<PAGE>1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 2 - 26720
LOUISVILLE GAS AND ELECTRIC COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Kentucky 61 - 0264150
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 West Main Street, P.O. Box 32010, Louisville, KY 40232
- ---------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(502) 627-2000
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(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
-- --
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
21,294,223 shares, without par value, as of July 31, 1994, all of which were
- ----------------------------------------------------------------------------
held by LG&E Energy Corp.
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<PAGE>2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF INCOME
(Thousands of $)
The following statements of income include all normal recurring adjustments
and accruals which are, in the opinion of the Company, necessary to present
a fair statement of the results for the periods shown.
Three Months Ended Six Months Ended
June 30 June 30
------------------- -----------------
1994 1993 1994 1993
---- ---- ---- ----
OPERATING REVENUES
Electric....................... $143,272 $137,176 $266,589 $261,026
Gas............................ 29,770 29,730 126,131 114,511
------- ------- ------- -------
Total operating revenues... 173,042 166,906 392,720 375,537
------- ------- ------- -------
OPERATING EXPENSES
Fuel for electric generation... 36,570 35,460 69,803 69,176
Power purchased................ 3,914 4,311 7,301 8,467
Gas supply expenses............ 18,447 19,487 85,846 76,849
Other operation expenses....... 34,527 32,783 69,880 66,221
Maintenance.................... 13,561 13,442 26,836 24,566
Non-recurring charges (Note 2). - - 38,613 -
Depreciation and amortization.. 20,633 19,889 41,266 39,763
Federal and State income
taxes - current............ 10,294 6,936 19,972 15,622
Deferred income taxes - net.... 2,548 3,449 (9,994) 7,702
Investment tax credit - net.... (1,189) (1,197) (2,378) (2,393)
Property and other taxes....... 3,864 3,951 9,100 8,415
------- ------- ------- -------
Total operating expenses... 143,169 138,511 356,245 314,388
------- ------- ------- -------
NET OPERATING INCOME............... 29,873 28,395 36,475 61,149
Other Income and (Deductions)
(Note 3)......................... 1,477 (133) (7,957) 44
Interest Charges................... 10,714 11,696 21,208 23,841
------- ------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING PRINCIPLE. 20,636 16,566 7,310 37,352
Cumulative Effect of Change in
Accounting for Post-Employment
Benefits, Net of Income Taxes
of $2,280 (Note 4)............... - - (3,369) -
------- ------- ------- -------
NET INCOME......................... 20,636 16,566 3,941 37,352
Preferred Stock Dividends.......... 1,380 1,668 2,758 3,255
------- ------- ------- -------
NET INCOME AVAILABLE FOR
COMMON STOCK..................... $ 19,256 $ 14,898 $ 1,183 $ 34,097
------- ------- ------- -------
------- ------- ------- -------
<PAGE>3
LOUISVILLE GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Thousands of $)
ASSETS
June 30, December 31,
1994 1993
-------- ------------
UTILITY PLANT
At Original Cost.......................... $2,497,341 $2,464,101
Less: Reserve for depreciation............ 859,387 823,141
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1,637,954 1,640,960
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OTHER PROPERTY AND INVESTMENTS -
less reserve.............................. 35,320 22,067
--------- ---------
CURRENT ASSETS
Cash and temporary cash investments....... 31,710 44,105
Accounts receivable - less reserve........ 92,961 104,397
Materials and supplies - at average cost
Fuel (predominantly coal)............. 15,071 12,075
Gas stored underground................ 12,471 33,370
Other................................. 38,721 40,357
Prepayments............................... 1,266 360
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192,200 234,664
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DEFERRED DEBITS AND OTHER ASSETS
Unamortized debt expense.................. 24,105 24,698
Accumulated deferred income taxes......... 78,636 58,675
Regulatory asset - income taxes........... 39,124 39,651
Other..................................... 23,810 52,195
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165,675 175,219
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$2,031,149 $2,072,910
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--------- ---------
<PAGE>4
LOUISVILLE GAS AND ELECTRIC COMPANY
CAPITAL AND LIABILITIES
(Thousands of $)
June 30, December 31,
1994 1993
-------- ------------
CAPITALIZATION
COMMON STOCK, without par value -
Authorized 75,000,000 shares;
outstanding 21,294,223 shares......... $ 425,170 $ 425,170
COMMON STOCK EXPENSE...................... (836) (836)
UNREALIZED LOSS ON MARKETABLE SECURITIES
Net of Income Taxes of $635 (Note 5).... (953) -
RETAINED EARNINGS......................... 178,586 194,903
--------- ---------
601,967 619,237
CUMULATIVE PREFERRED STOCK................ 116,716 116,716
LONG-TERM DEBT............................ 662,870 662,879
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1,381,553 1,398,832
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CURRENT LIABILITIES
Accounts payable.......................... 75,469 93,551
Dividends declared........................ 1,380 18,878
Accrued taxes............................. 1,210 9,494
