor in Appendix A
of each year, the Capital Budget and the Operating Budget for the
Additional Unit Common Facilities shall be approved or
disapproved, each in its entirety, by the Board by Requisite
Additional Units Owner Approval. If the Capital Budget or
Operating Budget is disapproved, the Board, shall then have until
the date set forth therefor in Appendix A to adopt by Requisite
Additional Units Owner Approval a revised Capital Budget or
Operating Budget which shall comply with Prudent Utility Practice
and Legal Requirements. In the event that the Board is unable to
approve any budget by Requisite Additional Units Owner Approval
by the date set forth therefor in Appendix A, then the budget to
be utilized shall be the one submitted by the Common Facilities
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Agent, and such budget shall be deemed approved by the Board, and
binding on the Additional Unit Participants.
The Operating Budget, the Capital Budget, or both, with
respect to Additional Unit Common Facilities for each calendar
year shall be revised as deemed necessary by the Common
Facilities Agent to reflect changed conditions in such calendar
year, and promptly upon any such revision, the Common Facilities
Agent shall provide to each of the other Additional Unit
Participants a revised Operating Budget, Capital Budget, or both,
as the case may be. Each revised Operating Budget, Capital
Budget, or both, shall include Operating Costs, Cost of
Construction, or both, as the case may be, incurred by the Common
Facilities Agent in the operation and maintenance or replacement,
modification, addition, renewal, completion or disposal of the
Additional Unit Common Facilities prior to the time such revised
Operating Budget or Capital Budget becomes effective but not
included in prior Operating Budgets or Capital Budgets, as the
case may be, and shall be supported by detail reasonably adequate
for the purpose of each Additional Unit Participant's reasonable
review thereof, as described in Appendix A. Any such revised
Operating Budget, Capital Budget, or both, shall be approved or
disapproved, and if disapproved, an alternative revised Operating
Budget, Capital Budget, or both, adopted or otherwise chosen for
utilization, all in accordance with the procedure set forth in
this Section 9.1, except that such approval or disapproval and
submission of alternative revisions must be completed by the
Board by Requisite Additional Units Owner Approval within 15 days
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of the Additional Unit Participants' receipt of the proposed
revisions from the Common Facilities Agent.
All budgets for Plant Scherer and each component thereof
shall be established and approved so as to permit each
Participant and each Additional Unit Participant to obtain its
desired energy output entitlement from its owned capacity at
Plant Scherer. The Common Facilities Agent shall attempt to
manage, control, operate and maintain the Additional Unit Common
Facilities in accordance with the then current Operating Budget
and attempt to replace, modify, add, renew, complete and dispose
of the Additional Unit Common Facilities in accordance with the
then current Capital Budget and the schedules of expenditures
contained therein. Notwithstanding the foregoing, the Common
Facilities Agent makes no representation, warranty or promise of
any kind as to the accuracy of any estimate contained in an
Operating Budget or Capital Budget or in a revised Operating
Budget or revised Capital Budget or that any such attempt
referred to in the preceding sentence will be successful, and
subject to the provisions of the Unit Four Participation
Agreements with respect to the Unit No. 4 Owners, in no event
shall the Common Facilities Agent have any liability to any of
the other Additional Unit Participants in these regards.
9.2 Damage or Destruction of the Additional Unit Common
Facilities. The Additional Unit Participants who are members of
the Plant Scherer Managing Board shall vote in accordance with
the relevant provisions of the respective Participation
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Agreements concerning the damage and destruction of the
Additional Unit Common Facilities.
9.3 Disposal (including Retirement and Salvage) of the
Additional Unit Common Facilities. The Common Facilities Agent
shall have sole authority and responsibility with respect to the
disposal (including retirement and salvaging) of all or any part
of the Additional Unit Common Facilities; provided, however, that
any action taken with respect thereto shall require the consent
of the Managing Board by Requisite Additional Units Owner
Approval.
9.4 Removal of GPC as Additional Unit Common Facilities
Agent. The removal of GPC as Agent for the Additional Unit
Common Facilities shall require approval by the Board by vote of
all Additional Unit Participants other than GPC. The appointment
of a successor to GPC as agent for the Agency Functions as it
pertains to the Additional Unit Common Facilities shall require
approval by vote of Requisite Additional Units Owner Approval.
9.5 Information to be provided to the Additional Unit
Participants. The information provided to the Owners pursuant to
Sections 4.2.1.2, 4.2.1.3 and 4.2.1.4 of this Agreement shall
also be provided to the Additional Unit Participants with respect
to the Additional Unit Common Facilities.
ARTICLE 10
RECOVERY OF COSTS
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Any costs incurred hereunder by the Common Facilities Agent
in accordance with the Participation Agreements shall be
recoverable from the Owners under the Participation Agreements as
may be applicable and all remedies provided therein shall be
available in the event any Owner shall default in the payment of
such costs; provided, however, that an Owner which is not in
default shall not be obligated to pay for any costs which should
have been paid by an Owner in default.
ARTICLE 11
RELATION TO EXISTING AGREEMENTS
This Agreement is not intended to nor does it modify, amend,
or terminate any of the Participation Agreements and does not
otherwise alter or impact rights and obligations of the Agent,
the Common Facilities Agent, Participants and Additional Unit
Participants under any such agreements, including, without
limitation, the obligations to make payments; the remedies for
defaults; the authority and obligation to insure Each Unit; the
authority to establish levels of output and to schedule and meter
output; entitlement to output; authority to establish retirement
dates for Each Unit; authority to repair (following substantial
damage or destruction), replace or make additions to Each Unit;
the authority to salvage and dispose of Each Unit; the property
rights established by the applicable Participation Agreements;
and GPC's responsibility, liability and authority as Agent and
Common Facilities Agent under such agreements. No Participation
Agreement shall be amended without 30 days prior written notice
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to the other Owners and no Participation Agreement shall be
amended in a manner materially adverse to other Owners without
such other Owners' consent. The Agent shall not be impaired in
its capacity to carry out its Agency Functions, nor shall this
Agreement diminish or add to (i) the liabilities of GPC or (ii)
the remedies of OPC, MEAG, Dalton, Gulf, FPL and JEA or any of
their successors established by any of the several Participation
Agreements. Further, the provisions of this Agreement shall
supersede the provisions concerning the Joint Committee
established by the Units Participation Agreements; provided,
however, the procedures heretofore adopted by the Joint Committee
set forth in Exhibit B attached hereto and made a part hereof
shall remain in full force and effect unless modified, terminated
or superseded by the Plant Scherer Managing Board by vote of such
percentage of Owners as is required under this Agreement.
ARTICLE 12
EFFECTIVE DATE AND TERMINATION
This Agreement shall become effective upon the execution and
delivery of this Agreement by all undersigned parties and shall
terminate upon the final decommissioning of Plant Scherer and
each component thereof.
ARTICLE 13
MISCELLANEOUS
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13.1 Required Approvals. This Agreement shall have no
force and effect until (i) it is approved by the Administrator of
the Rural Electrification Administration unless such
Administrator rules that his approval is not required by law;
(ii) it is approved by the Trustee under each MEAG bond
resolution pursuant to which MEAG's interests in the Units has
been financed.
13.2 Further Assurances. From time to time the Owners
will execute such instruments, upon the request of the Common
Facilities Agent or another Owner, as may be necessary or
appropriate to carry out the intent of this Agreement.
13.3 Governing Law. The validity, interpretation, and
performance of this Agreement and each of its provisions shall be
governed by the laws of the State of Georgia.
13.4 Notice. Any notice, request, consent or other
communication permitted or required by this Agreement shall be in
writing and shall be deemed given when sent by registered or
certified mail. All notices pertaining to or affecting the
provisions of this Agreement shall be addressed to:
GPC: (in its capacity as an Owner and as Common Facilities
Agent)
Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: President
Telephone Number: 404-526-6000
Telecopy Number: 404-526-7407
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<PAGE>
OPC:
Oglethorpe Power Corporation
2100 East Exchange Place
P.O. Box 1349
Tucker, Georgia 30085-1349
Attention: President and Chief Executive Officer
Telephone Number: 404-270-7900
Telecopy Number: 404-270-7872
MEAG:
Municipal Electric Authority of Georgia
1470 Riveredge Parkway, N.W.
Atlanta, Georgia 30328
Attention: President and General Manager
Telephone Number: 404-952-5445
Telecopy Number: 404-953-3141
Dalton:
The City of Dalton, Georgia
P.O. Box 869
Dalton, Georgia 30720
Attention: Chairman, Utilities Commission
Telephone Number: 404-278-1313
Telecopy Number: 404-278-7230
Gulf:
Gulf Power Company
500 Bayfront Parkway
Pensacola, Florida 32501
Attention: Earl B. Parsons, Jr.
Telephone Number: 904-444-6383
Telecopy Number: 904-444-6744
FPL:
Florida Power and Light Company
700 Universe Blvd.
Juno Beach, Florida 33408
Attention: Senior Vice President - Power
Generation
Telephone Number: 407-694-3838
Telecopy Number: 407-694-4999
with a courtesy copy (which shall not be required for effective
notice to be given to FPL) to :
Director of Bulk Power Markets
Florida Power & Light Company
9250 West Flagler Street
Miami, Florida 33174
Telephone Number: 305-522-3847
Telecopy Number: 305-552-2905
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<PAGE>
JEA:
Jacksonville Electric Authority
21 West Church Street
Jacksonville, Florida 32202
Attention: Managing Director
Telephone Number: 904-632-6441
Telecopy Number: 904-632-7366
unless a different address, phone number or telecopy number shall
have been designated by the respective Owner by notice in
writing.
13.5 Section Headings Not To Affect Meaning. The
descriptive headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall in
no way modify or restrict any of the terms and provisions
thereof.
13.6 Time of Essence. Time is of the essence of this
Agreement.
13.7 Amendments. This Agreement may be amended by and
only by a written instrument duly executed by each of the Owners.
13.8 Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon each of the Owners and its
respective successors and assigns. Each such successor and
assign shall assume all rights and obligations established by
this Agreement.
13.9 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
- 54 -
- 54 -
<PAGE>
be deemed an original but all of which together shall constitute
one and the same instrument.
13.10 Computation of Percentage Undivided Ownership
Interest. Except as may be provided by any Participation
Agreement and except as otherwise specifically provided in this
Agreement, whenever, pursuant to any provision of this Agreement,
any action is required to be agreed to or taken by the Managing
Board or the Owners (i) only those Owners not in default in the
payment of any amounts (together with interest, if appropriate)
required under any provisions of any applicable Participation
Agreement at the time such action is to be agreed to or taken
shall have the right to participate in such agreement or the
taking of such action and (ii) the computation of the aggregate
percentage undivided ownership interest in the Units, the
Additional Units, or the Additional Unit Common Facilities by
Owners agreeing to or taking any such action shall be based
solely upon the respective undivided ownership interests in the
Units, the Additional Units, or the Additional Unit Common
Facilities owned by Owners not so in default.
13.11 Several Agreements. Notwithstanding anything to the
contrary set forth herein, the agreements and obligations of the
Participants and Additional Unit Participants set forth in this
Agreement shall be the several, and not joint, agreements and
obligations of the Participants and Additional Unit Participants.
- 55 -
- 55 -
<PAGE>
13.12 Confidentiality. Realizing that publication of
information furnished hereunder by the Common Facilities Agent to
the Owners or by one Owner to the other Owners may detrimentally
affect the furnishing Common Facilities Agent or Owner, the
Common Facilities Agent and the Owners pledge to each other to
comply with the confidentiality provisions of the Participation
Agreements to which they are a party. Any party desiring JEA to
maintain such information as confidential shall mark such
information as "proprietary confidential business information" at
the time it is furnished to JEA.
[This space intentionally left blank]
- 56 -
- 56 -
<PAGE>
IN WITNESS WHEREOF, the undersigned parties hereto have duly
executed this Managing Board Agreement under seal as of the date
first above written.
"GPC"
GEORGIA POWER COMPANY
Signed, sealed and delivered By:___________________________
in the presence of:
Name:_________________________
____________________________ Its:__________________________
____________________________ Attest:_______________________
Notary Public
Name:_________________________
Its:__________________________
[CORPORATE SEAL]
"OPC"
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP
GENERATION & TRANSMISSION
CORPORATION)
Signed, sealed and delivered By:___________________________
in the presence of:
Name:_________________________
____________________________ Its:__________________________
____________________________ Attest:_______________________
Notary Public
Name:_________________________
Its:__________________________
[CORPORATE SEAL]
[Signatures continued on next page]
- 57 -
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<PAGE>
[Signatures continued from previous page]
"MEAG"
MUNICIPAL ELECTRIC AUTHORITY
OF GEORGIA
Signed, sealed and delivered By:___________________________
in the presence of:
Name:_________________________
____________________________ Its:__________________________
____________________________ Attest:_______________________
Notary Public
Name:_________________________
Its:__________________________
[OFFICIAL SEAL]
"Dalton"
CITY OF DALTON, GEORGIA
Signed, sealed and delivered By:___________________________
in the presence of:
Name:_________________________
____________________________ Its:__________________________
____________________________ Attest:_______________________
Notary Public
Name:_________________________
Its:__________________________
[OFFICIAL SEAL]
BOARD OF WATER, LIGHT AND
SINKING FUND COMMISSIONERS
Signed, sealed and delivered By:___________________________
in the presence of:
Name:_________________________
____________________________ Its:__________________________
____________________________ Attest:_______________________
Notary Public
Name:_________________________
Its:__________________________
[OFFICIAL SEAL]
[Signatures continued on next page]
- 58 -
- 58 -
<PAGE>
[Signatures continued from previous page]
"Gulf"
GULF POWER CORPORATION
Signed, sealed and delivered By:___________________________
in the presence of:
Name:_________________________
____________________________ Its:__________________________
____________________________ Attest:_______________________
Notary Public
Name:_________________________
Its:__________________________
[CORPORATE SEAL]
"FPL"
FLORIDA POWER & LIGHT COMPANY
Signed, sealed and delivered By:___________________________
in the presence of:
Name:_________________________
____________________________ Its:__________________________
____________________________ Attest:_______________________
Notary Public
Name:_________________________
Its:__________________________
[CORPORATE SEAL]
"JEA"
JACKSONVILLE ELECTRIC
AUTHORITY
Signed, sealed and delivered By:___________________________
in the presence of:
Name:_________________________
____________________________ Its:__________________________
____________________________ Attest:_______________________
Notary Public
Name:_________________________
Its:__________________________
Approved as to Form:
______________________________
[OFFICIAL SEAL]
- 59 -
- 59 -
<PAGE>
APPENDIX A
GUIDELINES FOR CAPITAL BUDGETS AND OPERATING BUDGETS
FOR PLANT SCHERER
Prior to August 15 of each year, each Owner may provide the
Common Facilities Agent with such information (whether in person
or in writing as determined by the respective Owner) as such
Owner wishes to be utilized in formulation of Budgets for the
following calendar year. By August 15 of each calendar year, GPC
shall attempt to prepare and submit to each Owner a written
budget estimate of Operating Costs and Cost of Construction for
the Plant Scherer Common Facilities, the Unit Common Facilities,
and the Additional Unit Common Facilities anticipated to be
incurred for the following year and in summary form for the
ensuing four calendar years. Each budget estimate to be
submitted under this subsection shall be based on information
reasonably available. The Budget estimates submitted and the
Budgets approved under the Managing Board Agreement, consistent
with this Appendix A, shall be in a format that reflects the
amounts GPC would expect to bill each Owner pursuant to the
underlying Participation Agreements.
Each budget estimate shall be supported by detail reasonably
adequate for the purpose of each Owner's review thereof and shall
be formatted such that for the next calendar year each month's
estimated costs are listed by reference to applicable Uniform
System of Accounts account numbers.
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<PAGE>
By September 15 of each year, the Capital Budget and the
Operating Budget for the following calendar year shall be
approved or disapproved, each in its entirety, by the Board by
Requisite Owner Approval, Requisite Units Owner Approval, or
Requisite Additional Units Owner Approval, as the case may be as
is set forth in the Managing Board Agreement. If the Capital
Budget or the Operating Budget is disapproved, the Board, by
approval of such majority, shall then have until October 15 to
submit an alternative revised Capital Budget or Operating Budget
which shall comply with Prudent Utility Practice, Legal
Requirements and all other requirements set forth in the Managing
Board Agreements and the applicable Participation Agreements, in
the failure of which, the Budget to be used, shall be the one
submitted by the Common Facilities Agent, and such Budget be
deemed approved by the Board and binding on all of the Owners to
which such Budget applies.
Compliance by the Common Facilities Agent with the
provisions of any Capital Budget or Operating Budget which has
been altered by the Participants, the Additional Unit
Participants or any of them from any such estimate submitted by
the Common Facilities Agent, shall not, in and of itself,
constitute a breach by the Common Facilities Agent of its
obligations to discharge its responsibilities as Common
Facilities Agent for the Participants and Additional Unit
Participants in accordance with Prudent Utility Practice.
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<PAGE>
EXHIBIT A
EXISTING CONTRACTS
The following is a listing of the coal purchase contracts in
existence on September 1, 1990.
1. That certain contract effective on March 31, 1977 among Shell
Mining Company, A.T. Massey Coal Company, Inc., Marrowbone
Development Company and Georgia Power Company as amended on
January 3, 1977, September 25, 1979, March 23, 1982, January 28,
1983, December 6, 1983, January 12, 1984, February 19, 1985,
September 9, 1985, December 11, 1985, December 18, 1985,
March 10, 1987, April 16, 1987, October 30, 1987, November 10,
1987, January 31, 1989, April 18, 1989, April 23, 1990, May 30,
1990, and the undated "Agreement To Provide For The Extension Of
Negotiations Between GPC and Shell Mining Company."
2. That certain contract effective December 1, 1987 among Delta
Coals Equity Company, Inc., Humphreys Enterprises, Inc., Greater
Wise, Inc., Red River Coal Company, Inc., Pardee Coal Company,
Inc., Delta Coals, Inc., and Georgia Power Company as amended on
November 6, 1987 (Notice of Assignment), November 6, 1987 (Notice
of Designation of Agent), November 23, 1987 (Response to Notice
of Assignment), June 17, 1988, April 7, 1989, and July 24, 1990.
3. That certain contract effective July 1, 1989 between Mingo
Logan Coal Company and Georgia Power Company as amended on
August 21, 1990.
<PAGE>
EXHIBIT B
JOINT COMMITTEE PROCEDURES
1. The revisions to depository account procedures presented to
the Joint Subcommittee for Finance and Accounting on
February 2, 1981 and April 2, 1982.
2. The General Operating Guidelines concerning the 180-day
audit provisions approved by the Joint Subcommittee for
Finance and Accounting on April 1, 1985.
3. The Joint Subcommittee for Power Generation Document
Distribution Form as revised on September 18, 1991.
- 2 -
<PAGE>
EXHIBIT C
OPERATING COSTS ALLOCATION
The Owners agree that Operating Cost shall be allocated
among and between the Units, the Unit Common Facilities, the
Additional Units, the Additional Unit Common Facilities and the
Plant Scherer Common Facilities as described in this EXHIBIT C,
as the same may be revised from time to time by Agreement:
(1) with respect to Operating Costs incurred in connection with
any one or more of Scherer Unit No. 1, Scherer Unit No. 2 and the
Unit Common Facilities, by approval of all of the Participants
(2) with respect to Operating Costs incurred in connection with
any one or more of Scherer Unit No. 3, Scherer Unit No. 4 and the
Additional Unit Common Facilities, by approval of all of the
Additional Unit Participants, and (3) with respect to Operating
Cost incurred in connection with the Plant Scherer Common
Facilities, by approval of all of the Owners.
<PAGE>
OPERATIONS AND MAINTENANCE COSTS
Operation and Maintenance costs at Plant Scherer are
accumulated by Location Code by FERC account. The Location
Codes, what they represent and the allocation basis are:
Location 8010 - General to Steam - 25% to Location 8100
(as such percentage may change from time to time based on the
nameplate capacity of GPC's total fossil steam)
Location 8100 - General to Scherer - 25% to each Unit
Location 8101 - Unit 1 Specific - 100% to Unit 1
Location 8102 - Unit 2 Specific - 100% to Unit 2
Location 8103 - Unit 3 Specific - 100% to Unit 3
Location 8104 - Unit 4 Specific - 100% to Unit 4
50% to Unit 2
Location 8107 - Unique to Units 1&2 - 50% to Unit 1
50% to Unit 2
Location 8108 - Unique to Units 3&4 - 50% to Unit 3
50% to Unit 4
Location 8109 - Common Facilities - allocation to Units
based on 12-month generation
The component systems that make up each of these location codes
are listed in Pages 4 through 9 of this Appendix C. The source
document for this listing was the 1989 Plant Scherer Continuing
Property Records (CPR). The CPR can be tied back to the Plant
Scherer Retirement Unit Manual. When construction is complete,
the various work orders are unitized into retirement units and
then grouped into schedule numbers. The schedule numbers which
compose a larger system are grouped to a major system for purposes
of this listing. This listing is intended to be a high level
summary of the items included in each location.
Within each Location Code are the various FERC Accounts:
Steam Power Generation - operation
FERC 500 - Operations Supervision and Engineering
FERC 501 - Fuel Handling
FERC 502 - Steam Expenses (Boiler)
FERC 505 - Electric Expenses (Turbine)
FERC 506 - Miscellaneous Steam Power Expenses
FERC 507 - Steam Power Generation Rents
Steam Power Generation - Maintenance
FERC 510 - Maintenance Supervision and Engineering
FERC 511 - Maintenance of Structures
FERC 512 - Maintenance of Boiler Plant
FERC 513 - Maintenance of Electric Plant (Turbine)
FERC 514 - Maintenance of Miscellaneous Steam Plant
After the allocation process is complete, all operations and
maintenance costs become a part of the Unit Specific Locations,
but still retain their FERC account identity.
-2-
<PAGE>
For the purposes of allocating costs between Scherer Units 1
and 2, all FERC accounts other than Operations and Maintenance on
the Boiler and Turbine (FERC's 502, 505, 512, and 513) are
designated as fixed costs to be allocated based upon the
respective undivided ownership interests in Scherer Units 1 and 2.
The Operations and Maintenance on Boiler and Turbine costs shall
be between labor and nonlabor. All labor, both straight time and
overtime, shall be designated as fixed costs. All other costs
charged to these FERC Accounts (502, 505, 512, 513) shall be
considered variable, and allocated to Owner based on relative
generation during the "applicable accounting period". A flow
chart of this information is attached hereto.
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<PAGE>
Plant Scherer Common Facilities
These facilities are classified as part of Plant Scherer
Common Facilities and their O&M costs vary with generation. O&M
costs incurred in the operation and maintenance of these
facilities shall be allocated to the individual units based on the
most recent 12-month generation or in appropriate cases, a
different applicable accounting period generation of the unit as a
percent of the total Plant Scherer generation for the same period.
Permanent Railroad System
Chemical Waste Treatment Control House
Coal Handling Equipment Buildings and System
Treated Water System
Ash Handling System
-4-
<PAGE>
Plant Scherer Common Facilities
These facilities are classified as part of Plant Scherer
common Facilities, but their O&M costs do not vary with
generation. Therefore, O&M costs incurred in the operation and
maintenance of these facilities shall be allocated to the
individual units based on the nameplate capacity of 818 MW per
unit (1/4 to each unit).
Raceway Systems - Equipment and Buildings
Site Grounding System
Plant Welding System
Hydrogen House
River Pumping System
Well Pump House
Lifting System - Turbine Room Cranes
Lube Oil Building Storage and Transfer Facilities
Potable Water System
Fire Protection System and Tanks
Distribution System - To Header
Auxiliary Boiler System Startup
Site Improvements
Service Bay
Maintenance Building
Warehouse
Service Water System
Visitors Center
Security Building
Sewage Treatment Facility
Environmental Monitoring Facility
Utility Trench
Nitrogen Storage Building
Nitrogen System
Lake Juliette
Retention and Ash Disposal Pond
Recreation Facilities
Intrasite Communication
Settling and Storage Pond
Plant Service Facilities
Service Building
Fee Simple Land
500kv Switchyard Facilities
-5-
<PAGE>
Facilities Common to Units 1 and 2
These facilities are classified as common to Scherer Units
No. 1 and No. 2, or "Cost Unique to 1 and 2" and their O&M costs
do not vary with generation. O&M costs incurred in the operation
and maintenance of these facilities shall be allocated to Scherer
Unit No. 1 and No. 2 based on nameplate capacity of 818 MW per
unit (1/2 to each unit).
Waste Water Treatment Facilities
Scherer Unit No. 1 and No. 2 Coal Handling-Building Equipment
and System
Treated Water System
Filtered Water System
Chemical Wash System Chemical Cleaning Header
Site Maintenance and Improvements
Emergency Generating Building
Raceway System Site
Collection System
Ground System
Fee Simple Land
Scherer Unit No. 1 and No. 2 Railroad System
Scherer Unit No. 1 and No. 2 Fire Protection System
Scherer Unit No. 1 and No. 2 Ash Handling Facility
Scherer Unit No. 1 and No. 2 Service Water System
Cooling Water Chlorination House and System
Fuel Oil Facilities
Fuel Storage Facilities
Stack
-6-
<PAGE>
Facilities Common to Units 3 and 4
These facilities are classified as common to Scherer Units
No. 3 and No. 4, or "Cost Unique to 3 and 4" and their O&M costs
do not vary with generation. O&M costs incurred in the operation
and maintenance of these facilities shall be allocated to Scherer
Unit No. 3 and No. 4 based on nameplate capacity of 818 NW per
unit (1/2 to each unit).
Waste Water Treatment Facilities
Scherer Unit No. 3 and No. 4 Coal Handling-Building Equipment
and System
Treated Water System
Filtered Water System
Chemical Wash System Chemical Cleaning Header
Site Maintenance and Improvements
Emergency Generating Building
Raceway System Site
Collection System
Ground System
Fee Simple Land
Scherer Unit No. 3 and No. 4 Railroad System
Scherer Unit No. 3 and No. 4 Fire Protection System
Scherer Unit No. 3 and No. 4 Ash Handling Facility
Scherer Unit No. 3 and No. 4 Service Water System
Cooling Water Chlorination House and System
Fuel Oil Facilities
Fuel Storage Facilities
Stack
-7-
<PAGE>
Plant Scherer Unit Specific Facilities
These facilities are classified as specific to the particular
unit. O&M costs associated with these facilities are charged
directly to the specific unit.
Site Fire Protection System
Roof Pressurizing System
Boiler Duct System
Boiler Water Circulating
System
Pulverizes
Oil Handling and Firing
System
Plant Welding System
Draft System
Induced Draft
Main Turbine Steam System
Extraction Steam System
Vent and Drain System
Condensate System
Turbine Generator System
Cooling Water Passageways
Cooling Water Pumps and
Drives
Cooling Water Chlorination
System
Cooling Tower
Storage Tanks Distribution
System
Raceway System
Ground System
Generator Bus System
Cathodic Protection System
Sluice Water System
Site Improvements
Service Air Systems
Sewage Treatment Facilities
Coal Handling System
Instrument/Control System
Turbine Building
Water Analysis System
Chemical Wash System
Metering Control System
Computer Systems-Electrical
Local Racks and Panels
DC Power Systems
Emergency Generator Systems
-8-
<PAGE>
AC Distribution Systems
Intrasite Communications
Plant Service Facilities
Steam Generator Building
Service Water System
Fee Simple Land
Control House
Precipitator Control House
Boiler Enclosure
Air Heaters
Step-up Substation
500kv Switchyard Facilities
-9- <PAGE>
Exhibit 10(a)57
PLANT MCINTOSH
COMBUSTION TURBINE
PURCHASE AND OWNERSHIP
PARTICIPATION AGREEMENT
between
GEORGIA POWER COMPANY
and
SAVANNAH ELECTRIC AND POWER COMPANY
Dated as of December 15, 1992
<PAGE>
Plant McIntosh
Combustion Turbine
Purchase and Ownership Participation Agreement
Table of Contents
Page
1. DEFINITIONS 1
(a) ADDITIONAL PLANT MCINTOSH CTS 1
(b) AFFILIATE 3
(c) AGENCY FUNCTIONS 3
(d) AGENT 3
(e) ARMY CORPS OF ENGINEERS 3
(f) ASSIGNMENT OF CT PURCHASE AGREEMENT 3
(g) BUSINESS DAY 3
(h) CAPITAL ACCOUNT 4
(i) CAPITAL BUDGET 4
(j) CLOSING 4
(k) COLLATERAL DOCUMENTS 4
(l) COMMERCIAL OPERATION 4
(m) CONSTRUCTION ACCOUNT 4
(n) CONSTRUCTION BUDGET 5
(o) COST OF CONSTRUCTION 5
(p) CT COMMON FACILITIES 6
(q) CT COMMON FACILITIES SITE 7
(r) CT FUEL SUPPLY 7
(s) DUE DILIGENCE 7
(t) EXECUTION AND DELIVERY 7
(u) FERC 7
(v) FORCE MAJEURE EVENT 7
(w) FUEL COSTS 8
(x) FUEL OIL TANK 8
(y) GEPD 8
(z) GOVERNMENTAL AUTHORITY 8
(aa) GPC PLANT MCINTOSH CTS 9
(ab) GPC PLANT MCINTOSH CTS SITE 9
(ac) GPSC 9
(ad) INDENTURE 9
(ae) LEASE 9
(af) LEGAL REQUIREMENTS 9
(ag) OPERATING ACCOUNT 10
(ah) OPERATING AGREEMENT 10
(ai) OPERATING BUDGET 10
(aj) OPERATING COSTS 10
(ak) PARTICIPANTS 10
-i-
<PAGE>
(al) PARTY 10
(am) PLANT MCINTOSH 10
(an) PLANT MCINTOSH CT NOS. 01 AND 02 11
(ao) PLANT MCINTOSH CT NOS. 03 AND 04 12
(ap) PLANT MCINTOSH CT NOS. 05 AND 06 14
(aq) PLANT MCINTOSH CT NOS. 07 AND 08 15
(ar) PLANT MCINTOSH CT PROJECT 17
(as) PLANT MCINTOSH CTS 17
(at) PLANT MCINTOSH CTS SITE 17
(au) 1994 PLANT MCINTOSH CTS 17
(av) 1995 PLANT MCINTOSH CTS 17
(aw) PLANT MCINTOSH SITE 17
(ax) PRIME RATE 17
(ay) PRO FORMA OWNERSHIP INTEREST 18
(az) PROJECT MANAGEMENT BOARD 18
(ba) PRUDENT UTILITY PRACTICE 18
(bb) PURCHASE PRICE 19
(bc) RELEASE 19
(bd) RENT 19
(be) SAVANNAH PLANT MCINTOSH CTS 19
(bf) SAVANNAH PLANT MCINTOSH CTS SITE. 19
(bg) SCSI 19
(bh) SEC 20
(bi) SITE REPRESENTATIVE 20
(bj) THE SOUTHERN COMPANY 20
(bk) UNIFORM SYSTEM OF ACCOUNTS 20
2. REPRESENTATIONS AND WARRANTIES 20
(a) GPC REPRESENTATIONS AND WARRANTIES 20
(i) Organization and Existence 20
(ii) Due Authorization 20
(iii) Litigation 21
(iv) No Material Violation, No Material
Impairment. 21
(v) Approvals 22
(b) SAVANNAH REPRESENTATIONS AND WARRANTIES 22
(i) Organization and Existence 22
(ii) Due Authorization 22
(iii) Litigation 23
(iv) No Material Violation, No Material
Impairment 23
(v) Approvals 24
3. SALE TO GPC OF AN UNDIVIDED OWNERSHIP INTEREST IN
CERTAIN OF THE CT COMMON FACILITIES EQUIPMENT 24
(a) SALE OF ASSETS 24
(b) PURCHASE PRICE AND PAYMENT 24
(c) CLOSING 25
-ii-
<PAGE>
4. LEASE TO GPC OF THE GPC PLANT MCINTOSH CTS SITE AND THE
CT COMMON FACILITIES SITE 26
(a) LEASE OF LAND 26
(b) RENT AND PAYMENT 27
(c) EXECUTION AND DELIVERY 27
(d) AMENDMENT OF LEASE IN CONNECTION WITH THE
CONSTRUCTION OF ONE OR MORE ADDITIONAL PLANT
MCINTOSH CTS 28
5. AGENCY 29
(a) APPOINTMENT 29
(b) AUTHORITY AND RESPONSIBILITY 29
(c) LIABILITY, REMEDIES AND LIMITATIONS OF LIABILITY 31
(d) MANAGEMENT AND CONSTRUCTION AUDITS 33
(e) ON-SITE OBSERVATION AND INSPECTION 33
(f) INDEMNIFICATION 34
(g) AVAILABILITY OF RECORDS 34
(h) RIGHT TO COPIES 34
(i) PLANT TOURS 35
(j) BILLING AND ACCOUNTING 35
(k) PLANT MCINTOSH CT PROJECT MANAGEMENT BOARD 35
(l) RECORD KEEPING 35
6. OWNERSHIP, RIGHTS AND OBLIGATIONS 36
(a) OWNERSHIP 36
(b) NONPAYMENT 37
(c) ALIENATION AND ASSIGNMENT 39
(d) DAMAGE OR DESTRUCTION 43
(e) TAXES 44
(f) INSURANCE 45
(g) RESERVED 46
(h) POLLUTION CONTROL AND OTHER FACILITIES 46
(i) NO IMPUTATION OF KNOWLEDGE 46
(j) CONSTRUCTION BUDGETS AND SCHEDULES 47
(k) PAYMENTS MADE DURING CONSTRUCTION 48
(l) CONSTRUCTION ACCOUNT 52
(m) SHARING OF COSTS - GENERAL 54
7. CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTICIPANTS 55
(a) NO ADVERSE DISTINCTION 55
(b) COOPERATION 55
(c) APPROVALS 55
(d) COMPLIANCE WITH LAWS AND ENVIRONMENTAL MATTERS 55
(e) SAFETY 56
(f) EQUAL EMPLOYMENT OPPORTUNITY AND CIVIL RIGHTS 57
8. CONDITIONS PRECEDENT TO EXECUTION AND DELIVERY 57
(a) SAVANNAH'S CONDITIONS 57
-iii-
<PAGE>
(i) Representations and Warranties Correct;
Performance by GPC 57
(ii) Litigation Certificate 58
(iii) Other Documents 58
(iv) Opinion of GPC's Counsel 58
(b) GPC'S CONDITIONS 59
(i) Representations and Warranties Correct;
Performance by Savannah 59
(ii) Litigation Certificate 59
(iii) Collateral Documents 60
(iv) Title Insurance 60
(v) No Material Change 60
(vi) Opinion of Savannah's Counsel 60
(vii) Due Diligence Satisfactory 61
(c) MUTUAL CONDITIONS 61
9. CONDITIONS PRECEDENT TO CLOSING 62
(a) SAVANNAH'S CONDITIONS 62
(i) Representations and Warranties Correct;
Performance by GPC 62
(ii) Litigation Certificate 62
(iii) Other Documents 63
(iv) Opinion of GPC's Counsel 63
(b) GPC'S CONDITIONS 64
(i) Representations and Warranties Correct;
Performance by Savannah 64
(ii) Litigation Certificate 64
(iii) Collateral Documents 64
(iv) No Material Change 65
(v) Opinion of Savannah's Counsel 65
(vi) Due Diligence Satisfactory 66
(c) MUTUAL CONDITIONS 66
10. MISCELLANEOUS 66
(a) SURVIVAL 66
(b) FURTHER ASSURANCES 67
(c) GOVERNING LAW 67
(d) NOTICE 67
(e) SECTION HEADINGS NOT TO AFFECT MEANING 68
(f) NO PARTNERSHIP 68
(g) TIME OF ESSENCE 68
(h) AMENDMENTS 68
(i) SUCCESSORS AND ASSIGNS 68
(j) COUNTERPARTS 68
(k) "AS IS" SALE 68
(l) COMPUTATION OF PERCENTAGE UNDIVIDED OWNERSHIP
INTEREST 69
(m) SUCCESSOR AGENT 69
(n) THE PLANT MCINTOSH CT UNITS 70
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(o) INSPECTION PRIOR TO EXECUTION AND DELIVERY AND
PRIOR TO CLOSING 70
(p) CONTINUING DUE DILIGENCE 70
(q) SEVERAL AGREEMENTS 71
(r) SPECIAL PROVISIONS RELATING TO THE CT COMMON
FACILITIES 71
(s) CONSTRUCTION OF "INCLUDING" 71
(t) NO DELAY 71
(u) OBLIGATION TO CONVEY INTERESTS IN THE CT COMMON
FACILITIES 72
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Exhibits
A Description of land for Plant McIntosh CTs
A1/2 Drawing depicting approximate location of land for
Plant McIntosh CT Nos. 01 and 02
A3/4 Drawing depicting approximate location of land for
Plant McIntosh CT Nos. 03 and 04
A5/6 Drawing depicting approximate location of land for
Plant McIntosh CT Nos. 05 and 06
A7/8 Drawing depicting approximate location of land for
Plant McIntosh CT Nos. 07 and 08
A9-16 Drawing depicting approximate location of land for
Additional Plant McIntosh CTs
B Drawing depicting approximate location of land constituting
the CT Common Facilities Site
C DELETED
D Form of bill of sale for sale to GPC of undivided ownership
interest in certain of the CT Common Facilities
E Form of lease for conveyance to GPC of leasehold interests
in the GPC Plant McIntosh CTs Site and the CT Common
Facilities Site
F Description of land constituting the Plant McIntosh Site
G Schedule of Permitted Exceptions
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THIS PLANT MCINTOSH COMBUSTION TURBINE PURCHASE AND
OWNERSHIP PARTICIPATION AGREEMENT (the "Agreement"), dated as of
December 15, 1992, is between GEORGIA POWER COMPANY, a
corporation organized and existing under the laws of the State of
Georgia ("GPC"), and SAVANNAH ELECTRIC AND POWER COMPANY, a
corporation organized and existing under the laws of the State of
Georgia ("Savannah").
W I T N E S S E T H:
A. GPC and Savannah desire and intend to establish their
respective ownership rights in the Plant McIntosh CTs, in the CT
Common Facilities and in the CT Fuel Supply on and subject to the
terms and provisions hereof and by an Operating Agreement, dated
as of the date hereof between GPC and Savannah pertaining to the
Plant McIntosh CTs, the CT Common Facilities and the CT Fuel
Supply, to provide for the planning, licensing, design,
procurement, construction, acquisition, completion, testing,
startup, management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of the Plant
McIntosh CTs, the CT Common Facilities and the CT Fuel Supply and
for the entitlement and use of capacity and energy from the Plant
McIntosh CTs and the sharing of the costs thereof and of the CT
Common Facilities and the CT Fuel Supply.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, GPC and Savannah hereby agree
as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in
this Agreement, the following terms have the meanings indicated
which meanings shall be equally applicable to both singular and
plural forms of such terms except when otherwise expressly
provided:
(a) ADDITIONAL PLANT MCINTOSH CTS. The "Additional Plant
McIntosh CTs" shall consist of:
(i) That certain real property upon which may be
constructed and located one or more of eight (8) complete
combustion turbine-generator units to be known as the
Additional Plant McIntosh CTs, the exact legal description
for which land shall be determined upon completion of such
construction, and which shall comprise a parcel of land
approximately 800 feet by 300 feet, and which parcel is
approximately shown as crosshatched and labeled as the
"Additional CTs Parcel" on Exhibit A9-16 hereof and
incorporated herein (which parcel shall be reduced, as
necessary, to suit the actual number of individual
Additional Plant McIntosh CTs constructed), together with
all such additional land, appurtenant easements or other
rights therein as may hereafter be acquired for the purposes
specified in subsection (iii) of this Section 1(a). GPC and
Savannah agree that the exact legal description for the
<PAGE>
aforedescribed parcel of land shall be substituted for
Exhibit A9-16 hereof upon completion of the survey of such
parcel of land and the approval of such survey by GPC, and
such legal description shall become a part hereof
automatically upon such substitution;
(ii) All personal property comprising the combustion
turbine-generator units to be known as the Additional Plant
McIntosh CTs, including, without limitation, eight complete
combustion turbine-generator units, the enclosures housing
the same and the main step-up transformers which are to be
used solely in connection with the Additional Plant McIntosh
CTs, all as the foregoing list of personal property may be
modified or supplemented at the closing;
(iii) Such additional land, easements or other rights
therein as may be acquired, and such additional facilities
and other tangible property as may be acquired, constructed,
installed or replaced solely in connection with the
Additional Plant McIntosh CTs or any one or more of them;
provided that (A) the cost of such additional land,
easements or other rights therein or of such additional
facilities or other tangible property shall be properly
recordable in accordance with the Uniform System of
Accounts, (B) such additional land, easements or other
rights therein or such additional facilities or other
tangible property shall have been acquired, constructed,
installed or replaced for the use of the Participants having
an ownership interest in the personal property comprising
the Additional Plant McIntosh CTs under and subject to the
provisions of this Agreement, and (C) the acquisition of
such additional land, easements or other rights therein or
the acquisition, construction, installation or replacement
of such additional facilities or other tangible property
shall (1) be necessary in order to keep the Additional Plant
McIntosh CTs (or any one or more of them) in good operating
condition or to satisfy the requirements of any Governmental
Authority having jurisdiction over the Additional Plant
McIntosh CTs, or (2) be agreed to by the Participants having
an ownership interest in the personal property comprising
the Additional Plant McIntosh CTs; and
(iv) Existing intangible property rights, and such
additional intangible property rights as may be hereafter
acquired, associated with the planning, licensing, design,
construction, acquisition, completion, testing, startup,
management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of any of
the items in this Section 1(a).
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<PAGE>
(b) AFFILIATE. An "Affiliate" of a Participant shall mean
any corporation, partnership (limited or general) or other person
or entity controlling, under common control with, or controlled
by such Participant.
(c) AGENCY FUNCTIONS. The "Agency Functions" shall mean
those activities which the Agent shall undertake on behalf of the
Participants which relate to the planning, design, licensing,
procurement, acquisition (other than acquisition by GPC of a
leasehold interest in the GPC Plant McIntosh CTs Site and the CT
Common Facilities Site and of an undivided ownership interest in
certain of the CT Common Facilities equipment pursuant to this
Agreement), construction, completion, testing, startup,
management, control, operation, maintenance, renewal, addition,
replacement, modification and disposal of the Plant McIntosh CTs,
the CT Common Facilities and the CT Fuel Supply, as the case may
be, under this Agreement, and the Operating Agreement.
(d) AGENT. "Agent" shall mean Savannah or its successors
with respect to its rights and obligations in the performance of
the Agency Functions on behalf of the Participants with respect
to the Plant McIntosh CTs, the CT Common Facilities and the CT
Fuel Supply. The term "Agent" shall also mean and refer to
Savannah (or its successor as Agent) acting on its own behalf
with respect to the Savannah Plant McIntosh CTs, the CT Common
Facilities and the CT Fuel Supply for so long as Savannah (or its
successor as Agent) owns an undivided ownership interest in the
Savannah Plant McIntosh CTs, the CT Common Facilities, and the CT
Fuel Supply, respectively.
(e) ARMY CORPS OF ENGINEERS. The "Army Corps of
Engineers" shall refer to the United States Army Corps of
Engineers, a subdivision of the United States Department of
Defense, or any entity succeeding to the powers and functions
thereof.
(f) ASSIGNMENT OF CT PURCHASE AGREEMENT. The "Assignment
of CT Purchase Agreement" shall refer to that certain Assignment
of Contract between SCSI and Savannah dated April 22, 1992 under
which SCSI assigned to Savannah that certain Agreement for the
Purchase and Sale of Combustion Turbine Generators and
Auxiliaries between ABB Energy Services, Inc. and SCSI dated as
of January 31, 1991, as amended by that certain Amendment Number
One, dated as of April 22, 1992.
(g) BUSINESS DAY. A "Business Day" shall be any Monday,
Tuesday, Wednesday, Thursday or Friday other than a day which has
been established by law or required by executive order as a
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<PAGE>
holiday for any commercial banking institution in the State of
Georgia.
(h) CAPITAL ACCOUNT. The "Capital Account" shall refer to
the separate, interest bearing account or accounts, in a bank or
banks, the deposits in which are insured, subject to applicable
limits, by the Federal Deposit Insurance Corporation and which
meets or meet all applicable requirements imposed upon
depositories of Savannah, established by Savannah as Agent,
pursuant to the terms of the Operating Agreement, for the payment
of additional Cost of Construction and Fuel Costs.
(i) CAPITAL BUDGET. The "Capital Budget" shall refer to
the budgets pertaining to additional Cost of Construction and
Fuel Costs for that portion of the Plant McIntosh CT Project
which has achieved Commercial Operation to be delivered to the
Participants pursuant to the terms of Section 2(c), DEVELOPMENT
OF BUDGETS, PLANS AND SCHEDULES, of the Operating Agreement.
(j) CLOSING. The "Closing" shall have the meaning
assigned in Section 3(c), CLOSING, hereof.
(k) COLLATERAL DOCUMENTS. The "Collateral Documents"
shall refer to the Operating Agreement and the Assignment of the
CT Purchase Agreement, collectively.
(l) COMMERCIAL OPERATION. "Commercial Operation" shall
refer to the date or dates when any of the Plant McIntosh CTs are
completed and declared fully operable by Savannah, as Agent for
the Participants with respect to construction; provided, however,
that none of the Additional Plant McIntosh CTs shall be included
in the Plant McIntosh CTs until such time as one or more
Participants provide written notice to the other Participants
that they are planning to construct one or more of the Additional
Plant McIntosh CTs, as the case may be, in order to serve such
Participants' energy needs. It is the intent of the Parties that
Plant McIntosh CT Nos. 07 and 08 achieve Commercial Operation on
January 24, 1994 (unit No. 08) and February 28, 1994 (unit No.
