<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
_____ SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
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 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-6554
MAINE YANKEE ATOMIC POWER COMPANY
(Exact name of registrant as specified in its charter)
Incorporated in Maine 01-0278125
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Edison Drive, Augusta, Maine 04330
(Address of principal executive offices) (Zip Code)
207-622-4868
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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
</Page>
<PAGE> FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Continued)
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 the registrant's 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. [X] (Not applicable to registrant)
The aggregate value of the voting stock held by non-affiliates of the
registrant is $50,000,000, based solely on the par value of the common
stock. There is no market in this security.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Shares Outstanding
Class as of March 29, 1994
Common Stock, $100 par value 500,000
DOCUMENTS INCORPORATED BY REFERENCE
No documents are incorporated by reference in this report.
</Page>
<PAGE> Maine Yankee Atomic Power Company
Form 10-K - 1993
<TABLE>
TABLE OF CONTENTS
<S> <C>
Page
Part I
Item Number
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 10
Part II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . . . 11
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 13
Item 8. Financial Statements and Supplementary Data . . . . . . . . . 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . 46
Part III
Item 10. Directors and Executive Officers of the Registrant. . . . . . 47
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . 55
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . 57
Item 13. Certain Relationships and Related Transactions. . . . . . . . 58
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . 59
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
</Page>
<PAGE> PART I
ITEM 1 - BUSINESS
(a) General. Maine Yankee Atomic Power Company (the "Company" or "Maine
Yankee"), incorporated under the laws of Maine on January 3, 1966, owns and
operates a pressurized-water nuclear-powered electric generating plant at
Wiscasset, Maine, with a current net capacity of approximately 860
megawatts electric (the "Plant"). The Company sells its capacity and
output to its ten sponsoring stockholder utilities. The Company's
principal office address is Edison Drive, Augusta, Maine 04330, and its
telephone number is (207) 622-4868.
The Plant was declared commercial on December 28, 1972, with regular
operation at approximately 570 megawatts electric (net) starting on
January 1, 1973. Hearings on the Company's application for a full
operating license were completed in 1972 and the license for full operation
to 2008 was granted by the Atomic Energy Commission, the predecessor of the
Nuclear Regulatory Commission ("NRC"), on June 29, 1973.
The Plant is operated on a planned 18-month operating cycle and must be
taken off line at the end of a cycle for approximately eight to ten weeks
for scheduled refueling, maintenance and construction activities. Through
December 31, 1993, the Company had sold over 106.8 billion kilowatt-hours
("KWH") of electricity at an average lifetime total cost per KWH of 2.3
cents. The Plant's lifetime average capacity factor is 72%.
In 1993 the Plant operated at an average capacity factor of 76 percent
(based on a net rating of 860 megawatts), and generated for sale 5.7
billion KWH of electric power, the highest total for a refueling year in
the Plant's history, at an average cost of 3.4 cents per KWH. The Plant
was shut down from July 30 to October 13, 1993, for scheduled refueling and
maintenance.
The Company is sponsored by ten investor-owned New England utilities (the
"Sponsors" or the "Stockholders"), each of which is committed under a Power
Contract with the Company to purchase a specified percentage of the
capacity and output of the Plant and to pay therefor a like percentage of
amounts sufficient to pay the Company's fuel costs, operating expenses
(including a depreciation accrual at a rate sufficient to fully amortize
the investment in the Plant over the operating life of the Plant and
amounts estimated to be sufficient to decommission the Plant), interest on
its debt and a return on its equity. The Company and its Sponsors have
also executed Additional Power Contracts for the purpose of extending the
term of the Power Contracts, as amended, from 2003 to the end of the useful
life of the Plant and the completion of its decommissioning and financial
obligations. Each Sponsor has also agreed under a Capital Funds Agreement
with the Company to provide a like percentage of the Company's capital
requirements not obtained from other sources, subject to obtaining
necessary authorizations of regulatory bodies in each instance. All such
obligations are subject to the continuing jurisdiction of various federal
and state regulatory bodies.