Accrued interest.......................... 13,189 12,864
Other..................................... 11,846 11,127
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103,094 145,914
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DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes......... 345,935 340,235
Investment tax credit,
in process of amortization............ 89,194 91,572
Customers' advances for construction...... 7,788 7,384
Regulatory liability - income taxes....... 47,582 46,528
Other..................................... 56,003 42,445
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546,502 528,164
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$2,031,149 $2,072,910
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<PAGE>5
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Thousands of $)
Six Months Ended June 30
------------------------
1994 1993
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................... $ 3,941 $ 37,352
Items not requiring cash currently:
Depreciation and amortization............ 41,266 39,996
Deferred income taxes - net.............. (12,268) (3,891)
Investment tax credit - net.............. (2,378) (10,659)
Cumulative effect of change in
accounting principle................... 3,369 -
Non-recurring charges.................... 38,613 -
Other.................................... 4,742 2,549
(Increase) decrease in certain net
current assets:
Accounts receivable...................... 11,436 7,154
Materials and supplies................... 19,539 27,708
Accounts payable......................... (18,082) (14,670)
Accrued taxes............................ (8,284) 10,890
Accrued interest......................... 325 (337)
Prepayments and other.................... (187) 1,198
Other........................................ (4,279) 597
------ ------
Net cash provided from
operating activities................... 77,753 97,887
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CASH FLOWS FROM INVESTING ACTIVITIES
Sale of capital asset........................ - 91,076
Long-term investment in securities........... (14,841) (363)
Construction expenditures.................... (37,551) (43,481)
------ ------
Net cash (used for) provided from
investing activities................... (52,392) 47,232
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of preferred stock.................. - 24,741
Redemption of preferred stock................ - (25,557)
Retirement of pollution control bonds........ - (27,427)
Decrease in notes payable.................... - (8,000)
Payment of dividends......................... (37,756) (36,608)
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Net cash used for financing activities... (37,756) (72,851)
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<PAGE>6
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Thousands of $)
Six Months Ended June 30
------------------------
1994 1993
---- ----
NET (DECREASE) INCREASE IN CASH AND
TEMPORARY CASH INVESTMENTS................... $(12,395) $ 72,268
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF PERIOD.......................... 44,105 946
------ ------
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF PERIOD................................ $ 31,710 $ 73,214
------ ------
------ ------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes............................. $ 25,864 $ 25,378
Interest on borrowed money............... 20,183 23,475
For the purposes of this statement, all temporary cash investments purchased
with a maturity of three months or less are considered cash equivalents.
<PAGE>7
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF RETAINED EARNINGS
(Thousands of $)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
Balance at beginning of period........ $159,330 $181,366 $194,903 $178,667
Add net income........................ 20,636 16,566 3,941 37,352
------- ------- ------- -------
179,966 197,932 198,844 216,019
------- ------- ------- -------
Deduct: Cash dividends declared
on stock -
5% cumulative preferred..... 269 269 538 538
7.45% cumulative preferred.. 400 399 799 799
$8.90 cumulative preferred.. - 556 - 1,112
Auction rate cumulative
preferred................. 344 305 687 667
$5.875 cumulative preferred. 367 139 734 139
Common...................... - 16,500 17,500 33,000
Preferred stock redemption
expense..................... - 818 - 818
------- ------- ------- -------
1,380 18,986 20,258 37,073
------- ------- ------- -------
Balance at end of period.............. $178,586 $178,946 $178,586 $178,946
------- ------- ------- -------
------- ------- ------- -------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. The financial statements included herein have been prepared by Louisville
Gas and Electric Company (the "Company" or "LG&E"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year 1993.
2. Effective January 1, 1994, LG&E's parent company, LG&E Energy Corp.,
realigned its business to reflect its outlook for rapidly emerging
competition in all segments of the energy services industry. Under the
realignment, a national business unit, LG&E Energy Services, was formed
to develop and manage all of its utility and non-utility electric power
generation and concentrate on the marketing and brokering of wholesale
electric power on a regional and national basis. LG&E will increase its
focus on customer service and develop more customer options as the local
utility industry becomes more competitive in the future.