07), that Plant McIntosh CT Nos. 05 and 06 achieve Commercial
Operation on March 9, 1994 (unit No. 06) and April 7, 1994 (unit
No. 05), that Plant McIntosh CT Nos. 03 and 04 achieve Commercial
Operation on May 5, 1994 (unit No. 04) and June 3, 1994 (unit No.
03), and that Plant McIntosh CT Nos. 01 and 02 achieve Commercial
Operation on April 13, 1995 (unit No. 02) and May 26, 1995 (unit
No. 01).
(m) CONSTRUCTION ACCOUNT. The "Construction Account"
shall refer to the separate, interest bearing account or
accounts, in a bank or banks, the deposits in which are insured,
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<PAGE>
subject to applicable limits, by the Federal Deposit Insurance
Corporation and which meets or meet all applicable requirements
imposed upon depositories of Savannah, established by Savannah as
Agent, pursuant to the terms of this Agreement, for the payment
of Cost of Construction.
(n) CONSTRUCTION BUDGET. The "Construction Budget" shall
refer to the budgets pertaining to the Cost of Construction to be
delivered to the Participants pursuant to the terms of
Section 6(j), CONSTRUCTION BUDGETS AND SCHEDULES, hereof.
(o) COST OF CONSTRUCTION. The "Cost of Construction"
shall refer to all costs incurred by Savannah, as Agent, for the
Participants in connection with the planning, design, licensing,
procurement, acquisition, construction, completion, testing,
startup, renewal, addition, modification, replacement or disposal
of the Plant McIntosh CTs and the CT Common Facilities, or any
portion thereof, including, without limitation, that portion of
administrative and general expenses incurred by Savannah, as
Agent, which is properly and reasonably allocable to the Plant
McIntosh CTs and the CT Common Facilities and for which Savannah
has not been otherwise reimbursed by the Participants, which
costs are properly recordable in accordance with the Electric
Plant Instructions and in appropriate accounts as set forth in
the Uniform System of Accounts, and shall also include all costs
incurred by Savannah, as Agent for the Participants in connection
with the purchase and acquisition of (i) the initial supply of
fuel for the Plant McIntosh CTs to the extent such fuel is
consumed by any of the Plant McIntosh CTs prior to the respective
dates of Commercial Operation of such Plant McIntosh CTs,
including, without limitation, that portion of administrative and
general expenses incurred by Savannah, as Agent, which is
properly and reasonably allocable to such acquisition of fuel for
the Plant McIntosh CTs and for which Savannah has not been
otherwise reimbursed by the Participants, and (ii) the initial
supply of spare parts, and any replacements for such spare parts
utilized during pre-Commercial Operation construction activities,
for the Plant McIntosh CTs and the CT Common Facilities,
including, without limitation, that portion of administrative and
general expenses incurred by Savannah, as Agent, which is
properly and reasonably allocable to such acquisition of spare
parts and for which Savannah has not been otherwise reimbursed by
the Participants; provided, however, that Cost of Construction
shall not include (i) costs incurred by Savannah in connection
with the draining and cleaning (except sand-blasting) of the
existing Fuel Oil Tank as preparatory to its becoming part of the
CT Common Facilities, (ii) interest cost attributable to the
carrying of any Participant's respective investment in the Plant
McIntosh CTs or the CT Common Facilities, or (iii) costs and
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<PAGE>
expenses incurred by any Participant in connection with the
development of this Agreement or the Collateral Documents.
(p) CT COMMON FACILITIES. The "CT Common Facilities"
shall consist of:
(i) All the property, both real and personal, used
or intended to be used in common by, or in connection with,
the Plant McIntosh CTs, including, without limitation, (A)
all that certain real property which is used or intended to
be used in connection with the Plant McIntosh CTs, which
real property is approximately shown as crosshatched on the
site plan attached hereto as Exhibit B and made a part
hereof, the exact legal description of which land shall be
determined upon completion of construction of the equipment
and facilities comprising a portion of the CT Common
Facilities, GPC and Savannah hereby agreeing that the exact
legal description for such parcel shall be substituted for
Exhibit B hereof upon completion of the survey of such
parcel of land and the approval of such survey by GPC and
Savannah, and such legal description shall become a part
hereof automatically upon such substitution, and (B)
starting modules, service building, the fuel oil storage
tank or tanks, the fuel oil distribution system, the
improvements to the fire protection system, the water
storage tank and water distribution system, the natural gas
system, all switchyard equipment and facilities excluding
the generator step-up transformers, the transmission line or
lines connecting the Plant McIntosh CT Project switchyard to
the existing Plant McIntosh 230 kv switchyard, and all
miscellaneous property improvements such as roadways,
fencing and lighting but excluding the CT Fuel Supply;
(ii) Such additional land or rights therein as may be
acquired, and such additional facilities and other tangible
property as may be acquired, constructed, installed or
replaced, and which are used or intended to be used in
common by, or in connection with, the Plant McIntosh CTs,
(but excluding any such additional tangible property as may
constitute a portion of the CT Fuel Supply), provided that
(A) the cost of such additional land or rights therein or of
such additional facilities or other tangible property shall
be properly recordable in accordance with the Uniform System
of Accounts, (B) such additional land or rights therein or
such additional facilities or other tangible property shall
have been acquired, constructed, installed or replaced for
the common use of the Participants under and subject to the
provisions of this Agreement, and (C) the acquisition of
such additional land or rights therein or the acquisition,
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<PAGE>
construction, installation or replacement of such additional
facilities or other tangible property shall (1) be necessary
in order to keep the Plant McIntosh CT Project in good
operating condition or to satisfy the requirements of any
Governmental Authority having jurisdiction over the Plant
McIntosh CT Project, or (2) be mutually agreed to by the
Participants; and
(iii) Existing intangible property rights, and such
additional intangible property rights as may hereafter be
acquired, associated with the planning, licensing, design,
construction, acquisition, completion, testing, startup,
operation, renewal, addition, replacement, modification and
disposal of any of the items described in clauses (i)
through (iii) of this Section 1(p).
(q) CT COMMON FACILITIES SITE. The "CT Common Facilities
Site" shall refer to so much of the CT Common Facilities as
constitutes real property. The CT Common Facilities Site is a
subset of the Plant McIntosh Site and is a separate and distinct
parcel of land from the GPC Plant McIntosh CTs Site and the
Savannah Plant McIntosh CTs Site.
(r) CT FUEL SUPPLY. The "CT Fuel Supply" shall mean the
fossil fuel supply of oil maintained in the fuel oil storage tank
or of natural gas provided by pipeline, as the case may be, for
the Plant McIntosh CTs pursuant to Section 3(c), FOSSIL FUEL, of
the Operating Agreement.
(s) DUE DILIGENCE. "Due Diligence" shall have the meaning
assigned in Section 10(p), CONTINUING DUE DILIGENCE, hereof.
(t) EXECUTION AND DELIVERY. The "Execution and Delivery"
shall have the meaning assigned in Section 4(c), EXECUTION AND
DELIVERY, hereof.
(u) FERC. The "FERC" shall mean the Federal Energy
Regulatory Commission or any entity succeeding to the powers and
functions thereof.
(v) FORCE MAJEURE EVENT. A "Force Majeure Event" shall
refer to any event which occurs due to no fault of the Party
asserting the occurrence of such event, and which is beyond the
reasonable control of such Party, including, but not limited to:
strike or other labor difficulty or dispute; lockout; act of God;
change in Legal Requirements; absence as of any particular time
of precise engineering and scientific knowledge generally
available to fashion a method for compliance with Legal
Requirements or absence as of any particular time of appropriate
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<PAGE>
technology generally available which may be required for
compliance with Legal Requirements; act or omission of any
Governmental Authority; act or omission of any third party other
than the Party asserting a Force Majeure Event; act of a public
enemy; expropriation or confiscation of facilities; riot;
rebellion; sabotage; embargo; blockade; quarantine; restriction;
epidemic; accident; wreck or delay in transportation;
unavailability or shortage of fuel, power, material or labor;
equipment failure; declared or undeclared war; or damage
resulting from wind, lightning, fire, flood, earthquake,
explosion or other physical disaster; provided, however, that no
Party shall be required by the foregoing provisions to settle a
strike, lockout or other labor difficulty or dispute except when,
according to its own best judgment, such a settlement seems
advisable.
(w) FUEL COSTS. The "Fuel Costs" shall mean all costs
incurred by the Agent for the Participants that are allocable to
the acquisition, processing, transportation, delivering,
handling, storage, accounting, analysis, measurement and disposal
of fuel for the CT Fuel Supply, including, without limitation,
any advance payments in connection therewith, less credits
related to such costs applied as appropriate, and including,
without limitation, that portion of administrative and general
expenses which is properly and reasonably allocable to
acquisition and management of fuel for the CT Fuel Supply and for
which the Agent has not been otherwise reimbursed by the
Participants; provided, however, that Fuel Costs shall not
include any costs allocable to the purchase and acquisition of
the initial supply of fuel for the Plant McIntosh CT Project to
the extent such fuel is consumed by any of the Plant McIntosh CTs
prior to the respective dates of Commercial Operation of such
Plant McIntosh CTs.
(x) FUEL OIL TANK. The "Fuel Oil Tank" shall refer to the
existing nine million gallon fuel oil storage tank, wholly owned
by Savannah prior to the Closing, a percentage undivided
ownership interest in which will be conveyed to GPC at the
Closing, and which shall be used to store water for the Plant
McIntosh CTs.
(y) GEPD. The "GEPD" shall refer to the Georgia
Environmental Protection Division of the Georgia Natural
Resources Department, a subdivision of the State of Georgia, or
any entity succeeding to the powers and functions thereof.
(z) GOVERNMENTAL AUTHORITY. A "Governmental Authority"
shall mean any local, state, regional or federal administrative,
legal, judicial, or executive agency, court, commission,
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<PAGE>
department or other entity, but excluding any agency, commission,
department or other such entity acting in its capacity as lender,
guarantor or mortgagee.
(aa) GPC PLANT MCINTOSH CTS. The "GPC Plant McIntosh CTs"
shall refer collectively to Plant McIntosh CT Nos. 01 and 02,
Plant McIntosh CT Nos. 03 and 04, Plant McIntosh CT Nos. 07 and
08, and one or more of the Additional Plant McIntosh CTs, any one
of which shall be a GPC Plant McIntosh CT; provided, however,
that none of the Additional Plant McIntosh CTs shall be included
in the GPC Plant McIntosh CTs until such time as GPC provides
written notice to Savannah that GPC is planning to construct one
or more of the Additional Plant McIntosh CTs, as the case may be,
in order to serve GPC's energy needs; and provided further that
the GPC Plant McIntosh CTs shall not include any GPC Plant
McIntosh CT which GPC decides shall not be constructed and which
is so identified in a written notice to Savannah.
(ab) GPC PLANT MCINTOSH CTS SITE. The "GPC Plant McIntosh
CTs Site" shall refer to so much of the GPC Plant McIntosh CTs as
constitutes real property.
(ac) GPSC. The "GPSC" shall mean the Georgia Public
Service Commission or any governmental agency succeeding to the
powers and functions thereof.
(ad) INDENTURE. The "Indenture" shall refer to that
certain Indenture dated as of March 1, 1945, from Savannah to
NationsBank of Georgia, National Association, as Trustee, as
amended and supplemented to the date hereof.
(ae) LEASE. The "Lease" shall have the meaning assigned in
Section 4(a), LEASE OF LAND, hereof.
(af) LEGAL REQUIREMENTS. "Legal Requirements" shall mean
all laws, codes, ordinances, orders, judgments, decrees,
injunctions, licenses, rules, permits, approvals, regulations and
requirements of every Governmental Authority having jurisdiction
over the matter in question, whether federal, state or local,
which may be applicable to Savannah, as Agent, or any
Participant, as required by the context in which used, or to the
Plant McIntosh CT Project, or to the use, manner of use,
occupancy, possession, planning, licensing, design, procurement,
construction, acquisition, testing, startup, operation,
maintenance, management, control, addition, renewal,
modification, replacement or disposal of the Plant McIntosh CT
Project, or any portion or portions thereof.
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<PAGE>
(ag) OPERATING ACCOUNT. The "Operating Account" shall
refer to the separate, interest bearing account or accounts, in a
bank or banks, the deposits in which are insured, subject to
applicable limits, by the Federal Deposit Insurance Corporation
and which meets or meet all applicable requirements imposed upon
depositories of Savannah, established by Savannah as Agent,
pursuant to the terms of the Operating Agreement, for the payment
of Operating Costs.
(ah) OPERATING AGREEMENT. "Operating Agreement" shall
refer to that certain Plant McIntosh Combustion Turbine Operating
Agreement, dated as of the date hereof, between GPC and Savannah,
as such agreement may be amended from time to time.
(ai) OPERATING BUDGET. The "Operating Budget" shall refer
to the budgets pertaining to Operating Costs to be delivered to
the Participants pursuant to the terms of Section 2(c),
DEVELOPMENT OF BUDGETS, PLANS AND SCHEDULES, of the Operating
Agreement.
(aj) OPERATING COSTS. "Operating Costs" shall have the
meaning given in Section 1(af), OPERATING COSTS, of the Operating
Agreement.
(ak) PARTICIPANTS. "Participant" and "Participants" shall
refer individually or collectively, as the case may be, to GPC
and Savannah (in their capacities as owners of one or more of the
Plant McIntosh CTs) and to any permitted transferee or assignee
of either of them of an ownership or leasehold interest in the
Plant McIntosh CT Project pursuant to Section 6(c), ALIENATION
AND ASSIGNMENT, hereof made in conformity with those provisions
of this Agreement and the Operating Agreement pertaining to the
Plant McIntosh CTs, the CT Common Facilities and the CT Fuel
Supply, provided, however, such references shall only refer to an
entity for so long as said entity has an ownership or an
ownership and a leasehold interest in the Plant McIntosh CT
Project.
(al) PARTY. A "Party" shall refer to any entity which is
now or hereafter a party to this Agreement; provided, however,
such reference shall only refer to an entity for so long as such
entity is a party to this Agreement.
(am) PLANT MCINTOSH. "Plant McIntosh" shall refer to the
Plant McIntosh Site plus all improvements thereon including,
without limitation, the Plant McIntosh CT Project and that
certain Plant McIntosh 170 Mw coal-fired generating plant, owned
by Savannah, together with its supporting facilities and
equipment.
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(an) PLANT MCINTOSH CT NOS. 01 AND 02. Plant McIntosh CT
Nos. 01 and 02 shall refer to:
(i) That certain real property upon which shall be
constructed and located two (2) complete combustion turbine-
generator units to be known as Plant McIntosh CT Nos. 01 and
02, the exact legal description for which land shall be
determined upon completion of such construction, and which
shall comprise a parcel of land approximately 200 feet by
300 feet, and which parcel is approximately shown as
crosshatched and labeled as the "CT Nos. 01 and 02 Parcel"
on Exhibit A1/2 hereof and incorporated herein, together
with all such additional land, appurtenant easements or
other rights therein as may hereafter be acquired for the
purposes specified in subsection (iii) of this Section
1(an). GPC and Savannah agree that the exact legal
description for the aforedescribed parcel of land shall be
substituted for Exhibit A1/2 hereof upon completion of the
survey of such parcel of land and the approval of such
survey by GPC, and such legal description shall become a
part hereof automatically upon such substitution;
(ii) All personal property comprising the combustion
turbine-generator units to be known as Plant McIntosh CT
Nos. 01 and 02, including, without limitation, two complete
combustion turbine-generator units (each comprised of a gas
turbine block, a combustion chamber, a generator exciter
block, a stack, a fin fan cooler, an auxiliary skid, a water
injection block, a cooling water block, a power and control
module, a battery module, a generator breaker module, a
generator bus duct, unit auxiliary transformer secondary
switchgear, a fuel oil pump block, an air intake filter, a
unit auxiliary transformer and a transfer switch module),
the enclosures housing the same and a main step-up
transformer which are to be used solely in connection with
Plant McIntosh CT Nos. 01 and 02, all as the foregoing list
of personal property may be modified or supplemented at the
Closing;
(iii) Such additional land, easements or other rights
therein as may be acquired, and such additional facilities
and other tangible property as may be acquired, constructed,
installed or replaced solely in connection with Plant
McIntosh CT Nos. 01 or 02 or both; provided that (A) the
cost of such additional land, easements or other rights
therein or of such additional facilities or other tangible
property shall be properly recordable in accordance with the
Uniform System of Accounts, (B) such additional land,
easements or other rights therein or such additional
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facilities or other tangible property shall have been
acquired, constructed, installed or replaced for the use of
the Participant having an ownership interest in the personal
property comprising Plant McIntosh CT Nos. 01 and 02 under
and subject to the provisions of this Agreement, and (C) the
acquisition of such additional land, easements or other
rights therein or the acquisition, construction,
installation or replacement of such additional facilities or
other tangible property shall (1) be necessary in order to
keep Plant McIntosh CT Nos. 01 and 02 (or either of them) in
good operating condition or to satisfy the requirements of
any Governmental Authority having jurisdiction over Plant
McIntosh CT Nos. 01 and 02, or (2) be agreed to by the
Participant having an ownership interest in the personal
property comprising Plant McIntosh CT Nos. 01 and 02; and
(iv) Existing intangible property rights, and such
additional intangible property rights as may be hereafter
acquired, associated with the planning, licensing, design,
construction, acquisition, completion, testing, startup,
management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of any of
the items in this Section 1(an).
(ao) PLANT MCINTOSH CT NOS. 03 AND 04. Plant McIntosh CT
Nos. 03 and 04 shall refer to:
(i) That certain real property upon which shall be
constructed and located two (2) complete combustion turbine-
generator units to be known as Plant McIntosh CT Nos. 03 and
04, the exact legal description for which land shall be
determined upon completion of such construction, and which
shall comprise a parcel of land approximately 200 feet by
300 feet, and which parcel is approximately shown as
crosshatched and labeled as the "CT Nos. 03 and 04 Parcel"
on Exhibit A3/4 hereof and incorporated herein, together
with all such additional land, appurtenant easements or
other rights therein as may hereafter be acquired for the
purposes specified in subsection (iii) of this Section
1(ao). GPC and Savannah agree that the exact legal
description for the aforedescribed parcel of land shall be
substituted for Exhibit A3/4 hereof upon completion of the
survey of such parcel of land and the approval of such
survey by GPC, and such legal description shall become a
part hereof automatically upon such substitution;
(ii) All personal property comprising the combustion
turbine-generator units to be known as Plant McIntosh CT
Nos. 03 and 04, including, without limitation, two complete
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combustion turbine-generator units (each comprising a gas
turbine block, a combustion chamber, a generator exciter
block, a stack, a fin fan cooler, an auxiliary skid, a water
injection block, a cooling water block, a power and control
module, a battery module, a generator breaker module, a
generator bus duct, unit auxiliary transformer secondary
switchgear, a fuel oil pump block, an air intake filter, a
unit auxiliary transformer and a transfer switch module),
the enclosures housing the same and a main step-up
transformer which are to be used solely in connection with
Plant McIntosh CT Nos. 03 and 04, all as the foregoing list
of personal property may be modified or supplemented at the
Closing;
(iii) Such additional land, easements or other rights
therein as may be acquired, and such additional facilities
and other tangible property as may be acquired, constructed,
installed or replaced solely in connection with Plant
McIntosh CT Nos. 03 or 04 or both; provided that (A) the
cost of such additional land, easements or other rights
therein or of such additional facilities or other tangible
property shall be properly recordable in accordance with the
Uniform System of Accounts, (B) such additional land,
easements or other rights therein or such additional
facilities or other tangible property shall have been
acquired, constructed, installed or replaced for the use of
the Participant having an ownership interest in the personal
property comprising Plant McIntosh CT Nos. 03 and 04 under
and subject to the provisions of this Agreement, and (C) the
acquisition of such additional land, easements or other
rights therein or the acquisition, construction,
installation or replacement of such additional facilities or
other tangible property shall (1) be necessary in order to
keep Plant McIntosh CT Nos. 03 and 04 (or either of them) in
good operating condition or to satisfy the requirements of
any Governmental Authority having jurisdiction over Plant
McIntosh CT Nos. 03 and 04, or (2) be agreed to by the
Participant having an ownership interest in the personal
property comprising Plant McIntosh CT Nos. 03 and 04; and
(iv) Existing intangible property rights, and such
additional intangible property rights as may be hereafter
acquired, associated with the planning, licensing, design,
construction, acquisition, completion, testing, startup,
management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of any of
the items in this Section 1(ao).
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<PAGE>
(ap) PLANT MCINTOSH CT NOS. 05 AND 06. Plant McIntosh CT
Nos. 05 and 06 shall refer to:
(i) That certain real property upon which shall be
constructed and located two (2) complete combustion turbine-
generator units to be known as Plant McIntosh CT Nos. 05 and
06, the exact legal description for which land shall be
determined upon completion of such construction, and which
shall comprise a parcel of land approximately 200 feet by
300 feet, and which parcel is approximately shown as
crosshatched and labeled as the "CT Nos. 05 and 06 Parcel"
on Exhibit A5/6 hereof and incorporated herein, together
with all such additional land, appurtenant easements or
other rights therein as may hereafter be acquired for the
purposes specified in subsection (iii) of this Section
1(ap). GPC and Savannah agree that the exact legal
description for the aforedescribed parcel of land shall be
substituted for Exhibit A5/6 hereof upon completion of the
survey of such parcel of land and the approval of such
survey by GPC, and such legal description shall become a
part hereof automatically upon such substitution;
(ii) All personal property comprising the combustion
turbine-generator units to be known as Plant McIntosh CT
Nos. 05 and 06, including, without limitation, two complete
combustion turbine-generator units (each comprising a gas
turbine block, a combustion chamber, a generator exciter
block, a stack, a fin fan cooler, an auxiliary skid, a water
injection block, a cooling water block, a power and control
module, a battery module, a generator breaker module, a
generator bus duct, unit auxiliary transformer secondary
switchgear, a fuel oil pump block, an air intake filter, a
unit auxiliary transformer and a transfer switch module),
the enclosures housing the same and a main step-up
transformer which are to be used solely in connection with
Plant McIntosh CT Nos. 05 and 06, all as the foregoing list
of personal property may be modified or supplemented at the
Closing;
(iii) Such additional land, easements or other rights
therein as may be acquired, and such additional facilities
and other tangible property as may be acquired, constructed,
installed or replaced solely in connection with Plant
McIntosh CT Nos. 05 or 06 or both; provided that (A) the
cost of such additional land, easements or other rights
therein or of such additional facilities or other tangible
property shall be properly recordable in accordance with the
Uniform System of Accounts, (B) such additional land,
easements or other rights therein or such additional
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facilities or other tangible property shall have been
acquired, constructed, installed or replaced for the use of
the Participant having an ownership interest in the personal
property comprising Plant McIntosh CT Nos. 05 and 06 under
and subject to the provisions of this Agreement, and (C) the
acquisition of such additional land, easements or other
rights therein or the acquisition, construction,
installation or replacement of such additional facilities or
other tangible property shall (1) be necessary in order to
keep Plant McIntosh CT Nos. 05 and 06 (or either of them) in
good operating condition or to satisfy the requirements of
any Governmental Authority having jurisdiction over Plant
McIntosh CT Nos. 05 and 06, or (2) be agreed to by the
Participant having an ownership interest in the personal
property comprising Plant McIntosh CT Nos. 05 and 06; and
(iv) Existing intangible property rights, and such
additional intangible property rights as may be hereafter
acquired, associated with the planning, licensing, design,
construction, acquisition, completion, testing, startup,
management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of any of
the items in this Section 1(ap).
(aq) PLANT MCINTOSH CT NOS. 07 AND 08. Plant McIntosh CT
Nos. 07 and 08 shall refer to:
(i) That certain real property upon which shall be
constructed and located two (2) complete combustion turbine-
generator units to be known as Plant McIntosh CT Nos. 07 and
08, the exact legal description for which land shall be
determined upon completion of such construction, and which
shall comprise a parcel of land approximately 200 feet by
300 feet, and which parcel is approximately shown as
crosshatched and labeled as the "CT Nos. 07 and 08 Parcel"
on Exhibit A7/8 hereof and incorporated herein, together
with all such additional land, appurtenant easements or
other rights therein as may hereafter be acquired for the
purposes specified in subsection (iii) of this Section
1(aq). GPC and Savannah agree that the exact legal
description for the aforedescribed parcel of land shall be
substituted for Exhibit A7/8 hereof upon completion of the
survey of such parcel of land and the approval of such
survey by GPC, and such legal description shall become a
part hereof automatically upon such substitution;
(ii) All personal property comprising the combustion
turbine-generator units to be known as Plant McIntosh CT
Nos. 07 and 08, including, without limitation, two complete
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<PAGE>
combustion turbine-generator units (each comprising a gas
turbine block, a combustion chamber, a generator exciter
block, a stack, a fin fan cooler, an auxiliary skid, a water
injection block, a cooling water block, a power and control
module, a battery module, a generator breaker module, a
generator bus duct, unit auxiliary transformer secondary
switchgear, a fuel oil pump block, an air intake filter, a
unit auxiliary transformer and a transfer switch module),
the enclosures housing the same and a main step-up
transformer which are to be used solely in connection with
Plant McIntosh CT Nos. 07 and 08, all as the foregoing list
of personal property may be modified or supplemented at the
Closing;
(iii) Such additional land, easements or other rights
therein as may be acquired, and such additional facilities
and other tangible property as may be acquired, constructed,
installed or replaced solely in connection with Plant
McIntosh CT Nos. 07 or 08 or both; provided that (A) the
cost of such additional land, easements or other rights
therein or of such additional facilities or other tangible
property shall be properly recordable in accordance with the
Uniform System of Accounts, (B) such additional land,
easements or other rights therein or such additional
facilities or other tangible property shall have been
acquired, constructed, installed or replaced for the use of
the Participant having an ownership interest in the personal
property comprising Plant McIntosh CT Nos. 07 and 08 under
and subject to the provisions of this Agreement, and (C) the
acquisition of such additional land, easements or other
rights therein or the acquisition, construction,
installation or replacement of such additional facilities or
other tangible property shall (1) be necessary in order to
keep Plant McIntosh CT Nos. 07 and 08 (or either of them) in
good operating condition or to satisfy the requirements of
any Governmental Authority having jurisdiction over Plant
McIntosh CT Nos. 07 and 08, or (2) be agreed to by the
Participant having an ownership interest in the personal
property comprising Plant McIntosh CT Nos. 07 and 08; and
(iv) Existing intangible property rights, and such
additional intangible property rights as may be hereafter
acquired, associated with the planning, licensing, design,
construction, acquisition, completion, testing, startup,
management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of any of
the items in this Section 1(aq).
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<PAGE>
(ar) PLANT MCINTOSH CT PROJECT. The "Plant McIntosh CT
Project" shall refer to the Plant McIntosh CTs, the CT Common
Facilities and the CT Fuel Supply.
(as) PLANT MCINTOSH CTS. The "Plant McIntosh CTs" shall
consist collectively of Plant McIntosh CT Nos. 01 and 02, Plant
McIntosh CT Nos. 03 and 04, Plant McIntosh CT Nos. 05 and 06,
Plant McIntosh CT Nos. 07 and 08, and one or more of the
Additional Plant McIntosh CTs, any one of which shall be a Plant
McIntosh CT; provided, however, that none of the Additional Plant
McIntosh CTs shall be included in the Plant McIntosh CTs until
such time as one or more Participants provide written notice to
the other Participants that they are planning to construct one or
more of the Additional Plant McIntosh CTs, as the case may be, in
order to serve such Participants' energy needs; and provided
further that the Plant McIntosh CTs shall not include any Plant
McIntosh CT which the Participant owning such unit decides shall
not be constructed and which is so identified in a written notice
to the other Participant.
(at) PLANT MCINTOSH CTS SITE. The "Plant McIntosh CTs
Site" shall refer to that portion of the Plant McIntosh CTs which
constitutes real property.
(au) 1994 PLANT MCINTOSH CTS. The "1994 Plant McIntosh
CTs" shall refer to Plant McIntosh CT Nos. 07 and 08, Plant
McIntosh CT Nos. 05 and 06, and Plant McIntosh CT Nos. 03 and 04,
any one (of the six) of which shall be a 1994 Plant McIntosh CT;
provided, however, that the 1994 Plant McIntosh CTs shall not
include any 1994 Plant McIntosh CT which the Participant owning
such unit decides shall not be constructed and which is so
identified in a written notice to the other Participant.
(av) 1995 PLANT MCINTOSH CTS. The "1995 Plant McIntosh
CTs" shall refer to Plant McIntosh CT Nos. 01 and 02, either one
of which shall be a 1995 Plant McIntosh CT; provided, however,
that the 1995 Plant McIntosh CTs shall not include any 1995 Plant
McIntosh CT which the Participant owning such unit decides shall
not be constructed and which is so identified in a written notice
to the other Participant.
(aw) PLANT MCINTOSH SITE. The "Plant McIntosh Site" shall
refer to the real property which is described in Exhibit F
attached hereto and made a part hereof.
(ax) PRIME RATE. The "Prime Rate" shall mean the per annum
rate of interest announced from time to time by Chemical Bank as
its prime rate, and with respect to any payment or reimbursement
to be made hereunder to which interest is to be added (other than
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<PAGE>
an adjustment to the Purchase Price), shall be determined as of
the date such payment or reimbursement is due, and with respect
to any adjustment to the Purchase Price as to which interest is
to be added pursuant to the terms hereof, shall be determined as
of the date of the Closing for which such adjustment is to be
made. The Prime Rate shall be calculated on the basis of a 365-
day year for the actual number of days that the payment,
reimbursement or purchase price adjustment, as the case may be,
has not been made.
(ay) PRO FORMA OWNERSHIP INTEREST. A "Pro Forma Ownership
Interest" shall mean for each Participant the number of the Plant
McIntosh CTs (whether or not completed) owned by such Participant
divided by the total number of Plant McIntosh CTs (whether or not
completed); provided, however, that none of the Additional Plant
McIntosh CTs shall be included in the calculation of Pro Forma
Ownership Interest until such time as one or more Participants
provide written notice to the other Participants that they are
planning to construct one or more of the Additional Plant
McIntosh CTs, as the case may be, in order to serve such
Participants' energy needs; provided further that, for purposes
of this definition of Pro Forma Ownership Interest, no Plant
McIntosh CT shall be included which has been cancelled by the
Participant owning such Plant McIntosh CT and which is identified
in a written notice of cancellation to the other Participant.
(az) PROJECT MANAGEMENT BOARD. The "Project Management
Board" shall refer to the Plant McIntosh CT Project Management
Board established pursuant to Section 5(k), PLANT MCINTOSH CT
PROJECT MANAGEMENT BOARD, hereof.
(ba) PRUDENT UTILITY PRACTICE. "Prudent Utility Practice"
at a particular time shall mean any of the practices, methods and
acts engaged in or approved by a significant portion of the
electric utility industry prior to such time, or any of the
practices, methods and acts, which in the exercise of reasonable
judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result
at the lowest reasonable cost consistent with good business
practices, reliability, safety and expedition. "Prudent Utility
Practice" is not intended to be limited to the optimum practice,
method or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts having due regard
for, among other things, manufacturers' warranties and the
requirements of Governmental Authorities of competent
jurisdiction and the requirements of this Agreement and the
Operating Agreement. Compliance by Savannah with the provisions
of any budget estimate which has been altered by the Participants
pursuant to this Agreement or the Operating Agreement, as the
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case may be, from any such estimate submitted by Savannah shall
not, in and of itself, constitute a breach by Savannah of its
obligation to discharge its responsibilities as Agent for the
Participants hereunder in accordance with Prudent Utility
Practice.
(bb) PURCHASE PRICE. The "Purchase Price" shall have the
meaning assigned in subsection (i) of Section 3(b), PURCHASE
PRICE AND PAYMENT, hereof.
(bc) RELEASE. "Release" shall mean a release executed and
delivered by the holder of a mortgage, deed to secure debt or
other security interest (including, without limitation,
NationsBank of Georgia, National Association, as Trustee under
the Indenture) sufficient to release the real or personal
property which is the subject thereof from the lien, security
title and effect of such mortgage, deed to secure debt or other
security insterest and, with respect to any release given as to
real property, sufficient to eliminate such mortgage, deed to
secure debt or other security interest as an exception to the
coverage under an owner's title insurance policy.
(bd) RENT. The "Rent" shall have the meaning assigned in
subsection (i) of Section 4(b), RENT AND PAYMENT, hereof.
(be) SAVANNAH PLANT MCINTOSH CTS. The "Savannah Plant
McIntosh CTs" shall refer to Plant McIntosh CT Nos. 05 and 06 and
one or more of the Additional Plant McIntosh CTs, any one of
which is a Savannah Plant McIntosh CT; provided, however, that
none of the Additional Plant McIntosh CTs shall be included in
the Savannah Plant McIntosh CTs until such time as Savannah
provides written notice to GPC that Savannah is planning to
construct one or more of the Additional Plant McIntosh CTs, as
the case may be, in order to serve Savannah's energy needs; and
provided further that the Savannah Plant McIntosh CTs shall not
include any Savannah Plant McIntosh CT which Savannah decides
shall not be constructed and which is so identified in a written
notice to GPC.
(bf) SAVANNAH PLANT MCINTOSH CTS SITE. The "Savannah Plant
McIntosh CTs Site" shall refer to so much of the Savannah Plant
McIntosh CTs as constitutes real property.
(bg) SCSI. "SCSI" shall mean Southern Company Services,
Inc., a corporation organized and existing under the laws of the
State of Alabama, and any successor corporation.
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<PAGE>
(bh) SEC. The "SEC" shall refer to the Securities and
Exchange Commission or any governmental agency succeeding to the
powers and functions thereof.
(bi) SITE REPRESENTATIVE. "Site Representative" shall
refer to the term as described in Section 5(e), ON-SITE
OBSERVATION AND INSPECTION, hereof.
(bj) THE SOUTHERN COMPANY. "The Southern Company" shall
refer to The Southern Company, a corporation organized and
existing under the laws of the State of Delaware.
(bk) UNIFORM SYSTEM OF ACCOUNTS. The "Uniform System of
Accounts" shall mean the FERC Uniform System of Accounts
prescribed for Public Utilities and Licensees (Class A and Class
B), as the same now exists or may be hereafter amended by the
FERC.
2. REPRESENTATIONS AND WARRANTIES.
(a) GPC REPRESENTATIONS AND WARRANTIES. GPC hereby
represents and warrants to Savannah as follows:
(i) Organization and Existence. GPC is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and has
sufficient corporate power and authority to own and lease
those portions of the Plant McIntosh CT Project as it is
required to own and lease from time to time pursuant to the
terms of this Agreement, to execute and deliver this
Agreement and the Operating Agreement and to perform its
obligations hereunder and thereunder and to carry on its
business as it is now being conducted and as it is
contemplated hereunder and thereunder to be conducted in the
future.
(ii) Due Authorization.
(A) The execution, delivery and performance of
this Agreement by GPC has been duly and effectively
authorized by all requisite corporate action. This
Agreement constitutes the legal, valid and binding
obligation of GPC, enforceable against GPC in
accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of
creditors generally and by general principles of
equity.
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<PAGE>
(B) The execution, delivery and performance of
the Operating Agreement by GPC has been duly and
effectively authorized by all requisite corporate
action. The Operating Agreement constitutes the legal,
valid and binding obligation of GPC, enforceable
against GPC in accordance with its terms, except as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
rights of creditors generally and by general principles
of equity.
(iii) Litigation. Other than as may be disclosed in
GPC's Annual Report on Form 10-K for the year ended 1991,
its quarterly reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1992, or as may be
otherwise disclosed in writing by GPC to Savannah, there is
no action, suit, claim, proceeding or investigation pending
or threatened against GPC by or before any Governmental
Authority having jurisdiction over GPC or its ownership
interest in the Plant McIntosh CT Project which, if
adversely determined, would have a material adverse effect
upon GPC's ability to enter into and perform its material
obligations and consummate the material transactions
contemplated by this Agreement and the Operating Agreement
or the material rights of Savannah as a tenant in common in
the CT Common Facilities and the CT Fuel Supply. GPC is not
subject to any material outstanding judgment, order, writ,
injunction or decree of any Governmental Authority having
jurisdiction over GPC or its ownership interest in the Plant
McIntosh CT Project which would materially and adversely
affect its ability to enter into and perform its material
obligations under this Agreement and the Operating Agreement
or the material rights of Savannah as a tenant in common in
the CT Common Facilities and the CT Fuel Supply.
(iv) No Material Violation, No Material Impairment.
There is no provision of GPC's charter or bylaws, nor any
existing statute, law, regulation, material note, bond,
resolution, indenture, agreement or instrument to which GPC
is a party and which is enforceable against GPC which would
be materially violated by or which would materially impair
GPC's entry into this Agreement or the Operating Agreement,
the performance by GPC of its material obligations hereunder
and thereunder in accordance with the terms hereof and
thereof or the consummation of the material transactions
contemplated hereby or thereby in accordance with the terms
hereof and thereof.
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(v) Approvals. Other than (A) the approval by the
GPSC of the GPC Application for Certification of the
McIntosh Combustion Turbine Project, (B) the approval of the
SEC under the Public Utility Holding Company Act of 1935,
(C) the approval of the GEPD, the Army Corps of Engineers
and Effingham County for certain permits or licenses, and
(D) the agreement of the Parties hereto to the terms and
provisions and execution and delivery of the Operating
Agreement, there are no approvals or consents other than
those referenced in Section 8, CONDITIONS PRECEDENT TO
EXECUTION AND DELIVERY, and Section 9, CONDITIONS PRECEDENT
TO CLOSING, hereof, the absence of which would materially
impair GPC's ability to consummate the transactions
described in Section 3, SALE TO GPC OF AN UNDIVIDED
OWNERSHIP INTEREST IN CERTAIN OF THE CT COMMON FACILITIES
EQUIPMENT, and Section 4, LEASE TO GPC OF THE GPC PLANT
MCINTOSH CTS SITE AND THE CT COMMON FACILITIES SITE, hereof.
(b) SAVANNAH REPRESENTATIONS AND WARRANTIES. Savannah
hereby represents and warrants to GPC as follows:
(i) Organization and Existence. Savannah is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and has
sufficient corporate power and authority to own those
portions of the Plant McIntosh CT Project as it now owns and
as it is required to own from time to time pursuant to the
terms of this Agreement, to execute and deliver this
Agreement and the Collateral Documents and to perform its
obligations hereunder and thereunder and to carry on its
business as it is now being conducted and as it is
contemplated hereunder and thereunder to be conducted in the
future.
(ii) Due Authorization.
(A) The execution, delivery and performance of
this Agreement by Savannah has been duly and
effectively authorized by all requisite corporate
action. This Agreement constitutes the legal, valid
and binding obligation of Savannah, enforceable against
Savannah in accordance with its terms, except as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
rights of creditors generally and by general principles
of equity.
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<PAGE>
(B) The execution, delivery and performance of
the Collateral Documents by Savannah has been duly and
effectively authorized by all requisite corporate
action. The Collateral Documents constitute the legal,
valid and binding obligations of Savannah, enforceable
against Savannah in accordance with their terms, except
as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
rights of creditors generally and by general principles
of equity.
(iii) Litigation. Other than as may be disclosed in
Savannah's Annual Report on Form 10-K for the year ended
1991, its quarterly reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1992, or as may be
otherwise disclosed in writing by Savannah to GPC, there is
no action, suit, claim, proceeding or investigation pending
or threatened against Savannah by or before any Governmental
Authority having jurisdiction over Savannah or its ownership
interest in Plant McIntosh which, if adversely determined,
would have a material adverse effect upon Savannah's ability
to enter into and perform its material obligations and
consummate the material transactions contemplated by this
Agreement and the Collateral Documents or the material
rights of GPC as a tenant in common in the CT Common
Facilities and the CT Fuel Supply. Savannah is not subject
to any material outstanding judgment, order, writ,
injunction or decree of any Governmental Authority having
jurisdiction over Savannah or its ownership interest in
Plant McIntosh which would materially and adversely affect
its ability to enter into and perform its material
obligations under this Agreement and the Collateral
Documents or the material rights of GPC as a tenant in
common in the CT Common Facilities and the CT Fuel Supply.
(iv) No Material Violation, No Material Impairment.
There is no provision of Savannah's charter or bylaws, nor
any existing statute, law, regulation, material note, bond,
resolution, indenture, agreement or instrument to which
Savannah is a party and which is enforceable against
Savannah which would be materially violated by or which
would materially impair Savannah's entry into this Agreement
or the Collateral Documents, the performance by Savannah of
its material obligations hereunder and thereunder in
accordance with the terms hereof and thereof or the
consummation of the material transactions contemplated
hereby or thereby in accordance with the terms hereof and
thereof; provided, however, no representation or warranty is
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given with respect to the provisions of the Indenture in the
event of a default by Savannah under the Indenture.
(v) Approvals. Other than (A) the approval by the
GPSC of the Savannah Application for Certification of the
McIntosh Combustion Turbine Project, (B) the approval of the
SEC under the Public Utility Holding Company Act of 1935,
(C) the approval of the GEPD, the Army Corps of Engineers
and Effingham County for certain permits or licenses, and
(D) the agreement of the Parties hereto to the terms and
provisions and the execution and delivery of the Operating
Agreement, there are no approvals or consents other than
those referenced in Section 8, CONDITIONS PRECEDENT TO
EXECUTION AND DELIVERY, and Section 9, CONDITIONS PRECEDENT
TO CLOSING, hereof, the absence of which would materially
impair Savannah's ability to consummate the transactions
described in Section 3, SALE TO GPC OF AN UNDIVIDED
OWNERSHIP INTEREST IN CERTAIN OF THE CT COMMON FACILITIES
EQUIPMENT, and Section 4, LEASE TO GPC OF THE GPC PLANT
MCINTOSH CTS SITE AND THE CT COMMON FACILITIES SITE, hereof.
3. SALE TO GPC OF AN UNDIVIDED OWNERSHIP INTEREST IN CERTAIN OF
THE CT COMMON FACILITIES EQUIPMENT.
(a) SALE OF ASSETS. Subject to the terms and conditions
of this Agreement, at the Closing Savannah will sell and convey
to GPC and GPC will purchase from Savannah a percentage undivided
ownership interest, equivalent to GPC's Pro Forma Ownership
Interest, as it may appear at the time, as a tenant in common
with Savannah, in that portion of the CT Common Facilities
(excluding the CT Common Facilities Site) which has been
acquired, constructed or completed prior to the Closing and
which, prior to the Closing, is exclusively the property of
Savannah. Such conveyance will be by Bill of Sale substantially
in the form of Exhibit D attached hereto and made a part hereof.
At the Closing, Savannah will furnish to GPC a Release from any
and all mortgages, deeds to secure debt or other security
interests on such undivided ownership interests in that portion
of the CT Common Facilities equipment being conveyed to GPC at
the Closing.
(b) PURCHASE PRICE AND PAYMENT.
(i) The purchase price for the assets to be acquired
by GPC at the Closing pursuant to subsection (i) of Section
3(a), SALE OF ASSETS, hereof ("Purchase Price") will be the
original book cost of such assets less depreciation. The
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Purchase Price shall be payable to Savannah at the Closing
in immediately available funds.
(ii) From time to time after the Closing, Savannah
and GPC shall execute and deliver such other instruments of
conveyance and transfer as may be necessary or appropriate
or as either of them may reasonably request to vest in GPC
its respective undivided ownership interests in and to that
portion of the CT Common Facilities equipment being conveyed
to GPC at the Closing.
(c) CLOSING. Subject to the provisions of Section 9,
CONDITIONS PRECEDENT TO CLOSING, hereof, the closing of the sale
and transfer contemplated in Section 3(a), SALE OF ASSETS, hereof
(the "Closing") will take place at 10:00 a.m., 20 Business Days
prior to the scheduled first Commercial Operation date of any of
the Plant McIntosh CTs. Savannah shall provide GPC with written
notice of the Commercial Operation schedule 40 Business Days
prior to the scheduled first Commercial Operation date. The
Closing shall take place at the offices of Bouhan, Williams &
Levy, 447 Bull Street, Savannah, Georgia 31401.
If the Closing has not occurred on or prior to May 1,
1994, and postponement of the Closing is not mutually agreed to
in writing by GPC and Savannah, the Closing shall be cancelled
and all obligations, duties and rights of Savannah to GPC and GPC
to Savannah under this Agreement and the Operating Agreement
shall be of no further force and effect and Savannah shall have
no liability to GPC nor shall GPC have any liability to Savannah
hereunder except for the liability of Savannah or GPC for the
breach of its obligations hereunder on or prior to such date and
except as may otherwise be provided in Section 6(m), SHARING OF
COSTS - GENERAL, hereof. If on the date of the Closing, Savannah
or GPC is unable to consummate the transactions to be consummated
on such date due to the failure to receive a regulatory approval
stated herein to be a condition precedent to its ability to
perform, such approval has been applied for and has been
diligently pursued, and such approval remains pending and not
refused or rejected on such date, then Savannah or GPC, as the
case may be, shall be entitled to a reasonable extension of the
Closing in order to permit Savannah or GPC, as the case may be,
to obtain such pending approval.
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4. LEASE TO GPC OF THE GPC PLANT MCINTOSH CTS SITE AND THE CT
COMMON FACILITIES SITE.
(a) LEASE OF LAND. Subject to the terms and conditions of
this Agreement, at the Execution and Delivery Savannah will
execute and deliver to GPC a lease ("Lease") conveying (i) a 100%
leasehold interest in the GPC Plant McIntosh CTs Site, and (ii) a
percentage undivided interest, equivalent to GPC's Pro Forma
Ownership Interest, as it may appear at the time, in a leasehold
estate, as a tenant in common with Savannah, in the CT Common
Facilities Site. Such Lease will be substantially in the form of
Exhibit E attached hereto and made a part hereof. The Lease
shall terminate upon the earlier of (i) the termination of the
Operating Agreement, or (ii) the date which is 100 years from the
date of the Lease. At the Execution and Delivery, Savannah will
furnish to GPC a Release of such leasehold interests conveyed to
GPC in the GPC Plant McIntosh CTs Site and the CT Common
Facilities Site from the holder of any and all mortgages, deeds
to secure debt or other security interests, including, without
limitation, the Indenture.