</Page> - 1 -
<PAGE>
ITEM 1 - BUSINESS (continued)
(a) General. (continued)
The obligations of the Sponsors to make payments under the Power Contracts
are unconditional, subject only to each Sponsor's right to cancel its Power
Contract if deliveries cannot be made to the Sponsor because either (i) the
Plant is damaged to the extent of being completely or substantially
completely destroyed, or (ii) the Plant is taken by exercise of the right
of eminent domain or a similar right or power, or (iii) (a) the Plant
cannot be used because of contamination or because a necessary license or
authorization cannot be obtained or is revoked or the utilization thereof
is made subject to specified conditions which are not met, and (b) the
situation cannot be rectified to an extent which will permit the Company to
make deliveries to the Sponsor from the Plant. Notwithstanding the right
to cancel, the obligation to pay decommissioning costs continues until the
Plant has been fully decommissioned.
A default by a Sponsor of the Company in making payments under the Power
Contract or Capital Funds Agreement could have a material adverse effect on
the Company, depending on the magnitude of the default, and would
constitute a default under the Company's First Mortgage Indenture and two
other major credit agreements unless cured within applicable grace periods
by the defaulting Sponsor or other Sponsors.
(b) Problems Affecting the Industry and the Company. Substantial
controversy exists concerning nuclear generating plants, which intensified
when events in 1979 at the Three Mile Island Nuclear Unit No. 2 in
Pennsylvania ("TMI") caused increased concern about the safety of such
plants. This prompted a rigorous reexamination of safety related equipment
and operating procedures in all nuclear facilities and caused the NRC to
promulgate numerous requirements in response to TMI, including both
near-term modifications to upgrade certain safety systems and
instrumentation and longer-term design changes, ranging from equipment
changes to operational support. The Company has made the modifications
required by the NRC. The NRC is continuing its safety reviews under both
long-standing and new regulations and may at any time issue orders which
could materially affect the Company's affairs and financial condition and
the operation of the Plant. For a discussion of the voluntary shutdown of
the Yankee Atomic Electric Company plant at Rowe, Massachusetts, for both
regulatory and economic reasons, see "(h) Yankee Atomic Electric Company
Plant Shutdown", below.
Public and regulatory attention has also focused on the disposal of both
low- and high-level nuclear wastes. Certain aspects of the disposal of
nuclear wastes and the decommissioning of nuclear generating facilities
have been regulated under federal and Maine law and further regulation is
likely in this area. Public concern about the operation of nuclear
generating facilities and the disposal of nuclear wastes has sometimes
resulted in public campaigns to close such facilities. Although affecting
various nuclear generating facilities in varying degrees, such events, as
well as other problems of the industry, have had, and will continue to
have, a direct effect on the affairs and financial condition of the
Company. For further discussion of nuclear waste disposal issues, see "(d)
Nuclear Fuel Disposal" and "(f) Low-Level Waste Disposal", below.
</Page> - 2 -
<PAGE>
ITEM 1 - BUSINESS (continued)
(b) Problems Affecting the Industry and the Company. (continued)
There have been three unsuccessful state referenda attempting to close the
Plant since 1980. The last referendum occurred on November 3, 1987, when
the Maine electorate defeated an initiated bill intended to close the Plant
on July 4, 1988, by a margin of 59 percent to 41 percent. There is no
certainty that such a referendum will not occur again, and in the event
that one takes place, no prediction can be made as to the potential
outcome. If a referendum were to be initiated, the Company would strongly
contest any attempts to close or impair the operation of the Plant. If
(contrary to the history of unsuccessful referenda on the Plant) a
referendum were to pass in Maine, the Company believes that such referendum
would be vulnerable to a challenge on the basis of fundamental legal
principles and that the Company would have substantial rights and remedies
available to it, which it would vigorously seek to enforce.