<PAGE>8
In addition to the realignment, LG&E has re-evaluated its regulatory
strategy which previously had been to seek full recovery of certain costs
deferred in accordance with prior precedents established by the Public
Service Commission of Kentucky. LG&E completed its study in the first
quarter of 1994 and decided to write off several non-recurring items
amounting to approximately $38.6 million before-tax. While LG&E continues
to believe that it could have reasonably expected to recover these costs
in future rate proceedings before the Public Service Commission of
Kentucky, LG&E decided to deduct these expenses currently and not seek
recovery for such expenses in future rates due to increasing competitive
pressures and the existing and anticipated future economic conditions.
The items written off include costs incurred in connection with early
retirements and work force reductions that occurred in 1992 and 1993 which
consist primarily of separation payments, enhanced early retirement
benefits, and health care benefits; costs associated with property damage
claims pertaining to particulate emissions from its Mill Creek electric
generating plant which primarily consist of spotting on automobile finish
and aluminum siding; and certain costs previously deferred resulting from
adoption in January 1993 of Statement of Financial Accounting Standards
No. 106, Employers' Accounting for Post-Retirement Benefits Other Than
Pensions.
3. In the first quarter of 1994, the Board of Directors of the Company
approved the formation of a tax-exempt charitable foundation which will
make charitable contributions to qualified persons and entities. The
Board authorized an initial contribution to the foundation of up to $15
million. Accordingly, the Company recorded a pre-tax charge against
income and accrued $15 million to fund the contribution. On June 6, 1994,
the Internal Revenue Service issued a letter stating that it had
determined the foundation was exempt from Federal income tax under the
Internal Revenue Code. Funding of the initial contribution is expected
to be completed by year-end. Contributions made from this foundation will
not be charged against income and, therefore, will not affect the
Company's net income in the future.
4. The Company adopted SFAS No. 112 (Statement of Financial Accounting
Standards No. 112, Employers' Accounting for Post-Employment Benefits) in
the first quarter of 1994. SFAS No. 112 requires the accrual of the
expected cost of benefits to former or inactive employees after employment
but before retirement. The cumulative effect of the accounting change was
recorded in the first quarter of 1994 and decreased pre-tax income by $5.6
million.
5. The Company adopted the provisions of SFAS No. 115 (Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities) effective January 1, 1994. Accordingly,
investments in marketable securities have been determined to be
"available-for-sale" and are stated at market value in the accompanying
June 30, 1994, balance sheet. Realized investment gains and losses are
calculated on the specific identification basis and were immaterial during
the three- and six-month periods ended June 30, 1994. Proceeds from sales
of available-for-sale securities for the three-and six-month periods ended
June 30, 1994, were $11.1 million and $32.7 million, respectively. The
pre-tax amount ($1.6 million) reflected in common equity as unrealized
loss includes gross unrealized losses ($1.7 million) net of gross
unrealized gains ($.1 million).
<PAGE>9
Available-for-sale securities at June 30, 1994, consisted of $34.8 million
classified as other property and investments in the accompanying balance
sheet. The $34.8 million is composed of approximately $14 million debt
securities and $21 million equity securities. The difference between the
amortized and unamortized cost bases of the Company's available-for-sale
securities at June 30, 1994, was immaterial. The approximate fair values
of debt securities by contractual-maturity category were as follows:
between one and five years, $6 million; between five and ten years, $5
million; not due at a single maturity date, $3 million.
6. Reference is made to Part II herein - Item 1, Legal Proceedings.
<PAGE>10
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
Results of Operations
---------------------
Because of seasonal fluctuations in temperature and other factors the results
of one interim period are not necessarily indicative of results to be
expected for the year.
Quarter Ended June 30, 1994, Compared with
Quarter Ended June 30, 1993
-------------------------------------------
The increase in net income for the quarter reflects an increase in electric
sales to retail customers as a result of warmer weather partially offset by
increased operation expenses.