In addition to the foregoing conveyances, Savannah
shall convey to GPC at the Execution and Delivery, easement
rights as follows: a non-exclusive easement, for the term of the
Lease, in, upon, over, under, through and across the Plant
McIntosh Site, less and except from the Plant McIntosh Site the
GPC Plant McIntosh CTs Site and the CT Common Facilities Site,
but including with respect to such grant of easement the Savannah
Plant McIntosh CTs Site. The terms and conditions of the
easement are as set forth in the Lease. As to the easement
rights to be granted in the Lease by Savannah to GPC, GPC
acknowledges and agrees that (i) Savannah reserves the right to
use the easement area in a manner wholly consistent with the
terms of the Lease, this Agreement, and the Operating Agreement,
(ii) the location of any improvements constructed or installed by
GPC pursuant to such easement shall be subject to the terms of
this Agreement, the Operating Agreement, the Lease and, if not
expressly governed thereby, to the prior, reasonable approval of
Savannah, and (iii) the use of such easement shall be for
purposes reasonably necessary or reasonably appropriate from time
to time in the operation of the Plant McIntosh CT Project or for
purposes for the benefit of or to be used in connection with the
Plant McIntosh CT Project.
From time to time after the Execution and Delivery, Savannah
and GPC shall execute and deliver such other instruments of
conveyance and transfer as may be necessary or appropriate or as
either of them may reasonably request to vest in GPC its
respective leasehold interests in and to the GPC Plant McIntosh
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CTs Site and the CT Common Facilities Site, as well as to provide
necessary easements appurtenant thereto.
(b) RENT AND PAYMENT. The rent for the leasehold
interests conveyed to GPC in Section 4(a), LEASE OF LAND, hereof
("Rent") shall be the sum of: (A) the original book cost of the
GPC Plant McIntosh CTs Site, plus (B) the original book cost of
the CT Common Facilities Site times GPC's Pro Forma Ownership
Interest; which sum shall then be multiplied by Savannah's
weighted cost of pretax capital as of December 31, 1991. The
Rent shall be paid to Savannah by July 1 of each year following
GPC's receipt of an annual invoice from Savannah for such Rent on
or about June 15 of each year. The first payment of the Rent
shall be prorated by the fraction of the number of days between
the Execution and Delivery and the date of Savannah's first
invoice divided by 365.
(c) EXECUTION AND DELIVERY. Subject to the provisions of
Section 8, CONDITIONS PRECEDENT TO EXECUTION AND DELIVERY hereof,
the execution and delivery of the Lease contemplated in Section
4(a), LEASE OF LAND, hereof (the "Execution and Delivery") will
take place at 10:00 a.m., 30 Business Days following receipt by
Savannah and GPC of all requisite approvals set forth in such
Section 8, but not later than April 1, 1994 at the offices of
Bouhan, Williams & Levy, 447 Bull Street, Savannah, Georgia.
If the Execution and Delivery has not occurred on or
prior to April 1, 1994, and postponement of the Execution and
Delivery is not mutually agreed to in writing by GPC and
Savannah, the Execution and Delivery shall be cancelled and all
obligations, duties and rights of Savannah to GPC and GPC to
Savannah under this Agreement and the Operating Agreement shall
be of no further force and effect and Savannah shall have no
liability to GPC nor shall GPC have any liability to Savannah
hereunder except for the liability of Savannah or GPC for the
breach of its obligations hereunder on or prior to such date and
except as may otherwise be provided in Section 6(m), SHARING OF
COSTS - GENERAL, hereof. If on the date of Execution and
Delivery, Savannah or GPC is unable to consummate the
transactions to be consummated on such date due to the failure to
receive a regulatory approval stated herein to be a condition
precedent to its ability to perform, such approval has been
applied for and has been diligently pursued, and such approval
remains pending and not refused or rejected on such date, then
Savannah or GPC, as the case may be, shall be entitled to a
reasonable extension of the Execution and Delivery in order to
permit Savannah or GPC, as the case may be, to obtain such
pending approval.
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(d) AMENDMENT OF LEASE IN CONNECTION WITH THE CONSTRUCTION
OF ONE OR MORE ADDITIONAL PLANT MCINTOSH CTS.
(i) The obligations of the Participants under this
Section 4(d) are subject to Section 7(c), APPROVALS, hereof.
In the event that GPC serves one or more notices that it
plans to construct one or more of the Additional Plant
McIntosh CTs, Savannah agrees that it will proceed
diligently in accordance with subsections (ii), (iii) and
(iv) of this Section 4(d) to a closing at which time
Savannah and GPC shall amend the Lease in order to convey to
GPC a 100% leasehold interest in the real property
associated with such one or more Additional Plant McIntosh
CTs such that GPC will always hold a 100% leasehold interest
in the GPC Plant McIntosh CTs Site.
(ii) Not more than 30 days following the date GPC
serves each notice that it plans to construct one or more of
the Additional Plant McIntosh CTs, GPC shall deliver to
Savannah a notice specifying the date on which the closing
contemplated in subsection (i) of this Section 4(d) shall
occur (the "closing notice"). Following receipt of each
such closing notice, the Participants shall proceed
diligently to such closing, at which time the closing
described in Section 10(u), OBLIGATION TO CONVEY INTERESTS
IN THE CT COMMON FACILITIES, hereof, shall also be
consummated. At such closing, Savannah and GPC shall
execute an amendment to the Lease, which shall substitute
for Exhibit A of said Lease the revised real property
description of the GPC Plant McIntosh CTs Site, such that
the Lease will convey a 100% leasehold interest in the
additional real property which is a part of such Additional
Plant McIntosh CTs. In connection with such amendment to
the Lease, Savannah shall deliver to GPC a properly executed
Release from the holder of any and all mortgages, deeds to
secure debt or other security interests of such leasehold
interest being conveyed by Savannah to GPC.
(iii) The increase in the Rent paid by GPC for each
conveyance of a leasehold interest pursuant to subsection
(i) of this Section 4(d), shall be the original book cost of
that percentage of the GPC Plant McIntosh CTs Site being
conveyed multiplied by Savannah's weighted cost of pretax
capital as of December 31, 1991.
(iv) From time to time after each closing pursuant to
this Section 4(d), the Participants shall execute and
deliver such other instruments of conveyance and transfer as
may be necessary or appropriate or as either of them may
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reasonably request to vest in GPC the leasehold interest in
that portion of the GPC Plant McIntosh CTs Site being
conveyed at such closing, including without limitation, any
necessary easements appurtenant thereto.
5. AGENCY.
(a) APPOINTMENT. Effective on the date of Execution and
Delivery, subject to the terms of this Agreement and the
Operating Agreement, the Participants hereby irrevocably appoint
Savannah as their Agent in connection with the Plant McIntosh
CTs, the CT Common Facilities and the CT Fuel Supply to act on
behalf of the Participants in performing the Agency Functions.
Savannah hereby accepts such appointment and agrees that it shall
discharge its responsibilities as Agent for the Participants in
accordance with the terms of this Agreement and in accordance
with Prudent Utility Practice.
(b) AUTHORITY AND RESPONSIBILITY. Subject to the
provisions of this Agreement and the Operating Agreement, as
Agent for the Participants, Savannah shall have sole authority
and responsibility with respect to the Agency Functions, and in
respect thereof, Savannah as Agent is authorized to take and
shall take, in the name and on behalf of the Participants all
reasonable actions which, in the discretion and judgment of
Savannah, are deemed necessary or advisable to effect the Agency
Functions, including, without limitation, the following:
(i) The making of such agreements and modifications
of existing agreements, other than this Agreement and the
Operating Agreement, and the taking of such other action as
Savannah as Agent deems necessary or appropriate, in its
sole discretion, or as may be required under the regulations
or directives of any Governmental Authority having
jurisdiction, with respect to the Agency Functions, which
such agreements and modifications shall, together with all
such existing agreements, be held by Savannah as Agent;
provided, however, that Savannah will develop procedures,
with respect to the purchase of equipment and materials and
the supply of services, which are mutually acceptable to the
Participants and which shall provide opportunity for the
Participants to participate in procurement decisions;
(ii) With respect to the disposal (including, without
limitation, retirement and salvaging) of all or any part of
the Plant McIntosh CTs (other than the Savannah Plant
McIntosh CTs), the making of such agreements and
modifications of existing agreements (other than this
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Agreement and the Operating Agreement) and the taking of
such other action as may be required under the regulations
or directives of any Governmental Authority having
jurisdiction or as Savannah as Agent deems necessary or
appropriate, with the consent in each case of the
Participants owning such Plant McIntosh CTs, which such
agreements and modifications, together with such existing
agreements, shall be held by Savannah as Agent; provided,
however, that Savannah shall not be required to obtain the
consent of any Participant prior to disposing of any
machinery, apparatus, supplies, equipment, tools or
implements which are (1) valued at less than $50,000.00
(original book cost), and (2) replaced or substituted for
with similar property of value at least equal to that of the
disposed property; provided, further, that Savannah is not
authorized by GPC to have any direct contact with the GPSC
on behalf of GPC without the written consent of GPC;
(iii) With respect to the disposal (including, without
limitation, retirement and salvaging) of all or any part of
the CT Common Facilities and the CT Fuel Supply, the making
of such agreements and modifications of existing agreements
(other than this Agreement and the Operating Agreement) and
the taking of such other action as may be required under the
regulations or directives of any Governmental Authority
having jurisdiction or as Savannah as Agent deems necessary
or appropriate, with the consent in each case of all the
Participants, which such agreements and modifications,
together with such existing agreements, shall be held by
Savannah as Agent; provided, however, that Savannah shall
not be required to obtain the consent of any Participant
prior to disposing of any machinery, apparatus, supplies,
equipment, tools or implements which are (1) valued at less
than $50,000.00 (original book cost), and (2) replaced or
substituted for with similar property of value at least
equal to that of the disposed property;
(iv) The execution and filing, with any Governmental
Authority having jurisdiction (except the GPSC on behalf of
GPC), of applications, amendments, reports and other
documents and filings in or in connection with the licensing
and other regulatory matters with respect to the Plant
McIntosh CTs, the CT Common Facilities, the CT Fuel Supply
or any combination thereof;
(v) The receipt of any notice or other communication
from any Governmental Authority having jurisdiction (except
the GPSC on behalf of GPC) as to any licensing or other
similar matter with respect to the Plant McIntosh CTs, the
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CT Common Facilities, the CT Fuel Supply or any combination
thereof; and
(vi) The provision of, or contracting with any third
party to purchase or provide, any equipment or facilities or
perform services in connection with the Plant McIntosh CTs,
the CT Common Facilities, or both, in accordance with the
provisions of this Agreement and the Operating Agreement.
GPC and Savannah agree that all such agreements which relate
to the Plant McIntosh CTs, the CT Common Facilities or the CT
Fuel Supply, described in this Section 5(b) which are entered
into after the effective date hereof shall, by their terms, be
made assignable by Savannah as Agent to any replacement or
successor Agent for the Agency Functions, pursuant to this
Agreement and the Operating Agreement; provided, however, that
any agreements between Savannah, as Agent, and its Affiliates
shall not be made assignable to any replacement or successor
Agent who is not also an Affiliate of Savannah.
(c) LIABILITY, REMEDIES AND LIMITATIONS OF LIABILITY.
(i) Notwithstanding any provision of law or any
provision of this Agreement, (A) in the event Savannah as
Agent fails to comply at any time with the provisions of
Section 7(a), NO ADVERSE DISTINCTION, hereof, or (B) in the
event that Savannah fails at any time to perform its duties,
responsibilities, obligations or functions hereunder as
Agent in accordance with Prudent Utility Practice, or (C) in
the event that Savannah conveys all of its undivided
ownership interest in the Plant McIntosh CT Project, then
the Participants shall have the right as their sole and
exclusive remedy to remove Savannah as Agent hereunder and
under the Operating Agreement in accordance with all of the
provisions of subsection (iv) of this Section 5(c).
GPC, in performing services, or acting as agent, for
Savannah in connection with the Plant McIntosh CT Project,
shall have equivalent limitations on its liability as are
set forth above for Savannah, as Agent.
(ii) The limitations upon the liability of Savannah
and the Participants herein shall also apply to the work
performed by Savannah and the Participants prior to the date
hereof and prior to the Execution and Delivery with respect
to the Plant McIntosh CTs, the CT Common Facilities or the
CT Fuel Supply.
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(iii) In the event that any particular application of
any of the limitations of liability contained in this
Section 5(c) should be finally adjudicated to be void as a
violation of the public policy of the State of Georgia, then
such limitation of liability shall not apply with respect to
such application to the extent (but only to the extent)
required in order for such limitation of liability not to be
void as a violation of such public policy, and such
limitations of liability shall remain in full force and
effect with respect to all other applications to the fullest
extent permitted by law.
(iv) The removal and replacement of Savannah as Agent
under this Agreement and under the Operating Agreement
pursuant to any provisions of this Agreement or the
Operating Agreement authorizing such removal and
replacement, shall be conducted in accordance with all of
the following provisions of this Section 5(c)(iv):
(A) The removal of Savannah as Agent under this
Agreement and the Operating Agreement with respect to
the Plant McIntosh CT Project (other than the Savannah
Plant McIntosh CTs) and the appointment of a successor
Agent shall be effected, subject to approval of any
Governmental Authority having jurisdiction, upon
written notice to Savannah executed by the Participant
or Participants owning the Plant McIntosh CT Project
(other than Savannah). Any such notice must identify
the date upon which such removal and appointment shall
be effective, the cause for such removal and the provi-
sions hereof or of the Operating Agreement or both upon
which such removal is based, and either the name of the
successor Agent appointed to replace Savannah as Agent
or the names of two potential successor Agents, one of
whom shall be appointed to replace Savannah as Agent.
In the event such notice of removal identifies two
potential successor Agents, the Participants owning the
Plant McIntosh CT Project (other than Savannah) shall
notify Savannah in writing of the identity of the one
appointed to replace Savannah as Agent forthwith upon
its appointment, which shall occur no later than the
date upon which the removal of Savannah as Agent is to
be effective as set forth in such notice of removal.
(B) Except as provided in the preceding paragraph
(A), Savannah shall have no obligation to continue as
Agent under this Agreement or under the Operating
Agreement from and after the date upon which its
removal as Agent is to be effective as set forth in
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said notice of removal. In addition, from and after
the date upon which such removal of Savannah as Agent
with respect to the Plant McIntosh CT Project (other
than the Savannah Plant McIntosh CTs) is to be
effective as set forth in the notice of removal, the
Participants (other than Savannah) shall indemnify and
hold Savannah harmless from and against any loss, cost
and expense resulting from the failure of the successor
Agent to assume such position on such effective date.
(C) Savannah agrees that it will cooperate with
the successor Agent in facilitating the assumption of
such position by the successor Agent and in generally
familiarizing the successor Agent and its employees and
agents with the Plant McIntosh CTs, the CT Common
Facilities and the CT Fuel Supply and with their
physical orientation and operation.
(d) MANAGEMENT AND CONSTRUCTION AUDITS. Each Participant
shall have the right from time to time to conduct management and
construction audits, at its own cost, of Savannah's performance
as Agent hereunder, either by its own officers and employees or
through its duly authorized agents or representatives. Savannah
shall cooperate with each Participant in conducting any such
audit and, subject to the applicable regulations of any
Governmental Authority having jurisdiction, give each Participant
reasonable access to all contracts, records, and other documents
relating to the Plant McIntosh CTs (other than the Savannah Plant
McIntosh CTs), the CT Common Facilities, the CT Fuel Supply or
any combination thereof.
(e) ON-SITE OBSERVATION AND INSPECTION. Each Participant
shall be entitled to have a reasonable number of Site
Representatives at the Plant McIntosh CT Project, on a full or
part time basis (whether on site or off site), as determined by
each Participant. Reasonable office space and facilities shall
be made available to such Site Representative and the Participant
represented by such Site Representative shall be solely
responsible for the Operating Costs and Cost of Construction, if
construction of such office space is required, for such office
space.
Each Site Representative shall have the right to review
expenditures, audit records, inspect equipment, advise on
procurement, construction and repairs required for equipment,
review the progress of licensing, design, procurement,
construction, testing, startup, outages, review maintenance and
operating practices and otherwise observe all activities
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respecting the Plant McIntosh CTs (other than the Savannah Plant
McIntosh CTs), the CT Common Facilities and the CT Fuel Supply.
(f) INDEMNIFICATION. Except as provided in subsection
(iii) of Section 5(c), LIABILITY, REMEDIES AND LIMITATIONS OF
LIABILITY, hereof, in the event Savannah, in its performance as
Agent hereunder, or any Participant in its capacity as such, or
GPC in performing services, or acting as agent, for Savannah,
incurs any liability to any third party, any reasonable amount
paid by Savannah on account of such liability shall, to the
extent such liability would be classified as Operating Costs
under the Uniform System of Accounts, be considered an Operating
Cost and apportioned between the Participants pursuant to
Sections 5(h), PAYMENT AND SETTLEMENT OF OPERATING COSTS, and
5(g), SHARING OF COSTS - GENERAL, of the Operating Agreement, and
to the extent such liability would be classified as a Cost of
Construction under the Uniform System of Accounts, be considered
a Cost of Construction and apportioned between the Participants
pursuant to Section 6(k), PAYMENTS MADE DURING CONSTRUCTION,
hereof and Sections 5(j), PAYMENT AND SETTLEMENT OF COST OF
CONSTRUCTION, and 5(g), SHARING OF COSTS - GENERAL, of the
Operating Agreement, as appropriate.
(g) AVAILABILITY OF RECORDS. Savannah, as Agent, will at
all times make available to each Participant and its duly
authorized agents and representatives, and each Participant and
its duly authorized agents and representatives may audit all
books and records regarding Cost of Construction sufficiently to
allow it to determine that such costs and expenditures attributed
to the Plant McIntosh CTs (other than the Savannah Plant McIntosh
CTs), the CT Common Facilities, the CT Fuel Supply or any
combination thereof by Savannah, as Agent, pursuant to this
Agreement are appropriate or as needed to satisfy requests from
Governmental Authorities. No payment made pursuant to the
provisions of this Agreement shall constitute a waiver of any
right of a Participant to question or contest the correctness of
any charge or credit by Savannah, as Agent.
(h) RIGHT TO COPIES. Any Participant and any successor
Agent hereunder or under the Operating Agreement shall be
entitled to copy (i) any and all contracts, books, records,
reports and other documents and papers to which such
Participants, their respective officers, employees, duly
authorized agents or representatives and consultants or any
successor Agent is permitted access, or which Savannah has agreed
shall be available for audit, under the terms of this Agreement
or the Operating Agreement, and (ii) any and all planning,
licensing, construction, testing, architectural, engineering and
design drawings and specifications that have been or shall
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hereafter be prepared in connection with the Plant McIntosh CTs,
the CT Common Facilities, the CT Fuel Supply, or any combination
thereof.
(i) PLANT TOURS. Upon prior approval of Savannah (which
approval shall not be unreasonably withheld), any Participant may
schedule plant tours and visits (for individuals other than the
Site Representatives) at the Plant McIntosh CT Project, subject
to the rules and regulations of Governmental Authorities.
(j) BILLING AND ACCOUNTING. Notwithstanding any reference
to Savannah's standard accounting practices contained herein, all
billing and accounting matters, including, without limitation,
payments to be made by the Participants and the Agent, shall be
carried out in a manner consistent with Section 13(b) of the
Public Utility Holding Company Act of 1935, as amended.
(k) PLANT MCINTOSH CT PROJECT MANAGEMENT BOARD. From and
after the date hereof, there is established a Plant McIntosh CT
Project Management Board to supervise, manage and control the
planning, licensing, design, procurement, acquisition,
construction, completion, testing and startup of the Plant
McIntosh CT Project. The Project Management Board shall consist
of two members, and an alternate for each, designated by each of
the Participants and one member and an alternate designated by
SCSI. The Project Management Board shall continue to function
until the last Commercial Operation date of the 1995 Plant
McIntosh CTs substantially as contemplated in that certain
July 25, 1991 letter signed by Savannah, GPC and SCSI and
designating the members of the Project Management Board.
(l) RECORD KEEPING. In furtherance of its duties as
Agent, Savannah shall also keep and maintain appropriate plant
records in accordance with applicable Legal Requirements and
Savannah's record retention policies, and upon request from time
to time by a Participant, Savannah will inform such Participant
of the location of such records and provide access thereto. To
the extent that any Participant would like to retain records for
longer periods of time than Savannah would retain such records,
then, upon written request from such Participant, Savannah shall
provide such Participant, at such Participant's sole expense,
with originals or copies as appropriate of such records on or
prior to the date that Savannah would dispose of such records.
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6. OWNERSHIP, RIGHTS AND OBLIGATIONS.
(a) OWNERSHIP.
(i) The Participants shall own the Plant McIntosh
CTs as follows: (A) GPC shall have sole title to the GPC
Plant McIntosh CTs (other than the GPC Plant McIntosh CTs
Site), and (B) Savannah shall have sole title to the
Savannah Plant McIntosh CTs.
(ii) The Participants shall have title to the CT
Common Facilities (other than the CT Common Facilities Site)
and the CT Fuel Supply, as tenants in common with undivided
ownership interests therein, subject to the terms of this
Agreement and the Operating Agreement, and shall own the
foregoing property and possess rights and obligations
related thereto, including, without limitation, payment
therefor, in the proportions equal to their respective Pro
Forma Ownership Interests as they may appear from time to
time. The Participants shall be entitled to the capacity
and, subject to the Operating Agreement, the associated
energy of each Plant McIntosh CT which they may own from
time to time.
(iii) The Participants shall have the following real
property interests in the Savannah Plant McIntosh CTs Site,
the GPC Plant McIntosh CTs Site and the CT Common Facilities
Site: (A) Savannah shall own fee simple title to the
Savannah Plant McIntosh CTs Site, the GPC Plant McIntosh CTs
Site and the CT Common Facilities Site, subject to the
leasehold interests and easements conveyed by Savannah to
GPC pursuant to the Lease described herein; and (B) GPC
shall have a 100% leasehold interest in the GPC Plant
McIntosh CTs Site and a percentage undivided interest,
equivalent to GPC's Pro Forma Ownership Interest as it may
appear from time to time, in a leasehold estate, as a tenant
in common with Savannah, in the CT Common Facilities Site,
together with the easements appurtenant to such leasehold
estate conveyed by Savannah to GPC pursuant to the Lease
described herein.
(iv) Savannah reserves the right to hold, own, use
and possess the Plant McIntosh Site, less and except
therefrom the GPC Plant McIntosh CTs Site and the CT Common
Facilities Site, but including the Savannah Plant McIntosh
CTs Site, at all times during the term of this Agreement,
the Operating Agreement and the Lease in a manner wholly
consistent with the terms, covenants, agreements and
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provisions of this Agreement, the Operating Agreement and
the Lease.
(b) NONPAYMENT.
(i) Payments due from a Participant hereunder and
payments due from the Agent to a Participant, if any, not
made when due shall bear interest, compounded monthly until
paid, at a rate per annum equal to the lesser of (A) the
highest interest rate allowed by law, or (B) the higher of
(1) a rate five percentage points above the average yield on
the issue of six-month United States Treasury Bills, as
reported by the Federal Reserve Bank of New York, at the
sale of such Treasury Bills by the United States Treasury
next preceding the due date of such payment, or (2) a rate
five percentage points above the highest of the net interest
costs on the most recent issue of bonds or other long-term
obligations by any Participant or the Agent. Such interest
shall accrue and is and shall be expressed in simple
interest terms per annum in accordance with Section 7-4-2(a) of
the Official Code of Georgia Annotated (1989), as amended.
(ii) A nonpaying Participant shall have no right to
any output of capacity and energy of the Plant McIntosh CT
Project or to exercise any other right of a Participant
until all amounts overdue from that Participant have been
paid, together with interest at the rate provided in
subsection (i) of this Section 6(b), into the Construction
Account, Operating Account, the Capital Account or to
another Participant if the latter has paid such overdue
amount on behalf of such nonpaying Participant, as
appropriate. Such overdue amounts, together with such
interest, shall be paid into the Construction Account, the
Operating Account or the Capital Account, as appropriate,
only to the extent that such amounts have not been paid by
another Participant pursuant to the further provisions of
this Section 6(b). Notwithstanding any of the provisions of
this Section 6(b), if Savannah is the nonpaying Participant,
Savannah, as Agent, shall continue to plan, license,
procure, acquire, construct, complete, test, start-up,
manage, control, operate, maintain, renew, add, replace,
modify and dispose of the Plant McIntosh CTs (other than the
Savannah Plant McIntosh CTs), the CT Common Facilities and
the CT Fuel Supply in accordance with the provisions of this
Agreement and the Operating Agreement.
(iii) Any output of capacity and energy of the Plant
McIntosh CTs of any nonpaying Participant may be sold or
utilized by any non-defaulting Participant and Savannah as
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Agent in the manner and upon the terms and conditions set
forth in Section 5(l), NONPAYMENT, of the Operating
Agreement.
(iv) In addition to all other rights of the
Participants pursuant to the foregoing provisions of this
Section 6(b), with respect to the CT Common Facilities, the
other Participant or Participants shall have the right,
subject to the receipt of all requisite regulatory
approvals, but not the obligation, to make any payment of
interest or principal due and owing (A) to Chemical Bank, as
Trustee under GPC's First Mortgage Bonds, or other lender or
trustee, as the case may be, if any, from GPC in respect of
such First Mortgage Bonds, pollution control revenue bonds,
or other bonds or notes for financing GPC's obligations
hereunder, which GPC fails to make when due, or (B) to
NationsBank of Georgia, National Association, as Trustee
under Savannah's Mortgage Bonds, or other lender or trustee,
as the case may be, if any, from Savannah in respect of such
mortgage bonds, pollution control revenue bonds, or other
bonds or notes for financing Savannah's obligations
hereunder, which Savannah fails to make when due, or (C) to
the corresponding lenders or trustees from any other
Participant hereunder in respect of a financing of such
Participant's obligations hereunder, which such Participant
fails to make when due, and in each such case to be promptly
reimbursed in full therefor by GPC, Savannah or such other
Participant, as the case may be, together with interest at
the rate provided in subsection (i) of this Section 6(b).
(v) No remedy referred to in this Section 6(b) is
intended to be exclusive of any other remedy set forth in
this section, but every such remedy herein provided shall be
cumulative and may be exercised from time to time and as
often as may be deemed expedient except where the exercise
of any one of such remedies precludes its further exercise
or the exercise of any other remedy. No delay or failure to
exercise any remedy herein provided shall impair the right
to exercise any such remedy or be construed to be a waiver
of such right or of any default by a Participant or by the
Agent. Notwithstanding the foregoing, the remedies which
are set forth in this Section 6(b) shall constitute the sole
and exclusive remedies of the Participants, legal or
equitable, for the failure of any Participant to make any
payment when due under this Agreement.
(vi) Notwithstanding the other provisions of this
Section 6(b), any Participant who disagrees with or disputes
the amount of any payment claimed by the Agent to be due
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pursuant to this Agreement shall make such payment under
protest and shall be reimbursed, together with all accrued
interest at the Prime Rate from the date of payment to the
date of reimbursement, for any amount charged in error after
the settlement of such disagreement or dispute as provided
in Section 6(k), PAYMENTS MADE DURING CONSTRUCTION, hereof,
and Sections 5(h), PAYMENT AND SETTLEMENT OF OPERATING COSTS
and 5(j), PAYMENT AND SETTLEMENT OF COST OF CONSTRUCTION, of
the Operating Agreement, as appropriate.
(vii) The foregoing provisions of this Section 6(b)
shall not apply to nonpayment of amounts to be paid pursuant
to Section 3, SALE TO GPC OF AN UNDIVIDED OWNERSHIP INTEREST
IN CERTAIN OF THE CT COMMON FACILITIES EQUIPMENT, Section 4,
LEASE TO GPC OF THE GPC PLANT MCINTOSH CTS SITE AND THE CT
COMMON FACILITIES SITE, or Section 10(u), OBLIGATION TO
CONVEY INTERESTS IN THE CT COMMON FACILITIES, hereof.
(c) ALIENATION AND ASSIGNMENT.
(i) Until the earlier of (A) 15 years after the
expiration of the term of the Operating Agreement, or (B) 20
years and 11 months after the death of the last survivor of
the now living lineal descendants of Mrs. Rose F. Kennedy,
mother of the thirty-fifth President of the United States of
America, no Participant shall have the right to sell, lease,
convey, transfer, assign, encumber or alienate in any manner
whatsoever, except as otherwise provided herein, its
ownership or leasehold interests, or any portion or portions
thereof, in the Plant McIntosh CTs, the CT Common
Facilities, or any rights under this Agreement without first
offering, subject to all requisite regulatory approvals,
including, without limitation, the approval of the SEC
pursuant to the Public Utility Holding Company Act of 1935,
such sale, lease or conveyance to GPC, upon the same terms
and conditions as the proposed sale, lease or conveyance to
another party (unless, pursuant to the terms of the Public
Utility Holding Company Act of 1935 and any amendments or
successor legislation thereto, the terms and conditions of
such conveyance are regulated, in which case the terms and
conditions of such conveyance shall not be inconsistent with
such Act), which offer shall be made in the form of a
proposed contract and shall be open for acceptance by GPC
for a period of 60 days for all of the interests being
offered, and in the event such offer is accepted by GPC, the
offering Participant and GPC shall proceed to a closing for
the interests accepted by GPC pursuant to the terms of the
aforesaid contract in an expeditious manner; provided,
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however, that with respect to any proposed sale by GPC of
all or any part of its ownership or leasehold interests in
the Plant McIntosh CTs and the CT Common Facilities,
Savannah shall have a right of first refusal upon the same
terms as set forth above for an offer to GPC.
(ii) In the event none of the offers pursuant to
subsection (i) of this Section 6(c) is accepted, the
offering Participant shall next offer, subject to all
requisite regulatory approvals, including, without
limitation, the approval of the SEC pursuant to the Public
Utility Holding Company Act of 1935, such sale, lease or
other conveyance of the ownership or ownership and leasehold
interests not accepted pursuant to subsection (i) to the
other Participants, if any, (other than GPC or Savannah) pro
rata in accordance with their respective Pro Forma Ownership
Interests, as they may appear at the time, upon the same
terms and conditions as the proposed sale, lease or
conveyance to another party (other than GPC or Savannah),
which offer shall be made in the form of a proposed contract
and shall be open for acceptance by the other Participants
for a period of 60 days, and in the event such offer is
accepted by all of the other Participants, the offering
Participant and all of the other Participants shall proceed
to a closing pursuant to the terms of the aforesaid contract
in an expeditious manner. In the event that there are three
or more Participants and such offer is accepted by one or
more but not by all of the other Participants within the
aforesaid 60-day period, the offering Participant shall
offer such unaccepted portion to such of the other
Participants who have accepted such original offer, and such
other Participants shall have ten Business Days to accept
such offer with respect to such unaccepted portion. In the
event that any of such offers is not timely accepted, the
offering Participant shall be entitled to consummate the
proposed sale, lease or other conveyance to such other
party.
(iii) If the offering Participant does not consummate
the proposed sale, lease or other conveyance of such
interests to the Participant hereof within a period of one
year after the date of its offer pursuant to subsection (i)
or if the offering Participant does not consummate the
proposed sale, lease or other conveyance of such interests
within a period of one year after the date of its offer to
the other Participants, no such sale, lease or other
conveyance may be consummated without re-offering the sale,
lease or conveyance pursuant to subsection (i) and if not
accepted then pursuant to subsection (ii). In no event
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shall the offering Participant sell, lease or convey such
interest to any party (including, without limitation, GPC or
Savannah) which is not financially responsible or do so on
any terms materially different from those set forth in the
aforesaid offer. Each Participant shall notify the other
Participants in writing as soon as possible after it learns
that any lien or security interest in respect of an
obligation or liability in excess of $100,000 (other than a
lien or security interest created by such Participant as
security for bonds or other obligations issued or to be
issued) has been or will be imposed upon its ownership or
leasehold interests in the Plant McIntosh CT Project or any
portion or portions thereof or has reason to believe that
such a lien or security interest will be imposed. In the
event of any sale, lease, conveyance, transfer, assignment
or alienation (other than solely as security for an
indebtedness) by one of the Participants of its ownership or
ownership and leasehold interests in the Plant McIntosh CTs
or any portion or portions thereof such Participant shall
also (A) sell to the transferee thereof and such transferee
shall purchase an equivalent portion of such Participant's
corresponding portion of the CT Common Facilities (other
than the CT Common Facilities site) and an equivalent
portion of such Participant's corresponding portion of the
CT Fuel Supply, and (B) assign the lease (or, in the case of
Savannah, grant a lease) to the transferee thereof to an
equivalent portion of such Participant's corresponding
interest in the CT Common Facilities Site. As a condition
precedent to the consummation of the foregoing transactions,
the transferring Participant shall cause the transferee of
such interests to become a Party to this Agreement and
assume the obligations of the transferor hereunder in
proportion to the interests so sold, leased, conveyed,
transferred, assigned, or alienated, whereupon such
transferee shall be a Participant hereunder. Each
Participant hereby expressly waives and renounces for the
term of the Operating Agreement for itself, its successors,
transferees and assigns, all rights to a partition of the CT
Common Facilities and the CT Fuel Supply and to an
accounting associated therewith.
(iv) Notwithstanding subsections (i), (ii) and (vii)
of this Section 6(c) each Participant shall have the right
to mortgage or to convey a security interest in its
ownership or leasehold interests in the Plant McIntosh CT
Project or any portion or portions thereof as security for
bonds or other obligations issued or to be issued.
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(v) Notwithstanding any other provisions of this
Agreement to the contrary, any Participant shall have the
right to sell, convey, transfer or assign its ownership or
leasehold interests, or any portion or portions thereof, in
the Plant McIntosh CT Project to any governmental or
political subdivision or authority in connection with the
financing of pollution control or solid waste disposal
facilities without the consent of Savannah or the other
Participants and without complying with the provisions of
this Section 6(c). Any provision of this Agreement to the
contrary notwithstanding, no sale, lease, conveyance,
transfer, assignment or alienation whatsoever by Savannah of
any or all of its undivided ownership interest in the Plant
McIntosh CT Project or any portion or portions thereof,
whether as security for an indebtedness, in connection with
the financing of pollution control or solid waste disposal
facilities or otherwise, shall relieve Savannah of its
obligations to act as Agent hereunder and under the
Operating Agreement.
(vi) In the event any Participant sells or conveys to
any party (including, without limitation, GPC or Savannah)
any ownership or ownership and leasehold interests in the
Plant McIntosh CT Project in accordance with the provisions
of subsection (i) or (ii) of this Section 6(c) or pursuant
to any other provisions of this Agreement authorizing such
sale, such Participant's rights and obligations hereunder as
a Participant and co-owner of the CT Common Facilities and
the CT Fuel Supply, including, without limitation, the
obligation to make payments of the Cost of Construction,
Operating Costs and Fuel Costs, shall be reduced to the
extent of the interests so sold, and the other Participants
shall look solely to such purchaser for performance of the
corresponding obligations relating to the interests sold.
(vii) Until the earlier of (A) 15 years after the
expiration of the term of the Operating Agreement, or (B) 20
years and 11 months after the death of the last survivor of
the now living lineal descendants of Mrs. Rose F. Kennedy,
mother of the thirty-fifth President of the United States of
America, Savannah shall not sell, lease, convey, transfer,
assign, encumber or alienate in any manner whatsoever,
except as otherwise provided herein, its ownership interest
in the Plant McIntosh facilities utilized to provide support
services to the Plant McIntosh CT Project, or any portion or
portions thereof, without first offering, subject to all
requisite regulatory approval, including, without
limitation, the SEC pursuant to the Public Utility Holding
Company Act of 1935, such sale, lease or conveyance to GPC,
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upon the same terms and conditions as the proposed sale,
lease or conveyance to another party (unless, pursuant to
the terms of the Public Utility Holding Company Act of 1935,
and any amendments or successor legislation thereto, the
terms and conditions of such conveyance are regulated, in
which case the terms and conditions of such conveyance shall
not be inconsistent with such Act), which offer shall be
made in the form of a proposed contract and shall be open
for acceptance by GPC for a period of 60 days for all of the
interests being offered, and in the event such offer is
accepted by GPC, Savannah and GPC shall proceed to a closing
for the interests accepted by GPC pursuant to the terms of
the aforesaid contract in an expeditious manner.
(viii) If, pursuant to this Section 6(c), any
Participant makes a sale, lease, transfer or assignment of
all or any portion of its ownership or ownership and
leasehold interests in the Plant McIntosh CT Project (other
than solely as security for indebtedness or to facilitate
the financing of pollution control or solid waste disposal
facilities), such Participant shall also assign the
Operating Agreement pro tanto, and shall cause the
transferee to assume to the same extent the rights and
obligations of such Participant thereunder; provided,
however, that Savannah shall not assign its responsibilities
as Agent hereunder without the prior written approval of the
Participants which shall not be unreasonably withheld. Any
attempted or purported assignment of this Agreement not in
compliance with this Section 6(c) shall be null and void and
of no force or effect whatsoever.
(d) DAMAGE OR DESTRUCTION. Subject to the receipt of all
requisite approvals of any Governmental Authority having
jurisdiction:
(i) In the event the CT Common Facilities or any
portion thereof is damaged or destroyed, and the cost of
repairs or reconstruction is estimated to be fully covered
by the aggregate amount of insurance coverage procured and
maintained by the Agent on behalf of the Participants (less
applicable deductibles) covering such repairs or
reconstruction, then, unless Participants owning in the
aggregate more than 51% Pro Forma Ownership Interest in the
Plant McIntosh CT Project determine not to repair or
reconstruct the CT Common Facilities, the CT Common
Facilities shall be repaired or reconstructed.
(ii) In the event the CT Common Facilities or any
portion thereof is damaged or destroyed, and the cost of
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repairs or reconstruction is estimated to be more than the
aggregate amount of insurance coverage procured and
maintained by the Agent on behalf of the Participants (less
applicable deductibles) covering such repairs or
reconstruction, then, unless Participants owning in the
aggregate more than 51% Pro Forma Ownership Interest in the
Plant McIntosh CT Project determine to repair or reconstruct
the CT Common Facilities, the CT Common Facilities shall not
be repaired or reconstructed.
(iii) If as a result of the preceding subsections (i)
and (ii), the CT Common Facilities are not to be repaired or
reconstructed but one or more Participants desire the repair
or reconstruction thereof, the CT Common Facilities shall be
repaired or reconstructed; provided, however, that the
Participants desiring to repair or reconstruct the CT Common
Facilities shall bear the full cost of such repair or
reconstruction (after taking into account available
insurance proceeds of such Participants); and provided
further, that if any other Participant should thereafter
desire to obtain its entitlement of energy from its
respective portion of the Plant McIntosh CT Project but
would not have been able to obtain such entitlement but for
the repairs or reconstruction effected pursuant to this
paragraph (iii), such other Participant shall reimburse the
repairing or reconstructing Participants their pro rata
share of the original book cost of such repairs or
reconstruction less depreciation, which shall include the
cost of capital.
(e) TAXES. To the extent possible, each Participant shall
separately report, file returns with respect to, be responsible
for and pay all real property, franchise, business, or other
taxes or fees (except payroll taxes for Savannah employees and
sales or use taxes for items purchased by Savannah as Agent, and
except to the extent that Savannah and GPC, as subsidiaries of
The Southern Company, file or have filed on their behalf
consolidated income tax returns), arising out of its ownership or
leasehold interests in the Plant McIntosh CT Project; provided,
however, that to the extent that such taxes or fees may be levied
on or assessed against the Plant McIntosh CT Project, its
operation, or the Participants in such a manner so as to make
impossible the carrying out of the foregoing provisions of this
Section 6(e), or upon mutual agreement of the Participants, such
taxes or fees shall be considered a Cost of Construction and paid
from the Construction Account or the Capital Account, as
appropriate, in accordance with the provisions of Section 6(k),
PAYMENTS MADE DURING CONSTRUCTION, hereof, or Section 5(j),
PAYMENT AND SETTLEMENT OF COST OF CONSTRUCTION, of the Operating
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Agreement, but in no event shall any taxes or fees from the
payment of which any Participant is exempt by law be considered a
Cost of Construction. Ad valorem taxes for the year in which the
Execution and Delivery occurs shall be a Cost of Construction and
paid by the Participants in accordance with Section 6(k),
PAYMENTS MADE DURING CONSTRUCTION, hereof. All such prorations
shall be based on estimated taxes and shall be adjusted among the
Participants upon receipt of the actual tax bills. All sales and
transfer taxes, recording and filing fees, if any, incurred in
connection with the conveyance to GPC of (i) any undivided
ownership interest in that portion of the CT Common Facilities
equipment pursuant to Section 3, SALE TO GPC OF AN UNDIVIDED
OWNERSHIP INTEREST IN CERTAIN OF THE CT COMMON FACILITIES
EQUIPMENT, hereof, or (ii) any leasehold interest in the GPC
Plant McIntosh CTs Site and the CT Common Facilities Site,
pursuant to Section 4, LEASE TO GPC OF THE GPC PLANT MCINTOSH CTS
SITE AND THE CT COMMON FACILITIES SITE, hereof, or the conveyance
of any ownership and leasehold interests in the CT Common
Facilities to a Participant pursuant to Section 10(u), OBLIGATION
TO CONVEY INTERESTS IN THE CT COMMON FACILITIES, hereof, shall be
paid by the Participants in proportion to their Pro Forma
Ownership Interests.
(f) INSURANCE. Except as may otherwise be provided in the
Operating Agreement, during the period of its construction and
operation of the Plant McIntosh CT Project, Savannah shall carry
in the name of the Participants, as their interests appear,
insurance covering (i) workers' compensation, which shall include
employers' liability, (ii) commercial general liability, which
shall include broad form contractual and products/completed
operations liability, and (iii) "all risk" property, including
coverage for boiler and machinery, in such amounts and with such
deductible or self-insurance features as is consistent with The
Southern Company's customary practices, provided such insurance
shall have the following minimum limits of liability: (w)
workers' compensation, statutory limits; (x) employers'
liability, $100,000 per accident; (y) commercial general
liability, which shall include broad form contractual and
products/completed operations liability, $50,000,000 combined
single limit per occurrence and (z) "all risk" property
insurance, $200,000,000 per occurrence; or such greater limits as
may be determined, from time to time, by mutual agreement of the
Participants. The maximum aggregate deductible amount under all
insurance policies for any occurrence shall be an amount
consistent with industry practice for utilities of similar size
and exposure, provided that such insurance is obtainable with a
deductible amount not exceeding such maximum deductible amount
and at commercially reasonable premiums. The aggregate cost of
all such insurance shall be considered (i) Cost of Construction
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for any such costs which are incurred with respect to any portion
or portions of the Plant McIntosh CT Project which has not yet
entered Commercial Operation, and (ii) Operating Costs for any
such costs which are incurred with respect to any portion or
portions of the Plant McIntosh CT Project which has entered
Commercial Operation, and shall be paid in accordance with the
provisions of Section 6(k), PAYMENTS MADE DURING CONSTRUCTION,
hereof, or Section 5(h), PAYMENT AND SETTLEMENT OF OPERATING
COSTS, of the Operating Agreement, as appropriate. For any
policy furnished by Savannah, the Participants shall each be
designated as an additional insured (including, without
limitation, for purposes of protecting their interests as owners)
and such policy shall be endorsed to be primary to any insurance
which may be maintained by any Participant.
Each other Participant may also maintain additional or other
insurance, at its own cost and expense, which it deems necessary
or advisable to protect its respective interest in any portion of
the Plant McIntosh CT Project provided that such additional
insurance does not reduce or diminish in any way the coverage of
the insurance procured and maintained by Savannah pursuant to
this Section 6(f).
Notwithstanding the foregoing, such Participant (other than
Savannah) shall separately procure and maintain in force, at its
own expense, workers' compensation and employers' liability
insurance for its Site Representatives and its other employees
visiting the Plant McIntosh CT Project with the minimum limits of
liability set forth above.
(g) RESERVED.
(h) POLLUTION CONTROL AND OTHER FACILITIES. The
Participants and the Agent shall cooperate with each other in any
financing undertaken by a Participant on its own behalf of its
respective interest in certain facilities and equipment located
at the Plant McIntosh CT Project site for the control of
environmental pollution and for such other purposes or facilities
as tax-exempt bonds may be issued from time to time through the
Development Authority of Effingham County, or its successors or
assigns or any other political subdivision or authority, of its
industrial revenue notes or bonds, or both, the interest on which
will be excluded from gross income for Federal income tax
purposes.
(i) NO IMPUTATION OF KNOWLEDGE. Savannah acknowledges
that subsequent to the Execution and Delivery, Savannah, although
acting as Agent for GPC with respect to the Agency Functions,
will not be acting as agent with respect to the conveyance to GPC
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of (i) leasehold interests in the GPC Plant McIntosh CT Site and
the CT Common Facilities Site, and (ii) undivided ownership
interests in those portions of the CT Common Facilities equipment
conveyed to GPC pursuant to this Agreement. Accordingly, GPC
shall not be deemed to have any knowledge imputed to it as a
result of the agency relationship between Savannah and GPC.
(j) CONSTRUCTION BUDGETS AND SCHEDULES.