(c) Regulation and Environmental Matters. The Plant is subject to exten-
sive regulation by the NRC, which is empowered to authorize the siting,
construction and operation of nuclear reactors after consideration of
public health, safety, environmental and antitrust matters.
The United States Environmental Protection Agency ("EPA") administers
programs established under the Federal Water Pollution Control Act and the
Clean Air Act, as amended in 1990, which affect the Plant. The former Act
establishes a national objective of complete elimination of discharges of
pollutants into the nation's water and creates a rigorous permit program
designed to achieve this objective. The latter Act empowers the EPA to
establish clean air standards which are implemented and enforced by state
agencies.
In addition, pursuant to the Federal Resource Conservation and Recovery Act
of 1976, the EPA regulates the generation, transportation, treatment,
storage and disposal of hazardous wastes. The EPA has broad authority in
administering these programs, including the ability to require installation
of pollution control and mitigation devices.
The National Environmental Policy Act of 1969 ("NEPA") requires that de-
tailed statements of the environmental effects of major federal actions be
prepared by federal agencies. Major federal actions can include licenses
or permits issued to the Company by the NRC and other federal agencies for
construction or operation of generation and transmission facilities. NEPA
requires that federal licensing agencies make an independent evaluation of
the environmental impact of, and alternatives to, the proposed action.
Future construction modifications or other activities at the Plant could
require federal licenses or approvals that involve NEPA requirements.
The Company is also subject to regulation as to environmental matters and
land use by various state and local authorities in Maine.
</Page> - 3 -
<PAGE>
ITEM 1 - BUSINESS (continued)
(c) Regulation and Environmental Matters. (continued)
Under their continuing jurisdiction, the NRC and one or more of the EPA and
the state authorities having jurisdiction over the Company's facilities may
modify permits or licenses which have already been issued, or impose new
conditions on such permits or licenses, and may require additional capital
expenditures or require that the level of the operation of a unit be
temporarily or permanently reduced. See "(b) Problems Affecting the
Industry and the Company", above. The Sponsors of the Company have agreed,
however, subject to certain exceptions including regulatory approval, (i)
to provide the required capital not otherwise available, (ii) to take the
total output of the Plant, and (iii) to pay all costs of the Plant,
including capital and decommissioning costs.
The Company and several of its Sponsors are subsidiaries of registered
holding companies and as such are subject to regulation by the Securities
and Exchange Commission ("SEC") under the Public Utility Holding Company
Act of 1935 with respect to various matters, including the issuance of
certain securities. The Company is also subject to regulation by the SEC
under other federal securities laws.
In addition the Company is subject to regulation by the Federal Energy
Regulatory Commission ("FERC") as to its rates (including the Power
Contracts and Additional Power Contracts) and various other matters, and is
subject to regulation by the Maine Public Utilities Commission ("MPUC") as
to some aspects of its business, including the issuance of securities.
(d) Nuclear Fuel Disposal. The cycle of production and utilization of
nuclear fuel for nuclear generating units consists of (1) the mining and
milling of uranium ore, (2) the conversion of the resulting concentrate to
uranium hexafluoride, (3) the enrichment of the uranium hexafluoride, (4)
the fabrication of fuel assemblies, (5) the utilization of the nuclear
fuel, and (6) the disposal of spent fuel. The Company has entered into a
contract with the federal Department of Energy ("DOE") for disposal of its
spent nuclear fuel, as required by the Nuclear Waste Policy Act of 1982,
pursuant to which a fee of $1.00 per megawatt-hour is currently assessed
against net generation of electricity and paid to the DOE quarterly. Under
this Act, the DOE has assumed the responsibility for disposal of spent
nuclear fuel produced in private nuclear reactors. In addition, Maine
Yankee is obligated to make a payment of $50.4 million with respect to
generation prior to April 7, 1983 (the date current DOE assessments began),
all of which the Company has already collected from its customers, but for
which a reserve was not funded. The Company has elected under the terms of
this contract to make a single payment of this obligation prior to the
first delivery of spent fuel to DOE, scheduled to begin no earlier than
1998. The payment will consist of the $50.4 million, plus interest accrued
at the 13-week Treasury Bill rate compounded on a quarterly basis from
April 7, 1983, through the date of the actual payment. Current costs
incurred by the Company under this contract are recoverable by it under the
terms of its Power Contracts with its Sponsors. The Company has accrued
and billed $53.1 million of interest cost for the period April 7, 1983,
through December 31, 1993.