A comparison of operating revenues for the quarter ended June 30, 1994, with
the quarter ended June 30, 1993, reflects increases and decreases which have
been segregated by the following principal causes:
Increase or (Decrease)
(Thousands of $)
--------------------------
Electric Gas
Cause Revenues Revenues
----- -------- --------
Sales to Ultimate Consumers:
Fuel and gas supply adjustments.............. $ 518 $ 1,387
Variation in sales volume, etc............... 6,846 (1,802)
----- -----
Total.................................... 7,364 (415)
Sales to other utilities....................... (1,278) -
Gas transportation - net....................... - 534
Other.......................................... 10 (79)
----- -----
Total.................................... $ 6,096 $ 40
----- -----
----- -----
Fuel for electric generation and gas supply expenses comprise a large segment
of the Company's total operating expenses. The Company's electric and gas
rates contain a fuel adjustment clause and a gas supply clause, respectively,
whereby increases or decreases in the cost of fuel and gas supply may be
reflected in the Company's rates, subject to the approval of the Public
Service Commission of Kentucky. Fuel for electric generation increased 3%
for the quarter primarily because of increased generation partially offset
by a decrease in the cost of coal burned. Gas supply expenses decreased 5%
due mainly to a decrease in the volume of gas delivered to the distribution
system and a slight decrease in the cost of gas purchased.
<PAGE>11
Other operation expenses increased primarily as a result of increased costs
to operate the power plants and a higher level of administrative and general
expenses including an increase in the provision for uncollectible service
accounts.
Depreciation and amortization increased because of increased depreciable
plant in service.
Variations in income tax expense are largely attributable to changes in
pre-tax income.
Other income and deductions include a gain realized from the sale of fully
depreciated heavy equipment.
Interest charges decreased because of a lower composite interest rate on
outstanding debt.
Six Months Ended June 30, 1994, Compared with
Six Months Ended June 30, 1993
---------------------------------------------
Excluding the write off of non-recurring items, the formation of a charitable
foundation and the adoption of SFAS No. 112 as discussed in Notes 2, 3, and
4, net income for the six months ended June 30, 1994, increased $2.7 million
(7.2%) over the same period in 1993, primarily because of increased sales of
electricity and natural gas to retail customers. This increase was partially
offset by increased storm damage expenses caused by the area's worst winter
storm in 16 years which occurred in January 1994.
A comparison of operating revenues for the six months ended June 30, 1994,
with the six months ended June 30, 1993, reflects increases and decreases
which have been segregated by the following principal causes:
Increase or (Decrease)
(Thousands of $)
--------------------------
Electric Gas
Cause Revenues Revenues
----- -------- --------
Sales to Ultimate Consumers:
Fuel and gas supply adjustments.............. $ (469) $ 2,199
Variation in sales volume, etc............... 10,743 10,274
------ ------
Total.................................... 10,274 12,473
Sales to other utilities....................... (4,827) -
Gas transportation - net....................... - (861)
Other.......................................... 116 8
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Total.................................... $ 5,563 $11,620
------ ------
------ ------
<PAGE>12
Fuel for electric generation increased slightly for the six months primarily
because of increased generation. Gas supply expenses increased 12% primarily
because of an increase in gas delivered to the distribution system and the
higher cost of gas purchased.
Power purchased declined largely because less power was wheeled for other
utilities.
Other operation expenses increased mainly as a result of increased costs to
operate the electric power plants and gas and electric distribution systems,
and an increase in the provision for uncollectible service accounts.
Maintenance expenses increased primarily due to an increase in storm damage
expenses caused by the severe winter weather and increased costs to maintain
the power plants.
Non-recurring charges include the write off of costs in connection with early
retirements and work force reductions that occurred in 1992 and 1993, costs
in connection with property damage claims pertaining to particulate emissions
from the Mill Creek electric generating plant, and certain costs previously
deferred resulting from adoption of Statement of Financial Accounting
Standards No. 106, Employers' Accounting for Post-Retirement Benefits Other
Than Pensions. See Note 2 of Notes to Financial Statements.
Depreciation and amortization increased because of an increase in depreciable
plant in service.
Variations in income tax expense are largely attributable to changes in
pre-tax income.
Property and other taxes increased mainly due to payroll taxes associated
with severance payments in connection with work force reductions. See Note 2
of Notes to Financial Statements.
Other income and deductions include the provision (net of taxes) associated
with the formation of a tax-exempt charitable foundation (see Note 3 of Notes
to Financial Statements), and a gain realized from the sale of fully
depreciated heavy equipment.
Interest charges decreased because of a lower composite interest rate on
outstanding debt.
Cumulative Effect of Change in Accounting for Post-Employment Benefits
reflects an accounting change required by the adoption of Statement of
Financial Accounting Standards No. 112, Employers' Accounting for
Post-Employment Benefits. See Note 4 of Notes to Financial Statements.