(i) Within 30 days of the date hereof, Savannah, as
Agent for the Participants in the construction of the Plant
McIntosh CT Project, will deliver to the other Participants
an initial Construction Budget setting forth the amounts
estimated to be expended by the Participants for the Cost of
Construction with respect to each Plant McIntosh CT and the
CT Common Facilities (for which payment is to be made in
accordance with the provisions of Section 6(k), PAYMENTS TO
BE MADE DURING CONSTRUCTION, hereof) and a summary cash flow
setting forth the amounts estimated to be expended, and
which have been expended as of that date, in each month
until the last estimated Commercial Operation date. By
July 1 and January 1 of each year until the last date of
Commercial Operation, Savannah will deliver to the
Participants additional Construction Budget estimates, based
on information reasonably available, supported by detail
reasonably adequate for the purpose of each Participant's
reasonable review thereof. Each such budget estimate shall
include a construction schedule containing a critical path
analysis for the design and construction of each Plant
McIntosh CT, as well as the CT Common Facilities, a plan and
timetable for obtaining the necessary permits, licenses and
approvals from the appropriate Governmental Authorities, the
then current expected dates of Commercial Operation and such
other plans, timetables or schedules, if any, as Savannah
may deem appropriate.
(ii) Within 30 days after receipt of the initial
Construction Budget and, thereafter, by August 1 and
February 1 of each year, respectively, (A) the Construction
Budget and construction schedule for each Participant's
Plant McIntosh CTs shall be approved or disapproved by the
Participant owning such Plant McIntosh CTs, and (B) the
Construction Budget and construction schedule for the CT
Common Facilities shall be approved by mutual agreement of
the Participants, in the absence of which such budget or
schedule, as the case may be, shall be disapproved, in its
entirety. If any Construction Budget or construction
schedule is disapproved, the Participants shall then have
until September 1 and March 1, respectively, to agree on an
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alternative revised Construction Budget or construction
schedule, as the case may be, which shall comply with
Prudent Utility Practice and Legal Requirements. In the
event that the Participants are unable to agree on a
complete revised budget or schedule which complies with
Prudent Utility Practice and Legal Requirements by
September 1 and March 1, respectively, then the budget or
schedule, as the case may be, to be utilized shall consist
only of such portions of the Construction Budget or
construction schedule as revised on which the Participants
agree. The Participants and Savannah, as Agent, agree to
cooperate with one another to revise to the extent
practicable, any Construction Budget or construction
schedule in effect from time to time to accommodate changed
circumstances.
(iii) Savannah, as Agent, shall attempt to construct
the Plant McIntosh CT Project in accordance with the then
current Construction Budget estimate and construction
schedule such that (A) payments to be made by the
Participants for the costs contained therein shall be, as
nearly as practicable, within the then current Construction
Budget and the schedules of expenditures contained therein,
and (B) the Plant McIntosh CTs meet their intended
Commercial Operation dates. Notwithstanding the foregoing,
Savannah makes no representation, warranty or promise of any
kind as to the accuracy of any estimate contained in a
Construction Budget or construction schedule or any
revisions thereto or that any such attempt referred to in
the preceding sentence will be successful, and in no event
shall Savannah, as Agent, have any liability to any of the
Participants in these regards.
(k) PAYMENTS MADE DURING CONSTRUCTION.
(i) Savannah, as Agent, shall be responsible for
making, and shall make, payment to third parties, and such
of the Participants which have rendered services to Savannah
in connection with the Plant McIntosh CT Project, of all
Cost of Construction only to the extent that funds are
available therefor in the Construction Account; provided,
however, that all payments of Cost of Construction made by
Savannah prior to the date hereof shall also be allocated
among and paid by the Participants in accordance with this
Agreement.
(ii) Within 30 days of the date hereof, and
thereafter, on or before the first Business Day of each
month, Savannah, as Agent, will notify the other
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Participants of the nature and amount of all Cost of
Construction expended to date and anticipated to be incurred
during the succeeding calendar month in respect of the
planning, design, licensing, procurement, construction,
acquisition, completion, testing and startup of the Plant
McIntosh CTs or the CT Common Facilities, or both, plus or
minus any adjustments for costs incurred in prior months but
not previously charged or credited to the Participants under
the provisions of this Section 6(k) with separate
computations as to each of the Plant McIntosh CTs and the CT
Common Facilities. Savannah, as Agent, will give each
Participant as much notice as is reasonably practicable of
any major anticipated cost. Each such notification made by
Savannah, as Agent, of anticipated costs and adjustments
shall be accompanied and adjusted by an accounting of costs
incurred and credits, if any, received for preceding months.
Each Participant shall make payment into the Construction
Account in immediately available funds of its respective
percentage share of the Cost of Construction incurred prior
to Commercial Operation in accordance with the provisions of
this Section 6(k) during the succeeding month in accordance
with the schedule determined and delivered to it by
Savannah, as Agent. Each Participant's respective
percentage share of such Cost of Construction shall be
consistent with its respective ownership interests in the
Plant McIntosh CT Project. Each Participant's share of the
Cost of Construction associated with the 1994 Plant McIntosh
CTs shall equal the number of 1994 Plant McIntosh CTs which
such Participant owns divided by the total number of 1994
Plant McIntosh CTs; provided, however, in the event that a
Participant makes unique additions to or delays the
construction of one or more of the 1994 Plant McIntosh CTs,
then each Participant shall pay the Cost of Construction
associated with the 1994 Plant McIntosh CTs which such
Participant owns; provided further that each Participant who
elects to cancel any one or more of the 1994 Plant McIntosh
CTs shall bear all Cost of Construction associated with such
cancelled 1994 Plant McIntosh CTs. Each Participant's share
of the Cost of Construction associated with the 1995 Plant
McIntosh CTs shall equal the number of 1995 Plant McIntosh
CTs which such Participant owns divided by the total number
of the 1995 Plant McIntosh CTs; provided, however, in the
event that a Participant makes unique additions to or delays
the construction of one or more of the 1995 Plant McIntosh
CTs, then each Participant shall pay the Cost of
Construction associated with the 1995 Plant McIntosh CTs
which such Participant owns; provided further that each
Participant who elects to cancel any one or more of the 1995
Plant McIntosh CTs shall bear all Cost of Construction
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associated with such cancelled 1995 Plant McIntosh CTs.
Each Participant's share of the Cost of Construction
associated with the Additional Plant McIntosh CTs shall
equal the number of Additional Plant McIntosh CTs which such
Participant owns divided by the total number of Additional
Plant McIntosh CTs; provided, however, that for purposes of
the calculation in this sentence, no Additional Plant
McIntosh CTs shall be included until such time as one or
more Participants have provided written notice to the other
Participants that such one or more Participants are planning
to construct one or more Additional Plant McIntosh CTs, as
the case may be, in order to meet their energy needs;
provided further in the event that a Participant makes
unique additions to or delays the construction of one or
more of the Additional Plant McIntosh CTs, then each
Participant shall pay the Cost of Construction associated
with the Additional Plant McIntosh CTs which such
Participant owns; and provided further that each Participant
who elects to cancel any one or more of the Additional Plant
McIntosh CTs shall bear all Cost of Construction associated
with such cancelled Additional Plant McIntosh CTs. Each
Participant's share of the Cost of Construction associated
with the CT Common Facilities shall equal such Participant's
Pro Forma Ownership Interest, as it may appear from time to
time; provided, however, that each Participant who elects to
construct one or more of the Additional Plant McIntosh CTs
shall bear all Cost of Construction associated with any
additions to the CT Common Facilities required to support
such Additional Plant McIntosh CTs, subject to the
provisions of Section 10(u) hereof; provided further that
each Participant who elects to cancel the construction of
any Plant McIntosh CT shall bear all Cost of Construction
associated with the CT Common Facilities which, but for the
initial decision to construct such cancelled Plant McIntosh
CT, would not have been expended.
(iii) Each Participant shall have until (A) the 180th
day after the later of (1) the commencement of Commercial
Operation of all of the 1994 Plant McIntosh CTs, with
respect to the 1994 Plant McIntosh CTs, and the commencement
of Commercial Operation of all of the 1995 Plant McIntosh
CTs, with respect to the 1995 Plant McIntosh CTs, and the
commencement of Commercial Operation of each of the
Additional Plant McIntosh CTs, with respect to each
respective Additional Plant McIntosh CT, or (2) the
furnishing of an accounting by Savannah, as Agent, of all
items of the Cost of Construction incurred prior to the
Commercial Operation of one or more of the Plant McIntosh
CTs (but including Cost of Construction attributable only to
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such of the CT Common Facilities as may have been required
for Commercial Operation of such Plant McIntosh CTs), or (B)
such time as the Parties may otherwise agree, to question or
contest the correctness of such charge or credit after which
time the correctness of such charge or credit shall be
conclusively presumed. In the event that any Participant by
timely notice questions or contests the correctness of any
such charge or credit, Savannah, as Agent, shall promptly
review the questioned charge or credit and shall within 55
days following notice from a Participant questioning or
contesting such charge or credit notify each Participant of
the amount of any error and the amount of reimbursement, if
any, that each Participant is required to make or is
entitled to receive in respect of such error. Not later
than the fifth Business Day after receipt of such notice
from Savannah, as Agent, each Participant required to make
reimbursement shall deposit the amount specified in such
notice into the Construction Account in immediately
available funds. Any such reimbursement required to be made
by Savannah, as Agent, shall be so deposited by Savannah, as
Agent, not later than the fifth Business Day after Savannah,
as Agent, notifies the other Participants of the amount of
such reimbursement that it is required to make. From the
amount so deposited, Savannah, as Agent, shall immediately
thereafter distribute the amount that each Participant is
entitled to receive (or if the amount so deposited is
insufficient to reimburse in full all Participants entitled
to receive reimbursement, then Savannah, as Agent, shall
distribute the amount so deposited among the Participants
entitled to receive such reimbursement pro rata in
accordance with each Participant's entitlement to
reimbursement in respect of such error), except that if any
such Participant is then in default in respect of any
payments required to be made under this Agreement or the
Operating Agreement, an amount equal to such defaulting
Participant's share of the amount so deposited with respect
to such reimbursement shall be retained in the Construction
Account and distributed in accordance with the provisions of
Section 6(l), CONSTRUCTION ACCOUNT, hereof. Savannah shall
have no responsibility or liability for the failure of any
Participant (other than itself) to deposit funds as provided
in this Section 6(k).
(iv) Savannah, as Agent, will provide each
Participant with such information as is reasonably required
by such Participant in order to account for payments made
pursuant to this Section 6(k) on such Participant's books.
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(l) CONSTRUCTION ACCOUNT.
(i) Within 30 days of the date hereof, Savannah, as
Agent, shall establish the Construction Account.
Contemporaneously with the establishment of the Construction
Account, Savannah shall transfer to the Construction Account
all moneys which have been delivered to and are held by
Savannah for the payment of Cost of Construction.
Henceforth, all payments (for which provision is made in
Section 6(k), PAYMENTS MADE DURING CONSTRUCTION, hereof) of
Cost of Construction incurred by the Participants shall be
deposited by the Participants in the Construction Account
and unless the Participants shall otherwise agree, Savannah,
as Agent, shall withdraw and apply funds from the
Construction Account only as necessary to pay Cost of
Construction in accordance with the provisions of
Section 6(k), PAYMENTS MADE DURING CONSTRUCTION, hereof. In
the event that during any month the balance in the
Construction Account is insufficient to pay such Cost of
Construction required to be paid that month (other than as a
result of the nonpayment by a Participant of an amount due
from it pursuant to Section 6(k), PAYMENTS MADE DURING
CONSTRUCTION, hereof), Savannah, as Agent, shall promptly so
notify the other Participants by telephone or telecopy of
the amount required to be paid by each Participant and
thereafter promptly confirm the same in writing, together
with a description of the cause of such deficit. Each of
the Participants shall pay its respective share of such
deficit into the Construction Account in immediately
available funds not later than the fifth Business Day after
receipt of such notice from Savannah, as Agent. Savannah
shall have no responsibility or liability to make up any
such deficit out of its own funds in excess of the
proportionate share of such deficit which it owes as a
Participant.
(ii) Until the last Commercial Operation date, each
Participant shall continue to own and maintain its undivided
ownership interest in the Construction Account (other than
amounts, if any, deposited in the Construction Account
pursuant to subsection (iii) of Section 6(k), PAYMENTS MADE
DURING CONSTRUCTION, above, which amounts shall be owned
solely by the Participants to whom such amounts are to be
distributed as provided in such subsection); provided,
however, that Savannah, as Agent, shall have the sole right
and authority to make withdrawals from the Construction
Account; and provided further, that a Participant shall not
own any undivided ownership interest in any amount in the
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Construction Account in respect of interest paid into such
Construction Account by or on behalf of such Participant
pursuant to the provisions of Section 6(b), NONPAYMENT,
hereof, which amount shall, if there is only one other
Participant, be owned entirely by such other Participant and
credited against payments required to be made into such
Construction Account by such other Participant in the
performance of its obligations under this Agreement, and
which amount shall, if there are three or more Participants,
be owned in common by, and credited against payments
required to be made into such Construction Account by, the
other Participants not then in default in the performance of
their obligations under this Agreement in the proportion
which their respective Pro Forma Ownership Interests, as
they may appear at the time, bear to the aggregate of their
Pro Forma Ownership Interests, as they may appear at the
time. Savannah, as Agent, shall not commingle any funds
deposited in the Construction Account with any other funds
owned or maintained by Savannah unless the Participants
shall otherwise agree.
(iii) Upon the last Commercial Operation date of the
1995 Plant McIntosh CTs and settlement of all obligations
relating to Cost of Construction incurred prior to such last
Commercial Operation date, and again upon the last
Commercial Operation date of the Additional Plant McIntosh
CTs and settlement of all obligations relating to Cost of
Construction incurred prior to such last Commercial
Operation date, Savannah, as Agent, shall close the
Construction Account and distribute to each Participant its
undivided ownership interest of any balance remaining in the
Construction Account at such times (exclusive of amounts
therein, if any, in which such Participant shall not own any
undivided ownership interest), except that if a Participant
shall then be in default with respect to any payment
required to be made under this Agreement or under the
Operating Agreement, an amount equal to the liability of
such defaulting Participant on account of such default (or
if such amount exceeds such Participant's share of the
balance in the Construction Account, its entire share of
such balance) shall first be distributed to the non-
defaulting Participant or, if there is more than one non-
defaulting Participant, to the non-defaulting Participants
in the proportion which their respective Pro Forma Ownership
Interests, as they may appear at the time, bear to the
aggregate of their Pro Forma Ownership Interests, as they
may appear at the time.
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(m) SHARING OF COSTS - GENERAL. Except as otherwise
provided in this Agreement, each Participant shall be responsible
for the payment of its respective percentage share of all Cost of
Construction in accordance with this Agreement and the Operating
Agreement.
In the event that (i) the Execution and Delivery does not
take place as contemplated herein, or (ii) the Closing does not
take place as contemplated herein, in the absence of any breach
of this Agreement all Cost of Construction incurred prior to the
date on which either (i) or (ii) of this Section 6(m) occurs
shall be paid by the Participants in accordance with this Section
6(m); provided, however, to the extent that any Participant has
deposited funds into the Construction Account which funds are not
expended by Savannah, as Agent, in accordance with this
Agreement, such funds shall be returned to such Participant.
It is the absolute intent of the Participants to share all
items of cost, obligation and liability incurred in connection
with the Plant McIntosh CT Project (other than the financing of
each Participant's respective ownership or leasehold interests in
the Plant McIntosh CT Project) which are not otherwise expressly
provided for in this Agreement or in the Operating Agreement in
proportion to their respective Pro Forma Ownership Interests, as
they may appear from time to time; provided, however, that any
such cost, obligation or liability incurred at the request of and
for the sole benefit of a particular Participant shall be the
sole responsibility of such Participant and such Participant
hereby agrees to indemnify all other Participants against any
claims, costs, damages, expenses, losses or any other liability
of any kind arising from such costs, obligations or liability.
Notwithstanding the foregoing provisions of this
Section 6(m) or any other provision of this Agreement, in the
event any Participant sells or leases to any other person
(including, without limitation, a Participant) any ownership or
ownership and leasehold interests in the Plant McIntosh CT
Project in accordance with the provisions of Section 6(c),
ALIENATION AND ASSIGNMENT, hereof, (other than a sale or
conveyance as security for an indebtedness or in connection with
the financing of pollution control or solid waste disposal
facilities), such conveying Participant's rights and obligations
hereunder as a Participant, including, without limitation, the
obligation to make payments of Cost of Construction and any other
costs to be shared by the Participants hereunder, shall be
reduced to the extent of the ownership or ownership and leasehold
interests so conveyed, and the Agent and all Participants shall
look solely to such purchaser for payment of the corresponding
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portion of the Cost of Construction and other costs to be shared
by the Participants hereunder.
7. CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTICIPANTS.
Savannah, as Agent, and the Participants hereby mutually covenant
and agree as follows:
(a) NO ADVERSE DISTINCTION. Notwithstanding any other
provision of this Agreement, in discharging their respective
responsibilities pursuant to this Agreement, neither Savannah as
Agent, or as a Participant, nor any other Participant, shall make
any adverse distinction between that portion of the Plant
McIntosh CT Project in which it has an interest, and any other
portion of the Plant McIntosh CT Project, because of its
ownership of (or ownership and leasehold interests in) a portion
of the Plant McIntosh CTs or an undivided share of the CT Common
Facilities with the other Participants.
(b) COOPERATION. The Participants and Savannah, as Agent,
will cooperate with each other in all activities relating to the
Plant McIntosh CT Project, including, without limitation, the
execution and filing of applications for authorizations, permits
and licenses with Governmental Authorities having jurisdiction
(except that Savannah is not authorized to have any contact with
the GPSC on behalf of GPC without the written consent of GPC),
fuel procurement and the execution of such other documents as may
be reasonably necessary to carry out the provisions of this
Agreement. Without Savannah's written consent, no other
Participant shall incur any obligation in connection with the
Plant McIntosh CT Project which would or could obligate Savannah
to any third party.
(c) APPROVALS. Following the execution and delivery of
this Agreement, GPC and Savannah shall use their reasonable best
efforts to obtain as quickly as possible all requisite and
contemplated judicial, governmental, regulatory and vendor (with
regard to assignment of contractual rights and obligations, if
any) approvals for the consummation of the transactions
contemplated hereby. The obligations of any Participant to
consummate any transaction contemplated by Section 10(u),
OBLIGATION TO CONVEY INTERESTS IN THE CT COMMON FACILITIES,
hereof is subject to the receipt of all requisite approvals of
Governmental Authorities.
(d) COMPLIANCE WITH LAWS AND ENVIRONMENTAL MATTERS.
(i) The Participants acknowledge and agree that
Savannah, as Agent, shall plan, design, license, procure,
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construct, acquire, complete, test, startup, manage,
control, operate, maintain, add to, renew, modify, replace
and dispose of the Plant McIntosh CT Project substantially
in accordance with all local, state and federal laws,
regulations, ordinances or orders now or hereinafter in
effect; provided, however, that any failure to substantially
comply with such local, state or federal laws, regulations,
ordinances or orders shall not be deemed a breach of this
Agreement if, and so long as, such failure is (A) caused by
a Force Majeure Event, or (B) in accordance with a court
order or decree, or a formal agreement with the regulatory
agency having jurisdiction over the subject matter of
noncompliance or having authority to issue the required
approval.
(ii) Each Participant, in addition to the Agent,
shall be a permittee for any air quality permit(s) issued
for such Participant's Plant McIntosh CTs by a Governmental
Authority if such Governmental Authority determines that the
Participants are required to be joint permittees.
(iii) The Agent shall not use, treat, store, dispose,
or recycle, at the Plant McIntosh CT Project any
Environmental Material (as hereinafter defined) in amounts
or under circumstances requiring notification of, or a
permit, license, or approval from any Governmental Authority
of competent jurisdiction, unless such Environmental
Material was generated at the Plant McIntosh CT Project or
related to the generation of electric power at the Plant
McIntosh CT Project. For purposes of this subsection (iii)
of Section 7(d), "Environmental Material" shall mean and
include asbestos, radioactive material, petroleum, petroleum
products, petroleum fractions, petroleum distillates, and
any substance, material or waste designated as hazardous
under the Comprehensive Environmental Response,
Compensation, and Liability Act and amendments thereto, or
designated as toxic or hazardous or otherwise regulated
under the Toxic Substances Control Act and amendments
thereto, the Resource Conservation and Recovery Act and
amendments thereto, the Clean Water Act and amendments
thereto, the Clean Air Act and amendments thereto, the
Georgia Air Quality Act and amendments thereto, the Georgia
Hazardous Waste Management Act and amendments thereto, or
the Georgia Water Quality Control Act and amendments
thereto.
(e) SAFETY. The Participants acknowledge and agree that
in the acquisition, construction and completion of the Plant
McIntosh CT Project, Savannah shall at all times take all
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reasonable precautions for the safety of employees on the work
site and of the public, and shall comply with all applicable
provisions of federal, state, and municipal safety laws and
building and construction codes, including, without limitation,
all regulations of the Occupational Safety and Health
Administration. The requirements of this paragraph shall be for
the sole benefit of the Participants only and shall not create or
impose any standard of care or duty to any third party or to any
employee or subcontractor's employee or to the public, beyond the
duty incumbent upon Savannah which would exist under applicable
law without reference to any term or provision of this Agreement.
(f) EQUAL EMPLOYMENT OPPORTUNITY AND CIVIL RIGHTS.
Savannah, as Agent, shall conform to the requirements of the
Equal Employment Opportunity clause in Section 202, Paragraphs 1
through 7 of Executive Order 11246, as amended, and applicable
portions of Executive Orders 11701 and 11758, relative to Equal
Employment Opportunity and the Implementing Rules and Regulations
of the Office of Federal Contract Compliance Programs.
8. CONDITIONS PRECEDENT TO EXECUTION AND DELIVERY.
(a) SAVANNAH'S CONDITIONS. Except as may otherwise be
provided in Section 6(m), SHARING OF COSTS - GENERAL, hereof, all
obligations of Savannah to GPC under this Agreement and the
Operating Agreement are subject to the fulfillment, prior to or
at the Execution and Delivery, of each of the conditions
contained in clauses (i) through (iv) below (or the waiver in
writing of such conditions by Savannah):
(i) Representations and Warranties Correct;
Performance by GPC. GPC's representations and warranties
contained in this Agreement shall have been materially true
and correct at the date hereof, and (other than the
representation and warranty set forth in subsection (iii) of
Section 2(a), GPC REPRESENTATIONS AND WARRANTIES, hereof)
shall be deemed to have been made again at and as of the
time of the Execution and Delivery and shall then be true
and correct in all material respects; GPC shall have
performed and complied with all agreements, covenants and
conditions required by this Agreement to be performed or
complied with by it prior to or at the Execution and
Delivery; and Savannah shall have been furnished with a
certificate of the President or a vice president of GPC,
dated the date of the Execution and Delivery, certifying in
such detail as Savannah may request to the fulfillment of
the foregoing conditions.
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(ii) Litigation Certificate. GPC shall have
delivered to Savannah a certificate executed by the
President or a vice president of GPC that, as of the time of
the Execution and Delivery, such officer of GPC has no
personal knowledge of actual or threatened litigation
against GPC which might materially adversely affect the
rights of Savannah as a tenant in common in the CT Common
Facilities and the CT Fuel Supply other than such pending or
threatened litigation described or referred to in such
certificate, and the contents of such certificate shall be
reasonably satisfactory to Savannah.
(iii) Other Documents. At or prior to the time of the
Execution and Delivery, GPC shall have entered into the
Operating Agreement and such Operating Agreement shall be in
full force and effect. At the Execution and Delivery, GPC
shall not be in material breach of the Operating Agreement.
(iv) Opinion of GPC's Counsel. Savannah shall have
been furnished with an opinion of Troutman Sanders, counsel
for GPC, dated the date of the Execution and Delivery, to
the effect that:
(A) GPC is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Georgia and has the requisite power and
authority to own and to lease those portions of the
Plant McIntosh CT Project as GPC is required to own and
lease following the Execution and Delivery, to execute
and deliver this Agreement and the Operating Agreement
and to perform its obligations hereunder and
thereunder, and to conduct its business as it is then
being conducted;
(B) the execution, delivery and performance of
this Agreement and the Operating Agreement by GPC have
been duly and effectively authorized by all requisite
corporate action; and
(C) GPC had full power and authority to execute
this Agreement and the Operating Agreement, and this
Agreement and the Operating Agreement have been fully
executed and delivered by GPC and are the legal, valid
and binding obligations of GPC enforceable against it
in accordance with their terms (except as the
provisions hereof or thereof may be limited by
bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors'
rights and by other laws of general application
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affecting the rights and remedies of creditors, except
that the availability of the remedy of specific
enforcement or of injunctive relief is subject to the
discretion of the court before which any proceeding
therefor may be brought, and except that no opinion
shall be expressed as to the validity and
enforceability of the restrictions on alienation set
forth in Sections 6(c), ALIENATION AND ASSIGNMENT
hereof).
Such opinion shall cover such other matters as Savannah
may reasonably request and shall be reasonably satisfactory
to Savannah's counsel.
(b) GPC'S CONDITIONS. Except as may otherwise be provided
in Section 6(m), SHARING OF COSTS - GENERAL, hereof, all
obligations of GPC under this Agreement and the Operating
Agreement are subject to the fulfillment, prior to or at the
Execution and Delivery, of each of the following conditions (or
the waiver in writing of such conditions by GPC):
(i) Representations and Warranties Correct;
Performance by Savannah. Savannah's representations and
warranties contained in this Agreement shall have been
materially true and correct at the date hereof and (other
than the representation and warranty set forth in subsection
(iii) of Section 2(b), SAVANNAH REPRESENTATIONS AND
WARRANTIES hereof) shall be deemed to have been made again
at and as of the time of the Execution and Delivery and
shall then be true and correct in all material respects;
Savannah shall have performed and complied with all
agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or
at the Execution and Delivery; and GPC shall have been
furnished with a certificate of the President or a vice
president of Savannah, dated the date of the Execution and
Delivery, certifying in such detail as GPC may request to
the fulfillment of the foregoing conditions.
(ii) Litigation Certificate. Savannah shall have
delivered to GPC a certificate executed by the President or
a vice president of Savannah that, as of the time of the
Execution and Delivery, such officer of Savannah has no
personal knowledge of actual or threatened litigation
against Savannah which might materially adversely affect the
rights of GPC as a tenant in common in the CT Common
Facilities and the CT Fuel Supply other than such pending or
threatened litigation described or referred to in such
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certificate, and the contents of such certificate shall be
reasonably satisfactory to GPC.
(iii) Collateral Documents. At or prior to the time
of the Execution and Delivery, Savannah shall have entered
into the Collateral Documents and such Collateral Documents
shall be in full force and effect. At the Execution and
Delivery, neither Savannah nor SCSI shall be in material
breach of any of the Collateral Documents.
(iv) Title Insurance. GPC shall have received, at
its own expense, at the Execution and Delivery an owner's
policy of title insurance in favor of GPC containing no
exceptions other than those exceptions set forth on Exhibit
G attached hereto and incorporated herein by reference
(hereinafter referred to as the "Permitted Exceptions"),
insuring GPC's leasehold estate in the real property being
demised to GPC at the Execution and Delivery. Savannah
shall have provided to GPC, or its title insurer, a
corporate officer's affidavit, dated the date of such
Execution and Delivery and executed by a vice president of
Savannah, covering such matters as may be reasonable and
customary in transactions involving commercial real property
in the State of Georgia.
(v) No Material Change. Between the date of this
Agreement and the Execution and Delivery, there shall not
have been any material adverse change in any portion of the
GPC Plant McIntosh CTs Site or the CT Common Facilities Site
that is being leased by GPC at the Execution and Delivery
and such assets shall not have suffered any material loss by
fire, explosion or other casualty.
(vi) Opinion of Savannah's Counsel. GPC shall have
been furnished with an opinion of Bouhan, Williams & Levy,
counsel for Savannah, dated the date of the Execution and
Delivery, to the effect that:
(A) Savannah is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Georgia and has the requisite power and
authority to execute and deliver this Agreement and the
Collateral Documents and to perform its obligations
hereunder and thereunder, and to conduct its business
as it is then being conducted;
(B) the execution, delivery and performance of
this Agreement and the Collateral Documents by Savannah
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have been duly and effectively authorized by all
requisite corporate action; and
(C) Savannah had full power and authority to
execute this Agreement and the Collateral Documents,
and this Agreement and the Collateral Documents have
been fully executed and delivered by Savannah and are
the legal, valid and binding obligations of Savannah
enforceable against it in accordance with their terms
(except as the provisions hereof or thereof may be
limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of
creditors' rights and by other laws of general
application affecting the rights and remedies of
creditors, except that the availability of the remedy
of specific enforcement or of injunctive relief is
subject to the discretion of the court before which any
proceeding therefor may be brought, and except that no
opinion shall be expressed as to the validity and
enforceability of the restrictions on alienation set
forth in Sections 6(c), ALIENATION AND ASSIGNMENT
hereof).
Such opinion shall cover other matters as GPC may
reasonably request and shall be reasonably satisfactory
to GPC's counsel.
(vii) Due Diligence Satisfactory. GPC shall have had
adequate opportunity to conduct Due Diligence and in the
course thereof shall not have discovered any information,
state of facts, condition or event which, in the exercise of
reasonable judgment, causes GPC to determine that (i) it
would be materially deprived of the value of the bargain
intended to be obtained thereby on the date hereof, or (ii)
that consummation of the Execution and Delivery would
subject GPC to any claims, liabilities, or obligations
estimated to be, singly or in the aggregate, in excess of
$50,000.00 over and above all amounts which Savannah has
otherwise agreed to pay to GPC with respect to such claims,
liabilities, or obligations.
(c) MUTUAL CONDITIONS. Except as may otherwise be
provided in Section 6(m), SHARING OF COSTS - GENERAL, hereof, the
respective obligations of GPC and Savannah under this Agreement
and the Operating Agreement are subject to the fulfillment, prior
to or at the Execution and Delivery (unless waived in writing by
GPC and Savannah prior to or at the Execution and Delivery), of
the further conditions that the following shall have been
achieved: (i) the receipt of all requisite or contemplated
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governmental, regulatory, judicial or other authorizations,
consents, orders, permits, licenses, certifications, filings,
waivers or approvals with respect to such Execution and Delivery
(including, without limitation, those of the GPSC, the SEC, the
GEPD, the Army Corps of Engineers, or Effingham County), (ii) the
execution, delivery and performance (to the extent required prior
to or at the Execution and Delivery) of this Agreement and the
Collateral Documents and the consummation of the transactions
contemplated thereby by GPC and Savannah (including, without
limitation, the substitution of land surveys for Exhibits A1/2,
A3/4, A5/6 and A7/8 pursuant to Sections 1(an), PLANT MCINTOSH
CTS NOS. 01 AND 02, 1(ao), PLANT MCINTOSH CTS NOS. 03 AND 04,
1(ap), PLANT MCINTOSH CTS NOS. 05 AND 06, and 1(aq), PLANT
MCINTOSH CTS NOS. 07 AND 08, hereof), and (iii) the receipt of
the Release by NationsBank of Georgia, National Association, as
Trustee under the Indenture of the leasehold estate to be
conveyed to GPC at the Execution and Delivery hereunder from the
lien of such Indenture.
9. CONDITIONS PRECEDENT TO CLOSING.
(a) SAVANNAH'S CONDITIONS. Except as may otherwise be
provided in Section 6(m), SHARING OF COSTS - GENERAL, hereof, all
obligations of Savannah to GPC under this Agreement and the
Operating Agreement are subject to the fulfillment, prior to or
at the Closing, of each of the conditions contained in clauses
(i) through (iv) below (or the waiver in writing of such
conditions by Savannah):
(i) Representations and Warranties Correct;
Performance by GPC. GPC's representations and warranties
contained in this Agreement shall have been materially true
and correct at the date hereof, and (other than the
representation and warranty set forth in subsection (iii) of
Section 2(a), GPC REPRESENTATIONS AND WARRANTIES, hereof)
shall be deemed to have been made again at and as of the
time of the Closing and shall then be true and correct in
all material respects; GPC shall have performed and complied
with all agreements, covenants and conditions required by
this Agreement to be performed or complied with by it prior
to or at the Closing; and Savannah shall have been furnished
with a certificate of the President or a vice president of
GPC, dated the date of the Closing, certifying in such
detail as Savannah may request to the fulfillment of the
foregoing conditions.
(ii) Litigation Certificate. GPC shall have
delivered to Savannah a certificate executed by the
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President or a vice president of GPC that, as of the time of
the Closing, such officer of GPC has no personal knowledge
of actual or threatened litigation against GPC which might
materially adversely affect the rights of Savannah as a
tenant in common in the CT Common Facilities and the CT Fuel
Supply other than such pending or threatened litigation
described or referred to in such certificate, and the
contents of such certificate shall be reasonably
satisfactory to Savannah.
(iii) Other Documents. At or prior to the time of the
Closing, GPC shall have entered into the Operating Agreement
and such Operating Agreement shall be in full force and
effect. At the Closing, GPC shall not be in material breach
of the Operating Agreement.
(iv) Opinion of GPC's Counsel. Savannah shall have
been furnished with an opinion of Troutman Sanders, counsel
for GPC, dated the date of the Closing, to the effect that:
(A) GPC is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Georgia and has the requisite power and
authority to own and to lease those portions of the
Plant McIntosh CT Project as GPC is required to own and
lease following the Closing, to execute and deliver
this Agreement and the Operating Agreement and to
perform its obligations hereunder and thereunder, and
to conduct its business as it is then being conducted;
(B) the execution, delivery and performance of
this Agreement and the Operating Agreement by GPC have
been duly and effectively authorized by all requisite
corporate action; and
(C) GPC had full power and authority to execute
this Agreement and the Operating Agreement, and this
Agreement and the Operating Agreement have been fully
executed and delivered by GPC and are the legal, valid
and binding obligations of GPC enforceable against it
in accordance with their terms (except as the
provisions hereof or thereof may be limited by
bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors'
rights and by other laws of general application
affecting the rights and remedies of creditors, except
that the availability of the remedy of specific
enforcement or of injunctive relief is subject to the
discretion of the court before which any proceeding
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therefor may be brought, and except that no opinion
shall be expressed as to the validity and
enforceability of the restrictions on alienation set
forth in Sections 6(c), ALIENATION AND ASSIGNMENT
hereof).
Such opinion shall cover such other matters as Savannah
may reasonably request and shall be reasonably satisfactory
to Savannah's counsel.
(b) GPC'S CONDITIONS. Except as may otherwise be provided
in Section 6(m), SHARING OF COSTS - GENERAL, hereof, all
obligations of GPC under this Agreement and the Operating
Agreement are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions (or the waiver in
writing of such conditions by GPC):
(i) Representations and Warranties Correct;
Performance by Savannah. Savannah's representations and
warranties contained in this Agreement shall have been
materially true and correct at the date hereof and (other
than the representation and warranty set forth in subsection
(iii) of Section 2(b), SAVANNAH REPRESENTATIONS AND
WARRANTIES hereof) shall be deemed to have been made again
at and as of the time of the Closing and shall then be true
and correct in all material respects; Savannah shall have
performed and complied with all agreements, covenants and
conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing; and GPC
shall have been furnished with a certificate of the
President or a vice president of Savannah, dated the date of
the Closing, certifying in such detail as GPC may request to
the fulfillment of the foregoing conditions.
(ii) Litigation Certificate. Savannah shall have
delivered to GPC a certificate executed by the President or
a vice president of Savannah that, as of the time of the
Closing, such officer of Savannah has no personal knowledge
of actual or threatened litigation against Savannah which
might materially adversely affect the rights of GPC as a
tenant in common in the CT Common Facilities and the CT Fuel
Supply other than such pending or threatened litigation
described or referred to in such certificate, and the
contents of such certificate shall be reasonably
satisfactory to GPC.
(iii) Collateral Documents. At or prior to the time
of the Closing, Savannah shall have entered into the
Collateral Documents and such Collateral Documents shall be
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in full force and effect. At the Closing, neither Savannah
nor SCSI shall be in material breach of any of the
Collateral Documents.
(iv) No Material Change. Between the date of this
Agreement and the Closing, there shall not have been any
material adverse change in any of that portion of the CT
Common Facilities equipment being conveyed to GPC at the
Closing and such assets shall not have suffered any material
loss by fire, explosion or other casualty.
(v) Opinion of Savannah's Counsel. GPC shall have
been furnished with an opinion of Bouhan, Williams & Levy,
counsel for Savannah, dated the date of the Closing, to the
effect that:
(A) Savannah is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Georgia and has the requisite power and
authority to execute and deliver this Agreement and the
Collateral Documents and to perform its obligations
hereunder and thereunder, and to conduct its business
as it is then being conducted;
(B) the execution, delivery and performance of
this Agreement and the Collateral Documents by Savannah
have been duly and effectively authorized by all
requisite corporate action; and
(C) Savannah had full power and authority to
execute this Agreement and the Collateral Documents,
and this Agreement and the Collateral Documents have
been fully executed and delivered by Savannah and are
the legal, valid and binding obligations of Savannah
enforceable against it in accordance with their terms
(except as the provisions hereof or thereof may be
limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of
creditors' rights and by other laws of general
application affecting the rights and remedies of
creditors, except that the availability of the remedy
of specific enforcement or of injunctive relief is
subject to the discretion of the court before which any
proceeding therefor may be brought, and except that no
opinion shall be expressed as to the validity and
enforceability of the restrictions on alienation set
forth in Sections 6(c), ALIENATION AND ASSIGNMENT
hereof).
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Such opinion shall cover other matters as GPC may
reasonably request and shall be reasonably satisfactory
to GPC's counsel.
(vi) Due Diligence Satisfactory. GPC shall have had
adequate opportunity to conduct Due Diligence and in the
course thereof shall not have discovered any information,
state of facts, condition or event which, in the exercise of
reasonable judgment, causes GPC to determine that (i) it
would be materially deprived of the value of the bargain
intended to be obtained thereby on the date hereof, or (ii)
that consummation of the Closing would subject GPC to any
claims, liabilities, or obligations estimated to be, singly
or in the aggregate, in excess of $50,000.00 over and above
all amounts which Savannah has otherwise agreed to pay to
GPC with respect to such claims, liabilities, or
obligations.
(c) MUTUAL CONDITIONS. Except as may otherwise be
provided in Section 6(m), SHARING OF COSTS - GENERAL, hereof, the
respective obligations of GPC and Savannah under this Agreement
and the Operating Agreement are subject to the fulfillment, prior
to or at the Closing (unless waived in writing by GPC and
Savannah prior to or at the Closing), of the further conditions
that the following shall have been achieved: (i) the receipt of
all requisite or contemplated governmental, regulatory, judicial
or other authorizations, consents, orders, permits, licenses,
certifications, filings, waivers or approvals with respect to
such Closing (including, without limitation, those of the FERC,
GPSC, the SEC, the GEPD, the Army Corps of Engineers, or
Effingham County), (ii) the execution, delivery and performance
(to the extent required prior to or at the Closing) of this
Agreement and the Collateral Documents and the consummation of
the transactions contemplated thereby by GPC and Savannah, and
(iii) the receipt of the Release by NationsBank of Georgia,
National Association, as Trustee under the Indenture of the
undivided ownership interest in that portion of the CT Common
Facilities equipment to be conveyed to GPC at the Closing
hereunder from the lien of such Indenture.
10. MISCELLANEOUS.
(a) SURVIVAL. The agreements, covenants, representations
and warranties contained in Sections 1, DEFINITIONS, 2,
REPRESENTATIONS AND WARRANTIES, 3, SALE TO GPC OF AN UNDIVIDED
OWNERSHIP INTEREST IN CERTAIN OF THE CT COMMON FACILITIES
EQUIPMENT, 4, LEASE TO GPC OF THE PLANT MCINTOSH CTS SITE AND THE
CT COMMON FACILITIES SITE, 5, AGENCY, 6, OWNERSHIP, RIGHTS AND
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OBLIGATIONS, 7, CERTAIN ADDITIONAL AGREEMENTS AMONG THE
PARTICIPANTS, and 10, MISCELLANEOUS, of this Agreement shall
survive the Closing; provided, however, that such agreements,
covenants, representations and warranties shall remain in effect
only so long as the Operating Agreement remains in effect,
pursuant to Section 7(b), TERM, of the Operating Agreement.
(b) FURTHER ASSURANCES. From time to time after the date
hereof, each Party will execute and deliver such instruments of
conveyance and other documents, upon the request of another
Party, as may be necessary or appropriate to carry out the intent
of this Agreement.
(c) GOVERNING LAW. The validity, interpretation, and
performance of this Agreement and each of its provisions shall be
governed by the laws of the State of Georgia.
(d) NOTICE.
(i) Any notice, request, consent or other
communication permitted or required by this Agreement
(including, without limitation, any offer or acceptance
pursuant to Section 6(c), ALIENATION AND ASSIGNMENT, hereof)
shall be in writing. All notices pertaining to or affecting
the provisions of this Agreement shall be deemed given when
deposited in the United States Mail, and sent by registered
or certified mail to the Parties at the following addresses:
GPC:
Georgia Power Company
333 Piedmont Avenue
Atlanta, Georgia 30308
Attention: Senior Vice President - Bulk Power Markets
Telephone Number: (404) 526-6599
Telecopy Number: (404) 526-7407
Savannah (in its capacity as a Participant and as Agent):
Savannah Electric and Power Company
600 East Bay Street
Savannah, Georgia 31402
Attention: Vice President - Operations
Telephone Number: (912) 238-2250
Telecopy Number: (912) 944-1378
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<PAGE>
(ii) Any Party shall be entitled to specify a
different officer or address upon notice in writing to the
other Parties.
(e) SECTION HEADINGS NOT TO AFFECT MEANING. The
descriptive headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall in
no way modify or restrict any of the terms and provisions hereof.
(f) NO PARTNERSHIP. Notwithstanding any provision of this
Agreement, none of the Parties intend to create hereby any joint
venture, partnership, association taxable as a corporation, or
other entity for the conduct of any business for profit either
among themselves or with any one or more of the Participants.
(g) TIME OF ESSENCE. Time is of the essence of this
Agreement.
(h) AMENDMENTS. This Agreement may be amended by and only
by a written instrument duly executed by each of the Parties.
(i) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon each of the Parties and their
respective successors and upon their assigns pursuant to the
provisions of Section 6(c), ALIENATION AND ASSIGNMENT, hereof.
Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies hereunder,
except that any transferee of an ownership or ownership and
leasehold interest in the Plant McIntosh CT Project or any
portion or portions thereof, from any Participant in accordance
with this Agreement and pursuant to an agreement under which the
other Participants have been made third-party beneficiaries of
such transferee's obligations thereunder shall be a third-party
beneficiary of such other Participants' respective obligations
hereunder and shall be deemed a Participant for all purposes of
this Agreement.
(j) COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute
one and the same instrument.
(k) "AS IS" SALE. EXCEPT AND TO THE EXTENT AS OTHERWISE
EXPRESSLY SET FORTH HEREIN OR IN ANY BILL OF SALE TO BE DELIVERED
PURSUANT TO THIS AGREEMENT: (A) ANY PORTION OF THE CT COMMON
FACILITIES EQUIPMENT TO BE CONVEYED HEREUNDER SHALL BE SOLD "AS
IS" AND "WHERE IS"; (B) NEITHER GPC NOR SAVANNAH MAKES ANY
REPRESENTATION OR WARRANTY WHATSOEVER IN THIS AGREEMENT, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY
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REPRESENTATION OR WARRANTY AS TO THE VALUE, QUANTITY, CONDITION,
SALABILITY, OBSOLESCENCE, MERCHANTABILITY, FITNESS OR SUITABILITY
FOR USE OR WORKING ORDER OF ANY PORTION OF THE CT COMMON
FACILITIES EQUIPMENT TO BE CONVEYED HEREUNDER; AND (C) NEITHER
GPC NOR SAVANNAH REPRESENT OR WARRANT THAT THE USE OR OPERATION
OF ANY PORTION OF THE CT COMMON FACILITIES EQUIPMENT CONVEYED
HEREUNDER WILL NOT VIOLATE PATENT, TRADEMARK OR SERVICE MARK
RIGHTS OF ANY THIRD PARTIES. GPC AND SAVANNAH ARE WILLING TO
PURCHASE THOSE PORTIONS OF THE CT COMMON FACILITIES EQUIPMENT
CONVEYED HEREUNDER "AS IS" AND "WHERE IS" SUBJECT TO AND IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT.
Notwithstanding the foregoing, GPC and Savannah shall have the
benefit, consistent with their ownership and leasehold interests
in the Plant McIntosh CT Project, of all manufacturers' and
vendors' warranties and all patent, trademark and service mark
rights running to GPC and Savannah, respectively, in connection
with the Plant McIntosh CT Project.
(l) COMPUTATION OF PERCENTAGE UNDIVIDED OWNERSHIP
INTEREST. Notwithstanding any other provision of this Agreement,
whenever, pursuant to any provision of this Agreement, any action
is required to be agreed to or taken by any one or more of the
Participants hereunder (other than any action to be taken by
Savannah in its capacity as Agent hereunder), (i) only those
Participants not in default in the payment of any amounts
(together with interest, if appropriate) required under any
provisions of this Agreement or the Operating Agreement at the
time such action is to be agreed to or taken shall have the right
to participate in such agreement or the taking of such action,
and (ii) the computation of the aggregate Pro Forma Ownership
Interest in the Plant McIntosh CT Project of the Participants
agreeing to or taking any such action shall be based solely upon
the Pro Forma Ownership Interests in the Plant McIntosh CT
Project of the Participants not so in default.
(m) SUCCESSOR AGENT. In the event that Savannah (or any
successor Agent) is removed as Agent for the Participants
hereunder or under the Operating Agreement or in the event
Savannah (with prior written approval from the Participants which
shall not be unreasonably withheld) assigns its responsibilities
as Agent, any successor Agent for the Participants as
contemplated hereby shall exercise all of the rights and powers
and shall be subject to all of the duties and obligations of
Savannah as Agent hereunder or under the Operating Agreement and
shall be subject to removal by the Participants in the same
manner as Savannah, and Savannah shall take all action and
execute (and file where appropriate) all documents and
instruments which shall be requested by the successor Agent to
effect the transfer to such successor Agent of such rights,
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powers, duties and obligations, including, but not limited to,
taking such actions and executing such documents and instruments
necessary to enable the successor Agent to operate and maintain
those facilities and equipment of Plant McIntosh owned by
Savannah which provide support services to the Plant McIntosh CT
Project.