</Page> - 4 -
<PAGE>
ITEM 1 - BUSINESS (continued)
(d) Nuclear Fuel Disposal. (continued)
Maine Yankee has formed a trust to provide for payment of its long-term
spent fuel obligation. The total spent fuel fund balance, held by an
independent trustee, as of December 31, 1993, was $86.7 million (including
interest earned). The trust is funded at least semiannually by the Company
through deposits, which began in December 1985, with current projected
semiannual deposits of approximately $0.26 million through December 1997.
Deposits are expected to total approximately $62.8 million. The estimated
liability, including interest due at the time of disposal, is projected to
be approximately $115.9 million at January 31, 1998. The Company estimates
that trust fund deposits plus estimated earnings will meet this total
liability if funding continues without material changes.
Federal legislation enacted in 1987 directed the DOE to proceed with the
studies necessary to develop and operate a permanent high-level waste
(spent fuel) disposal site at Yucca Mountain, Nevada. The legislation also
provides for the possible development of a Monitored Retrievable Storage
("MRS") facility and abandons plans to identify and select a second
permanent disposal site. An MRS facility would provide temporary storage
for high-level waste prior to eventual permanent disposal. In late 1989
the DOE announced that the permanent disposal site was not expected to open
before 2010, although originally scheduled to open in 1998. Additional
delays due to political and technical problems are probable.
Under the terms of a license amendment approved by the NRC in 1984, the
present storage capacity of the spent fuel pool at the Plant will be
reached in 1999 and after 1996 the available capacity of the pool will not
accommodate a full-core removal. After consideration of available
technologies, the Company elected to provide additional capacity by
replacing the fuel racks in the spent fuel pool at the Plant and, on
January 25, 1993, filed with the NRC seeking authorization to implement the
plan. On March 15, 1994, the NRC granted the authorization. Maine Yankee
believes that the replacement of the fuel racks will provide adequate
storage capacity through the Plant's licensed operating life, but cannot
predict with certainty whether or to what extent the new level of storage
capacity at the Plant will affect the operation of the Plant or the future
cost of disposal.
(e) Decommissioning. A study conducted for the Company in 1987 by an
external engineering consultant estimated decommissioning costs, which
include the costs of removal of the Plant and reclamation of the Plant
site, to be $142.5 million, plus a contingency of $35.6 million, for a
total of $178.1 million (in mid-1987 dollars). The Company is currently
allowed to collect $9.1 million annually in rates, based on the FERC-
approved rate case settlement amount of $167.0 million (in mid-1987
dollars). Through 1993 the Company had collected $69.1 million for
decommissioning, which funds are held by an independent trustee. The total
decommissioning fund balance as of December 31, 1993, was $93.8 million
(including interest earned). The amounts collected, together with the
trust earnings, will be used to meet the Company's decommissioning
obligation.
</Page> - 5 -
<PAGE>
ITEM 1 - BUSINESS (continued)
(e) Decommissioning. (continued)
The Company's most recent study, conducted by the same consultant in 1993,
estimated decommissioning costs to be $273.1 million, plus a contingency of
$43.5 million, for a total of $316.6 million (in mid-1993 dollars). For a
discussion of a rate filing by the Company with the FERC, in which
decommissioning costs are a major area of focus, see Item 3, LEGAL
PROCEEDINGS, Section (b), "Rate Proceedings", below. The Company
recognizes the relative uncertainties associated with decommissioning,
including its changing technology and the possibility of new requirements
of law, and therefore recognizes the need to monitor and adjust
decommissioning collections through supplemental rate filings with the
FERC.