Liquidity and Capital Resources
-------------------------------
The Company's need for capital funds is primarily related to the construction
of plant and equipment necessary to meet electric and gas customers' needs
and the protection of the environment. Construction expenditures for the
first six months of 1994 of $38 million were financed with internally
generated funds.
<PAGE>13
At June 30, 1994, the Company had unused lines of credit of $145 million with
banks for which it pays commitment fees. The lines are scheduled to expire
at various periods throughout 1994. The Company intends to renegotiate such
lines when they expire.
The Company's capitalization ratios at June 30, 1994, and December 31, 1993
were:
June 30, 1994 December 31, 1993
------------- -----------------
Long-term debt.................... 48.0% 47.4
Preferred stock................... 8.4 8.3
Common stock equity............... 43.6 44.3
----- -----
Total........................... 100.0% 100.0%
----- -----
----- -----
The decrease in common stock equity reflects the write off of several
non-recurring items as discussed in Notes 2 and 4 and the provision for
charitable contributions discussed in Note 3 of Notes to Financial Statements
under Part I, Item 1 - Financial Statements.
For a description of significant contingencies that may affect the Company,
reference is made to Part II herein - Item 1, Legal Proceedings.
<PAGE>14
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings.
For a description of the significant legal proceedings involving the Company,
reference is made to the information under the following items and captions
of the Company's Annual Report on Form 10-K for the year ended December 31,
1993: Item 1, Business; Item 3, Legal Proceedings; Item 7, Management's
Discussion and Analysis of Results of Operations and Financial Condition; and
Notes 7 and 8 of the Notes to Financial Statements under Item 8, Financial
Statements and Supplementary Data and to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994: Part II, Item I, Legal
Proceedings. Except as noted below, there have been no material changes in
these proceedings as reported in the Company's 1993 Form 10-K and March 1994
Form 10-Q.
Environmental. As discussed in Note 7 of the Notes to Financial Statements
under Item 8 of the Company's 1993 Form 10-K, in August 1993, 34 persons
filed a complaint in Jefferson Circuit Court against the Company seeking
certification of a class consisting of all persons within 2.5 miles of its
Mill Creek generating plant. The plaintiffs seek compensation for alleged
personal injury and property damage attributable to emissions from the Mill
Creek plant, injunctive relief, a fund to finance medical monitoring of area
residents, and other relief. In June 1994, the court denied the plaintiffs'
motion for certification of the class and thus limited the scope of the
litigation to the claims of the individual plaintiffs. The Company intends
to vigorously defend the pending litigation.
As discussed in Note 7 of the Notes to Financial Statements under Item 8 of
the 1993 Form 10-K, in June 1992, the U.S. Environmental Protection Agency
(USEPA) identified the Company as a potentially responsible party (PRP)
allegedly liable under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) for $1.6 million in costs allegedly
incurred by USEPA in cleanup of the Sonora site and Carlie Middleton Burn
site located in Hardin County, Kentucky. In November 1992, USEPA demanded
immediate payment from the PRPs. To date, USEPA has identified nine PRPs for
the sites. The Company and several other parties have commenced discussions
with USEPA. The USEPA has since increased the amount of its demand to $1.8
million to reflect additional cleanup costs. In the Company's opinion, the
resolution of this issue will not have a material adverse impact on its
financial position or results of operations.
Trimble County Generating Plant. As discussed in Note 8 of the Notes to
Financial Statements under Item 8 of the Company's 1993 Form 10-K and in
Part II, Item 1, of the March 1994 Form 10-Q, on January 7, 1994, the Company
filed testimony with the Kentucky Public Service Commission (Commission) in
which it recommended that the Commission allow it to recover the
approximately $11.1 million it refunded to customers under the 1989
settlement agreement. Testimony was filed by the Kentucky Attorney General,
the Jefferson County Attorney, the Metro Human Needs Alliance, and the
Kentucky Industrial Utility Customers. The testimony recommended that the
Commission order the Company to refund approximately $183 million, based upon
their argument that the Company should refund 25% of the revenue requirements
associated with Trimble County's construction-work-in-progress (CWIP) it
collected over the course of the Trimble County construction project.