(n) THE PLANT MCINTOSH CT UNITS. In the event that at any
time the same party shall not serve as Agent with respect to all
the Plant McIntosh CTs, Participants mutually agree (and agree to
exercise their reasonable best efforts to obtain the agreement of
any other Agent), if any or more than one of them is an Agent
with respect to any of the Plant McIntosh CTs, to exercise the
rights, powers, duties and obligations of an Agent hereunder and
under the Operating Agreement in such a manner as will not
unreasonably interfere with the rights of any Participant under
this Agreement or the Operating Agreement.
(o) INSPECTION PRIOR TO EXECUTION AND DELIVERY AND PRIOR
TO CLOSING. Prior to the Execution and Delivery, GPC shall have
the right to inspect the GPC Plant McIntosh CTs Site and the CT
Common Facilities Site and prior to the Closing GPC shall have
the right to inspect that portion of the CT Common Facilities
equipment to be conveyed to GPC at the Closing. During such
inspections, GPC may take pictures for the purpose of determining
the inventory of personal property located at the CT Common
Facilities Site and for such other purposes as may be reasonably
requested by GPC in connection with the Execution and Delivery
and the Closing and the consummation of the transactions contem-
plated hereby.
(p) CONTINUING DUE DILIGENCE.
(i) From the date hereof and until the consummation of
the Execution and Delivery, GPC shall, in addition to any other
rights conferred otherwise hereunder or under the Operating
Agreement, be entitled to conduct such reasonable review of the
GPC Plant McIntosh CTs Site and the CT Common Facilities Site as
it may reasonably deem appropriate.
(ii) From the date hereof and until the consummation of
the Closing, GPC shall, in addition to any other rights conferred
otherwise hereunder or under the Operating Agreement, be entitled
to conduct such reasonable review of that portion of the CT
Common Facilities equipment being conveyed to GPC at the Closing
as it may reasonably deem appropriate.
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(iii) The reviews described in subsections (i) and (ii)
of this Section 10(p) shall be collectively referred to herein as
"Due Diligence."
(q) SEVERAL AGREEMENTS. The agreements and obligations of
the Participants set forth in this Agreement shall be the
several, and not joint, agreements and obligations of the
Participants.
(r) SPECIAL PROVISIONS RELATING TO THE CT COMMON
FACILITIES.
(i) The CT Common Facilities shall be used for the
mutual benefit and enjoyment of the Participants and in such
a manner as will not unreasonably interfere with the use,
benefit and enjoyment of any Participant. No area of the CT
Common Facilities may be used exclusively by less than all
the Participants without the approval of all Participants;
provided, however, that if such use is essential to the
operation of any of the Plant McIntosh CTs, such approval
will not be unreasonably withheld.
(ii) For purposes of the various provisions of this
Agreement and of the Operating Agreement permitting or
requiring the vote, consent, concurrence or approval of the
Participants owning a designated percentage undivided
ownership interest in the Plant McIntosh CT Project, the
Plant McIntosh CTs or the CT Common Facilities, a
Participant's percentage undivided ownership interest in the
Plant McIntosh CT Project, the Plant McIntosh CTs or the CT
Common Facilities at any particular time shall be deemed to
be equivalent to that Participant's Pro Forma Ownership
Interest at such time.
(s) CONSTRUCTION OF "INCLUDING". Wherever the term
"including" is used in this Agreement, such term shall not be
construed as limiting the generality of any statement, clause,
phrase or term and shall not be deemed to exclude any person or
thing otherwise within the meaning of the statement, clause,
phrase or term which it modifies.
(t) NO DELAY. No disagreement or dispute of any kind
between or among any of the Participants concerning any matter,
including, without limitation, the amount of any payment due from
any Participant or the correctness of any charge made to any
Participant, shall permit any Participant to delay or withhold
any payment pursuant to this Agreement.
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(u) OBLIGATION TO CONVEY INTERESTS IN THE CT COMMON
FACILITIES.
(i) The obligations of Participants under this
Section 10(u) are subject to Section 7(c), APPROVALS,
hereof. In the event that any one or more Participants
serve notice that they plan to construct one or more of the
Additional Plant McIntosh CTs, each Participant agrees that
it shall proceed diligently to a closing in accordance with
subsections (ii), (iii), (iv) and (v) of this Section 10(u)
to effect (A) a sale and purchase of such percentage
ownership interest in the CT Common Facilities (other than
the CT Common Facilities Site) as is necessary to adjust
each Participant's percentage ownership interest in the CT
Common Facilities (other than the CT Common Facilities Site)
to a percentage equivalent to each Participant's respective
Pro Forma Ownership Interest, and (B) an amendment to the
Lease so as to adjust GPC's leasehold interest in the CT
Common Facilities Site to a percentage equivalent to GPC's
Pro Forma Ownership Interest.
(ii) Not more than 30 days following the date any
Participant serves a notice that such Participant plans to
construct one or more of the Additional Plant McIntosh CTs,
each Participant owning such Additional Plant McIntosh CTs,
shall deliver to the other Participants notices specifying
the date on which the closing described in subsection (i) of
this Section 10(u) shall occur. Following receipt of each
such notice, each Participant shall proceed diligently to
such closing, which, if GPC is serving such notice, shall
coincide with the respective closing described in Section
4(d), AMENDMENT TO LEASE IN CONNECTION WITH THE CONSTRUCTION
OF ONE OR MORE ADDITIONAL PLANT MCINTOSH CTS, hereof. At
such closing, there shall be delivered to GPC or to
Savannah, as the case may be, (A) a bill of sale, with
respect to the sale described in subsection (i)(A) of this
Section 10(u), equivalent in form to Exhibit D of this
Agreement, and (B) an amendment to the Lease, with respect
to the conveyance of the leasehold interest described in
subsection (i)(B) of this Section 10(u), with a term
commensurate with the term of the Lease described in Section
4(a), LEASE OF LAND, hereof. At such closing, there shall
also be delivered to GPC or to Savannah, as the case may be,
a properly executed Release of that portion of the CT Common
Facilities being conveyed from the holder of any and all
mortgages, deeds to secure debt or other security interests
in such undivided ownership interests and leasehold
interests.
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(iii) The purchase price for each conveyance of a
percentage undivided ownership interest in the CT Common
Facilities (other than the CT Common Facilities Site)
pursuant to subsection (i)(A) of this Section 10(u), shall
be book value. Such purchase price shall be payable at the
closing in immediately available funds.
(iv) The reduction or increase in the Rent paid by
GPC, as the case may be, for each conveyance of a leasehold
interest in the CT Common Facilities Site pursuant to
subsection (i)(B) of this Section 10(u), shall be the
original book cost of that percentage of the CT Common
Facilities Site being conveyed multiplied by Savannah's
weighted cost of pretax capital as of December 31, 1991.
(v) From time to time after each closing pursuant to
this Section 10(u), the Participants shall execute and
deliver such other instruments of conveyance and transfer as
may be necessary or appropriate or as any of them may
reasonably request to vest the percentage undivided
ownership interest and leasehold interest in the CT Common
Facilities being conveyed at such closing, including without
limitation, any necessary easements appurtenant thereto.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned Parties hereto have duly
executed this Agreement under seal as of the date first above
written.
Signed, sealed and delivered GEORGIA POWER COMPANY, as a
in the presence of: Participant
___________________________ By: ________________________
___________________________ Attest: ____________________
Notary Public
(CORPORATE SEAL)
Signed, sealed and delivered SAVANNAH ELECTRIC AND
in the presence of: POWER COMPANY, as Agent
and as a Participant
___________________________ By: _________________________
___________________________ Attest: _____________________
Notary Public
(CORPORATE SEAL)
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Exhibit 10(a)58
PLANT MCINTOSH
COMBUSTION TURBINE
OPERATING AGREEMENT
between
GEORGIA POWER COMPANY
and
SAVANNAH ELECTRIC AND POWER COMPANY
Dated as of December 15, 1992
<PAGE>
Plant McIntosh
Combustion Turbine
Operating Agreement
TABLE OF CONTENTS
Section
No. Page
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
(a) ADDITIONAL PLANT MCINTOSH CTS . . . . . . . . . . 1
(b) AFFILIATE . . . . . . . . . . . . . . . . . . . . 3
(c) AGENCY FUNCTIONS . . . . . . . . . . . . . . . . . 3
(d) AGENT . . . . . . . . . . . . . . . . . . . . . . 3
(e) ASSIGNMENT OF CT PURCHASE AGREEMENT . . . . . . . 3
(f) BUDGET . . . . . . . . . . . . . . . . . . . . . . 3
(g) BUSINESS DAY . . . . . . . . . . . . . . . . . . . 3
(h) CAPITAL ACCOUNT . . . . . . . . . . . . . . . . . 4
(i) CAPITAL BUDGET . . . . . . . . . . . . . . . . . . 4
(j) CLOSING . . . . . . . . . . . . . . . . . . . . . 4
(k) COMMERCIAL OPERATION . . . . . . . . . . . . . . . 4
(l) CONSTRUCTION ACCOUNT . . . . . . . . . . . . . . . 4
(m) CONSTRUCTION BUDGET . . . . . . . . . . . . . . . 5
(n) COST OF CONSTRUCTION . . . . . . . . . . . . . . . 5
(o) CT COMMON FACILITIES . . . . . . . . . . . . . . . 5
(p) CT COMMON FACILITIES SITE . . . . . . . . . . . . 6
(q) CT FUEL SUPPLY . . . . . . . . . . . . . . . . . . 6
(r) EXECUTION AND DELIVERY . . . . . . . . . . . . . . 6
(s) FERC . . . . . . . . . . . . . . . . . . . . . . . 6
(t) FORCE MAJEURE EVENT . . . . . . . . . . . . . . . 6
(u) FUEL COSTS . . . . . . . . . . . . . . . . . . . . 6
(v) FUEL OIL TANK . . . . . . . . . . . . . . . . . . 7
(w) FUEL PLAN . . . . . . . . . . . . . . . . . . . . 7
(x) GOVERNMENTAL AUTHORITY . . . . . . . . . . . . . . 7
(y) GPC PLANT MCINTOSH CTS . . . . . . . . . . . . . . 7
(z) GPC PLANT MCINTOSH CTS SITE . . . . . . . . . . . 7
(aa) GPSC . . . . . . . . . . . . . . . . . . . . . . . 7
(ab) INTERCOMPANY INTERCHANGE CONTRACT . . . . . . . . 8
(ac) LEGAL REQUIREMENTS . . . . . . . . . . . . . . . . 8
(ad) OPERATING ACCOUNT . . . . . . . . . . . . . . . . 8
(ae) OPERATING BUDGET . . . . . . . . . . . . . . . . . 8
(af) OPERATING COSTS . . . . . . . . . . . . . . . . . 8
(ag) OWNERSHIP AGREEMENT . . . . . . . . . . . . . . . 9
(ah) PARTICIPANTS . . . . . . . . . . . . . . . . . . . 9
(ai) PARTY . . . . . . . . . . . . . . . . . . . . . . 9
(aj) PLANT MCINTOSH . . . . . . . . . . . . . . . . . . 9
(ak) PLANT MCINTOSH CT NOS. 01 AND 02 . . . . . . . . . 9
(al) PLANT MCINTOSH CT NOS. 03 AND 04 . . . . . . . . . 9
(am) PLANT MCINTOSH CT NOS. 05 AND 06 . . . . . . . . . 9
(an) PLANT MCINTOSH CT NOS. 07 AND 08 . . . . . . . . . 9
(ao) PLANT MCINTOSH CT PROJECT . . . . . . . . . . . . 10
(ap) PLANT MCINTOSH CTS . . . . . . . . . . . . . . . . 10
<PAGE>
(aq) 1994 PLANT MCINTOSH CTS . . . . . . . . . . . . . 10
(ar) 1995 PLANT MCINTOSH CTS . . . . . . . . . . . . . 10
(as) PLANT MCINTOSH SITE . . . . . . . . . . . . . . . 10
(at) PRIME RATE . . . . . . . . . . . . . . . . . . . . 10
(au) PRO FORMA OWNERSHIP INTEREST . . . . . . . . . . . 11
(av) PRUDENT UTILITY PRACTICE . . . . . . . . . . . . . 11
(aw) PURCHASE PRICE . . . . . . . . . . . . . . . . . . 11
(ax) SAVANNAH PLANT MCINTOSH CTS . . . . . . . . . . . 11
(ay) SAVANNAH PLANT MCINTOSH CTs SITE . . . . . . . . . 12
(az) SCSI . . . . . . . . . . . . . . . . . . . . . . . 12
(ba) SEC . . . . . . . . . . . . . . . . . . . . . . . 12
(bb) SITE REPRESENTATIVE . . . . . . . . . . . . . . . 12
(bc) THE SOUTHERN COMPANY . . . . . . . . . . . . . . . 12
(bd) UNIFORM SYSTEM OF ACCOUNTS . . . . . . . . . . . . 12
(be) VARIABLE OPERATING COSTS . . . . . . . . . . . . . 12
2. OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . 12
(a) AGENT . . . . . . . . . . . . . . . . . . . . . . 12
(b) COMMITTEES . . . . . . . . . . . . . . . . . . . . 13
(c) DEVELOPMENT OF BUDGETS, PLANS AND SCHEDULES . . . 13
(d) RECORD KEEPING . . . . . . . . . . . . . . . . . . 14
3. AUTHORITY AND RESPONSIBILITY FOR OPERATION . . . . . . . 15
(a) OPERATION . . . . . . . . . . . . . . . . . . . . 15
(b) OTHER CONTRACTS . . . . . . . . . . . . . . . . . 17
(c) FOSSIL FUEL . . . . . . . . . . . . . . . . . . . 17
4. INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . 18
5. OPERATION, RIGHTS AND OBLIGATIONS . . . . . . . . . . . 18
(a) AVAILABILITY OF OUTPUT . . . . . . . . . . . . . . 18
(b) SCHEDULING AND DISPATCHING . . . . . . . . . . . . 18
(c) FUEL PLAN . . . . . . . . . . . . . . . . . . . . 18
(d) MAINTENANCE SCHEDULE . . . . . . . . . . . . . . . 19
(e) BILLING AND ACCOUNTING . . . . . . . . . . . . . . 20
(f) METERING . . . . . . . . . . . . . . . . . . . . . 20
(g) SHARING OF COSTS - GENERAL . . . . . . . . . . . . 21
(h) PAYMENT AND SETTLEMENT OF OPERATING COSTS . . . . 22
(i) OPERATING ACCOUNT . . . . . . . . . . . . . . . . 23
(j) PAYMENT AND SETTLEMENT OF COST OF CONSTRUCTION . . 25
(k) CAPITAL ACCOUNT . . . . . . . . . . . . . . . . . 27
(l) NONPAYMENT . . . . . . . . . . . . . . . . . . . . 28
(m) INSURANCE . . . . . . . . . . . . . . . . . . . . 31
6. CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTICIPANTS . . 33
(a) NO ADVERSE DISTINCTION . . . . . . . . . . . . . . 33
(b) COOPERATION . . . . . . . . . . . . . . . . . . . 33
(c) LIABILITY, REMEDIES AND LIMITATIONS OF LIABILITY . 33
(d) INDEMNIFICATION . . . . . . . . . . . . . . . . . 35
(e) AVAILABILITY OF RECORDS . . . . . . . . . . . . . 35
(f) RIGHT TO COPIES . . . . . . . . . . . . . . . . . 36
(g) COMPLIANCE WITH LAWS AND ENVIRONMENTAL MATTERS . . 36
(h) SAFETY . . . . . . . . . . . . . . . . . . . . . . 37
(i) MANAGEMENT AND OPERATING AUDITS . . . . . . . . . 38
<PAGE>
Section
No. Page
(j) ON-SITE OBSERVATION AND INSPECTION . . . . . . . . 38
(k) PLANT TOURS . . . . . . . . . . . . . . . . . . . 39
7. ASSIGNMENT AND TERMINATION. . . . . . . . . . . . . . . . 39
(a) LIMITATION ON ASSIGNABILITY . . . . . . . . . . . 39
(b) TERM . . . . . . . . . . . . . . . . . . . . . . . 39
8. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) GOVERNING LAW . . . . . . . . . . . . . . . . . . 40
(b) NO DELAY . . . . . . . . . . . . . . . . . . . . . 40
(c) NOTICE . . . . . . . . . . . . . . . . . . . . . . 40
(d) SECTION HEADINGS NOT TO AFFECT MEANING . . . . . . 41
(e) NO PARTNERSHIP . . . . . . . . . . . . . . . . . . 41
(f) AMENDMENTS . . . . . . . . . . . . . . . . . . . . 41
(g) SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . 41
(h) COUNTERPARTS . . . . . . . . . . . . . . . . . . . 41
(i) TIME IS OF THE ESSENCE . . . . . . . . . . . . . . 41
(j) FURTHER ASSURANCES . . . . . . . . . . . . . . . . 41
(k) COMPUTATION OF PERCENTAGE UNDIVIDED OWNERSHIP
INTEREST . . . . . . . . . . . . . . . . . . . . 41
(l) SUCCESSOR AGENT . . . . . . . . . . . . . . . . . 42
(m) SEVERAL AGREEMENTS . . . . . . . . . . . . . . . . 42
(n) SPECIAL PROVISIONS RELATING TO THE CT COMMON
FACILITIES . . . . . . . . . . . . . . . . . . . 42
(o) CONSTRUCTION OF "INCLUDING" . . . . . . . . . . . 43
(p) EQUAL EMPLOYMENT OPPORTUNITY AND CIVIL RIGHTS . . 43
(q) THE PLANT MCINTOSH CT UNITS . . . . . . . . . . . 43
<PAGE>
THIS PLANT MCINTOSH COMBUSTION TURBINE OPERATING AGREEMENT
("Agreement"), dated as of December 15, 1992, is between GEORGIA
POWER COMPANY, a corporation organized and existing under the
laws of the State of Georgia ("GPC") and SAVANNAH ELECTRIC AND
POWER COMPANY, a corporation organized and existing under the
laws of the State of Georgia ("Savannah").
W I T N E S S E T H:
A. GPC and Savannah have heretofore entered into that
certain Plant McIntosh Combustion Turbine Purchase and Ownership
Participation Agreement dated as of the date hereof providing for
the ownership by them of their respective undivided ownership
interests in the Plant McIntosh CT Project.
B. As set forth in the Ownership Agreement, Savannah and GPC
are to have undivided ownership interests and are to share the
costs of the Plant McIntosh CTs, the CT Common Facilities, and
the CT Fuel Supply as provided for in the Ownership Agreement and
this Agreement. By this Agreement, the Participants intend to
provide for the management, control, operation, maintenance,
renewal, addition, replacement, modification and disposal of the
Plant McIntosh CTs, the CT Common Facilities and the CT Fuel
Supply in all respects not covered by the Ownership Agreement and
for the entitlement and use of capacity and energy from the Plant
McIntosh CT Project and the sharing of the costs thereof by the
Participants in accordance with their respective undivided
ownership interests.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, GPC and Savannah hereby agree as
follows:
1. DEFINITIONS.
In addition to the terms defined elsewhere in this Agreement,
the following terms have the meanings indicated which meanings
shall be equally applicable to both singular and plural forms of
such terms except as otherwise expressly provided:
(a) ADDITIONAL PLANT MCINTOSH CTS. The "Additional Plant
McIntosh CTs" shall consist of:
(i) That certain real property upon which may be
constructed and located one or more of eight (8) complete
combustion turbine-generator units to be known as the
Additional Plant McIntosh CTs, the exact legal description for
which land shall be determined upon completion of such
construction, and which shall comprise a parcel of land
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<PAGE>
approximately 800 feet by 300 feet, and which parcel is
approximately shown as crosshatched and labeled as the
"Additional CTs Parcel" on Exhibit A9-16 hereof and
incorporated herein (which parcel shall be reduced, as
necessary, to suit the actual number of individual Additional
Plant McIntosh CTs constructed), together with all such
additional land, appurtenant easements or other rights therein
as may hereafter be acquired for the purposes specified in
subsection (iii) of this Section 1(a). GPC and Savannah agree
that the exact legal description for the aforedescribed parcel
of land shall be substituted for Exhibit A9-16 hereof upon
completion of the survey of such parcel of land and the
approval of such survey by GPC, and such legal description
shall become a part hereof automatically upon such
substitution;
(ii) All personal property comprising the combustion
turbine-generator units to be known as the Additional Plant
McIntosh CTs, including, without limitation, eight complete
combustion turbine-generator units, the enclosures housing the
same and the main step-up transformers which are to be used
solely in connection with the Additional Plant McIntosh CTs,
all as the foregoing list of personal property may be modified
or supplemented at the closing;
(iii) Such additional land, easements or other rights
therein as may be acquired, and such additional facilities and
other tangible property as may be acquired, constructed,
installed or replaced solely in connection with the Additional
Plant McIntosh CTs or any one or more of them; provided that
(A) the cost of such additional land, easements or other
rights therein or of such additional facilities or other
tangible property shall be properly recordable in accordance
with the Uniform System of Accounts, (B) such additional land,
easements or other rights therein or such additional
facilities or other tangible property shall have been
acquired, constructed, installed or replaced for the use of
the Participants having an ownership interest in the personal
property comprising the Additional Plant McIntosh CTs under
and subject to the provisions of this Agreement, and (C) the
acquisition of such additional land, easements or other rights
therein or the acquisition, construction, installation or
replacement of such additional facilities or other tangible
property shall (1) be necessary in order to keep the
Additional Plant McIntosh CTs (or any one or more of them) in
good operating condition or to satisfy the requirements of any
Governmental Authority having jurisdiction over the Additional
Plant McIntosh CTs, or (2) be agreed to by the Participants
having an ownership interest in the personal property
comprising the Additional Plant McIntosh CTs; and
(iv) Existing intangible property rights, and such
additional intangible property rights as may be hereafter
acquired, associated with the planning, licensing, design,
<PAGE>
construction, acquisition, completion, testing, startup,
management, control, operation, maintenance, renewal,
addition, replacement, modification and disposal of any of the
items in this Section 1(a).
(b) AFFILIATE. An "Affiliate" of a Participant shall mean
any corporation, partnership (limited or general) or other person
or entity controlling, under common control with, or controlled
by such Participant.
(c) AGENCY FUNCTIONS. The "Agency Functions" shall mean
those activities which the Agent shall undertake on behalf of the
Participants which relate to the planning, design, licensing,
procurement, acquisition (other than acquisition by GPC of a
leasehold interest in the GPC Plant McIntosh CTs Site and the CT
Common Facilities Site and of an undivided ownership interest in
certain of the CT Common Facilities equipment pursuant to the
Ownership Agreement), construction, completion, testing, startup,
management, control, operation, maintenance, renewal, addition,
replacement, modification and disposal of the Plant McIntosh CTs,
the CT Common Facilities and the CT Fuel Supply, as the case may
be, under this Agreement and the Ownership Agreement.
(d) AGENT. "Agent" shall mean Savannah or its successors
with respect to its rights and obligations in the performance of
the Agency Functions on behalf of the Participants with respect
to the Plant McIntosh CTs, the CT Common Facilities and the CT
Fuel Supply. The term "Agent" shall also mean and refer to
Savannah (or its successor as Agent) acting on its own behalf
with respect to the Savannah Plant McIntosh CTs, the CT Common
Facilities and the CT Fuel Supply for so long as Savannah (or its
successor as Agent) owns an undivided ownership interest in the
Plant McIntosh CTs, the CT Common Facilities, and the CT Fuel
Supply, respectively.
(e) ASSIGNMENT OF CT PURCHASE AGREEMENT. The "Assignment of
CT Purchase Agreement" shall refer to that certain Assignment of
Contract between SCSI and Savannah dated April 22, 1992 under
which SCSI assigned to Savannah that certain Agreement for the
Purchase and Sale of Combustion Turbine Generators and
Auxiliaries between ABB Energy Services, Inc. and SCSI, dated as
of January 31, 1991, as amended by that certain Amendment Number
One, dated as of April 22, 1992.
(f) BUDGET. A "Budget" shall mean any Capital Budget or
Operating Budget.
(g) BUSINESS DAY. A "Business Day" shall be any Monday,
Tuesday, Wednesday, Thursday or Friday other than a day which has
been established by law or required by executive order as a
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<PAGE>
holiday for any commercial banking institution in the State of
Georgia.
(h) CAPITAL ACCOUNT. The "Capital Account" shall refer to
the separate, interest bearing account or accounts, in a bank or
banks, the deposits in which are insured, subject to applicable
limits, by the Federal Deposit Insurance Corporation and which
meets or meet all applicable requirements imposed upon
depositories of Savannah, established by Savannah as Agent,
pursuant to the terms of this Agreement, for the payment of
additional Cost of Construction and Fuel Costs.
(i) CAPITAL BUDGET. The "Capital Budget" shall refer to the
Budgets pertaining to additional Cost of Construction and Fuel
Costs for that portion of the Plant McIntosh CT Project which has
achieved Commercial Operation to be delivered to the Participants
pursuant to the terms of Section 2(c), DEVELOPMENT OF BUDGETS,
PLANS AND SCHEDULES, of this Agreement.
(j) CLOSING. The "Closing" shall have the meaning assigned
in Section 3(c), CLOSING, of the Ownership Agreement.
(k) COMMERCIAL OPERATION. "Commercial Operation" shall
refer to the date or dates when any of the Plant McIntosh CTs are
completed and declared fully operable by Savannah, as Agent for
the Participants with respect to construction; provided, however,
that none of the Additional Plant McIntosh CTs shall be included
in the Plant McIntosh CTs until such time as one or more
Participants provide written notice to the other Participants
that they are planning to construct one or more of the Additional
Plant McIntosh CTs, as the case may be, in order to serve such
Participants' energy needs. It is the intent of the Parties that
Plant McIntosh CT Nos. 07 and 08 achieve Commercial Operation on
January 24, 1994 (unit No. 08) and February 28, 1994 (unit No.
07), that Plant McIntosh CT Nos. 05 and 06 achieve Commercial
Operation on March 9, 1994 (unit No. 06) and April 7, 1994 (unit
No. 05), that Plant McIntosh CT Nos. 03 and 04 achieve Commercial
Operation on May 5, 1994 (unit No. 04) and June 3, 1994 (unit No.
03), and that Plant McIntosh CT Nos. 01 and 02 achieve Commercial
Operation on April 13, 1995 (unit No. 02) and May 26, 1995 (unit
No. 01).
(l) CONSTRUCTION ACCOUNT. The "Construction Account" shall
refer to the separate, interest bearing account or accounts, in a
bank or banks, the deposits in which are insured, subject to
applicable limits, by the Federal Deposit Insurance Corporation
and which meets or meet all applicable requirements imposed upon
depositories of Savannah, established by Savannah as Agent,
pursuant to the terms of the Ownership Agreement, for the payment
of Cost of Construction.
- 4 -
<PAGE>
(m) CONSTRUCTION BUDGET. The "Construction Budget" shall
refer to the budgets pertaining to the Cost of Construction to be
delivered to the Participants pursuant to the terms of
Section 6(j), CONSTRUCTION BUDGETS AND SCHEDULES, of the
Ownership Agreement.
(n) COST OF CONSTRUCTION. The "Cost of Construction" shall
refer to all costs incurred by Savannah, as Agent, for the
Participants in connection with the planning, design, licensing,
procurement, acquisition, construction, completion, testing,
startup, renewal, addition, modification, replacement or disposal
of the Plant McIntosh CTs and the CT Common Facilities, or any
portion thereof, including, without limitation, that portion of
administrative and general expenses incurred by Savannah, as
Agent, which is properly and reasonably allocable to the Plant
McIntosh CTs and the CT Common Facilities and for which Savannah
has not been otherwise reimbursed by the Participants, which
costs are properly recordable in accordance with the Electric
Plant Instructions and in appropriate accounts as set forth in
the Uniform System of Accounts, and shall also include all costs
incurred by Savannah, as Agent for the Participants in connection
with the purchase and acquisition of (i) the initial supply of
fuel for the Plant McIntosh CTs to the extent such fuel is
consumed by any of the Plant McIntosh CTs prior to the respective
dates of Commercial Operation of such Plant McIntosh CTs,
including, without limitation, that portion of administrative and
general expenses incurred by Savannah, as Agent, which is
properly and reasonably allocable to such acquisition of fuel for
the Plant McIntosh CTs and for which Savannah has not been
otherwise reimbursed by the Participants, and (ii) the initial
supply of spare parts, and any replacements for such spare parts
utilized during pre-Commercial Operation construction activities,
for the Plant McIntosh CTs and the CT Common Facilities,
including, without limitation, that portion of administrative and
general expenses incurred by Savannah, as Agent, which is
properly and reasonably allocable to such acquisition of spare
parts and for which Savannah has not been otherwise reimbursed by
the Participants; provided, however, that Cost of Construction
shall not include (i) costs incurred by Savannah in connection
with the draining and cleaning (except sand-blasting) of the
existing Fuel Oil Tank as preparatory to its becoming part of the
CT Common Facilities, (ii) interest cost attributable to the
carrying of any Participant's respective investment in the Plant
McIntosh CTs or the CT Common Facilities, or (iii) costs and
expenses incurred by any Participant in connection with the
development of this Agreement, the Ownership Agreement or the
Assignment of CT Purchase Agreement.
(o) CT COMMON FACILITIES. The "CT Common Facilities" shall
have the meaning assigned in Section 1(p), CT COMMON FACILITIES,
of the Ownership Agreement.
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<PAGE>
(p) CT COMMON FACILITIES SITE. The "CT Common Facilities
Site" shall refer to so much of the CT Common Facilities as
constitutes real property.
(q) CT FUEL SUPPLY. The "CT Fuel Supply" shall mean the
fossil fuel supply of oil maintained in the fuel oil storage tank
or of natural gas provided by pipeline, as the case may be, for
the Plant McIntosh CTs pursuant to Section 3(c), FOSSIL FUEL,
hereof.
(r) EXECUTION AND DELIVERY. The "Execution and Delivery"
shall have the meaning assigned in Section 4(c), EXECUTION AND
DELIVERY, of the Ownership Agreement.
(s) FERC. The "FERC" shall mean the Federal Energy
Regulatory Commission or any entity succeeding to the powers and
functions thereof.
(t) FORCE MAJEURE EVENT. A "Force Majeure Event" shall
refer to any event which occurs due to no fault of the Party
asserting the occurrence of such event, and which is beyond the
reasonable control of such Party, including, but not limited to:
strike or other labor difficulty or dispute; lockout; act of God;
change in Legal Requirements; absence as of any particular time
of precise engineering and scientific knowledge generally
available to fashion a method for compliance with Legal
Requirements or absence as of any particular time of appropriate
technology generally available which may be required for
compliance with Legal Requirements; act or omission of any
Governmental Authority; act or omission of any third party other
than the Party asserting a Force Majeure Event; act of a public
enemy; expropriation or confiscation of facilities; riot;
rebellion; sabotage; embargo; blockade; quarantine; restriction;
epidemic; accident; wreck or delay in transportation;
unavailability or shortage of fuel, power, material or labor;
equipment failure; declared or undeclared war; or damage
resulting from wind, lightning, fire, flood, earthquake,
explosion or other physical disaster; provided, however, that no
Party shall be required by the foregoing provisions to settle a
strike, lockout or other labor difficulty or dispute except when,
according to its own best judgment, such a settlement seems
advisable.
(u) FUEL COSTS. The "Fuel Costs" shall mean all costs
incurred by the Agent for the Participants that are allocable to
the acquisition, processing, transportation, delivering,
handling, storage, accounting, analysis, measurement and disposal
of fuel for the CT Fuel Supply, including, without limitation,
any advance payments in connection therewith, less credits
related to such costs applied as appropriate, and including,
without limitation, that portion of administrative and general
- 6 -
<PAGE>
expenses which is properly and reasonably allocable to
acquisition and management of fuel for the CT Fuel Supply and for
which the Agent has not been otherwise reimbursed by the
Participants; provided, however, that Fuel Costs shall not
include any costs allocable to the purchase and acquisition of
the initial supply of fuel oil for the Plant McIntosh CT Project
to the extent such fuel is consumed by any of the Plant McIntosh
CTs prior to the respective dates of Commercial Operation of such
Plant McIntosh CTs.
(v) FUEL OIL TANK. The "Fuel Oil Tank" shall refer to the
existing nine million gallon fuel oil storage tank, wholly owned
by Savannah prior to the Closing, a percentage undivided
ownership interest in which will be conveyed to GPC at the
Closing, and which shall be used to store water for the Plant
McIntosh CTs.
(w) FUEL PLAN. The "Fuel Plan" shall refer to the fuel
supply plan covering at least a five-year period that the Agent
shall prepare and submit annually to the Participants as set
forth in Section 5(c), FUEL PLAN, hereof.
(x) GOVERNMENTAL AUTHORITY. A "Governmental Authority" shall
mean any local, state, regional or federal administrative, legal,
judicial, or executive agency, court, commission, department or
other entity, but excluding any agency, commission, department or
other such entity acting in its capacity as lender, guarantor or
mortgagee.
(y) GPC PLANT MCINTOSH CTS. The "GPC Plant McIntosh CTs"
shall refer collectively to Plant McIntosh CT Nos. 01 and 02,
Plant McIntosh CT Nos. 03 and 04, Plant McIntosh CT Nos. 07 and
08, and one or more of the Additional Plant McIntosh CTs, any one
of which shall be a GPC Plant McIntosh CT; provided, however,
that none of the Additional Plant McIntosh CTs shall be included
in the GPC Plant McIntosh CTs until such time as GPC provides
written notice to Savannah that GPC is planning to construct one
or more Additional Plant McIntosh CTs, as the case may be, in
order to serve GPC's energy needs; and provided, further, that
the GPC Plant McIntosh CTs shall not include any GPC Plant
McIntosh CT which GPC decides shall not be constructed and which
is so identified in a written notice to Savannah.
(z) GPC PLANT MCINTOSH CTS SITE. The "GPC Plant McIntosh CTs
Site" shall refer to so much of the GPC Plant McIntosh CTs as
constitutes real property.
(aa) GPSC. The "GPSC" shall mean the Georgia Public Service
Commission or any governmental agency succeeding to the powers
and functions thereof.
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<PAGE>
(ab) INTERCOMPANY INTERCHANGE CONTRACT. The "Intercompany
Interchange Contract" shall refer to that certain "Southern
Company System Intercompany Interchange Contract" entered into on
October 31, 1988 by and among Alabama Power Company, GPC, Gulf
Power Company, Mississippi Power Company, Savannah and SCSI, as
the same may be amended from time to time.
(ac) LEGAL REQUIREMENTS. "Legal Requirements" shall mean all
laws, codes, ordinances, orders, judgments, decrees, injunctions,
licenses, rules, permits, approvals, regulations and requirements
of every Governmental Authority having jurisdiction over the
matter in question, whether federal, state or local, which may be
applicable to Savannah, as Agent, or any Participant, as required
by the context in which used, or to the Plant McIntosh CT
Project, or to the use, manner of use, occupancy, possession,
planning, licensing, design, procurement, construction,
acquisition, testing, startup, operation, maintenance,
management, control, addition, renewal, modification, replacement
or disposal of the Plant McIntosh CT Project, or any portion or
portions thereof.
(ad) OPERATING ACCOUNT. The "Operating Account" shall refer
to the separate, interest bearing account or accounts, in a bank
or banks, the deposits in which are insured, subject to
applicable limits, by the Federal Deposit Insurance Corporation
and which meets or meet all applicable requirements imposed upon
depositories of Savannah, established by Savannah as Agent,
pursuant to the terms of this Agreement, for the payment of
Operating Costs.
(ae) OPERATING BUDGET. The "Operating Budget" shall refer to
the Budgets pertaining to Operating Costs to be delivered to the
Participants pursuant to the terms of Section 2(c), DEVELOPMENT
OF BUDGETS, PLANS AND SCHEDULES, of this Agreement.
(af) OPERATING COSTS. The "Operating Costs" shall mean all
costs and expenses (other than Cost of Construction and Fuel
Costs) incurred by Savannah, as Agent for the Participants in
respect of the management, control, operation or maintenance,
including, without limitation, scheduling and dispatching, of the
Plant McIntosh CTs or the CT Common Facilities, or both,
including, without limitation, that portion of administrative and
general expenses incurred by Savannah, as Agent, which is
properly and reasonably allocable to the Plant McIntosh CTs or
the CT Common Facilities, or both, and which costs and expenses
are properly recordable in accordance with the Operating Expense
Instructions and in appropriate accounts as set forth in the
Uniform System of Accounts and, to the extent practicable,
Operating Costs shall be properly allocated among each Plant
McIntosh CT and the CT Common Facilities; provided, however, that
there shall not be included as Operating Costs any costs
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<PAGE>
attributable to Plant McIntosh exclusive of the Plant McIntosh CT
Project.
(ag) OWNERSHIP AGREEMENT. The "Ownership Agreement" shall
refer to that certain Plant McIntosh Combustion Turbine Purchase
and Ownership Participation Agreement, dated as of the date
hereof, between GPC and Savannah, as such agreement may be
amended from time to time.
(ah) PARTICIPANTS. "Participant" and "Participants" shall
refer individually or collectively, as the case may be, to GPC
and Savannah (in their capacities as owners of one or more of the
Plant McIntosh CTs) and to any permitted transferee or assignee
of either of them of an ownership or leasehold interest in the
Plant McIntosh CT Project pursuant to Section 6(c), ALIENATION
AND ASSIGNMENT, of the Ownership Agreement made in conformity
with those provisions of this Agreement and the Ownership
Agreement pertaining to the Plant McIntosh CTs, the CT Common
Facilities and the CT Fuel Supply, provided, however, such
references shall only refer to an entity for so long as said
entity has an ownership or an ownership and a leasehold interest
in the Plant McIntosh CT Project.
(ai) PARTY. A "Party" shall refer to any entity which is now
or hereafter a party to this Agreement; provided, however, such
reference shall only refer to an entity for so long as such
entity is a party to this Agreement.
(aj) PLANT MCINTOSH. "Plant McIntosh" shall consist of the
Plant McIntosh Site plus all improvements thereon including,
without limitation, the Plant McIntosh CT Project and that
certain Plant McIntosh 170 Mw coal-fired generating plant owned
by Savannah, together with its supporting facilities and
equipment.
(ak) PLANT MCINTOSH CT NOS. 01 AND 02. "Plant McIntosh CT
Nos. 01 and 02" shall have the meaning assigned in Section 1(an),
PLANT MCINTOSH CT NOS. 01 AND 02, of the Ownership Agreement.
(al) PLANT MCINTOSH CT NOS. 03 AND 04. "Plant McIntosh CT
Nos. 03 and 04" shall have the meaning assigned in Section 1(ao),
PLANT MCINTOSH CT NOS. 03 AND 04, of the Ownership Agreement.
(am) PLANT MCINTOSH CT NOS. 05 AND 06. "Plant McIntosh CT
Nos. 05 and 06" shall have the meaning assigned in Section 1(ap),
PLANT MCINTOSH CT NOS. 05 AND 06, of the Ownership Agreement.
(an) PLANT MCINTOSH CT NOS. 07 AND 08. "Plant McIntosh CT
Nos. 07 and 08" shall have the meaning assigned in Section 1(aq),
PLANT MCINTOSH CT NOS. 07 AND 08, of the Ownership Agreement.
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<PAGE>
(ao) PLANT MCINTOSH CT PROJECT. The "Plant McIntosh CT
Project" shall refer to the Plant McIntosh CTs, the CT Common
Facilities and the CT Fuel Supply.
(ap) PLANT MCINTOSH CTS. The "Plant McIntosh CTs" shall
consist collectively of Plant McIntosh CT Nos. 01 and 02, Plant
McIntosh CT Nos. 03 and 04, Plant McIntosh CT Nos. 05 and 06,
Plant McIntosh CT Nos. 07 and 08, and any one or more of the
Additional Plant McIntosh CTs, any one of which shall be a Plant
McIntosh CT; provided, however, that none of the Additional Plant
McIntosh CTs shall be included in the Plant McIntosh CTs until
such time as one or more Participants provide written notice to
the other Participants that they are planning to construct one or
more of the Additional Plant McIntosh CTs, as the case may be, in
order to serve such Participants' energy needs; and provided,
further, that the Plant McIntosh CTs shall not include any Plant
McIntosh CT which the Participant owning such unit decides shall
not be constructed and which is so identified in a written notice
to the other Participant.
(aq) 1994 PLANT MCINTOSH CTS. The "1994 Plant McIntosh CTs"
shall refer to Plant McIntosh CT Nos. 07 and 08, Plant McIntosh
CT Nos. 05 and 06, and Plant McIntosh CT Nos. 03 and 04, any one
(of the six) of which shall be a 1994 Plant McIntosh CT;
provided, however, that the 1994 Plant McIntosh CTs shall not
include any 1994 Plant McIntosh CT which the Participant owning
such unit decides shall not be constructed and which is so
identified in a written notice to the other Participant.
(ar) 1995 PLANT MCINTOSH CTS. The "1995 Plant McIntosh CTs"
shall refer to Plant McIntosh CT Nos. 01 and 02, either one of
which shall be a 1995 Plant McIntosh CT; provided, however, that
the 1995 Plant McIntosh CTs shall not include any 1995 Plant
McIntosh CT which the Participant owning such unit decides shall
not be constructed and which is so identified in a written notice
to the other Participant.
(as) PLANT MCINTOSH SITE. The "Plant McIntosh Site" shall
refer to the real property which is described in Exhibit F
attached to the Ownership Agreement.
(at) PRIME RATE. The "Prime Rate" shall mean the per annum
rate of interest announced from time to time by Chemical Bank as
its prime rate, and with respect to any payment or reimbursement
to be made hereunder to which interest is to be added (other than
an adjustment to the Purchase Price), shall be determined as of
the date such payment or reimbursement is due, and with respect
to any adjustment to the Purchase Price as to which interest is
to be added pursuant to the terms hereof, shall be determined as
of the date of the Closing for which such adjustment is to be
made. The Prime Rate shall be calculated on the basis of a 365-
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day year for the actual number of days that the payment,
reimbursement or purchase price adjustment, as the case may be,
has not been made.
(au) PRO FORMA OWNERSHIP INTEREST. A "Pro Forma Ownership
Interest" shall mean for each Participant the number of the Plant
McIntosh CTs (whether or not completed) owned by such Participant
divided by the total number of Plant McIntosh CTs (whether or not
completed); provided, however, that none of the Additional Plant
McIntosh CTs shall be included in the calculation of Pro Forma
Ownership Interest until such time as one or more Participants
provide written notice to the other Participants that they are
planning to construct one or more of the Additional Plant
McIntosh CTs, as the case may be, in order to serve such
Participants' energy needs; provided further that, for purposes
of this definition of Pro Forma Ownership Interest, no Plant
McIntosh CT shall be included which has been cancelled by the
Participant owning such Plant McIntosh CT and which is identified
in a written notice of cancellation to the other Participants.
(av) PRUDENT UTILITY PRACTICE. "Prudent Utility Practice" at
a particular time shall mean any of the practices, methods and
acts engaged in or approved by a significant portion of the
electric utility industry prior to such time, or any of the
practices, methods and acts, which in the exercise of reasonable
judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result
at the lowest reasonable cost consistent with good business
practices, reliability, safety and expedition. "Prudent Utility
Practice" is not intended to be limited to the optimum practice,
method or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts having due regard
for, among other things, manufacturers' warranties and the
requirements of Governmental Authorities of competent
jurisdiction and the requirements of this Agreement and the
Ownership Agreement. Compliance by Savannah with the provisions
of any Budget estimate which has been altered by the Participants
pursuant to this Agreement or the Ownership Agreement, as the
case may be, from any such estimate submitted by Savannah shall
not, in and of itself, constitute a breach by Savannah of its
obligation to discharge its responsibilities as Agent for the
Participants hereunder in accordance with Prudent Utility
Practice.
(aw) PURCHASE PRICE. The "Purchase Price" shall have the
meaning assigned in subsection (i) of Section 3(b), PURCHASE
PRICE AND PAYMENT, of the Ownership Agreement.
(ax) SAVANNAH PLANT MCINTOSH CTS. The "Savannah Plant
McIntosh CTs" shall refer to Plant McIntosh CT Nos. 05 and 06 and
one or more of the Additional Plant McIntosh CTs, any one of
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which is a Savannah Plant McIntosh CT; provided, however, that
none of the Additional Plant McIntosh CTs shall be included in
the Savannah Plant McIntosh CTs until such time as Savannah
provides written notice to GPC that Savannah is planning to
construct one or more of the Additional Plant McIntosh CTs, as
the case may be, in order to serve Savannah's energy needs;
and provided, further, that the Savannah Plant McIntosh CTs shall
not include any Savannah Plant McIntosh CT which Savannah decides
shall not be constructed and which is so identified in a written
notice to GPC.
(ay) SAVANNAH PLANT MCINTOSH CTs SITE. The "Savannah Plant
McIntosh CTs Site" shall refer to so much of the Savannah Plant
McIntosh CTs as constitutes real property.
(az) SCSI. "SCSI" shall mean Southern Company Services,
Inc., a corporation organized and existing under the laws of the
State of Alabama, and any successor corporation.
(ba) SEC. The "SEC" shall refer to the Securities and
Exchange Commission or any governmental agency succeeding to the
powers and functions thereof.
(bb) SITE REPRESENTATIVE. "Site Representative" shall refer
to the term as described in Section 6(j), ON-SITE OBSERVATION AND
INSPECTION, hereof.
(bc) THE SOUTHERN COMPANY. "The Southern Company" shall
refer to The Southern Company, a corporation organized and
existing under the laws of the State of Delaware.
(bd) UNIFORM SYSTEM OF ACCOUNTS. The "Uniform System of
Accounts" shall mean the FERC Uniform System of Accounts
prescribed for Public Utilities and Licensees (Class A and Class
B), as the same now exists or may be hereafter amended by the
FERC.