(f) Low-Level Waste Disposal. The federal Low-Level Radioactive Waste
Policy Amendments Act (the "Waste Act"), enacted in 1986, required
operating disposal facilities to accept low-level nuclear waste from other
states until December 31, 1992. The Waste Act also set limits on the
volume of waste each disposal facility must accept from each state,
established milestones for the nonsited states to establish facilities
within their states or regions (pursuant to regional compacts) and
authorized increasing surcharges on waste disposal until 1992. After 1992
the states in which there are operating disposal sites are permitted to
refuse to accept waste generated outside their states or compact regions.
In 1987 the Maine Legislature created the Maine Low-Level Radioactive Waste
Authority (the "Maine Authority") to provide for such a facility if Maine
is unable to secure continued access to out-of-state facilities after 1992,
and the Maine Authority has been engaged in a search for a qualified
disposal site in Maine. The Company volunteered its site at the Plant for
that purpose, but progress toward establishing a definitive site in Maine,
as in other states, was difficult because of the complex technical nature
of the search process and the political sensitivities associated with it.
As a result, Maine did not satisfy its milestone obligation under the Waste
Act requiring submission of a site license application by the end of 1991,
and is therefore subject to surcharges on its waste and has not had access
to regulated disposal facilities since the end of 1992. Thus, Maine Yankee
now stores all waste generated at an on-site storage facility.
At the same time, the State of Maine was pursuing discussions with the
State of Texas concerning participation in a compact with that state and
Vermont. In May 1993, the Texas Legislature approved a compact with the
states of Maine and Vermont. The Maine Legislature in June 1993 ratified
the compact and submitted it to ratification by Maine voters in a
referendum held on November 2, 1993, in which the compact was ratified by
a margin of approximately 73% to 27%. It must now be presented to the
United States Congress for final ratification.
The compact provides for Texas to take Maine's low-level waste over a 30-
year period for disposal at a planned facility in west Texas. In return
Maine would be required to pay $25 million, assessed to the Company by the
State of Maine, payable in two equal installments, the first after
ratification by Congress and the second upon commencement of operation of
the Texas facility. In addition, the Company would be assessed a total of
$2.5 million for the benefit of the Texas county in which the facility
would be located and would also be responsible for its pro-rata share of
</Page> - 6 -
<PAGE>
ITEM 1 - BUSINESS (continued)
(f) Low-Level Waste Disposal. (continued)
the Texas governing commission's operating expenses. Pending the
ratification votes, the Maine Authority has suspended its search for a
suitable disposal site in Maine.
In the event the required ratification by Congress is not obtained, subject
to continued NRC approval, the Company can continue to utilize its capacity
to store approximately ten to twelve years' production of low-level waste
in its facility at the Plant site, which it started in January 1993.
Subject to obtaining necessary regulatory approval, the Company could also
build a second facility on the Plant site. The Company believes it is
probable that it will have adequate storage capacity for such low-level
waste available on-site, if needed, through the licensed operating life of
the Plant. On January 26, 1993, the NRC published for public comment a
proposed rulemaking that, if adopted, would require a licensee such as
Maine Yankee, as a condition of its license, to document that it had
exhausted other reasonable waste management options in order to be
permitted to store low-level waste on-site beyond January 1, 1996. Such
options include taking all reasonable steps to contract, either directly or
through the state, for disposal of the low-level waste. On February 9,
1994, the NRC, after affirming its preference for disposal of waste over
storage, announced its decision to withdraw the proposed rulemaking. Maine
Yankee expects the NRC to issue its formal notice of withdrawal in the
spring of 1994.
The Company cannot predict whether the final required ratification of the
Texas compact or other regulatory approvals required for on-site storage
will be obtained, but the Company intends to utilize its on-site storage
facility in the interim and continue to cooperate with the State of Maine
in pursuing all appropriate options.