<PAGE>15
On March 25, 1994, the Kentucky Attorney General and the Jefferson County
Attorney (Intervenors) filed a motion with the Commission in which they
requested that two of the three members of the Commission and certain
unspecified Commission staff employees be recused from further participation
in the case. The parties supported the motion by arguing that past
statements and orders of the Commission in this and other proceedings showed
that the Commissioners had prejudged the issues relevant to the current
proceeding. The issues referred to in the motion centered on the
Intervenors' claims that the Company should refund 25% of all revenues
associated with Trimble County CWIP collected through rates during the course
of the plant's construction.
On July 8, 1994, the Commission entered an order which denied the motion.
In the order, the Commission stated that it had not prejudged any issues but
rather had decided a number of issues in past proceedings which are binding
on it and the parties. The Commission also stated that it had never implied
in prior orders that the amounts of Trimble County CWIP included in rate base
prior to the issuance of its July 1, 1988, order in Case No. 10064, a general
rate case, would be subject to later review. The Commission concluded that
the scope of the present case had been limited since at least 1985 when the
Commission issued an order that put the Company on notice that in future rate
cases the continuation of allowing a return on further additions to Trimble
County CWIP would be an issue.
The Commission made its July 8, 1994, order final and appealable. The order
also stated that the Commission would not take any further action in this
case pending the passage of the statutory amount of time to file an appeal.
On July 27, the Intervenors filed with the Commission a Petition for
Rehearing of the July 8 order. The Petition requested that the Commission
reconsider the statements it made in the order regarding the scope of the
case, and in the alternative requested that the Commission schedule a hearing
date on which the Intervenors can make an offer of proof of their prefiled
testimony on the issue of refunds of revenues collected prior to the
effective date of the 1988 order in Case No. 10064.
On July 27, 1994, the Kentucky Industrial Utility Customers (KIUC) filed an
Application for Rehearing with the Commission. The Application seeks
rehearing on the issue of whether the Commission's July 8 order decides that
prior Commission orders regarding rate treatment of the Company's investment
in Trimble County prevent the Commission in this case from ordering refunds
of revenue related to Trimble County CWIP collected from 1979 through 1990.
On July 29, 1994, the City of Louisville filed a pleading with the Commission
in which it indicated its support for and joinder in the Application of KIUC.
Under statute, the Commission has until August 16, 1994 to rule on the
Intervenors' and KIUC's requests for rehearing. If the Commission fails to
rule by that date, the requests are by law deemed denied. The parties will
then have 20 days from August 16, or September 6, 1994, to file actions in
the Franklin Circuit Court for review of the Commission's July 8 order. If
the Commission issues an order by August 16, 1994 which denies the requests,
then the parties will have 23 days from the date such an order is issued to
file actions in the Franklin Circuit Court for review.
<PAGE>16
The Company believes that the Commission's July 8 order forecloses the
possibility that the Commission will entertain the position that the
Intervenors have taken in their previously-filed testimony that the Company
should refund approximately $183 million to its customers. The Company
believes that remaining at issue in the proceeding is what amount, if any,
of the approximately $30 million it collected subject to refund under a rate
case order issued in 1988 should be returned to ratepayers. Of this amount,
the Company has already returned to ratepayers under the 1989 settlement
agreement approximately $11.1 million through refunds and rate reductions.
The Company has submitted testimony to the Commission which recommends that
it be allowed to recover this amount. However, the Company is unable to
predict the outcome of the Commission proceedings, or the amount of
additional refunds or recoveries, if any, that may be ordered.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company's Annual Meeting of Stockholders was held on May 24,
1994.
(b) Not applicable.
(c) The matters voted upon and the results of the voting at the Annual
Meeting were as follows:
1. The stockholders voted to elect the Company's nominees for
election to the Board of Directors as follows:
. William C. Ballard, Jr. - 22,645,673 shares in favor of
election and 12,272 shares withheld;
. S. Gordon Dabney - 22,643,314 shares in favor of election
and 14,631 shares withheld; and
. T. Ballard Morton, Jr. - 22,643,583 shares in favor of
election and 14,362 shares withheld.
2. The stockholders voted 22,636,432 shares of voting stock in favor
of and 4,305 shares of voting stock against the approval of
Arthur Andersen & Co. as independent auditors for the Company for
1994. Holders of 17,208 shares of voting stock abstained from
voting on this matter.
(d) Not applicable.
Item 6(b). Reports on Form 8-K.
None
<PAGE>17
SIGNATURES
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOUISVILLE GAS AND ELECTRIC COMPANY
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Registrant
By M. L. Fowler
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Vice President and Controller
(On behalf of the registrant in
his capacity as Principal
Accounting Officer)
Date August 12, 1994
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