(be) VARIABLE OPERATING COSTS. "Variable Operating Costs"
shall mean those Operating Costs identified as variable operation
and maintenance expenses from time to time in the Intercompany
Interchange Contract.
2. OPERATIONS.
(a) AGENT. Subject to the terms of this Agreement and of
the Ownership Agreement, the Participants hereby irrevocably
appoint Savannah as their Agent in connection with the Plant
McIntosh CT Project, to act on behalf of the Participants in
performing the Agency Functions. Savannah hereby accepts such
appointment and agrees that it shall discharge its
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responsibilities as Agent in accordance with this Agreement, the
Ownership Agreement and Prudent Utility Practice.
(b) COMMITTEES. From time to time the Participants may
appoint and charge committees to study and make recommendations
on any subject, as the Participants may designate. The purpose,
charge and duty of each committee so appointed shall not exist
for more than one year unless the committee is reappointed by the
Participants.
(c) DEVELOPMENT OF BUDGETS, PLANS AND SCHEDULES. Prior to a
reasonable period in advance of the date when the Agent is
required under this Agreement to deliver any Budget, plan or
schedule to the Participants, each Participant shall have the
right to provide the Agent information (whether in writing or in
person, as determined by the Participants) to be used in the
formation of the subsequent year's Operating Budget, the Capital
Budget and such other plans and schedules as the Participants
shall reasonably request, including, without limitation, the Fuel
Plan and the maintenance schedule. Taking into account such
information from the Participants, Savannah, as Agent, shall
prepare proposed Capital Budgets (including separate Capital
Budgets for each Participant's Plant McIntosh CTs and for the CT
Common Facilities), a proposed Operating Budget, and other
appropriate proposed plans and schedules and shall submit them to
the Participants as provided below. Such Budgets, plans and
schedules shall be based upon information reasonably available
and shall contain such information as is reasonably adequate for
the purpose of each Participant's reasonable review thereof.
The proposed Budgets, plans and schedules for each calendar
year shall be submitted to the Participants by August 1 of the
preceding year, beginning on August 1, 1993. On or before
September 1 of each year, beginning with September 1, 1993, the
Participants shall approve by mutual agreement or disapprove each
Budget, plan and schedule separately, other than the Capital
Budgets for each Participant's Plant McIntosh CTs which shall be
approved or disapproved by the respective Participants owning the
personal property comprising such Plant McIntosh CTs. In the
event that any proposed Budget, plan or schedule as submitted is
disapproved, the Participants shall have until October 1 of each
year to agree on revised Budgets, plans or schedules, as the case
may be, which shall comply with Prudent Utility Practice and
Legal Requirements. In the event that the Participants are
unable to agree on complete revised Budgets, plans or schedules
which comply with Prudent Utility Practice and Legal Requirements
by October 1 of each year, then the Budgets, plans and schedules
to be utilized shall consist only of such portions of the
Budgets, plans and schedules on which the Participants agree.
The Agent shall have reasonable day-to-day discretion with
respect to individual expenditures, provided that such
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expenditures shall be generally consistent with the guidelines
set forth in such Budgets and, unless otherwise approved by the
Participants (or, in the case of any of the Plant McIntosh CTs,
by the respective Participants owning the personal property
comprising such Plant McIntosh CTs), such aggregate expenditures
for Operating Costs or Cost of Construction, as the case may be,
shall not exceed 100% of the Capital Budgets (excluding any
budgeted amount for Fuel Costs) or Operating Budget, as the case
may be, without the approval of the affected Participants.
Notwithstanding the foregoing, Savannah, as Agent, may make or
incur such expenditures as are reasonably required to respond
appropriately to emergencies, and the Participants shall make
payment for such expenditures as Operating Costs or Cost of
Construction; provided, however, that any expenditures beyond the
period of the emergency may not be incurred without the prior
approval of the affected Participants. The Participants and
Savannah, as Agent, agree to cooperate with one another to
revise, to the extent practicable, any Budget, plan or schedule
in effect from time to time to accommodate changed circumstances.
The Agent shall provide the Participants with such other
information as the Participants may reasonably request; provided,
however, that such information shall be provided only for the
convenience of the Participants except as the Agent may otherwise
agree from time to time. Notwithstanding the foregoing,
Savannah, as Agent, makes no representation, warranty or promise
of any kind as to the accuracy of any estimate contained in any
Budget, plan or schedule or in any revision thereto or that any
information referred to in the preceding sentence will be
sufficient, and in no event shall Savannah, as Agent, have any
liability to any of the Participants in these regards.
(d) RECORD KEEPING. In furtherance of its duties as Agent,
Savannah shall also keep and maintain appropriate plant records
in accordance with applicable Legal Requirements and Savannah's
record retention policies, and upon request from time to time by
a Participant, Savannah will inform such Participant of the
location of such records and provide access thereto. To the
extent that any Participant would like to retain records for
longer periods of time than Savannah would retain such records,
then, upon written request from such Participant, Savannah shall
provide such Participant, at such Participant's sole expense,
with originals or copies as appropriate of such records on or
prior to the date that Savannah would dispose of such records.
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3. AUTHORITY AND RESPONSIBILITY FOR OPERATION
(a) OPERATION. Subject to the provisions of this Agreement
and the Ownership Agreement, Savannah, as Agent for the
Participants, shall have sole authority and responsibility with
respect to the Agency Functions, and in respect thereof,
Savannah, as Agent, is authorized to take and shall take, in the
name and on behalf of the Participants all reasonable actions
which, in the discretion and judgment of Savannah, are deemed
necessary or advisable to effect the Agency Functions, including,
without limitation, the following:
(i) The making of such agreements and modifications of
existing agreements, other than this Agreement and the
Ownership Agreement, and the taking of such other action as
Savannah, as Agent, deems necessary or appropriate, in its
sole discretion, or as may be required under the regulations
or directives of any Governmental Authority having
jurisdiction, with respect to the Agency Functions, which such
agreements and modifications, together with all such existing
agreements, shall be held by Savannah as Agent; provided,
however, that Savannah will develop procedures, with respect
to the purchase of equipment and materials and the supply of
services, which are mutually acceptable to the Participants
and which shall provide opportunity for the Participants to
participate in procurement decisions;
(ii) With respect to the disposal (including, without
limitation, retirement and salvaging) of all or any part of
the Plant McIntosh CTs (other than the Savannah Plant McIntosh
CTs), the making of such agreements and modifications of
existing agreements (other than this Agreement and the
Ownership Agreement) and the taking of such other action as
may be required under the regulations or directives of any
Governmental Authority having jurisdiction or as Savannah, as
Agent, deems necessary or appropriate, with the consent in
each case of the Participants owning such Plant McIntosh CTs,
which such agreements and modifications, together with such
existing agreements, shall be held by Savannah, as Agent;
provided, however, that Savannah shall not be required to
obtain the consent of any Participant prior to disposing of
any machinery, apparatus, supplies, equipment, tools or
implements which are (1) valued at less than $50,000.00
(original book cost), and (2) replaced or substituted for with
similar property of value at least equal to that of the
disposed property; provided, further, that Savannah is not
authorized by GPC to have any direct contact with the GPSC on
behalf of GPC without the written consent of GPC;
(iii) With respect to the disposal (including, without
limitation, retirement and salvaging) of all or any part of
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the CT Common Facilities and the CT Fuel Supply, the making of
such agreements and modifications of existing agreements
(other than this Agreement and the Ownership Agreement) and
the taking of such other action as may be required under the
regulations or directives of any Governmental Authority having
jurisdiction or as Savannah, as Agent, deems necessary or
appropriate, with the consent in each case of all the
Participants, which such agreements and modifications,
together with such existing agreements, shall be held by
Savannah, as Agent; provided, however, that Savannah shall not
be required to obtain the consent of any Participant prior to
disposing of any machinery, apparatus, supplies, equipment,
tools or implements which are (1) valued at less than
$50,000.00 (original book cost), and (2) replaced or
substituted for with similar property of value at least equal
to that of the disposed property;
(iv) The execution and filing, with any Governmental
Authority having jurisdiction (except the GPSC on behalf of
GPC), of applications, amendments, reports and other documents
and filings in or in connection with the licensing and other
regulatory matters with respect to the Plant McIntosh CTs, the
CT Common Facilities, the CT Fuel Supply or any combination
thereof;
(v) The receipt of any notice or other communication
from any Governmental Authority having jurisdiction (except
the GPSC on behalf of GPC), as to any licensing or other
similar matter with respect to the Plant McIntosh CTs, the CT
Common Facilities, the CT Fuel Supply or any combination
thereof; and
(vi) The provision of, or contracting with any third
party to purchase or provide, any equipment or facilities or
perform services in connection with the Plant McIntosh CTs,
the CT Common Facilities, the CT Fuel Supply or any
combination thereof.
GPC and Savannah agree that all such agreements which relate
to the Plant McIntosh CTs, the CT Common Facilities or the CT
Fuel Supply, described in this Section 3(a) which are entered
into after the effective date hereof shall, by their terms, be
made assignable by Savannah, as Agent, to any replacement or
successor Agent for the Agency Functions, pursuant to this
Agreement and the Ownership Agreement; provided, however, that
any agreements between Savannah, as Agent, and its Affiliates
shall not be made assignable to any replacement or successor
Agent who is not also an Affiliate of Savannah.
Savannah, as Agent, shall also, at all times, be responsible
for ensuring the continued availability of any equipment and
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services necessary to support the operation and maintenance of
the Plant McIntosh CT Project (including, without limitation,
fire protection, potable water and the intake structure), which
equipment and services are to be supplied from portions of Plant
McIntosh wholly owned by Savannah.
(b) OTHER CONTRACTS. In discharging its obligations as
Agent hereunder, Savannah shall have the right, on behalf of the
Participants, to provide, or contract with any of its Affiliates
to purchase or provide, at cost, any equipment or facilities or
to perform, or contract with any of its Affiliates to perform, at
cost, services in connection with the Plant McIntosh CTs, the CT
Common Facilities, the CT Fuel Supply or any combination thereof.
(c) FOSSIL FUEL.
(i) Savannah, as Agent, shall have sole authority to and
shall arrange for and acquire all fossil fuel and fuel
transportation for the Plant McIntosh CT Project consistent
with such policies and procedures with respect thereto as may
be adopted from time to time by the Participants by mutual
agreement, and shall have sole authority to administer all
fuel standards for fossil fuel for the Plant McIntosh CT
Project consistent with such standards with respect thereto as
may be adopted from time to time by the Participants by mutual
agreement.
(ii) Each Participant shall have the right to make
whatever financial arrangements it may desire, whether by
lease, security transaction or otherwise, for the discharge of
its fossil fuel payment obligations so long as such
arrangements do not adversely affect the rights of the other
Participants.
(iii) The Participants shall pay Fuel Costs and shall own
fuel in the CT Fuel Supply in proportion to (A) their
respective undivided ownership interests in the personal
property comprising the 1994 Plant McIntosh CTs prior to the
last Commercial Operation date of the 1995 Plant McIntosh CTs,
and (B) their respective Pro Forma Ownership Interests in the
Plant McIntosh CT Project after the last Commercial Operation
date of the 1995 Plant McIntosh CTs.
(iv) All Fuel Costs incurred in connection with the CT
Fuel Supply shall be allocated among the Participants at the
time such Fuel Costs are incurred in accordance with
subsection (iii) of this Section 3(c) and such Fuel Costs
shall be paid as provided in Section 5(j), PAYMENT AND
SETTLEMENT OF COST OF CONSTRUCTION, hereof; provided, however,
that at the end of each calendar month Savannah, as Agent,
shall cause an adjustment to be made among the Participants in
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accordance with the amount of fuel actually consumed by each
Participant, all in accordance with Savannah's standard
accounting practices which shall comply with the Uniform
System of Accounts in effect from time to time.
(v) At least once each calendar quarter, Savannah, as
Agent, shall cause a physical inventory of the CT Fuel Supply
to be performed. All discrepancies between the book inventory
and the physical inventory of the CT Fuel Supply shall be
charged or credited, as appropriate, among the respective
accounts of each Participant in accordance with their
respective undivided ownership interests (determined as
provided in subsection (iii) of this Section 3(c)) during the
physical inventory period to which such discrepancy relates,
all as determined in accordance with Savannah's standard
accounting practices which shall comply with the Uniform
System of Accounts in effect from time to time.
4. INTENTIONALLY OMITTED.
5. OPERATION, RIGHTS AND OBLIGATIONS.
(a) AVAILABILITY OF OUTPUT. Subject to the further
provisions of this Agreement and the provisions of the Ownership
Agreement, at any given time each Participant shall each be
entitled to (i) the net capacity of such Participant's Plant
McIntosh CTs, as specified in the Ownership Agreement, and (ii)
the net energy output of such Participant's Plant McIntosh CTs
dispatched in accordance with the provisions of Section 5(b),
SCHEDULING AND DISPATCHING, hereof.
(b) SCHEDULING AND DISPATCHING. The Plant McIntosh CTs will
be dispatched in order of costs regardless of ownership to meet
Southern electric system requirements. If the Plant McIntosh CTs
have no cost differences, the Agent, upon notification by the
Southern electric system dispatcher of the need for generation
from the Plant McIntosh CTs, will dispatch the required number of
Plant McIntosh CTs using its reasonable best efforts to ensure
that over the operating lives of the Plant McIntosh CTs each
Plant McIntosh CT accumulates equivalent operating hours and
equivalent numbers of starts.
(c) FUEL PLAN. In connection with the development of each
Operating Budget and Capital Budget beginning with the first such
Budgets, Savannah, as Agent, shall prepare and submit annually to
the Participants for their approval, in accordance with the
provisions in Section 2(c), DEVELOPMENT OF BUDGETS, PLANS AND
SCHEDULES, hereof, a Fuel Plan covering at least a five-year
period for the Plant McIntosh CT Project. Each Fuel Plan shall
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describe such reasonable information as the Participants may
request and each action or contemplated action and payment and
the estimated dates thereof relating to the acquisition,
transportation, delivery, storage and inventory of fossil fuel
for the Plant McIntosh CT Project, the entitlement (or estimates
thereof) of each Participant to the energy generated by such
Participant's Plant McIntosh CTs for each calendar year of the
Fuel Plan pursuant to Sections 5(a), AVAILABILITY OF OUTPUT, and
5(b), SCHEDULING AND DISPATCHING, hereof, a cash flow analysis of
forecasted expenditures and credits for each Participant for each
major cost component of the Fuel Plan by year for the period
covered by the Fuel Plan, and cash flow by month (or other period
as agreed to by the Agent and the Participants) for the first
three years of each such period. Savannah, as Agent, shall
attempt to acquire, transport, deliver and store fuel for the
Plant McIntosh CT Project in accordance with the Fuel Plan to the
extent reasonably practicable; provided, however, that Savannah,
as Agent, makes no representation, warranty or promise of any
kind as to the accuracy of any estimate or forecast or other
information contained in any Fuel Plan or that any attempt to
acquire, transport, deliver and store fuel for the Plant McIntosh
CT Project in accordance with the Fuel Plan will be successful,
and in no event shall Savannah, as Agent, have any liability to
any of the Participants in these regards.
(d) MAINTENANCE SCHEDULE. In connection with the
development of the Operating Budget and Capital Budgets,
beginning with the first such Budgets, and after receiving and
taking into consideration input from the Participants, Savannah
shall submit annually for approval by the Participants, in
accordance with the schedule provided in Section 2(c),
DEVELOPMENT OF BUDGETS, PLANS AND SCHEDULES, hereof, a
maintenance plan which covers all planned and potential
maintenance for the succeeding two years for such portion of the
Plant McIntosh CT Project as is in Commercial Operation. To the
extent that the desired maintenance plan of any Participant
adversely affects any other Participant, Savannah, as Agent, and
the Participants shall prioritize the maintenance work to be
performed giving due regard to the relative burdens on and
benefits to the Participants, including, without limitation, the
effect of the timing and duration of scheduled outages, and
giving due regard to past burdens and benefits which resulted
from the resolution of prior similar conflicts. Such
prioritization shall take place and be communicated in a timely
manner to limit any unreasonable delays in the maintenance
schedule.
Each such maintenance plan shall describe, in reasonable
detail, the contemplated time and duration of each outage and
maintenance work to be done and the estimated cost thereof. The
maintenance plan for the Plant McIntosh CTs and the CT Common
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Facilities shall be subject to approval, rejection or revisions
as provided in Section 2(c), DEVELOPMENT OF BUDGETS, PLANS AND
SCHEDULES, hereof; provided, however, that any rejection of or
revisions to such recommended plan shall comply with the
requirements of Prudent Utility Practice and the other
requirements of this Section 5(d). Proposed changes to the
maintenance plan may be submitted by Savannah, as Agent, or by
any Participant, from time to time. Such proposed changes shall
be prioritized as provided in this Section 5(d). Savannah, as
Agent, makes no representation, warranty or promise of any kind
as to the accuracy of any estimate or other information contained
in any maintenance plan, and in no event shall Savannah, as
Agent, have any liability to any of the Participants in these
regards.
(e) BILLING AND ACCOUNTING. Notwithstanding any reference
to Savannah's standard accounting practices contained herein, all
billing and accounting matters, including, without limitation,
payments to be made by the Participants and the Agent, shall be
carried out in a manner consistent with Section 13(b) of the
Public Utility Holding Company Act of 1935, as amended.
(f) METERING. Savannah, as Agent, shall install and
maintain the necessary metering equipment so as to determine (i)
the gross output, auxiliary requirements, net output and reactive
power of each Plant McIntosh CT each hour to the transmission
grid in the State of Georgia, and (ii) the monthly power, fuel
and water consumption of each Plant McIntosh CT. All metering
equipment shall meet the standards set by the Participants which
shall be consistent with Prudent Utility Practice. Each meter
used pursuant to this Section 5(f) shall, by comparison with
accurate standards, be tested and calibrated by Savannah, as
Agent, at approximately 12-month intervals. If a meter is found
not registering within 1% accuracy, it shall be restored to an
accurate condition or an accurate meter shall be substituted.
Any meter tested and found to be within 1% accuracy shall be
considered to be accurate. If, as a result of any test, any
meter is found to register not within 1% accuracy, Savannah, as
Agent, shall meet with the affected Participant or Participants,
as soon as practicable, after the meter has been repaired or
replaced to resolve any correction for measurement inaccuracy.
The correction shall be calculated from the day the inaccurate
meter was repaired or replaced, working back to the last meter
reading date that was deemed accurate, as agreed to between
Savannah, as Agent, and the affected Participant or Participants.
The energy produced during the time of any electrical meter error
shall be calculated in whole megawatt-hours and scheduled for
payback either to or from Savannah in a time frame agreeable to
Savannah and the affected Participant or Participants. All
metering records and tests shall be available to authorized
representatives of the Participants. All costs incurred in
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connection with such metering equipment and compliance with the
provisions of this Section 5(f) shall be Cost of Construction or
Operating Costs, as appropriate, and as such shall be paid by the
Participants in accordance with the provisions of Section 5(g),
SHARING OF COSTS - GENERAL, hereof.
(g) SHARING OF COSTS - GENERAL. Except as otherwise
provided in this Section 5, each Participant shall be responsible
for the payment of its respective percentage share of all
Operating Costs and Cost of Construction in accordance with this
Agreement and the Ownership Agreement. Notwithstanding the
foregoing sentence, the allocation among the Participants of all
Variable Operating Costs for any given month shall be adjusted at
the end of such month such that each Participant pays that
fraction of such Variable Operating Costs equal to the twelve-
month rolling average of gross generation of such Participant
ending in such month divided by the total twelve-month rolling
average of gross generation of all Participants ending in such
month. The Participants shall be responsible for the payment of
Fuel Costs in accordance with the provisions of Sections 3(c),
FOSSIL FUEL, and 5(j), PAYMENT AND SETTLEMENT OF COST OF
CONSTRUCTION, hereof.
It is the absolute intent of the Participants to share all
items of cost, obligation and liability incurred in connection
with the Plant McIntosh CT Project (other than the financing of
each Participant's respective ownership or leasehold interests in
the Plant McIntosh CT Project), which are not otherwise expressly
provided for in this Agreement or in the Ownership Agreement in
proportion to their respective Pro Forma Ownership Interests, as
they may appear from time to time; provided, however, that any
such cost, obligation or liability incurred at the request of and
for the sole benefit of a particular Participant shall be the
sole responsibility of such Participant and such Participant
hereby agrees to indemnify all other Participants against any
claims, costs, damages, expenses, losses or any other liability
of any kind arising from such costs, obligations or liability.
Notwithstanding the foregoing provisions of this Section 5(g)
or any other provision of this Agreement, in the event any
Participant sells or conveys to any other person (including,
without limitation, a Participant) any ownership or ownership and
leasehold interest in the Plant McIntosh CT Project in accordance
with the provisions of Section 6(c), ALIENATION AND ASSIGNMENT,
of the Ownership Agreement (other than a sale or conveyance as
security for an indebtedness or in connection with the financing
of pollution control or solid waste disposal facilities), such
selling or conveying Participant's rights and obligations
hereunder as a Participant, including, without limitation, the
obligation to make payments of the Operating Costs, Cost of
Construction and Fuel Costs and any other costs to be shared by
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the Participants hereunder, shall be reduced to the extent of the
ownership or ownership and leasehold interests so sold or
conveyed, and the Agent and all Participants shall look solely to
such purchaser for payment of the corresponding portion of the
Operating Costs, Cost of Construction and Fuel Costs and other
costs to be shared by the Participants hereunder.
(h) PAYMENT AND SETTLEMENT OF OPERATING COSTS.
(i) Savannah, as Agent, shall be responsible for making,
and shall make, payment to third parties of all Operating
Costs only to the extent that funds are available therefor in
the Operating Account.
(ii) As Agent for the Participants, Savannah will, from
and after the first Commercial Operation date, and on or
before the first day of each month thereafter, notify the
Participants of the Operating Costs anticipated to be due and
payable during the succeeding calendar month, plus or minus
any adjustments of Operating Costs incurred in prior months
but not previously charged or credited to the Participants
under the provisions of this Section 5(h), with separate
computations as to each of the Plant McIntosh CTs and the CT
Common Facilities. Each Participant shall make payment into
the Operating Account in immediately available funds during
such succeeding month, in accordance with the schedule
determined and delivered to it by Savannah, as Agent, of its
respective percentage share of such Operating Costs. Each
Participant shall pay all Operating Costs associated with the
Plant McIntosh CTs owned by such Participant. Each
Participant's share of the Operating Costs associated with the
CT Common Facilities shall be equivalent to the proportion
which the number of Plant McIntosh CTs in Commercial Operation
owned by such Participant bears to the total number of Plant
McIntosh CTs in Commercial Operation. Each such notification
made by Savannah, as Agent, of anticipated Operating Costs and
adjustments shall be accompanied and adjusted by an accounting
of the Operating Costs incurred and credits, if any, accrued
for preceding months.
(iii) Each Participant shall have until (A) the 180th day
after the furnishing of such accounting by Savannah, as Agent,
for any charge or credit made to it pursuant to this Section
5(h), or (B) such time as the Parties may otherwise agree, to
question or contest the correctness of such charge or credit
after which time the correctness of such charge or credit
shall be conclusively presumed. In the event that any
Participant by timely notice questions or contests the
correctness of any such charge or credit, Savannah shall
promptly review the questioned charge or credit and shall
within 55 days following notice from a Participant questioning
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or contesting such charge or credit notify each Participant of
the amount of any error and the amount of reimbursement, if
any, that each Participant is required to make or is entitled
to receive in respect of such error. Not later than the fifth
Business Day after receipt of such notice from Savannah, as
Agent, each Participant required to make reimbursement shall
deposit the amount specified in such notice into the Operating
Account in immediately available funds. Any such
reimbursement required to be made by Savannah, as Agent, shall
be so deposited by Savannah, as Agent, not later than the
fifth Business Day after Savannah, as Agent, notifies the
Participants of the amount of such reimbursement that they are
required to make. From the amount so deposited, Savannah, as
Agent, shall immediately thereafter distribute the amount that
each Participant is entitled to receive (or if the amount so
deposited is insufficient to reimburse in full all
Participants entitled to receive reimbursement, Savannah, as
Agent, shall distribute the amount so deposited among the
Participants entitled to receive such reimbursement pro rata
in accordance with each Participant's entitlement to
reimbursement in respect of such error), except that if any
such Participant is then in default in respect of any payments
required to be made under this Agreement or the Ownership
Agreement, an amount equal to such defaulting Participant's
share of the amount so deposited with respect to such
reimbursement shall be retained in the Operating Account and
distributed in accordance with the provisions of Section 5(i),
OPERATING ACCOUNT, hereof. Savannah shall have no
responsibility or liability for the failure of any Participant
(other than itself) to deposit funds as provided in this
subsection (iii) of Section 5(h).
(iv) Savannah, as Agent, will provide each Participant
with such information as is reasonably required by such
Participant in order to account for payments made pursuant to
this Section 5(h) on such Participant's books.
(i) OPERATING ACCOUNT. Prior to the first Commercial
Operation date, Savannah, as Agent, shall establish the Operating
Account. All monies paid by the Participants for Operating Costs
shall be deposited by the Participants in the Operating Account
and, unless otherwise agreed to by the Participants with respect
to Operating Costs, Savannah, as Agent, shall withdraw and apply
funds therefrom only as necessary to pay Operating Costs. In the
event that during any month the balance in the Operating Account
is insufficient to pay the Operating Costs required to be paid
that month (other than as the result of the non-payment by a
Participant of amounts due pursuant to Section 5(h), PAYMENT AND
SETTLEMENT OF OPERATING COSTS, hereof), Savannah, as Agent, shall
promptly so notify the Participants by telephone or telecopy of
the amount required to be paid by each Participant and thereafter
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promptly confirm the same in writing, together with a description
of the cause of the deficit. Each of the Participants shall pay
its respective share of such deficit into the Operating Account
in immediately available funds not later than the fifth Business
Day after receipt of such telephone or telecopy notice from
Savannah, as Agent. Savannah, as Agent, shall have no
responsibility or liability to make up any such deficit out of
its own funds in excess of the proportionate share of such
deficit which it owes as a Participant.
Until retirement of the Plant McIntosh CT Project and
settlement of all the obligations relating to Operating Costs,
each Participant shall continue to own and maintain its undivided
ownership interest in the Operating Account (other than amounts,
if any, deposited in the Operating Account pursuant to subsection
(iii) of Section 5(h), PAYMENT AND SETTLEMENT OF OPERATING COSTS,
hereof, which amounts shall be owned solely by the Participants
to whom such amounts are to be distributed as provided in such
subsection); provided, however, that Savannah, as Agent, shall
have the sole right and authority to make withdrawals from the
Operating Account; and provided further, that a Participant shall
not own any undivided ownership interest in any amount in the
Operating Account in respect of interest paid into such Operating
Account by or on behalf of such Participant pursuant to the
provisions of Section 5(l), NONPAYMENT, hereof, which amount, in
the event there are two Participants, shall be owned by the other
Participant and credited against payments required to be made
into such account by such other Participant in the performance of
its obligations under this Agreement, and which amount, in the
event there are three or more Participants, shall be owned in
common by, and credited against payments required to be made into
such account by, the other Participants not then in default in
the performance of their obligations under this Agreement in the
proportion which their respective Pro Forma Ownership Interests,
as they may appear at the time, bear to the aggregate of their
Pro Forma Ownership Interests, as they may appear at the time.
Savannah, as Agent, shall not commingle any funds deposited in
the Operating Account with any other funds owned or maintained by
Savannah unless otherwise agreed to by the Participants.
Upon retirement of the Plant McIntosh CTs and settlement of
all the obligations relating to Operating Costs and payment of
all decommissioning costs, Savannah, as Agent, shall close the
Operating Account and distribute to each Participant its
undivided ownership interest of any balance remaining in such
Operating Account (exclusive of amounts therein, if any, in which
such Participant shall not own any undivided ownership interest),
except that if a Participant shall then be in default with
respect to any payment required to be made under this Agreement
or under the Ownership Agreement, an amount equal to the
liability of such defaulting Participant on account of such
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default (of if such amount exceeds such Participant's share of
the balance in the Operating Account, its entire share of such
balance) shall first be distributed to the non-defaulting
Participant, or, if there is more than one non-defaulting
Participant, to the non-defaulting Participants in the proportion
which their respective Pro Forma Ownership Interests, as they may
appear at the time, bear to the aggregate of their Pro Forma
Ownership Interests, as they may appear at the time.
(j) PAYMENT AND SETTLEMENT OF COST OF CONSTRUCTION.
(i) Savannah, as Agent, shall be responsible for making,
and shall make, payment to third parties of all additional
Cost of Construction only to the extent that funds are
available therefor in the Capital Account.
(ii) As Agent for the Participants, Savannah will, from
and after the first Commercial Operation date, and on or
before the first day of each month thereafter, notify the
Participants of the nature and amount of all additional Cost
of Construction anticipated to be incurred during the
succeeding calendar month, including, without limitation, that
portion of the Plant McIntosh CTs and the CT Common Facilities
to which reference is made in subsection (iii) of Section
1(an), PLANT MCINTOSH CT NOS. 01 AND 02, of the Ownership
Agreement, subsection (iii) of Section 1(ao), PLANT MCINTOSH
CT NOS. 03 AND 04, of the Ownership Agreement, subsection
(iii) of Section 1(ap), PLANT MCINTOSH CT NOS. 05 AND 06, of
the Ownership Agreement, subsection (iii) of Section 1(aq),
PLANT MCINTOSH CT NOS. 07 AND 08 of the Ownership Agreement
and subsection (ii) of Section 1(p), CT COMMON FACILITIES, of
the Ownership Agreement, respectively, in respect of
completions, renewals, additions, replacements, modifications
or disposals of the Plant McIntosh CTs, the CT Common
Facilities, or any portion or portions thereof and the amount
of Fuel Costs anticipated to be incurred during such
succeeding calendar month, plus or minus any adjustments for
costs incurred in prior months but not previously charged or
credited to the Participants under the provisions of this
Section 5(j) with separate computations as to each of the
Plant McIntosh CTs and the CT Common Facilities. Savannah, as
Agent, will give each Participant as much notice as is
reasonably practicable of any major anticipated cost. Each
Participant shall make payment into the Capital Account in
immediately available funds of its respective percentage
shares of such additional Cost of Construction and its
respective share of such Fuel Costs in accordance with the
provisions of this Section 5(j) during the succeeding month in
accordance with the schedule determined and delivered to it by
Savannah, as Agent. Each Participant shall pay all such
additional Cost of Construction associated with the Plant
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McIntosh CTs owned by such Participant. Each Participant's
share of the additional Cost of Construction associated with
the CT Common Facilities shall be equivalent to the Pro Forma
Ownership Interest of such Participant, as it may appear at
the time. Each Participant's share of Fuel Costs shall be as
provided in Section 3(c), FOSSIL FUEL, hereof. Each such
notification made by Savannah, as Agent, of anticipated costs
and adjustments shall be accompanied and adjusted by an
accounting of costs incurred and credits, if any, received for
preceding months.
(iii) Each Participant shall have until (A) the 180th day
after the furnishing of such accounting by Savannah, as Agent,
for any charge or credit made to it pursuant to this Section
5(j), or (B) such time as the Parties may otherwise agree, to
question or contest the correctness of such charge or credit
after which time the correctness of such charge or credit
shall be conclusively presumed. In the event that any
Participant by timely notice questions or contests the
correctness of any such charge or credit, Savannah, as Agent,
shall promptly review the questioned charge or credit and
shall within 55 days following notice from a Participant
questioning or contesting such charge or credit notify each
Participant of the amount of any error and the amount of
reimbursement, if any, that each Participant is required to
make or is entitled to receive in respect of such error. Not
later than the fifth Business Day after receipt of such notice
from Savannah, as Agent, each Participant required to make
reimbursement shall deposit the amount specified in such
notice into the Capital Account in immediately available
funds. Any such reimbursement required to be made by
Savannah, as Agent, shall be so deposited by Savannah, as
Agent, not later than the fifth Business Day after Savannah,
as Agent, notifies the other Participants of the amount of
such reimbursement that it is required to make. From the
amount so deposited, Savannah, as Agent, shall immediately
thereafter distribute the amount that each Participant is
entitled to receive (or if the amount so deposited is
insufficient to reimburse in full all Participants entitled to
receive reimbursement, then Savannah, as Agent, shall
distribute the amount so deposited among the Participants
entitled to receive such reimbursement pro rata in accordance
with each Participant's entitlement to reimbursement in
respect of such error), except that if any such Participant is
then in default in respect of any payments required to be made
under this Agreement or the Ownership Agreement, an amount
equal to such defaulting Participant's share of the amount so
deposited with respect to such reimbursement shall be retained
in the Capital Account and distributed in accordance with the
provisions of Section 5(k), CAPITAL ACCOUNT, hereof. Savannah
shall have no responsibility or liability for the failure of
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any Participant (other than itself) to deposit funds as
provided in this Section 5(j).
(iv) Savannah, as Agent, will provide each Participant
with such information as is reasonably required by such
Participant in order to account for payments made pursuant to
this Section 5(j) on such Participant's books.
(k) CAPITAL ACCOUNT. Prior to the first Commercial
Operation date, Savannah, as Agent, shall establish the Capital
Account. All payments (for which provision is made in
Section 5(j), PAYMENT AND SETTLEMENT OF COST OF CONSTRUCTION,
hereof) of additional Cost of Construction and Fuel Costs
incurred by the Participants shall be deposited by the
Participants in the Capital Account and unless the Participants
shall otherwise agree, Savannah, as Agent, shall withdraw and
apply funds from the Capital Account only as necessary to pay
additional Cost of Construction and Fuel Costs in accordance with
the provisions of Section 5(j), PAYMENT AND SETTLEMENT OF COST OF
CONSTRUCTION, hereof. In the event that during any month the
balance in the Capital Account is insufficient to pay such
additional Cost of Construction and Fuel Costs required to be
paid that month (other than as a result of the nonpayment by a
Participant of an amount due from it pursuant to Section 5(j),
PAYMENT AND SETTLEMENT OF COST OF CONSTRUCTION, hereof),
Savannah, as Agent, shall promptly so notify the other
Participants by telephone or telecopy of the amount required to
be paid by each Participant and thereafter promptly confirm the
same in writing, together with a description of the cause of such
deficit. Each of the Participants shall pay its respective share
of such deficit into the Capital Account in immediately available
funds not later than the fifth Business Day after receipt of such
telephone or telecopy notice from Savannah, as Agent. Savannah
shall have no responsibility or liability to make up any such
deficit out of its own funds in excess of the proportionate share
of such deficit which it owes as a Participant.
Until retirement of the Plant McIntosh CT Project and
settlement of all obligations relating to Cost of Construction
and Fuel Costs, each Participant shall continue to own and
maintain its undivided ownership interest in the Capital Account
(other than amounts, if any, deposited in the Capital Account
pursuant to subsection (iii) of Section 5(j), PAYMENT AND
SETTLEMENT OF COST OF CONSTRUCTION, above, which amounts shall be
owned solely by the Participants to whom such amounts are to be
distributed as provided in such subsection); provided, however,
that Savannah, as Agent, shall have the sole right and authority
to make withdrawals from the Capital Account; and provided
further, that a Participant shall not own any undivided ownership
interest in any amount in the Capital Account in respect of
interest paid into such Capital Account by or on behalf of such
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Participant pursuant to the provisions of Section 5(l),
NONPAYMENT, hereof, which amount shall, if there is only one
other Participant, be owned entirely by such other Participant
and credited against payments required to be made into such
Capital Account by such other Participant in the performance of
its obligations under this Agreement, and which amount shall, if
there are three or more Participants, be owned in common by, and
credited against payments required to be made into such Capital
Account by, the other Participants not then in default in the
performance of their obligations under this Agreement in the
proportion which their respective Pro Forma Ownership Interests,
as they may appear at the time, bear to the aggregate of their
Pro Forma Ownership Interests, as they may appear at the time.
Savannah, as Agent, shall not commingle any funds deposited in
any Capital Account with any other funds owned or maintained by
Savannah unless the Participants shall otherwise agree.
Upon retirement of the Plant McIntosh CT Project and
settlement of all obligations relating to Cost of Construction
and Fuel Costs, including, without limitation, all costs incurred
in the disposal of the Plant McIntosh CTs, the CT Common
Facilities and the CT Fuel Supply, Savannah, as Agent, shall
close the Capital Account and distribute to each Participant its
undivided ownership interest of any balance remaining in the
Capital Account (exclusive of amounts therein, if any, in which
such Participant shall not own any undivided ownership interest),
except that if a Participant shall then be in default with
respect to any payment required to be made under this Agreement
or under the Ownership Agreement, an amount equal to the
liability of such defaulting Participant on account of such
default (or if such amount exceeds such Participant's share of
the balance in the Capital Account, its entire share of such
balance) shall first be distributed to the non-defaulting
Participant or, if there is more than one non-defaulting
Participant, to the non-defaulting Participants in the proportion
which their respective Pro Forma Ownership Interests, as they may
appear at the time, bear to the aggregate of their Pro Forma
Ownership Interests, as they may appear at the time.
(l) NONPAYMENT.
(i) Payments due from a Participant hereunder and
payments due from the Agent to the Participants, if any, not
made when due shall bear interest, compounded monthly until
paid, at a rate per annum equal to the lesser of (A) the
highest interest rate allowed by law, or (B) the higher of
(1) a rate five percentage points above the average yield on
the issue of six-month United States Treasury Bills, as
reported by the Federal Reserve Bank of New York, at the sale
of such Treasury Bills by the United States Treasury next
preceding the due date of such payment, or (2) a rate five
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percentage points above the highest of the net interest costs
on the most recent issue of bonds or other long-term
obligations by any Participant or the Agent. Such interest
shall accrue and is and shall be expressed in simple interest
terms per annum in accordance with Section 7-4-2(a) of the Official
Code of Georgia Annotated (1989), as amended.
(ii) A nonpaying Participant shall have no right to any
output of capacity and energy of the Plant McIntosh CT Project
or to exercise any other right of a Participant until all
amounts overdue from that Participant have been paid, together
with interest at the rate provided in subsection (i) of this
Section 5(l), into the Construction Account, the Operating
Account, the Capital Account or to another Participant if it
has paid such overdue amount on behalf of such nonpaying
Participant, as appropriate. Such overdue amounts, together
with such interest, shall be paid into the Construction
Account, the Operating Account or the Capital Account, as
appropriate, only to the extent that such amounts have not
been paid by another Participant pursuant to the further
provisions of this Section 5(l). Notwithstanding any of the
provisions of this Section 5(l), if Savannah is the nonpaying
Participant, Savannah, as Agent for the other Participants,
shall continue to renew, add, replace, modify, manage,
control, operate, maintain and dispose of the Plant McIntosh
CT Project in accordance with the provisions of this Agreement
and the Ownership Agreement.
(iii) Any output of capacity and energy of the Plant
McIntosh CTs of any nonpaying Participant may be sold or
utilized by any non-defaulting Participant, at its option
(provided that if two or more Participants elect to exercise
such right, it shall be exercised pursuant to the fourth
sentence of this subsection (iii) of this Section 5(l)), to
reduce the liability of the nonpaying Participant until all
amounts due from such nonpaying Participant, together with
interest at the rate provided in subsection (i) of this
Section 5(l), have been paid. Each Participant (A) electing
to sell the energy of a nonpaying Participant shall endeavor
to make such sales at then prevailing market prices, and (B)
electing to utilize the energy of a nonpaying Participant
shall pay on behalf of or credit the nonpaying Participant in
an amount equal to the hourly decremental energy cost of the
Participant utilizing such energy. If two or more
Participants wish to exercise the aforesaid right of sale or
utilization, unless such Participants shall otherwise agree,
they shall be entitled to the benefits of such sale or
utilization on a pro rata basis in accordance with the
proportion which their respective Pro Forma Ownership
Interests, as they may appear at the time, bear to the
aggregate of their Pro Forma Ownership Interests, as they may
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appear at the time. The net proceeds of such sale or
utilization shall be applied to reduce the liability of such
nonpaying Participant arising from such nonpayment (including,
without limitation, interest as provided in subsection (i) of
this Section 5(l)) as follows: (A) If any Participant or the
Agent exercising such right of sale or utilization has
advanced monies into the Construction Account, the Operating
Account or the Capital Account on behalf of the defaulting
Participant, then the net proceeds of sale or credit from
utilization shall be applied to reduce the liability of such
defaulting Participant; and (B) To the extent that no such
liability is owed to any Participant or the Agent exercising
such right of sale or utilization, then the net proceeds of
such sale or, in the case of utilization, the amount payable
with respect to such utilization, shall be paid into the
Construction Account, the Operating Account or the Capital
Account, as appropriate, to reduce the liability of the
defaulting Participant. Any such net proceeds from sale or
amounts payable for utilization in excess of the amount of
such liability of the nonpaying Participant shall be applied
as a credit against such nonpaying Participant's share of
future Operating Costs or Cost of Construction, as
appropriate. Notwithstanding the foregoing provisions of this
subsection (iii) of this Section 5(l), any non-defaulting
Participant shall have the right, but not the obligation, to
advance monies into the Construction Account, the Operating
Account, the Capital Account, or both, on behalf of any
nonpaying Participant and to be reimbursed therefor
(including, without limitation, interest as provided in
subsection (i) of this Section 5(l)) and to exercise the right
of sale or utilization set forth in this subsection (iii) of
this Section 5(l) to the exclusion of all Participants which
have not advanced monies on behalf of such nonpaying
Participant and been fully reimbursed therefor; provided,
however, that if more than one Party elects to advance monies
pursuant to this sentence, the Parties advancing such monies
shall be entitled to exercise such right of sale or
utilization in proportion to the respective amounts advanced
by them (including, without limitation, interest as provided
in subsection (i) of this Section 5(l)) which remain
outstanding from time to time; provided further, however, in
the event the Participants do not elect to advance all such
monies due from time to time from nonpaying Participants, the
Agent shall also have the right, but not the obligation, to
exercise the rights described in this sentence.
(iv) In addition to all other rights of the Participants
pursuant to the foregoing provisions of this Section 5(l), the
other Participant or Participants shall have the right,
subject to the receipt of all requisite regulatory approvals,
but not the obligation, to make any payment of interest or
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principal due and owing (A) to Chemical Bank, as Trustee under
GPC's First Mortgage Bonds, pollution control revenue bonds,
or other lender or trustee, as the case may be, if any, from
GPC in respect of such First Mortgage Bonds, or other bonds or
notes for financing GPC's obligations hereunder, which GPC
fails to make when due, or (B) to NationsBank of Georgia,
National Association, as Trustee under Savannah's First
Mortgage Bonds, or other lender or trustee, as the case may
be, if any, from Savannah in respect of such First Mortgage
Bonds, pollution control revenue bonds, or other bonds or
notes for financing Savannah's obligations hereunder, which
Savannah fails to make when due, or (C) to the corresponding
lenders or trustees from any other Participant hereunder in
respect of a financing of such Participant's obligations
hereunder, which such Participant fails to make when due, and
in each such case to be promptly reimbursed in full therefor
by GPC, Savannah or such other Participant, as the case may
be, together with interest at the rate provided in
subsection (i) of this Section 5(l).
(v) No remedy referred to in this Section 5(l) is
intended to be exclusive of any other remedy set forth in this
Section 5(l), but every such remedy herein provided shall be
cumulative and may be exercised from time to time and as often
as may be deemed expedient except where the exercise of any
one of such remedies precludes its further exercise or the
exercise of any other remedy. No delay or failure to exercise
any remedy herein provided shall impair the right to exercise
any such remedy or be construed to be a waiver of such right
or of any default by a Participant or by the Agent.
Notwithstanding the foregoing, the remedies which are set
forth in this Section 5(l) shall constitute the sole and
exclusive remedies of the Participants, legal or equitable,
for the failure of any Participant to make any payment when
due under this Agreement.
(vi) Notwithstanding the foregoing provisions of this
Section 5(l), any Participant who disagrees with or disputes
the amount of any payment claimed by the Agent to be due
pursuant to this Agreement shall make such payment under
protest and shall be reimbursed, together with all accrued
interest at the Prime Rate from the date of payment to the
date of reimbursement, for any amount charged in error after
the settlement of such disagreement or dispute as provided in
Sections 5(h), PAYMENT AND SETTLEMENT OF OPERATING COSTS, and
5(j), PAYMENT AND SETTLEMENT OF COST OF CONSTRUCTION, hereof,
as appropriate.
(m) INSURANCE. Except as may otherwise be agreed to by the
Participants, during the period of its construction and operation
of the Plant McIntosh CT Project, Savannah, as Agent, shall carry
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in the name of the Participants as their interests appear,
insurance covering (i) workers' compensation, which shall include
employers' liability, (ii) commercial general liability, which
shall include broad form contractual and products/completed
operations liability, and (iii) "all risk" property, which shall
include coverage for boiler and machinery, in such amounts and
with such deductible or self-insurance features as is consistent
with The Southern Company's customary practices, provided such
insurance shall have the following minimum limits of liability:
(w) workers' compensation, statutory limits; (x) employers'
liability, $100,000 per accident; (y) commercial general
liability, which shall include broad form contractual and
products/completed operations liability, $50,000,000 combined
single limit per occurrence; and (z) "all risk" property
insurance, $200,000,000 per occurrence; or such greater limits as
may be determined, from time to time, by mutual agreement of the
Participants. The maximum aggregate deductible amount under all
insurance policies for any occurrence shall be an amount
consistent with industry practice for utilities of similar size
and exposure provided that such insurance is obtainable with a
deductible amount not exceeding such maximum deductible amount
and at commercially reasonable premiums. The aggregate cost of
all such insurance shall be considered (i) Cost of Construction
for any such costs which are incurred with respect to any portion
or portions of the Plant McIntosh CT Project which has not yet
entered Commercial Operation, and (ii) Operating Costs for any
such costs which are incurred with respect to any portion or
portions of the Plant McIntosh CT Project which has entered
Commercial Operation, and shall be paid in accordance with the
provisions of Section 6(k), PAYMENTS MADE DURING CONSTRUCTION, of
the Ownership Agreement, or Section 5(h), PAYMENT AND SETTLEMENT
OF OPERATING COSTS, hereof, as appropriate. For any policy
furnished by Savannah, the Participants shall each be designated
as an additional insured (including, without limitation, for
purposes of protecting their interests as owners) and such policy
shall be endorsed to be primary to any insurance which may be
maintained by any Participant.