(g) Nuclear Insurance. In accordance with the Price-Anderson Act, the limit
of liability for a nuclear-related accident is approximately $9.317
billion, effective March 20, 1994. The primary layer of insurance for the
liability is $200 million of coverage provided by the commercial insurance
market. The secondary coverage is approximately $9.117 billion, based on
115 licensed reactors. The secondary layer is based on a retrospective
premium assessment of $75.5 million per nuclear accident per licensed
reactor, payable at a rate not exceeding $10 million per year per accident.
In addition, the retrospective premium is subject to inflation-based
indexing at five-year intervals and, if the sum of all public liability
claims and legal costs arising from any nuclear accident exceeds the
maximum amount of financial protection, each licensee can be assessed an
additional 5% ($3.775 million) of the maximum retrospective assessment.
In addition to the insurance required by the Price-Anderson Act, the
Company carries all-risk nuclear property damage insurance in the amount of
$500 million plus additional excess nuclear property insurance in the
amount of $2.25 billion, effective January 1, 1994. Of this additional
excess insurance, $1.4 billion is provided by a nuclear electric utility
industry insurance company through a combination of current premiums and
retrospective premium assessments. If the insurance company experiences
losses in excess of its capacity to pay them, each participating utility
may be assessed a retrospective premium of up to 7.5 times its premium with
respect to industry losses in any policy year, which could range up to
</Page> - 7 -
<PAGE>
ITEM 1 - BUSINESS (continued)
(g) Nuclear Insurance. (continued)
approximately $12.8 million for the Company. The remaining excess nuclear
property coverage of $850 million is obtained from the commercial insurance
market and is not subject to retrospective premium assessments. These
excess coverage amounts are the maximum offered by both the industry mutual
company and the commercial market.
(h) Yankee Atomic Electric Company Plant Shutdown. In February 1992,
Yankee Atomic Electric Company ("Yankee Atomic"), a Massachusetts
corporation with several of the same sponsors as Maine Yankee, announced
that it would permanently cease power operation of the Yankee Nuclear Power
Station in Rowe, Massachusetts, and would prepare for an orderly
decommissioning of the facility. Yankee Atomic cited continued regulatory
uncertainty and economics as the key factors in its decision to close the
generating plant eight years prior to the expiration of its operating
license.
Yankee Atomic said several important regulatory issues had not been fully
resolved, which, coupled with unfavorable economic conditions, would have
imposed costs too large to justify the expense of seeking to restart the
185-megawatt plant. The Yankee Atomic Plant, which had been voluntarily
shut down in October 1991, is a small plant whose design is technologically
different from that of the larger and more modern Maine Yankee Plant.
(i) Employees. At December 31, 1993, the Company had 472 full-time
employees.
ITEM 2 - PROPERTIES
The Plant is located on tidewater on Bailey Point in Wiscasset, Maine, on
a 740-acre site which is owned in fee by the Company and is adequate for
the Plant and for all associated facilities, including the associated
switchyard facilities which are owned in part and operated by Central Maine
Power Company.
The Plant is a nuclear-powered electric generating plant, utilizing a
pressurized-water reactor, fueled with slightly enriched uranium oxide.
The nuclear steam supply system and certain other equipment were designed
and fabricated by Combustion Engineering, Inc. The turbine generator was
supplied by Westinghouse Electric Corporation. Stone & Webster Engineering
Corporation, as engineer and constructor, designed and constructed the
Plant. Construction of the Plant, which began in 1967, was completed in
1972 except for certain discharge temperature control facilities designed
to meet the requirements of the Maine Board of Environmental Protection,
which were completed in 1975.
Under the terms of the Indenture securing the First Mortgage Bonds,
substantially all electric plant of the Company is subject to a first
mortgage lien.