Each other Participant may also maintain additional or other
insurance, at its own cost and expense, which it deems necessary
or advisable to protect its respective interest in any portion of
the Plant McIntosh CT Project, provided that such additional
insurance does not reduce or diminish in any way the coverage of
the insurance procured and maintained by Savannah pursuant to
this Section 5(m).
Notwithstanding the foregoing, each Participant (other than
Savannah) shall separately procure and maintain in force, at its
own expense, workers' compensation and employer's liability
insurance for its Site Representatives and its other employees
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visiting the Plant McIntosh CT Project with the minimum limits of
liability set forth above.
6. CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTICIPANTS.
The Agent and the Participants hereby covenant and agree as
follows:
(a) NO ADVERSE DISTINCTION. Notwithstanding any other
provision of this Agreement, in discharging their respective
responsibilities pursuant to this Agreement, neither Savannah, as
Agent or as a Participant, nor any other Participant, shall make
any adverse distinction between that portion of the Plant
McIntosh CT Project in which it has an interest, and any other
portion of the Plant McIntosh CT Project because of its ownership
of (or ownership and leasehold interest in) a portion of the
Plant McIntosh CTs or an undivided share of the CT Common
Facilities with the other Participants.
(b) COOPERATION. The Participants and Savannah, as Agent,
will cooperate with each other in all activities relating to the
Plant McIntosh CT Project, including, without limitation, the
execution and filing of applications for authorizations, permits
and licenses with Governmental Authorities having jurisdiction
(except that Savannah is not authorized to have any contact with
the GPSC on behalf of GPC without the written consent of GPC),
fuel procurement and the execution of such other documents as may
be reasonably necessary to carry out the provisions of this
Agreement. Without Savannah's written consent, no other
Participant shall incur any obligation in connection with the
Plant McIntosh CT Project which would or could obligate Savannah
to any third party.
(c) LIABILITY, REMEDIES AND LIMITATIONS OF LIABILITY.
(i) Notwithstanding any provision of law or any
provision of this Agreement, (A) in the event Savannah, as
Agent, fails to comply at any time with the provisions of
Section 6(a), NO ADVERSE DISTINCTION, hereof, or (B) in the
event Savannah fails at any time to perform its duties,
responsibilities, obligations or functions hereunder as Agent
in accordance with Prudent Utility Practice, or (C) in the
event that Savannah conveys all of its undivided ownership
interest in the Plant McIntosh CT Project, then the
Participants shall have the right as their sole and exclusive
remedy to remove Savannah, as Agent, hereunder and under the
Ownership Agreement in accordance with all of the provisions
of subsection (iv) of this Section 6(c).
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GPC, in performing services, or acting as agent, for
Savannah in connection with the Plant McIntosh CT Project,
shall have equivalent limitations on its liability as are set
forth above for Savannah, as Agent.
(ii) The limitations upon the liability of Savannah and
GPC herein shall also apply to the work performed by Savannah
and GPC prior to the date hereof and prior to the Execution
and Delivery with respect to the Plant McIntosh CTs, the CT
Common Facilities and the CT Fuel Supply.
(iii) In the event that any particular application of any
of the limitations of liability contained in this Section 6(c)
should be finally adjudicated to be void as a violation of the
public policy of the State of Georgia, then such limitation of
liability shall not apply with respect to such application to
the extent (but only to the extent) required in order for such
limitation of liability not to be void as a violation of such
public policy, and such limitations of liability shall remain
in full force and effect with respect to all other
applications to the fullest extent permitted by law.
(iv) The removal and replacement of Savannah as Agent
under this Agreement and under the Ownership Agreement
pursuant to any provisions of this Agreement or the Ownership
Agreement authorizing such removal and replacement, shall be
conducted in accordance with all of the following provisions
of this subsection (iv) of Section 6(c):
(A) The removal of Savannah as Agent under this Agree-
ment and under the Ownership Agreement with respect to the
Plant McIntosh CT Project (other than the Savannah Plant
McIntosh CTs) and the appointment of a successor Agent
shall be effected, subject to approval of any Governmental
Authority having jurisdiction, upon written notice to
Savannah executed by the Participant or Participants owning
the Plant McIntosh CT Project (other than Savannah). Any
such notice must identify the date upon which such removal
and appointment shall be effective, the cause for such
removal and the provisions hereof or of the Ownership
Agreement or both upon which such removal is based, and
either the name of the successor Agent appointed to replace
Savannah, as Agent, or the names of two potential successor
Agents, one of whom shall be appointed to replace Savannah,
as Agent. In the event such notice of removal identifies
two potential successor Agents, the Participant or
Participants owning the Plant McIntosh CT Project (other
than Savannah) shall notify Savannah in writing of the
identity of the one appointed to replace Savannah, as
Agent, forthwith upon its appointment, which shall occur no
later than the date upon which the removal of Savannah, as
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<PAGE>
Agent, is to be effective as set forth in such notice of
removal.
(B) Except as provided in the preceding paragraph (A),
Savannah shall have no obligation to continue as Agent
under this Agreement or under the Ownership Agreement from
and after the date upon which its removal as Agent is to be
effective as set forth in such notice of removal. In
addition, from and after the date upon which such removal
of Savannah, as Agent with respect to the Plant McIntosh CT
Project (other than the Savannah Plant McIntosh CTs), is to
be effective as set forth in the notice of removal, the
Participants (other than Savannah) shall indemnify and hold
Savannah harmless from and against any loss, cost and
expense resulting from the failure of the successor Agent
to assume such position on such effective date.
(C) Savannah agrees that it will cooperate with the
successor Agent in facilitating the assumption of such
position by the successor Agent and in generally
familiarizing the successor Agent and its employees and
agents with the Plant McIntosh CTs or the CT Common
Facilities, as the case may be, and with their physical
orientation and operation.
(d) INDEMNIFICATION. Except as provided in subsection (iii)
of Section 6(c), LIABILITIES, REMEDIES AND LIMITATIONS OF
LIABILITY, hereof, in the event Savannah, in its performance as
Agent hereunder, or any Participant in its capacity as such, or
GPC in performing services, or acting as agent, for Savannah,
incurs any liability to any third party, any reasonable amount
paid on account of such liability shall, to the extent such
liability would be classified as Operating Costs under the
Uniform System of Accounts, be considered an Operating Cost and
apportioned among the Participants pursuant to Section 5(h),
PAYMENT AND SETTLEMENT OF OPERATING COSTS, hereof, and to the
extent such liability would be classified as a Cost of
Construction under the Uniform System of Accounts, be considered
a Cost of Construction and apportioned among the Participants
pursuant to Section 6(k), PAYMENTS MADE DURING CONSTRUCTION, of
the Ownership Agreement and Section 5(j), PAYMENT AND SETTLEMENT
OF COST OF CONSTRUCTION, hereof, as appropriate.
(e) AVAILABILITY OF RECORDS. Savannah, as Agent, will at
all times make available to each Participant and its duly
authorized agents and representatives, and each Participant and
its duly authorized agents and representatives may audit all
books and records regarding Cost of Construction, Operating Costs
and Fuel Costs sufficiently to allow it to determine that such
costs and expenditures attributed to the Plant McIntosh CTs
(other than the Savannah Plant McIntosh CTs), the CT Common
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<PAGE>
Facilities, the CT Fuel Supply or any combination thereof by
Savannah, as Agent, pursuant to Sections 5, OPERATION, RIGHTS AND
OBLIGATIONS, or 3, AUTHORITY AND RESPONSIBILITY FOR OPERATION,
hereof, are appropriate or as needed to satisfy requests from
Governmental Authorities. No payment made pursuant to the
provisions of such Section 5 or such Section 3 shall constitute a
waiver of any right of a Participant to question or contest the
correctness of any charge or credit by Savannah, as Agent.
(f) RIGHT TO COPIES. Any Participant and any successor
Agent hereunder or under the Ownership Agreement shall be
entitled to copy (i) any and all contracts, books, records,
reports and other documents and papers to which such
Participants, their respective officers, employees, duly
authorized agents or representatives and consultants or any
successor Agent is permitted access, or which Savannah has agreed
shall be available for audit, under the terms of this Agreement
or the Ownership Agreement, and (ii) any and all planning,
licensing, construction, testing, architectural, engineering and
design drawings and specifications that have been or shall
hereafter be prepared in connection with the Plant McIntosh CTs,
the CT Common Facilities, the CT Fuel Supply, or any combination
thereof.
(g) COMPLIANCE WITH LAWS AND ENVIRONMENTAL MATTERS.
(i) The Participants acknowledge and agree that
Savannah, as Agent, shall plan, design, license, procure,
construct, acquire, complete, test, startup, manage, control,
operate, maintain, add to, renew, modify, replace and dispose
of the Plant McIntosh CT Project substantially in accordance
with all local, state and federal laws, regulations,
ordinances or orders now or hereinafter in effect; provided,
however, that any failure to substantially comply with such
local, state or federal laws, regulations, ordinances or
orders shall not be deemed a breach of this Operating
Agreement if, and so long as, such failure is (A) caused by a
Force Majeure Event, or (B) in accordance with a court order
or decree, or a formal agreement with the regulatory agency
having jurisdiction over the subject matter of noncompliance
or having authority to issue the required approval.
(ii) Each Participant shall be solely responsible for
providing any Allowances required to operate such
Participant's Plant McIntosh CTs in compliance with the Clean
Air Act, as amended, and any regulations and requirements
arising thereunder, at the operating level utilized by such
Participant. "Allowance" shall have the meaning set forth in
Title IV of the Clean Air Act. Savannah, as Agent, shall
develop procedures mutually agreeable to the Participants for
determining the volume of the emissions attributable to each
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<PAGE>
Participant for the purpose of determining the Allowances
required of each Participant. Each Participant shall provide
information reasonably satisfactory to the Agent that such
Allowances are or will be available in order to operate such
Participant's Plant McIntosh CTs at the actual and anticipated
levels of operation.
Each Participant, in addition to the Agent, shall be a
permittee for any air quality permit(s) issued for such
Participant's Plant McIntosh CTs by a Governmental Authority
if such Governmental Authority determines that the
Participants are required to be joint permittees.
(iii) The Agent shall not use, treat, store, dispose, or
recycle at the Plant McIntosh CT Project any Environmental
Material (as hereinafter defined) in amounts or under
circumstances requiring notification of, or a permit, license,
or approval from, any Governmental Authority of competent
jurisdiction unless such Environmental Material was generated
at the Plant McIntosh CT Project or related to the generation
of electric power at the Plant McIntosh CT Project. For
purposes of this subsection (iii) of Section 6(g),
"Environmental Material" shall mean and include asbestos,
radioactive material, petroleum, petroleum products, petroleum
fractions, petroleum distillates, and any substance, material
or waste designated as hazardous under the Comprehensive
Environmental Response, Compensation, and Liability Act and
amendments thereto, or designated as toxic or hazardous or
otherwise regulated under the Toxic Substances Control Act and
amendments thereto, the Resource Conservation and Recovery Act
and amendments thereto, the Clean Water Act and amendments
thereto, the Clean Air Act and amendments thereto, the Georgia
Air Quality Act and amendments thereto, the Georgia Hazardous
Waste Management Act and amendments thereto, or the Georgia
Water Quality Control Act and amendments thereto.
(h) SAFETY. The Participants acknowledge and agree that in
the management, control, operation, maintenance, renewal,
addition, replacement, modification or disposal of the Plant
McIntosh CT Project pursuant to this Agreement, Savannah shall at
all times take all reasonable precautions for the safety of
employees on the work site and of the public, and shall comply
with all applicable provisions of federal, state, and municipal
safety laws and building and construction codes, including,
without limitation, all regulations of the Occupational Safety
and Health Administration. The requirements of this paragraph
shall be for the sole benefit of the Participants only and shall
not create or impose any standard of care or duty to any third
party or to any employee or subcontractor's employee or to the
public, beyond the duty incumbent upon Savannah which would exist
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<PAGE>
under applicable law without reference to any term or provision
of this Agreement.
(i) MANAGEMENT AND OPERATING AUDITS. Each Participant shall
have the right from time to time to conduct management and
operating audits, at its own cost, of Savannah's performance as
Agent hereunder, either by its own officers and employees or
through its duly authorized agents or representatives. Savannah
shall cooperate with each Participant in the conducting of any
such audit and, subject to the applicable regulations of any
Governmental Authority having jurisdiction, give each Participant
reasonable access to all contracts, records, and other documents
relating to the Plant McIntosh CTs (other than the Savannah Plant
McIntosh CTs), the CT Common Facilities, the CT Fuel Supply or
any combination thereof.
(j) ON-SITE OBSERVATION AND INSPECTION.
(i) Each Participant shall be entitled to have a
reasonable number of Site Representatives at the Plant
McIntosh CT Project, on a full or part time basis (whether on
site or off site), as determined by the Participant.
Reasonable office space and facilities shall be made available
to such Site Representatives and the Participant represented
by such Site Representatives shall be solely responsible for
the Operating Costs and Cost of Construction, if construction
of such office space is required, for such office space.
Each Site Representative shall have the right to review
expenditures, audit records, inspect equipment, advise on
repairs required for equipment, review the progress of
outages, review maintenance and operating practices and
otherwise observe all activities respecting the Plant McIntosh
CTs (other than the Savannah Plant McIntosh CTs), the CT
Common Facilities and the CT Fuel Supply.
(ii) Each Participant shall also be entitled to have its
employees and other authorized representatives, including,
without limitation, outside consultants, visit the Plant
McIntosh CT Project site at reasonable times to observe and
inspect the Plant McIntosh CTs (other than the Savannah Plant
McIntosh CTs), the CT Common Facilities and the CT Fuel Supply
and the activities by Savannah, as Agent; provided, however,
that such employees and representatives shall be subject to,
and required to conduct themselves in accordance with, the
directives of Savannah's senior site official to the end that
their on-site activities shall not interfere with Savannah's
performance of its obligations as Agent hereunder and under
the Ownership Agreement.
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<PAGE>
(k) PLANT TOURS. Upon prior approval of Savannah (which
approval shall not be unreasonably withheld), any Participant may
schedule plant tours and visits (for individuals other than the
Site Representatives) at the Plant McIntosh CT Project, subject
to the rules and regulations of Governmental Authorities.
7. ASSIGNMENT AND TERMINATION.
(a) LIMITATION ON ASSIGNABILITY. If, pursuant to the
Ownership Agreement, any Participant makes a sale, transfer or
assignment of all or any portion of its ownership or leasehold
interests in the Plant McIntosh CT Project (other than solely as
security for indebtedness or to facilitate the financing of
pollution control or solid waste disposal facilities), such
Participant shall also assign this Agreement pro tanto, and shall
cause the transferee to assume to the same extent the rights and
obligations of such Participant hereunder; provided, however,
that Savannah shall not assign its responsibilities as Agent
hereunder without the prior written approval of the Participants
which shall not be unreasonably withheld. No other assignment of
this Agreement shall be made except in connection with a sale,
transfer or assignment of the assignor's interest in the Plant
McIntosh CT Project pursuant to the Ownership Agreement. Any
attempted or purported assignment of this Agreement not in
compliance with this Section 7(a) shall be null and void and of
no force or effect whatsoever.
(b) TERM. Subject to the provisions of Section 8,
CONDITIONS PRECEDENT TO EXECUTION AND DELIVERY, and Section 9,
CONDITIONS PRECEDENT TO CLOSING, of the Ownership Agreement, this
Agreement shall become effective upon the Execution and Delivery
of the Lease pursuant to Section 4(c), EXECUTION AND DELIVERY, of
the Ownership Agreement and shall remain in effect until final
retirement and decommissioning of the Plant McIntosh CT Project.
Upon termination of this Agreement in connection with the
retirement and decommissioning of the Plant McIntosh CT Project,
Savannah, as Agent, shall retain such powers hereunder as shall
be necessary in connection with the decommissioning of the
property included in the Plant McIntosh CT Project at the time of
such termination, and the respective rights and obligations of
the Participants hereunder shall continue with respect to any
action taken hereunder in connection with such decommissioning,
and for all necessary expenses incurred in connection with such
decommissioning.
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<PAGE>
8. GENERAL.
(a) GOVERNING LAW. The validity, interpretation and
performance of this Agreement and each of its provisions shall be
governed by the laws of the State of Georgia.
(b) NO DELAY. No disagreement or dispute of any kind
between or among any of the Participants concerning any matter,
including, without limitation, the amount of any payment due from
any Participant or the correctness of any charge made to any
Participant, shall permit such Participant to delay or withhold
any payment pursuant to this Agreement.
(c) NOTICE.
(i) Except as otherwise provided in Sections 5(i),
OPERATING ACCOUNT, and 5(k), CAPITAL ACCOUNT, hereof, any
notice, request, consent or other communication permitted or
required by this Agreement shall be in writing. All notices
pertaining to or affecting the provisions of this Agreement
shall be deemed given when deposited in the United States Mail
and sent by registered or certified mail to the Parties at the
following addresses:
GPC:
Georgia Power Company
333 Piedmont Avenue
Atlanta, Georgia 30308
Attention: Senior Vice President - Bulk Power Markets
Telephone Number: (404) 526-6599
Telecopy Number: (404) 526-7407
Savannah (in its capacity as a Participant and as Agent):
Savannah Electric and Power Company
600 East Bay Street
Savannah, Georgia 31402
Attention: Vice President - Operations
Telephone Number: (912) 238-2250
Telecopy Number: (912) 944-1378
(ii) Any Party shall be entitled to specify a different
officer or address upon notice in writing to the other
Parties.
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<PAGE>
(d) SECTION HEADINGS NOT TO AFFECT MEANING. The descriptive
headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall in no way
modify or restrict any of the terms or provisions hereof.
(e) NO PARTNERSHIP. Notwithstanding any provision of this
Agreement, none of the Parties intend to create hereby any joint
venture, partnership, association taxable as a corporation, or
other entity for the conduct of any business for profit either
among themselves or with any one or more of the Participants.
(f) AMENDMENTS. This Agreement may be amended by and only
by a written instrument duly executed by each of the Parties.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon each of the Parties and their
respective successors and upon their assigns pursuant to the
provisions of Section 7(a), LIMITATION ON ASSIGNABILITY, hereof.
Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies hereunder,
except that any transferee of an ownership or an ownership and
leasehold interest in the Plant McIntosh CT Project or any
portion or portions thereof, from any Participant in accordance
with the Ownership Agreement and pursuant to an agreement under
which the other Participants have been made third-party
beneficiaries of such transferee's obligations thereunder shall
be a third-party beneficiary of such other Participants'
respective obligations hereunder and shall be deemed a
Participant for all purposes of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute
one and the same instrument.
(i) TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
(j) FURTHER ASSURANCES. From time to time after the date
hereof, each Party will execute and deliver such instruments of
conveyance and other documents, upon the request of another
Party, as may be necessary or appropriate to carry out the intent
of this Agreement.
(k) COMPUTATION OF PERCENTAGE UNDIVIDED OWNERSHIP INTEREST.
Notwithstanding any other provision of this Agreement, whenever,
pursuant to any provision of this Agreement, any action is
required to be agreed to or taken by any one or more of the
Participants hereunder (other than any action to be taken by
Savannah in its capacity as Agent hereunder), (i) only those
Participants not in default in the payment of any amounts
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<PAGE>
(together with interest, if appropriate) required under any
provisions of this Agreement or the Ownership Agreement at the
time such action is to be agreed to or taken shall have the right
to participate in such agreement or the taking of such action,
and (ii) the computation of the aggregate Pro Forma Ownership
Interests in the Plant McIntosh CT Project of the Participants
agreeing to or taking any such actions shall be based solely upon
the Pro Forma Ownership Interests in the Plant McIntosh CT
Project of the Participants not so in default.
(l) SUCCESSOR AGENT. In the event that Savannah (or any
successor Agent) is removed as Agent for the Participants
hereunder or under the Ownership Agreement, or in the event that
Savannah (with prior written approval from the Participants which
approval shall not be unreasonably withheld) assigns its
responsibilities as Agent, any successor Agent for the
Participants as contemplated hereby shall exercise all of the
rights and powers and shall be subject to all of the duties and
obligations of Savannah, as Agent, hereunder or under the
Ownership Agreement and shall be subject to removal by the
Participants in the same manner as Savannah, and Savannah shall
take all action and execute (and file where appropriate) all
documents and instruments which shall be reasonably requested by
the successor Agent to effect the transfer to such replacement or
successor Agent of such rights, powers, duties and obligations,
including, but not limited to, taking such actions and executing
such documents and instruments necessary to enable the successor
Agent to operate and maintain those facilities and equipment of
Plant McIntosh owned by Savannah which provide support services
to the Plant McIntosh CT Project.
(m) SEVERAL AGREEMENTS. The agreements and obligations of
the Participants set forth in this Agreement shall be the
several, and not joint, agreements and obligations of the
Participants.
(n) SPECIAL PROVISIONS RELATING TO THE CT COMMON FACILITIES.
(i) The CT Common Facilities shall be used for the
mutual benefit and enjoyment of the Participants and in such a
manner as will not unreasonably interfere with the use,
benefit and enjoyment of any Participant. No area of the CT
Common Facilities may be used exclusively by less than all the
Participants without the approval of all Participants;
provided, however, that if such use is essential to the
operation of any of the Plant McIntosh CTs, such approval will
not be unreasonably withheld.
(ii) For purposes of the various provisions of this
Agreement and of the Ownership Agreement permitting or
requiring the vote, consent, concurrence or approval of the
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<PAGE>
Participants owning a designated percentage undivided
ownership interest in the Plant McIntosh CT Project, the Plant
McIntosh CTs or CT Common Facilities, a Participant's
percentage undivided ownership interest in the Plant McIntosh
CT Project, the Plant McIntosh CTs or the CT Common Facilities
at any particular time shall be deemed to be equivalent to
that Participant's Pro Forma Ownership Interest at such time.
(o) CONSTRUCTION OF "INCLUDING". Wherever the term
"including" is used in this Agreement such term shall not be
construed as limiting the generality of any statement, clause,
phrase or term and shall not be deemed to exclude any person or
thing otherwise within the meaning of the statement, clause,
phrase or term which it modifies.
(p) EQUAL EMPLOYMENT OPPORTUNITY AND CIVIL RIGHTS.
Savannah, as Agent, shall conform to the requirements of the
Equal Employment Opportunity clause in Section 202, Paragraphs 1
through 7 of Executive Order 11246, as amended, and applicable
portions of Executive Orders 11701 and 11758, relative to Equal
Employment Opportunity and the Implementing Rules and Regulations
of the Office of Federal Contract Compliance Programs.
(q) THE PLANT MCINTOSH CT UNITS. In the event that at any
time the same party shall not serve as Agent with respect to all
the Plant McIntosh CTs, the Participants mutually agree (and
agree to exercise their reasonable best efforts to obtain the
agreement of any other Agent), if any or more than one of them is
an Agent with respect to any of the Plant McIntosh CTs, to
exercise the rights, powers, duties and obligations of an Agent
hereunder and under the Ownership Agreement in such a manner as
will not unreasonably interfere with the rights of any
Participant under this Agreement or the Ownership Agreement.
[The remainder of this page is intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement under seal as of the date first above written.
Signed, sealed and GEORGIA POWER COMPANY, as a
delivered in the Participant
presence of:
By:_________________________
_____________________________
Attest:_____________________
_____________________________
Notary Public (CORPORATE SEAL)
Signed, sealed and SAVANNAH ELECTRIC AND POWER
delivered in the COMPANY, as Agent and as a
presence of: Participant
By:__________________________
_____________________________
Attest:______________________
_____________________________
Notary Public (CORPORATE SEAL)
- 44 - <PAGE>
Exhibit 10(a)59
POWER PURCHASE AGREEMENT
between
GEORGIA POWER COMPANY
and
FLORIDA POWER CORPORATION
Dated as of December 3, 1993
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions . . . . . . . . . . . . . . . . 2
1.2 Interpretation . . . . . . . . . . . . . . . . . . 7
ARTICLE 2
TERM
2.1 Term . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3
SYSTEM PEAKING CAPACITY
3.1 Guaranteed System Peaking Capacity . . . . . . . . 8
3.2 Capacity to be Purchased and Sold . . . . . . . . . 9
3.3 Advancement Option. . . . . . . . . . . . . . . . . 9
3.4 Termination Options. . . . . . . . . . . . . . . . 10
3.5 Calculation of Monthly Capacity Payments . . . . . 12
ARTICLE 4
ENERGY AVAILABILITY
4.1 Energy . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Scheduling of Energy . . . . . . . . . . . . . . . 13
4.3 Availability of Committed System Peaking Capacity . 13
4.4 Interconnection Points . . . . . . . . . . . . . . 13
4.5 Metering . . . . . . . . . . . . . . . . . . . . . 13
4.6 Calculation of Monthly Energy Payments . . . . . . 14
ARTICLE 5
BILLING AND COLLECTIONS
5.1 Capacity and Energy Billing and Payment . . . . . . 14
5.2 Billing Disputes and Final Accounting . . . . . . . 15
5.3 Interest . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 6
OPERATION AND MAINTENANCE
6.1 General Standards . . . . . . . . . . . . . . . . . 16
6.2 Standard of Performance of Obligations . . . . . . 16
6.3 Establishment of Operating Committee . . . . . . . 17
6.4 Responsibilities of the Peaking Capacity Operating
Committee . . . . . . . . . . . . . . . . . . . . . 17
6.5 Peaking Capacity Operating Committee Meetings . . . 18
ARTICLE 7
FORCE MAJEURE
7.1 Definition of Force Majeure Event . . . . . . . . . 19
7.2 No Breach or Liability . . . . . . . . . . . . . . 19
7.3 Mitigation . . . . . . . . . . . . . . . . . . . . 20
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<PAGE>
7.4 Suspension of Performance . . . . . . . . . . . . . 20
7.5 Extended Force Majeure Events . . . . . . . . . . . 21
7.6 Capacity and Energy Payments during Force Majeure
Events . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 8
INABILITY TO MEET LEGAL REQUIREMENTS
8.1 Cure Period and Default. . . . . . . . . . . . . . 21
8.2 Mitigation. . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 9
CHANGES TO LEGAL REQUIREMENTS
9.1 Changes to Legal Requirements . . . . . . . . . . . 23
ARTICLE 10
REGULATORY APPROVALS
10.1 GPSC Approval . . . . . . . . . . . . . . . . . . . 24
10.2 FERC Approval . . . . . . . . . . . . . . . . . . . 26
ARTICLE 11
DEFAULT AND REMEDIES
11.1 Default by Seller . . . . . . . . . . . . . . . . . 28
11.2 Default by Buyer . . . . . . . . . . . . . . . . . 31
11.3 Remedies . . . . . . . . . . . . . . . . . . . . . 34
11.4 Suspension of Performance . . . . . . . . . . . . . 34
ARTICLE 12
REPRESENTATIONS, WARRANTIES AND COVENANTS
12.1 Representations, Warranties and Covenants of
Seller . . . . . . . . . . . . . . . . . . . . . . 35
12.2 Representations and Warranties of Buyer . . . . . . 37
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Interrelationship with Interchange Contract . . . . 39
13.2 Assignment and Assumption of Obligations . . . . . 40
13.3 No Consequential Damages . . . . . . . . . . . . . 40
13.4 Amendments . . . . . . . . . . . . . . . . . . . . 41
13.5 Binding Effect . . . . . . . . . . . . . . . . . . 41
13.6 Counterparts . . . . . . . . . . . . . . . . . . . 41
13.7 Notices . . . . . . . . . . . . . . . . . . . . . . 41
13.8 Entire Agreement . . . . . . . . . . . . . . . . . 42
13.9 Governing Law . . . . . . . . . . . . . . . . . . . 42
13.10 Waiver . . . . . . . . . . . . . . . . . . . . 43
13.11 Headings . . . . . . . . . . . . . . . . . . . 43
13.12 Third Parties . . . . . . . . . . . . . . . . 43
-ii-
<PAGE>
13.13 Agency . . . . . . . . . . . . . . . . . . . . 44
13.14 Severability. . . . . . . . . . . . . . . . . 44
-iii-
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBIT A SYSTEM PEAKING UNITS
EXHIBIT B DISPATCH CHARACTERISTICS OF SYSTEM PEAKING
CAPACITY
SCHEDULE A MONTHLY CAPACITY PAYMENT CALCULATION
SCHEDULE B MONTHLY ENERGY PAYMENT CALCULATION
<PAGE>
POWER PURCHASE AGREEMENT
THIS POWER PURCHASE AGREEMENT ("Agreement"), dated as of
December 3, 1993, between GEORGIA POWER COMPANY, a corporation
organized and existing under the laws of the State of Georgia
("Buyer") and FLORIDA POWER CORPORATION, a corporation organized
and existing under the laws of the State of Florida ("Seller").
W I T N E S E T H:
WHEREAS, Buyer is authorized by its Certificate of
Incorporation and by the State of Georgia to engage in the
generation, transmission, sale and distribution of electricity;
WHEREAS, Seller is authorized by its Certificate of
Incorporation and by the State of Florida to engage in the
generation, transmission, sale and distribution of electricity;
WHEREAS, Buyer and Seller, together with Alabama Power
Company, Gulf Power Company, Mississippi Power Company, Savannah
Electric and Power Company and Southern Company Services, Inc.
are parties to an Interchange Contract dated December 22, 1988,
as amended ("Interchange Contract"); and
WHEREAS, Buyer desires to purchase and Seller desires to
sell peaking capacity and associated energy from peaking units on
Seller's electric system in designated amounts during the periods
specified herein;
<PAGE>
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises,
the mutual promises and agreements set forth herein and other
good and valuable consideration, the receipt, sufficiency and
adequacy of which are hereby acknowledged, Buyer and Seller each
intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. In addition to the initially
capitalized terms and phrases defined in the preamble of this
Agreement, the following initially capitalized terms and phrases
as and when used in this Agreement shall have the respective
meanings set forth below:
1.1.1 "Actual Demand Availability" - has the meaning
defined in Schedule A attached hereto and by this reference
incorporated herein.
1.1.2 "Affiliate" - of any specified entity means any
other entity directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
entity. For purposes of this definition, "control" when used
with respect to any entity means the power to direct the
management and policies of such entity, directly or indirectly,
whether through the ownership of voting securities, by contract
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<PAGE>
or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
1.1.3 "Commencement of Service Date" - means June 1,
1996 unless Buyer exercises its advancement option pursuant to
Section 3.3, in which case the Commencement of Service Date shall
be June 1, 1995.
1.1.4 "Committed System Peaking Capacity" - means the
amount of Guaranteed System Peaking Capacity which Buyer agrees
to purchase during a Summer Period pursuant to Sections 3.2 and
3.3.
1.1.5 "Cumulative Escalation for Fixed O&M" - has the
meaning defined in Schedule A.
1.1.6 "Day" - means a calendar day.
1.1.7 "Event of Default" - has the meanings ascribed
to it in Section 11.1 for Seller and Section 11.2 for Buyer.
1.1.8 "FERC" - means the Federal Energy Regulatory
Commission or any Governmental Authority succeeding to the powers
and functions thereof as relevant to this Agreement.
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1.1.9 "Force Majeure Event" - has the meaning defined
in Section 7.1.
1.1.10 "GPSC" - means the Georgia Public Service
Commission or any Governmental Authority succeeding to the powers
and functions thereof as relevant to this Agreement.
1.1.11 "Governmental Authority" - means any local,
state, regional or federal administrative, legal, judicial or
executive agency, court, commission, department or other such
entity, but excluding any such agency, court, commission,
department or other such entity acting in its capacity as lender,
guarantor or mortgagor.
1.1.12 "Guaranteed System Peaking Capacity" - means
the capacity of the System Peaking Units that Seller guarantees
will be available to Buyer at a demand availability rate of 98%
at those times and in those amounts specified in Section 3.1.
1.1.13 "Interconnection Points" - means one or more of
the points of interconnection specified in Section 4.4 of this
Agreement for the delivery to Buyer of the energy associated with
the Committed System Peaking Capacity.
1.1.14 "Legal Requirement" - means any law, code,
statute, regulation, rule, ordinance, judgment, injunction, order
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or other requirement of a Governmental Authority having
jurisdiction over the matter in question, which is valid and
applicable to the matter in question at the time of the execution
of this Agreement or anytime thereafter during the Term.
1.1.15 "Month" - means a calendar month, commencing at
the beginning of the first Day of such calendar month. "Monthly"
- - has a meaning correlative to that of Month.
1.1.16 "Monthly Capacity Payment" - for a particular
Month of a Summer Period, means the Monthly amount to be paid by
Buyer to Seller for Buyer's purchase of Committed System Peaking
Capacity, as the same is calculated by Seller as provided in
Section 3.5 and Schedule A.
1.1.17 "Monthly Energy Payment" - for a particular
Month of a Summer Period, means the Monthly amount to be paid by
Buyer to Seller for Buyer's purchase of energy associated with
the Committed System Peaking Capacity, as the same is calculated
by Seller as provided in Section 4.6 and Schedule B attached
hereto and by this reference incorporated herein.
1.1.18 "Monthly Maximum Capacity Payment" - has the
meaning defined in Schedule A.
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1.1.19 "Party" - means either Buyer or Seller and
their respective successors and assigns.
1.1.20 "Penalty Interest Rate" - means one hundred and
five percent (105%) of the prime rate quoted on the date a
payment is due by Chemical Bank in New York, New York.
1.1.21 "Prudent Utility Practices" - means, at a
particular time, any of the practices, methods and acts engaged
in or approved by a significant portion of the electric utility
industry prior to such time, or any of the practices, methods and
acts which, in the exercise of reasonable judgment in light of
the facts known at the time the decision was made, could have
been expected to accomplish the desired results at a reasonable
cost consistent with good business practices, reliability, safety
and expedition. Prudent Utility Practices is not intended to be
limited to the optimum practice, method or act to the exclusion
of all others, but rather to be a spectrum of possible practices,
methods or acts expected to accomplish the desired results,
having due regard for, among other things, manufacturers'
warranties and the requirements of Governmental Authorities of
competent jurisdiction and the requirements of this Agreement.
1.1.22 "Summer Period" - means the Months of June,
July, August and September in each of the Years during the Term
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in which Buyer purchases Committed System Peaking Capacity from
Seller.
1.1.23 "System Peaking Units" - means those certain
combustion turbine electric generating units referred to on
Exhibit A attached hereto and by this reference incorporated
herein.
1.1.24 "Term" - means the term of this Agreement as
specified in Article 2.
1.1.25 "Termination of Service Date" - means
September 30, 1999 unless this Agreement is earlier terminated in
accordance with its terms.
1.1.26 "Year" - means a calendar year, commencing on
January 1 of a year and ending on December 31 of that year.
1.2 Interpretation. In this Agreement and the Exhibits and
the Schedules attached hereto, unless the context otherwise
requires:
1.2.1 words generally importing the singular shall
include the plural and vice versa;
1.2.2 references to "entity" include, without
limitation, corporations, partnerships, associations and
Governmental Authorities.
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ARTICLE 2
TERM
2.1 Term. This Agreement shall become effective when
executed by both Buyer and Seller and shall remain in full force
and effect until the Termination of Service Date. Applicable
provisions of this Agreement shall continue in effect after
termination of this Agreement to the extent necessary to provide
for final billings and adjustments.
ARTICLE 3
SYSTEM PEAKING CAPACITY
3.1 Guaranteed System Peaking Capacity. The Guaranteed
System Peaking Capacity shall be as follows during the periods
indicated:
Period Guaranteed System
Peaking Capacity
June 1, 1995 - September 30, 1995 300 MW
June 1, 1996 - September 30, 1996 500 MW
June 1, 1997 - September 30, 1997 400 MW
June 1, 1998 - September 30, 1998 200 MW
June 1, 1999 - September 30, 1999 200 MW
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3.2 Capacity to be Purchased and Sold.
3.2.1 Except as provided in Section 3.3, Buyer shall
provide Seller written notice by May 31 of the Year preceding
each Summer Period of the amount of Guaranteed System Peaking
Capacity which Buyer desires to purchase from Seller during such
Summer Period. The amount of Guaranteed System Peaking Capacity
which Buyer requests be made available to Buyer during a Summer
Period shall be referred to herein as "Committed System Peaking
Capacity".
3.2.2 Subject to Buyer's right to terminate this
Agreement pursuant to Section 3.4, Buyer agrees that the minimum
amounts of Committed System Peaking Capacity shall be 400 MW in
each Month of the 1996 Summer Period, 300 MW in each Month of the
1997 Summer Period, 150 MW in each Month of the 1998 Summer
Period and 150 MW in each Month of the 1999 Summer Period.
3.2.3 Seller agrees to sell and Buyer agrees to
purchase the Committed System Peaking Capacity and any energy
associated therewith which shall be delivered to and measured at
one of more of the Interconnection Points.
3.3 Advancement Option. Buyer shall have the option,
exercisable in its sole discretion, to commence taking Guaranteed
System Peaking Capacity in an amount up to 300 MW, for the period
June 1, 1995 through September 30, 1995, upon advance written
notice to Seller by December 31, 1994 of the amount of Committed
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System Peaking Capacity that Buyer agrees to purchase during such
period.
3.4 Termination Options.
3.4.1 Buyer may terminate this Agreement at any time
prior to December 31, 1994 upon prior written notice to Seller
and payment to Seller of a termination fee in the amount of
$100,000, and neither Buyer nor Seller shall have any further
obligations to the other hereunder upon such termination.
3.4.2 Between January 1, 1995 and May 31, 1996 Buyer
may cancel its obligation to purchase Committed System Peaking
Capacity in the 1997, 1998 and 1999 Summer Periods upon prior
written notice to Seller and payment to Seller of a termination
fee in an amount of the sum of (i) the product of .50 times the
sum of the Monthly Maximum Capacity Payments for each Month of
the 1997 Summer Period (assuming Committed System Peaking
Capacity is 400 MW; Cumulative Escalation for Fixed O&M has a
maximum value as of January 1 of the Year in which Buyer gives
its cancellation notice to Seller; and Actual Demand Availability
is 1.0), plus (ii) the product of .25 times the sum of the
Monthly Maximum Capacity Payments for each Month of the 1998
Summer Period (assuming Committed System Peaking Capacity is 200
MW; Cumulative Escalation for Fixed O&M has a maximum value as of
January 1 of the Year in which Buyer gives its cancellation
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notice to Seller; and Actual Demand Availability is 1.0), plus
(iii) the product of .25 times the sum of the Monthly Maximum
Capacity Payments for each Month of the 1999 Summer Period
(assuming Committed System Peaking Capacity is 200 MW; Cumulative
Escalation for Fixed O&M has a maximum value as of January 1 of
the Year in which Buyer gives its cancellation notice to Seller;
and Actual Demand Availability is 1.0).
3.4.3 Between June 1, 1996 and May 31, 1997 Buyer may
cancel its obligation to purchase Committed System Peaking
Capacity in the 1998 and 1999 Summer Periods upon prior written
notice to Seller and payment to Seller of a termination fee in
the amount of the sum of (i) the product of .50 times the sum of
the Monthly Maximum Capacity Payments for each Month of the 1998
Summer Period (assuming Committed System Peaking Capacity is
200 MW; Cumulative Escalation for Fixed O&M has a maximum value
as of January 1 of the Year in which Buyer gives its cancellation
notice to Seller; and Actual Demand Availability is 1.0), plus
(ii) the product of .25 times the sum of the Monthly Maximum
Capacity Payments for each Month of the 1999 Summer Period
(assuming Committed System Peaking Capacity is 200 MW; Cumulative
Escalation for Fixed O&M has a maximum value as of January 1 of
the Year in which Buyer gives its cancellation notice to Seller;
and Actual Demand Availability is 1.0).
3.4.4 Between June 1, 1997 and May 31, 1998 Buyer may
cancel its obligation to purchase Committed System Peaking
Capacity in the 1999 Summer Period upon prior written notice to
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Seller and payment to Seller of a termination fee in the amount
of .50 times the sum of the Monthly Maximum Capacity Payments for
each Month of the 1999 Summer Period (assuming Committed System
Peaking Capacity is 200 MW; Cumulative Escalation for Fixed O&M
has a maximum value as of January 1 of the Year in which Buyer
gives its cancellation notice to Seller; and Actual Demand
Availability is 1.0).
3.5 Calculation of Monthly Capacity Payments. Buyer shall
pay Seller for each Month of a Summer Period a Monthly Capacity
Payment which shall be calculated in accordance with Schedule A.
ARTICLE 4
ENERGY AVAILABILITY
4.1 Energy. During a Summer Period, Buyer will be entitled
to schedule energy in amounts up to the Committed System Peaking
Capacity for such Summer Period on an hourly basis subject only
to the dispatch restrictions set forth on Exhibit B attached
hereto and by this reference incorporated herein. All scheduling
times specified herein are based on established practices and
procedures between the Parties and are subject to change upon
mutual agreement of the Parties. All times specified herein
shall be prevailing Central Time unless otherwise agreed.
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4.2 Scheduling of Energy. Buyer shall provide Seller on or
before 1:30 p.m. of the Friday prior to the commencement of each
week during a Summer Period, an estimated schedule of capacity
usage for each hour of each Day of the following week.
4.3 Availability of Committed System Peaking Capacity.
Committed System Peaking Capacity shall be available to Buyer for
scheduling and dispatch during a Summer Period at a demand
availability rate of 98% twenty-four (24) hours a Day and seven
(7) Days a week.
4.4 Interconnection Points. Seller shall deliver the
energy scheduled by Buyer hereunder to one or more of the points
of delivery listed on that certain Exhibit A to the Interchange
Contract or such other delivery points on the Buyer's
transmission system as Seller may arrange from time to time with
the prior consent of Buyer, which such consent shall not be
unreasonably withheld.
4.5 Metering. Metering of Committed System Peaking
Capacity and energy associated therewith shall be done in
accordance with Article VI of the Interchange Contract, Delivery
Points and Metering.
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4.6 Calculation of Monthly Energy Payments. Buyer shall
pay Seller for each Month of a Summer Period a Monthly Energy
Payment which shall be calculated in accordance with Schedule B.
ARTICLE 5
BILLING AND COLLECTIONS
5.1 Capacity and Energy Billing and Payment.
5.1.1 By the (10th) tenth Day after each Month in a
Summer Period, Seller shall send Buyer an invoice stating the
Monthly Capacity Payment and Monthly Energy Payment for the
immediately previous Month. Each Monthly invoice shall contain a
statement explaining in reasonable detail how the invoice was
calculated pursuant to Sections 3.5 and 4.6.
5.1.2 All such invoices of capacity payments and
energy payments shall be due and payable by Buyer on or before
the twentieth (20th) Day after the postmark date of such invoice.
If any such twentieth (20th) Day is not a banking Day in either
Georgia or Florida, then payment shall be due on the next
succeeding common banking Day. Buyer shall make payment to
Seller in accordance with such invoices on or before the date due
in immediately available funds, through wire transfer of funds to
an account designated by Seller, or other means acceptable to
Seller. Remittance received by mail will be accepted without
interest charges if such payment is postmarked on or before the
due date.
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5.2 Billing Disputes and Final Accounting. If Buyer
reasonably questions or contests the amount of any payment
claimed by Seller to be due pursuant to this Agreement, Buyer
shall provide Seller with written notice of the disputed amount.
Buyer shall make payment to Seller of amounts not in dispute, but
may withhold disputed amounts until after the settlement of such
question or contest. Seller shall promptly review the amount of
any payment disputed by Buyer and shall notify Buyer of the
amount of any error and the amount of any payment that Buyer is
required to make in respect of such alleged error. Not later
than the twentieth (20th) Day after a billing dispute is resolved
and receipt by Buyer of notice from Seller as to the amount of
any payment that Buyer is required to make, Buyer shall make
payment to Seller in immediately available funds. Payments made
by the Buyer under this Section 5.2 shall include interest from
the date the original payment was due until the date such payment
together with interest is made, which interest shall accrue in
simple interest terms at the prime rate quoted on the date a
payment is due by Chemical Bank in New York, New York.
Buyer shall have until the end of one (1) year after its
receipt of any invoice to question or contest the correctness of
any charge or credit made to Buyer on such invoice. Seller shall
make available to Buyer at Seller's offices, after reasonable
notice, such books and records as were necessary for Seller to
calculate the Monthly Capacity Payment and the Monthly Energy
Payment shown on Seller's invoice to allow Buyer to verify the
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accuracy of the amounts billed to Buyer on Seller's invoice. If
an invoice has not been questioned or contested by Buyer during
this one (1) year period, such invoice shall become final for all
purposes and no longer subject to adjustment.
5.3 Interest. If Buyer or Seller does not make a payment
required by this Agreement when due, then interest shall be added
to the overdue payment from the date such overdue payment was due
until such overdue payment together with interest is paid, which
interest shall accrue in simple interest terms per annum at the
Penalty Interest Rate.
ARTICLE 6
OPERATION AND MAINTENANCE
6.1 General Standards. Seller shall construct, own,
operate and maintain the System Peaking Units and all components
of Seller's transmission system which directly affect Seller's
obligations to supply Committed System Peaking Capacity and to
deliver associated energy hereunder in a manner consistent with
Prudent Utility Practices and in accordance with operating and
interconnection procedures in existence from time to time between
Buyer and Seller.
6.2 Standard of Performance of Obligations. In connection
with the construction, operation and maintenance of the System
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Peaking Units and those components of Seller's transmission
system which directly affect Seller's obligations to supply
Committed System Peaking Capacity and to deliver associated
energy hereunder, Seller's standard of management and performance
during the Term shall be at least equal to the standard which it
would use if those System Peaking Units and components were
solely for the benefit of its own territorial customers.
6.3 Establishment of Operating Committee. Buyer and Seller
shall each appoint one representative ("Operating
Representative") to act for it in matters pertaining to detailed
operating arrangements for delivery of power hereunder, and the
Buyer and Seller may each appoint an alternate to act for it in
the absence of its Operating Representative. The two Operating
Representatives, or their alternates, comprise and shall be
referred to as the "Peaking Capacity Operating Committee".
Evidence of such appointment shall be given by written notice to
the other Party, and such appointments may be changed at any time
by similar notice.
6.4 Responsibilities of the Peaking Capacity Operating
Committee. The Peaking Capacity Operating Committee shall be
responsible for the following:
(1) Establishment of procedures for communications
with respect to energy availability and scheduling under Article
4.
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(2) Establishment of arrangements for metering,
telemetering, computer data link, telecommunications, data
acquisition, etc., associated with the supply of capacity and
delivery of energy hereunder.
(3) Establishment of control and operating procedures.
(4) Establishment of ramping levels and procedures for
the energy scheduled hereunder.
(5) Such other duties as may be conferred upon it by
mutual agreement of Buyer and Seller.
Both Buyer and Seller shall cooperate in providing to the Peaking
Capacity Operating Committee all information required in the
performance of its duties. If the Peaking Capacity Operating
Committee is unable to agree on any matter falling under its
jurisdiction, such matter shall be referred by the
representatives to their principals for decision. Failure of the
principals to agree on any matter referred to them shall not
constitute a basis for termination of this Agreement. All
decisions and agreements made by the Peaking Capacity Operating
Committee with respect to matters falling under its jurisdiction
shall be evidenced in writing.
6.5 Peaking Capacity Operating Committee Meetings. The
Peaking Capacity Operating Committee shall hold an annual meeting
at a time and place agreed upon by its members and review the
duties set forth herein. When requested by either Buyer or
Seller, the Peaking Capacity Operating Committee shall also meet
at the earliest opportunity for consideration of matters under
its jurisdiction.
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ARTICLE 7
FORCE MAJEURE
7.1 Definition of Force Majeure Event. For the purposes of
this Agreement, a "Force Majeure Event" as to a Party means any
occurrence, nonoccurrence or set of circumstances that is
unforeseeable and beyond the reasonable control of such Party,
including without limitation, flood, ice, earthquake, windstorm
or eruption; fire or explosion; invasion, civil war, strike,
commotion or insurrection; sabotage or vandalism; military or
usurped power; or act of God or of a public enemy; provided,
however, in no event shall the inability to meet a Legal
Requirement constitute a Force Majeure Event.
7.2 No Breach or Liability.
7.2.1 Seller shall not be responsible or liable for or
deemed in breach or default hereof because of any delay in
performance of, or inability to perform, its obligations
hereunder, including, without limitation, Seller's obligations
under Articles 3 and 4 hereof, due to or resulting from a Force
Majeure Event affecting Seller or to any act or omission of
Buyer.
7.2.2 Buyer shall not be responsible or liable for or
deemed in breach or default hereof because of any delay in
performance of, or inability to perform, its obligations
hereunder due to or resulting from a Force Majeure Event
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affecting Buyer or to any act or omission of Seller; provided,
however, that Buyer shall not be relieved of its obligation to
pay for Committed System Peaking Capacity and associated energy
actually received by Buyer hereunder.
7.3 Mitigation. Following the occurrence of a Force
Majeure Event, the affected Party shall:
7.3.1 give the other Party notice thereof, followed by
written notice if the first notice is not written, as promptly as
practicable after such Party becomes aware of such Force Majeure
Event, describing the particulars of such Force Majeure Event;
7.3.2 use its reasonable best efforts to remedy its
inability to perform as soon as practicable, provided that
neither Party shall be required to settle a strike on terms which
in the sole judgment of the affected Party are contrary to its
interests; and
7.3.3 when it is able to resume performance of its
obligations under this Agreement, give the other Party written
notice to that effect.
7.4 Suspension of Performance. The suspension of
performance due to a Force Majeure Event shall be of no greater
scope and of no larger duration than is required by such Force
Majeure Event. No Force Majeure Event shall extend this
Agreement beyond its stated Term.
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7.5 Extended Force Majeure Events. If any Force Majeure
Event delays a Party's performance for a time period greater than
sixty (60) Days, the Party not delayed by such Force Majeure
Event may terminate this Agreement, without further obligation,
or extend such period at its sole discretion if the Party delayed
by such Force Majeure Event is exercising due diligence in its
efforts to cure the Force Majeure Event.
7.6 Capacity and Energy Payments during Force Majeure
Events. Buyer shall be relieved of its obligation to make
Monthly Capacity Payments and Monthly Energy Payments during the
suspension of performance due to or resulting from a Force
Majeure Event affecting Seller to the extent capacity and energy
are unavailable to Buyer during such Force Majeure Event;
provided, however, that Buyer shall not be relieved of its
obligation to pay Seller for Committed System Peaking Capacity
and associated energy actually received by Buyer prior to and
during such Force Majeure Event.
ARTICLE 8
INABILITY TO MEET LEGAL REQUIREMENTS
8.1 Cure Period and Default. In the event Seller is unable
to perform its obligations hereunder due to its inability to meet
a Legal Requirement, Seller shall be excused from performance of
its obligation to supply Committed System Peaking Capacity and to
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deliver associated energy to Buyer through the Summer Period
which commences after the effectiveness of the Legal Requirement
prohibiting performance. Notwithstanding the foregoing sentence,
if within one (1) year of the effectiveness of the Legal
Requirement which renders Seller unable to perform its
obligations hereunder Seller is unable to demonstrate to the
reasonable satisfaction of Buyer that Seller is able to perform
its obligations for the remainder of the Term, Buyer may declare
Seller in default hereunder and pursue the remedies set forth in
Section 11.3. Buyer shall be relieved of its obligation to make
Monthly Capacity Payments and Monthly Energy Payments during the
suspension of performance due to Seller's inability to meet a
Legal Requirement to the extent capacity and energy are
unavailable to Buyer during such suspension of performance;
provided that Buyer shall not be relieved of its obligation to
pay Seller for Committed System Peaking Capacity and associated
energy actually received by Buyer prior to and during such
suspension of performance.
8.2 Mitigation. Following the effectiveness of a Legal
Requirement which renders Seller unable to perform its
obligations hereunder, Seller shall:
8.2.1 give Buyer notice as promptly as practicable
after Seller becomes aware that such Legal Requirement will
prohibit Seller from performing during the Summer Period
following the effectiveness of such Legal Requirement; and
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8.2.2 use its reasonable best efforts to remedy its
inability to perform as soon as practicable, including, without
limitation, the payment of all amounts necessary or appropriate
to remedy such inability.
ARTICLE 9
CHANGES TO LEGAL REQUIREMENTS
9.1 Changes to Legal Requirements. In the event that after
the date of this Agreement there are changes to Legal
Requirements, including, without limitation, changes to
environmental laws or regulations, or tax laws or regulations,
which cause Seller to incur additional costs in carrying out its
obligations under this Agreement, Seller agrees to pay all costs
associated with such changes to Legal Requirements and
acknowledges that the capacity and energy payments made by Buyer
to Seller pursuant to this Agreement shall not be altered as a
result of such changes to Legal Requirements. Notwithstanding
the foregoing sentence, Buyer agrees that changes to Legal
Requirements which result in increases in the fuel prices
reported in Platt's Oilgram Price Report (or such other fuel
index as may be agreed to by the Parties) shall be paid by Buyer
in accordance with the Monthly Energy Payment calculation set
forth on Schedule B.
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ARTICLE 10
REGULATORY APPROVALS
10.1 GPSC Approval.
10.1.1 GPSC approval of this Agreement shall be a
condition precedent to Buyer's and Seller's obligations to
purchase and sell capacity and energy hereunder.
10.1.2 Buyer shall use its reasonable best efforts to
obtain and maintain in effect during the Term an order of the
GPSC approving this Agreement and the recovery by Buyer from its
customers of all payments required or contemplated to be made to
Seller pursuant to Sections 3.5 and 4.6 of this Agreement.
Seller agrees to use its reasonable best efforts to assist Buyer
in obtaining GPSC approval and to comply with any reasonable
request for information of the GPSC pertaining to any aspect of
the power purchase; provided, however, that Seller shall have no
obligation to supply confidential, proprietary, privileged or
commercially sensitive information without assurances reasonably
satisfactory to Seller, in its sole discretion, that
confidentiality will be protected.
10.1.3 Notwithstanding the foregoing, if the GPSC has
not issued a final non-appealable order in form and substance
satisfactory to Buyer and Seller approving this Agreement within
twelve (12) months after the filing of this Agreement with the
GPSC, then either Party may thereafter terminate this Agreement
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upon prior written notice to the other Party, and neither Party
shall have any further liability to the other hereunder.
10.1.4 If at any time after the initial approval of
this Agreement and the rates charged hereunder, Buyer,
notwithstanding its obligations pursuant to Section 10.1.2, is
denied the authorization by the GPSC to recover from its
customers any or all of the payments made or contemplated to be
made to Seller pursuant to Sections 3.5 and 4.6 due to Buyer's
malfeasance or intentional or wilful misconduct, Seller may
terminate this Agreement upon prior written notice to Buyer, and
neither Party shall have any further liability to the other
hereunder. Buyer agrees to use its reasonable best efforts to
exhaust all opportunities for administrative and judicial appeal
of any such GPSC determination.
10.1.5 If at any time after the initial approval of
this Agreement and the rates charged hereunder, Buyer,
notwithstanding its obligations pursuant to Section 10.1.2, is
denied the authorization by the GPSC to recover from its
customers any or all of the payments made or contemplated to be
made to the Seller pursuant to Sections 3.5 and 4.6 for any
reason other than Buyer's malfeasance or intentional or wilful
misconduct, Buyer may, prospectively from the final effective
date of such GPSC determination, adjust the payments to be made
under this Agreement to the amount which Buyer is authorized to
recover from its customers; provided, however, that Seller shall
have the right to terminate this Agreement twelve (12) months
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after the effective date of the GPSC determination and any time
thereafter upon prior written notice to Buyer. Buyer agrees to
use its reasonable best efforts to exhaust all opportunities for
administrative and judicial appeal of any such GPSC
determination.
10.2 FERC Approval.
10.2.1 FERC acceptance for filing of this Agreement
and authorization for the recovery by Seller of all payments and
charges to be made by Buyer under this Agreement, without a
refund condition, shall be a condition precedent to Buyer's and
Seller's obligations to purchase and sell capacity and energy
hereunder.
10.2.2 If Seller fails to tender this Agreement for
filing with the FERC within ninety (90) Days after the execution
of this Agreement, Seller shall pay Buyer an amount of $45,000
per Day by wire transfer within seventy-two (72) hours after the
end of each such Day until this condition has been met.
10.2.3 Seller shall use its reasonable best efforts to
obtain an order of the FERC accepting for filing this Agreement
and authorizing the recovery by Seller of all payments specified
in Sections 3.5 and 4.6 of this Agreement. Buyer agrees to use
its reasonable best efforts to assist Seller in obtaining FERC
acceptance for filing of this Agreement and the authorization of
the rates and charges hereunder.
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10.2.4 Notwithstanding the foregoing, if the FERC has
not issued a final non-appealable order in form and substance
satisfactory to Buyer and Seller accepting for filing this
Agreement and authorizing the rates and charges hereunder within
twelve (12) months after tender for filing of this Agreement with
the FERC, then either Party may thereafter terminate this
Agreement upon prior written notice to the other Party, and
neither Party shall have any further liability to the other
hereunder.
10.2.5 The Parties agree that the results of the
formulae provided in Schedules A and B shall constitute the rates
to be charged for Committed System Peaking Capacity and
associated energy hereunder and are fixed for the Term, subject
to change only by FERC under Section 206 of the Federal Power
Act. If the FERC seeks to amend the rates for Committed System
Peaking Capacity and energy under this Agreement, the Parties
intend that the FERC will make any such changes only under the
"public interest" standard, as opposed to a "just and reasonable
and non-discriminatory" standard. If, after the initial
acceptance for filing of this Agreement and the authorization of
the rates charged hereunder, FERC issues a rule, regulation,
order or other requirement which causes a reduction in the
capacity and energy rates charged under this Agreement, Seller
agrees to be bound by such reduction and agrees to prospectively
adjust the capacity and energy rates charged under this Agreement
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<PAGE>
accordingly (subject however, to Seller's right to appeal such
rule, regulation, order or other requirement).
ARTICLE 11
DEFAULT AND REMEDIES
11.1 Default by Seller. The occurrence of any of the
following events at any time during the Term, unless caused by an
act or omission of Buyer or circumstances on Buyer's system or
unless due to or the result of a Force Majeure Event or an
excused suspension of performance due to Seller's inability to
meet a Legal Requirement pursuant to Section 8.1, shall
constitute an Event of Default by Seller:
11.1.1 Seller fails, following a prior request by
Buyer, to demonstrate to the reasonable satisfaction of Buyer
that Seller's electric system is capable of providing the
Committed System Peaking Capacity on any weekday from 12:00 noon
until 6:00 p.m. during the fourteen (14) Day period prior to the
Commencement of Service Date. If Buyer schedules energy during
this fourteen (14) Day period to assure demonstration of the
Committed System Peaking Capacity, Buyer shall pay for such test
energy at the rate set forth on Schedule B;
11.1.2 Seller fails for a period of five (5) or more
consecutive Days, during which time Buyer requests some positive
amount of energy for at least one (1) hour of each such Day, to
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<PAGE>
deliver energy in at least one (1) hour of such period in the
amount requested by Buyer.
11.1.3 Seller fails to manage, control, operate and
maintain the System Peaking Units and all components of Seller's
transmission system which directly affect Seller's ability to
supply Committed System Peaking Capacity and to deliver
associated energy hereunder in accordance with Prudent Utility
Practices and the provisions of this Agreement and fails to
promptly commence and diligently pursue action to cure such
default after receipt of written demand therefor from Buyer;
11.1.4 Seller fails to pay an amount due and payable
to Buyer in accordance with Section 10.2.2;
11.1.5 Any representation or warranty made by Seller
herein shall prove to be incorrect in any material respect when
made, unless (i) the fact, circumstance or condition that is the
subject of such representation or warranty is made true within
thirty (30) Days after notice thereof has been given to Seller by
Buyer and (ii) such cure removes any adverse effect on Buyer of
such fact, circumstance or condition being otherwise than as
first represented, or unless such fact, circumstance or condition
being otherwise than as first represented does not materially
adversely affect Buyer;
11.1.6 A court having jurisdiction shall enter (i) a
decree or order for relief in respect of Seller in an involuntary
case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law, or
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<PAGE>
(ii) a decree or order adjudicating Seller bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of Seller
under any applicable Federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of Seller or of any substantial part of
its affairs; provided, however, that if Seller can demonstrate
that the bankruptcy, insolvency or reorganization is not likely
to lead to a rejection of this Agreement and Seller can still
perform under this Agreement, then such event shall not be deemed
an Event of Default;
11.1.7 Seller shall (i) commence a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or any other case
or proceeding to be adjudicated a bankrupt or insolvent, or
(ii) consent to the entry of a decree or order for relief in
respect of Seller in any involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or
(iii) file any petition, answer or consent seeking reorganization
or relief under any applicable Federal or state law, or
(iv) consent to the filing of any petition or to the appointment
of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of Seller or
of any substantial part of its property, or (v) make an
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<PAGE>
assignment for the benefit of creditors, or (vi) be unable, or
admit in writing its inability, to pay its debts as they become
due, or (vii) take any action in furtherance of any of the
foregoing; provided, however, that if Seller can demonstrate that
the bankruptcy, insolvency or reorganization is not likely to
lead to a rejection of this Agreement and Seller can still
perform under this Agreement, then such event shall not be deemed
an Event of Default; and
11.1.8 Seller fails in the performance or observance
of any material obligation of Seller under this Agreement, other
than those obligations included in this Section 11.1, the
occurrence of which default materially and adversely affects the
ability of Seller or Buyer to perform its respective obligations
under this Agreement and fails to promptly commence and
diligently pursue action to cure such default after receipt of
written demand therefor from Buyer.
11.2 Default by Buyer. The occurrence of any of the
following events at any time during the Term, unless caused by an
act or omission of Seller or unless due to or the result of a
Force Majeure Event shall constitute an Event of Default by
Buyer:
11.2.1 Buyer shall fail to pay pursuant to this
Agreement any sum due and payable to Seller hereunder which
failure has continued for thirty (30) Days after notice thereof
has been given by Seller to Buyer;
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<PAGE>
11.2.2 Any representation or warranty made by Buyer
herein shall prove to be incorrect in any material respect when
made, unless (i) the fact, circumstance or condition that is the
subject of such representation or warranty is made true within
thirty (30) Days after notice thereof has been given to Buyer by
Seller and (ii) such cure removes any adverse effect on Seller of
such fact, circumstance or condition being otherwise than as
first represented, or unless such fact, circumstance or condition
being otherwise than as first represented does not materially
adversely affect Seller;
11.2.3 A court having jurisdiction shall enter (i) a
decree or order for relief in respect of Buyer in an involuntary
case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law, or
(ii) a decree or order adjudicating Buyer bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of Buyer
under any applicable Federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of Buyer or of any substantial part of
its affairs; provided, however, that if Buyer can demonstrate
that the bankruptcy, insolvency or reorganization is not likely
to lead to a rejection of this Agreement and Buyer can still
perform under this Agreement, then such event shall not be deemed
an Event of Default;
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<PAGE>
11.2.4 Buyer shall (i) commence a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or any other case
or proceeding to be adjudicated a bankrupt or insolvent, or
(ii) consent to the entry of a decree or order for relief in
respect of Buyer in any involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or
(iii) file any petition, answer or consent seeking reorganization
or relief under any applicable Federal or state law, or
(iv) consent to the filing of any petition or to the appointment
of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of Buyer or
of any substantial part of its property, or (v) make an
assignment for the benefit of creditors, or (vi) be unable, or
admit in writing its inability, to pay its debts as they become
due, or (vii) take any action in furtherance of any of the
foregoing; provided, however, that if Buyer can demonstrate that
the bankruptcy, insolvency or reorganization is not likely to
lead to a rejection of this Agreement and Buyer can still perform
under this Agreement, then such event shall not be deemed an
Event of Default;
11.2.5 Buyer fails in the performance or observance of
any material obligation of Buyer under this Agreement, other than
those obligations included in this Section 11.2 the occurrence of
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<PAGE>
which default materially and adversely affects the ability of
Buyer or Seller to perform its respective obligations under this
Agreement and fails to promptly commence and diligently pursue
action to cure such default after receipt of written demand
therefor from Seller.
11.3 Remedies. If an Event of Default has occurred and is
continuing, then the non-defaulting Party may, at its discretion,
take either or both of the following actions: (i) proceed by
appropriate proceedings, judicial, administrative or otherwise at
law, in equity or otherwise, to protect and enforce its rights,
to recover any damages to which it may be entitled, and to
enforce performance by the defaulting Party, including specific
performance of the defaulting Party's obligations hereunder; and
(ii) terminate this Agreement by giving written notice thereof to
the defaulting Party.
11.4 Suspension of Performance. In addition to the remedies
set forth above, whenever an Event of Default shall have occurred
and is continuing, the non-defaulting Party, to the extent
permitted by law, shall be entitled to suspend immediately its
performance under this Agreement until such Event of Default is
cured; provided, however, that Buyer shall not be relieved of its
obligation to pay Seller for Committed System Peaking Capacity
and associated energy actually received by Buyer (1) prior to
such Event of Default or (2) after such Event of Default if Buyer
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<PAGE>
has not exercised its right to terminate this Agreement as
provided in Section 11.3.
ARTICLE 12
REPRESENTATIONS, WARRANTIES AND COVENANTS
12.1 Representations, Warranties and Covenants of Seller.
Seller hereby makes the following representations and warranties
to Buyer:
12.1.1 Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Florida, that it is qualified to do business in the State of
Florida and that it has the power and authority to own its
properties, to carry on its business as now being conducted and
to enter into this Agreement and carry out the transactions
contemplated hereby and perform and carry out all covenants and
obligations on its part to be performed under and pursuant to
this Agreement.
12.1.2 The execution, delivery and performance by the
Seller of this Agreement have been duly authorized by all
necessary corporate action, and do not and will not require any
consent or approval of the Seller's Board of Directors or
shareholders.
12.1.3 The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and the
fulfillment of and compliance with the provisions of this
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<PAGE>
Agreement, do not and will not conflict with or constitute a
breach of or a default under, any of the terms, conditions or
provisions of any Legal Requirements, or any partnership
agreement, deed of trust, mortgage, loan agreement, other
evidence of indebtedness or any other agreement or instrument to
which the Seller is a party or by which it or any of its property
is bound, or result in a breach of or a default under any of the
foregoing.
12.1.4 This Agreement is the legal, valid and binding
obligation of the Seller enforceable in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws relating
to or affecting the enforcement of creditors' rights generally or
by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
12.1.5 There is no pending, or to the knowledge of
Seller, threatened action or proceeding affecting Seller before
any Governmental Authority which purports to affect the legality,
validity or enforceability of this Agreement as in effect on the
date hereof.
12.1.6 Seller covenants to Buyer that it will at all
times during the Term pay all charges, taxes, assessments and
fees which may be assessed upon Seller or Buyer by reason of the
sale or purchase of Committed System Peaking Capacity and
associated energy hereunder.
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<PAGE>
12.1.7 Seller covenants that as of the Commencement of
Service Date and for the Term, Seller shall (i) be in substantial
compliance with all Legal Requirements with respect to the
construction, ownership, operation and maintenance of the System
Peaking Units and all components of Seller's transmission system
which directly affect Seller's obligations to supply Committed
System Peaking Capacity and associated energy hereunder,
including without limitation, all relevant requirements to seek,
obtain, maintain, comply with and, as necessary, renew and modify
from time to time, any and all applicable certificates, licenses,
permits and government approvals and all applicable environmental
certificates, licenses, permits and approvals, and (ii) except as
provided in Section 9.1, with respect to fuel prices reported in
Platt's Oilgram Price Report, pay all costs, expenses, charges
and fees in connection therewith.
12.2 Representations and Warranties of Buyer. Buyer hereby
makes the following representations and warranties to Seller:
12.2.1 Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Georgia, has the corporate power and authority to own its
properties, to carry on its business as now being conducted and
to enter into this Agreement and carry out the transactions
contemplated hereby and perform and carry out all covenants and
obligations on its part to be performed pursuant to this
Agreement.
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<PAGE>
12.2.2 The execution, delivery and performance by the
Buyer of this Agreement have been duly authorized by all
necessary corporate action, and do not and will not require any
consent or approval of the Buyer's Board of Directors or
shareholders.
12.2.3 The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and the
fulfillment of the compliance with the provisions of this
Agreement will not conflict with or constitute a breach of or a
default under, any of the terms, conditions, or provisions of any
Legal Requirements, the certificate of incorporation or by-laws
of Buyer, or any contractual limitation, corporate restriction or
outstanding trust indenture, deed or trust, mortgage, loan
agreement, other evidence of indebtedness or any other agreement
or instrument to which Buyer is a party or by which it or any of
its property is bound or result in a breach of or default under
any of the foregoing.
12.2.4 This Agreement is the legal, valid and binding
obligation of the Buyer enforceable in accordance with its terms
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally or by
general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
12.2.5 There is no pending, or to the knowledge of
Buyer, threatened action or proceeding affecting Buyer before any
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<PAGE>
Governmental Authority which purports to affect the legality,
validity or enforceability of this Agreement as in effect on the
date hereof.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Interrelationship with Interchange Contract.
13.1.1 It is recognized by the Parties that the
Interchange Contract as in effect from time to time between the
Parties governs the interconnected operations of the Parties
necessary for conduct of the transactions contemplated hereunder.
To the extent not inconsistent herewith, the Interchange
Contract, including any amendments thereto, shall govern the
operations of the Parties hereunder.
13.1.2 In the event such Interchange Contract is
terminated or cancelled during the Term, the provisions of such
Interchange Contract which are essential for the continuation of
transactions hereunder shall survive the termination or
cancellation of such Interchange Contract.
13.1.3 The Parties acknowledge and agree that the
following provisions of the Interchange Contract are inconsistent
with provisions set forth in this Agreement and that the terms
and conditions of this Agreement which address the topics of the
listed provisions shall govern the operation of the Parties
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<PAGE>
hereunder and that the listed provisions shall not apply to this
Agreement:
Article IV Services to be Rendered.
Article VIII Billing and Payment.
Section 10.2 Force Majeure.
Section 10.4 Regulation.
Section 10.8 Tax Adjustment.
13.2 Assignment and Assumption of Obligations. Neither
Party shall assign this Agreement or any portion thereof without
the prior written consent of the other Party (except that Buyer
may assign this Agreement or any portion thereof to any Affiliate
of the Buyer without the consent of Seller); but provided,
further that: (i) any assignee shall expressly assume assignor's
obligations hereunder and (ii) unless expressly approved by the
other Party to this Agreement, which approval shall not be
unreasonably withheld, no assignment, whether or not consented
to, shall relieve the assignor of its obligations hereunder in
the event its assignee fails to perform.
13.3 No Consequential Damages. Notwithstanding any other
provision of this Agreement, neither Buyer nor Seller shall be
liable to the other for special, indirect, incidental or
consequential damages under, arising out of, due to or in
connection with its performance or non-performance of this
Agreement or any of its obligations herein, whether based on
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<PAGE>
contract, tort (including without limitation negligence), strict
liability, warranty or otherwise.
13.4 Amendments. This Agreement may be amended by and only
by a written instrument duly executed by each of Buyer and
Seller, which has received all approvals of Governmental
Authorities of competent jurisdiction necessary for the
effectiveness thereof.
13.5 Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the Parties and their
respective successors and assigns.
13.6 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all
of which shall constitute but one and the same instrument.
13.7 Notices. Where written notice is required by this
Agreement, such notice shall be in writing and shall be deemed
given (i) when mailed by United States registered or certified
mail, postage prepaid, return receipt requested, addressed as
follows:
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<PAGE>
To Seller: Florida Power Corporation
6565 38th Avenue North
St. Petersburg, Florida 33710
Attn: Director, Energy Control
To Buyer: Bulk Power Markets
Georgia Power Company
333 Piedmont Avenue
Atlanta, Georgia 30308
Attn: Manager, Purchased Power
or to such other address as may be designated by the Parties; or
(ii) when sent by telecopy, provided such telecopy is confirmed
by mailing a hard copy confirmation, as provided in clause (i)
above, within one business Day after the sending of the telecopy.
13.8 Entire Agreement. This Agreement constitutes the
entire understanding between the Parties as to the subject matter
hereof and supersedes any previous agreements between the Parties
relating to such subject matter. The Parties have entered into
this Agreement in reliance upon the representations and mutual
undertakings contained herein and not in reliance upon any oral
or written representations or information provided by one Party
to the other Party not contained or incorporated herein.
13.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia.
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<PAGE>
13.10 Waiver. The failure of either Party to enforce at
any time any of the provisions of this Agreement, or to acquire
at any time performance by the other Party of any of the
provisions hereof, shall in no way be construed to be a waiver of
such provisions, nor in any way to affect the validity of this
Agreement or any part hereof, or the right of such Party
hereafter to enforce every such provision. No modification or
waiver of all or any part of this Agreement shall be valid unless
reduced to a writing, which expressly states that the Parties
hereby agree to a waiver or modification as applicable, and is
signed by both Parties.
13.11 Headings. The headings contained in this
Agreement are used solely for convenience and do not constitute a
part of the Agreement between the Parties hereto, nor should they
be used to aid in any manner in the construction of this
Agreement.
13.12 Third Parties. This Agreement is intended solely
for the benefit of the Parties hereto. Except as otherwise
expressly provided herein, nothing in this Agreement shall be
construed to create any duty to, or standard of care with
reference to, or any liability to, any person not a Party to this
Agreement.
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<PAGE>
13.13 Agency. This Agreement shall not be interpreted
or construed to create an association, joint venture, or
partnership between the Parties or to impose any partnership
obligation or liability upon either Party. Neither Party shall
have any right, power or authority to enter into any agreement or
undertaking for, or act on behalf of, or to act as or be an agent
or representative of, or to otherwise bind, the other Party.
13.14 Severability. Subject only to the right of Buyer
or Seller to terminate this Agreement pursuant to Sections 10.1.3
and 10.2.4, if any term or provision of this Agreement or the
application thereof to any person, entity, or circumstance shall
to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to
persons, entities or circumstances other than those as to which
it is invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
[Remainder of page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the undersigned Parties hereto have duly
executed this Agreement as of the date first above written.
GEORGIA POWER COMPANY
"Buyer"
_________________________________
By:______________________________
Title:________________________
_________________________________
Attest:__________________________
Title:________________________
[SEAL]
FLORIDA POWER CORPORATION
"Seller"
___________________________________
By:________________________________
Title:_____________________________
___________________________________
Attest:____________________________
Title:___________________________
[SEAL]
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<PAGE>
EXHIBIT A
SYSTEM PEAKING UNITS
Nominal Net
Name of Facility Number of Units Summer Ratings
Intercession City 10 580
Debary 10 580
Bayboro 4 172
Suwannee 3 153
Bartow 4 176
Turner 4 148
Avon Park 2 44
Higgins 4 96
Pt. St. Joe 1 13
Rio Pinar 1 13
Seller reserves the unilateral right to add to, or delete from, the
above list of System Peaking Units or parts of System Peaking Units,
provided that the total generating capacity of the System Peaking
Units shall never be less than 1,900 MW.
<PAGE>
EXHIBIT B
DISPATCH CHARACTERISTICS OF SYSTEM PEAKING CAPACITY
Block Loading Size: 25 MW
Time required between Block Loading: 0 minutes
Notice Required to Meet Minimum Load from Cold Start: 6 minutes
Notice Required to Meet Minimum if
Operated Previous Day: 6 minutes
Time Required to go from Minimum to Maximum Load: 7 minutes
Minimum Down Time: 0 minutes
Minimum Up Time: 0 minutes
The System Peaking Capacity does not have to come to
full output before moving to minimum
Existence of Automatic Generation Control
Ramping levels and procedures as determined by the Peaking
Capacity Operating Committee <PAGE>
Exhibit 24(a)
January 17, 1994
Edward L. Addison, A. W. Dahlberg, W. L. Westbrook,
Tommy Chisholm and Wayne Boston
Dear Sirs:
The Southern Company proposes to file or join in the filing
of statements under the Securities Exchange Act of 1934, as
amended, with the Securities and Exchange Commission with respect
to the following: (1) the filing of this Company's Annual Report
on Form 10-K for the year ended December 31, 1993, and (2) the
filing of Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K during 1994.
The Southern Company also proposes to file post-effective
amendments to registration statements under the Securities Act of
1933, as amended, with the Securities and Exchange Commission
with respect to certain previously filed registration statements.
These post-effective amendments, in each case, would be required
in order to increase the amount of remaining shares covered by
such registration statements as the result of the stock split (in
the form of a stock distribution) of shares of The Southern
Company's common stock. The registration statements affected
include File Nos. 2-78617, 33-23152, 33-23153, and 33-30171.
The Southern Company and the undersigned directors and
officers of said Company, individually as a director and/or as an
officer of the Company, hereby make, constitute and appoint each
<PAGE>
of you our true and lawful Attorney for each of us and in each of
our names, places and steads to sign and cause to be filed with
the Securities and Exchange Commission in connection with the
<PAGE>
- 2 -
foregoing said Annual Report on Form 10-K and any appropriate
amendment or amendments thereto and any necessary exhibits, said
Quarterly Reports on Form 10-Q and any necessary exhibits, any
Current Reports on Form 8-K and any necessary exhibits, and said
post-effective amendments to said registration statements, to be
accompanied (to the extent required) by a prospectus or
prospectuses and any appropriately amended or supplemented
prospectus or prospectuses and any necessary exhibits.
Yours very truly,
THE SOUTHERN COMPANY
By /s/A. W. Dahlberg
A. W. Dahlberg, President
<PAGE>
- 3 -
/s/Edward L. Addison /s/William A. Parker, Jr.
/s/W. P. Copenhaver /s/William J. Rushton, III
/s/A. W. Dahlberg /s/Gloria M. Shatto
/s/Paul J. DeNicola /s/Herbert Stockham
/s/Jack Edwards /s/Louis J. Willie
/s/H. Allen Franklin /s/W. L. Westbrook
/s/L. G. Hardman, III /s/Tommy Chisholm
/s/Elmer B. Harris /s/W. Dean Hudson
/s/John M. McIntosh /s/William A. Maner, III
/s/Earl D. McLean, Jr.
<PAGE>
Extract from minutes of meeting of the board of directors of The
Southern Company.
- - - - - - - - - -
RESOLVED: That for the purpose of signing the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993, 1994 Form 10-Q's and Form 8-K's and the
amendments to each of the Company's existing registration
statements hereinbefore authorized and of remedying any
deficiencies with respect thereto by appropriate amendment
or amendments, this Company, the members of its board of
directors, and its officers, are authorized to give their
several powers of attorney to Edward L. Addison, A. W.
Dahlberg, W. L. Westbrook, Tommy Chisholm, and Wayne Boston.
- - - - - - - - - -
The undersigned officer of The Southern Company does
hereby certify that the foregoing is a true and correct copy of
resolution duly and regularly adopted at a meeting of the board
of directors of The Southern Company, duly held on January 17,
1994, at which a quorum was in attendance and voting throughout,
and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 25, 1994 THE SOUTHERN COMPANY
By /s/Tommy Chisholm
Tommy Chisholm
Secretary
Exhibit 24(b)
February 25, 1994
W. Larry Westbrook and E. Wayne Boston
64 Perimeter Center East
Atlanta, Georgia 30346
Dear Sirs:
Alabama Power Company proposes to file with the Securities
and Exchange Commission, under the Securities Exchange Act of
1934, (1) its Annual Report on Form 10-K for the year ended
December 31, 1993, and (2) its quarterly reports on Form 10-Q
during 1994.
Alabama Power Company and the undersigned directors and
officers of said Company, individually as a director and/or as an
officer of the Company, hereby make, constitute and appoint W. L.
Westbrook and Wayne Boston our true and lawful Attorneys for each
of us and in each of our names, places and steads to sign and
cause to be filed with the Securities and Exchange Commission in
connection with the foregoing said Annual Report on Form 10-K,
quarterly reports on Form 10-Q, and any appropriate amendment or
amendments thereto and any necessary exhibits.
Yours very truly,
ALABAMA POWER COMPANY
By /s/Elmer B. Harris
Elmer B. Harris, President
<PAGE>
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/s/Edward L. Addison /s/Gerald H. Powell
/s/Whit Armstrong /s/Robert D. Powers
/s/Philip E. Austin /s/John W. Rouse
______________________________
/s/Margaret A. Carpenter William J. Rushton, III
/s/Peter V. Gregerson, Sr. /s/James H. Sanford
/s/Bill M. Guthrie /s/John Cox Webb, IV
/s/Elmer B. Harris /s/Louis J. Willie
/s/Crawford T. Johnson, III /s/John W. Woods
/s/Carl E. Jones, Jr. /s/David L. Whitson
______________________________
/s/Wallace D. Malone, Jr. William B. Hutchins, III
/s/William V. Muse /s/Art P. Beattie
/s/John T. Porter /s/Charles D. McCrary
<PAGE>
Extract from minutes of meeting of the board of directors of
Alabama Power Company.
- - - - - - - - - -
RESOLVED: That for the purpose of signing and filing
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, Alabama Power Company's
annual report on Form 10-K for the year ended December 31,
1993, and of remedying any deficiencies with respect thereto
by appropriate amendment or amendments, and also filing
quarterly reports on Form 10-Q, Alabama Power Company, the
members of its Board of Directors, and its officers are
authorized to give their several powers of attorney to W.
Larry Westbrook and E. Wayne Boston, in substantially the
form of power of attorney presented to this meeting.
- - - - - - - - - -
The undersigned officer of Alabama Power Company does
hereby certify that the foregoing is a true and correct copy of
resolution duly and regularly adopted at a meeting of the board
of directors of Alabama Power Company, duly held on February 25,
1994, at which a quorum was in attendance and voting throughout,
and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 25, 1994 ALABAMA POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
Exhibit 24(c)
February 16, 1994
W. L. Westbrook and Wayne Boston
Dear Sirs:
Georgia Power Company proposes to file or join in the filing
of statements under the Securities Exchange Act of 1934 with the
Securities and Exchange Commission with respect to the following:
(1) the filing of its Annual Report on Form 10-K for the year
ended December 31, 1993, and (2) the filing of its quarterly
reports on Form 10-Q during 1994.
Georgia Power Company and the undersigned directors and
officers of said Company, individually as a director and/or as an
officer of the Company, hereby make, constitute and appoint each
of you our true and lawful Attorney for each of us and in each of
our names, places and steads to sign and cause to be filed with
the Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on
Form 10-Q and any appropriate amendment or amendments thereto and
any necessary exhibits.
Yours very truly,
GEORGIA POWER COMPANY
By /s/H. Allen Franklin
H. Allen Franklin
President and Chief Executive
Officer
<PAGE>
- 2 -
______________________________
/s/Edward L. Addison William A. Parker, Jr.
/s/Bennett A. Brown /s/G. Joseph Prendergast
/s/William P. Copenhaver /s/Herman J. Russell
/s/A. W. Dahlberg /s/Gloria M. Shatto
/s/William A. Fickling, Jr. /s/Robert Strickland
/s/H. Allen Franklin /s/William Jerry Vereen
/s/L. G. Hardman, III /s/Thomas R. Williams
/s/Warren Y. Jobe /s/C. B. Harreld
/s/James R. Lientz, Jr. /s/Judy M. Anderson
<PAGE>
Extract from minutes of meeting of the board of directors of
Georgia Power Company.
- - - - - - - - - -
RESOLVED: That for the purpose of signing reports
under the Securities Exchange Act of 1934 to be filed with
the Securities and Exchange Commission with respect to (a)
the filing of the Company's Annual Report on Form 10-K for
the year ended December 31, 1993, and (b) quarterly filings
on Form 10-Q during 1994; and of remedying any deficiencies
with respect thereto by appropriate amendment or amendments,
this Company and the members of its Board of Directors
authorize their several powers of attorney to W. L.
Westbrook, John F. Young and Wayne Boston.
- - - - - - - - - -
The undersigned officer of Georgia Power Company does
hereby certify that the foregoing is a true and correct copy of
resolution duly and regularly adopted at a meeting of the board
of directors of Georgia Power Company, duly held on February 16,
1994, at which a quorum was in attendance and voting throughout,
and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 25, 1994 GEORGIA POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
Exhibit 24(d)
February 25, 1994
Mr. W. L. Westbrook Mr. Wayne Boston
Southern Company Services, Inc. Southern Company Services, Inc.
64 Perimeter Center East 64 Perimeter Center East
Atlanta, Georgia 30346 Atlanta, Georgia 30346
Dear Sirs:
Re: Forms 10-K and 10-Q
Gulf Power Company proposes to file or join in the filing of
statements under the Securities Exchange Act of 1934 with the
Securities and Exchange Commission with respect to the following:
(1) its Annual Report on Form 10-K for the year ended
December 31, 1993, and (2) its 1994 quarterly reports on Form
10-Q.
Gulf Power Company and the undersigned Directors and
Officers of said Company, individually as a Director and/or as an
Officer of the Company, hereby make, constitute and appoint each
of you our true and lawful Attorney for each of us and in each of
our names, places and steads to sign and cause to be filed with
the Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on
Form 10-Q and any appropriate amendment or amendments thereto and
any necessary exhibits.
Sincerely,
/s/Douglas L. McCrary
Douglas L. McCrary
Chairman of the Board and
Chief Executive Officer
<PAGE>
- 2 -
/s/Reed Bell /s/D. L. McCrary
/s/Travis J. Bowden /s/C. Walter Ruckel
/s/Paul J. DeNicola /s/Joseph K. Tannehill
/s/Fred C. Donovan /s/Arlan E. Scarbrough
/s/W. D. Hull, Jr. /s/Warren E. Tate
<PAGE>
Extract from minutes of meeting of the board of directors of Gulf
Power Company.
- - - - - - - - - -
RESOLVED, That for the purpose of signing the
statements under the Securities Exchange Act of 1934 to be
filed with the Securities and Exchange Commission with
respect to the filing of this Company's Annual Report on
Form 10-K for the year ended December 31, 1993, and its 1994
quarterly reports on Form 10-Q, and of remedying any
deficiencies with respect thereto by appropriate amendment
or amendments (both before and after such statements become
effective), this Company, the members of its Board of
Directors, and its Officers, are authorized to give their
several powers of attorney to W. L. Westbrook and Wayne
Boston.
- - - - - - - - - -
The undersigned officer of Gulf Power Company does
hereby certify that the foregoing is a true and correct copy of
resolution duly and regularly adopted at a meeting of the board
of directors of Gulf Power Company, duly held on February 25,
1994, at which a quorum was in attendance and voting throughout,
and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 25, 1994 GULF POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
Exhibit 24(e)
February 24, 1994
W. L. Westbrook, John F. Young and Wayne Boston
Dear Sirs:
Mississippi Power Company proposes to file or join in the
filing of statements under the Securities Exchange Act of 1934
with the Securities and Exchange Commission with respect to the
following: (1) the filing of its Annual Report on Form 10-K for
the year ended December 31, 1993, and (2) the filing of its
quarterly reports on Form 10-Q during 1994.
Mississippi Power Company and the undersigned directors and
officers of said Company, individually as a director and/or as an
officer of the Company, hereby make, constitute and appoint each
of you our true and lawful Attorney for each of us and in each of
our names, places and steads to sign and cause to be filed with
the Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on
Form 10-Q and any appropriate amendment or amendments thereto and
any necessary exhibits.
Yours very truly,
MISSISSIPPI POWER COMPANY
By /s/David M. Ratcliffe
David M. Ratcliffe
President
<PAGE>
- 2 -
/s/Paul J. DeNicola /s/Gerald J. St. Pe'
/s/Edwin E. Downer /s/Leo W. Seal, Jr.
/s/Robert S. Gaddis /s/N. Eugene Warr
/s/Walter H. Hurt, III /s/Thomas A. Fanning
/s/Aubrey K. Lucas /s/W. E. Gilmore
/s/Earl D. McLean, Jr. /s/Frances V. Turnage
/s/David M. Ratcliffe
<PAGE>
Extract from minutes of meeting of the board of directors of
Mississippi Power Company.
- - - - - - - - - -
RESOLVED: That the members of this Company's Board of
Directors and its officers are authorized to give their
several powers of attorney to W. L. Westbrook, John F. Young
and Wayne Boston for the purpose of signing the statements
under the Securities Exchange Act of 1934 to be filed with
the Securities and Exchange Commission with respect to the
filing of the Company's Annual Report on Form 10-K for the
year ended December 31, 1993, and the filing of this
Company's quarterly reports to the Securities and Exchange
Commission on Form 10-Q for the year 1994.
- - - - - - - - - -
The undersigned officer of Mississippi Power Company
does hereby certify that the foregoing is a true and correct copy
of resolution duly and regularly adopted at a meeting of the
board of directors of Mississippi Power Company, duly held on
February 24, 1994, at which a quorum was in attendance and voting
throughout, and that said resolution has not since been rescinded
but is still in full force and effect.
Dated March 25, 1994 MISSISSIPPI POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
Exhibit 24(f)
February 16, 1994
W. L. Westbrook, John F. Young and Wayne Boston
Dear Sirs:
Savannah Electric and Power Company proposes to file with
the Securities and Exchange Commission, under the Securities
Exchange Act of 1934, (1) its Annual Report on Form 10-K for the
year ended December 31, 1993, and (2) its quarterly reports on
Form 10-Q during 1994.
Savannah Electric and Power Company and the undersigned
directors and officers of said Company, individually as a
director and/or as an officer of the Company, hereby make,
constitute and appoint W. L. Westbrook, John F. Young and Wayne
Boston our true and lawful Attorneys for each of us and in each
of our names, places and steads to sign and cause to be filed
with the Securities and Exchange Commission in connection with
the foregoing said Annual Report on Form 10-K, quarterly reports
on Form 10-Q, and any appropriate amendment or amendments thereto
and any necessary exhibits.
Yours very truly,
SAVANNAH ELECTRIC AND POWER COMPANY
By /s/Arthur M. Gignilliat, Jr.
Arthur M. Gignilliat, Jr.
President and
Chief Executive Officer
<PAGE>
- 2 -
/s/Helen Q. Artley /s/Robert B. Miller, III
/s/Paul J. DeNicola /s/James M. Piette
/s/Brian R. Foster /s/Arnold M. Tenenbaum
/s/Arthur M. Gignilliat, Jr. /s/Frederick F. Williams, Jr.
/s/Walter D. Gnann /s/K. R. Willis
/s/John M. McIntosh
<PAGE>
Extract from minutes of meeting of the board of directors of
Savannah Electric and Power Company.
- - - - - - - - - -
RESOLVED: That for the purpose of signing statements
under the Securities Exchange Act of 1934 to be filed with
the Securities and Exchange Commission with respect to (a)
the filing of this Company's Annual Report on Form 10-K for
the year ended December 31, 1993, and (b) quarterly reports
on Form 10-Q during 1994; and of remedying any deficiencies
with respect thereto by appropriate amendment or amendments,
this Company, the members of its Board of Directors, and its
officers, are authorized to give their several powers of
attorney to W. L. Westbrook, John F. Young, and Wayne
Boston.
- - - - - - - - - -
The undersigned officer of Savannah Electric and Power
Company does hereby certify that the foregoing is a true and
correct copy of resolution duly and regularly adopted at a
meeting of the board of directors of Savannah Electric and Power
Company, duly held on February 16, 1994, at which a quorum was in
attendance and voting throughout, and that said resolution has
not since been rescinded but is still in full force and effect.
Dated March 25, 1994 SAVANNAH ELECTRIC AND POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