</Page> - 8 -
<PAGE>
ITEM 2 - PROPERTIES (continued)
Since the Plant commenced operation, the Company has sought to improve its
safety and reliability, while increasing its output, through periodic
upgrading of equipment and facilities, along with regular training programs
for Plant personnel. In furtherance of those goals, the Company replaced
the Plant's two low-pressure turbines and its high-pressure turbine in 1988
and 1990, respectively, with new units provided by Asea Brown Boveri
("ABB"), which resulted in an increase of approximately 20 megawatts in the
Plant's output. In addition, the Company had contracted with ABB for the
purchase and installation of a new main generator, which was planned to be
installed during the February 1992 refueling outage, but which the Company
is now retaining as a spare. For accounting purposes, Maine Yankee has
carried the approximately $8.1 million cost of the spare generator and
associated equipment in a plant account as an emergency spare since
December 1992, and in January 1993 filed an accounting letter request
seeking FERC concurrence in that treatment. In a letter dated April 27,
1993, the FERC approved the treatment of the spare generator and associated
equipment as an emergency spare component.
ITEM 3 - LEGAL PROCEEDINGS
(a) General. The operation of existing nuclear units and the construction
of nuclear units in the United States continue to be subjects of public
controversy. Various groups have filed lawsuits and participated in
administrative proceedings claiming that the present state of nuclear
technology presents risks to public health and safety and to the environ-
ment. In addition, certain of these groups have proposed restrictive
legislation relating to nuclear power. Some of the claims made by such
groups, if they should prevail, or the existence of the controversy itself,
could cause substantial modifications to or extended shutdowns of plants
presently in operation. See Item 1, BUSINESS, Section (b), "Problems
Affecting the Industry and the Company", above.
(b) Rate Proceedings. On April 7, 1993, the FERC initiated an
investigation pursuant to Section 206 of the Federal Power Act into the
justness and reasonableness of Maine Yankee's rate of return on common
equity ("ROE") established in the Company's 1988 FERC rate case. The FERC
indicated that its concurrent investigations of the rates of return on
common equity of Maine Yankee and other nuclear generating companies were
based on an independent analysis that suggested such rates might be
excessive under current market conditions. After extensive negotiations,
on September 20, 1993, the FERC staff, intervenors and Maine Yankee
submitted for filing an offer of partial settlement, which was approved by
the Commission on December 30, 1993. The settlement agreement provided,
among other things, for the following:
(1) a reduction in Maine Yankee's ROE effective June 15, 1993, to
10.65% from 12.9%;
(2) an agreement by the parties to enter into good-faith negotiations
regarding Maine Yankee's estimated cost of decommissioning and
the corresponding collection rate;
</Page> - 9 -
<PAGE>
ITEM 3 - LEGAL PROCEEDINGS (continued)
(b) Rate Proceedings. (continued)
(3) an agreement that if the parties reached a settlement on Maine
Yankee's decommissioning and collection rate, Maine Yankee would
submit a rate filing requesting approval of the agreed-upon
decommissioning and collection rate and a continuation of the
10.65% ROE, with the support of the FERC staff and intervenors;
(4) an agreement that if the parties were unable to reach agreement
on the decommissioning issues, the Company would submit a rate
filing that would encompass all appropriate rate issues.
On January 18, 1994, Maine Yankee, after reaching agreement on the major
issues, filed its rate case with the FERC. In the filing, the Company
sought approval to continue the ROE of 10.65% as earlier approved by the
FERC. Maine Yankee also sought to increase the annual amount collected to
fund decommissioning costs for the Plant from $9.1 million to the agreed
amount of $14.9 million commencing April 1, 1994. This amount reflects the
first step increase in the estimated cost to fully decommission the Plant
from the $167.0 million (in mid-1987 dollars) allowed by the FERC in the
Company's 1988 rate case to $316.6 million (in mid-1993 dollars) based on
the Company's 1993 decommissioning cost study. The Company plans to
continue to evaluate the cost of decommissioning periodically and seek
additional step increases as necessary. With this filing, Maine Yankee is
also requesting the FERC's approval for current and past expenses to fund
postretirement benefits other than pensions, pursuant to a new accounting
standard. See Note 11 of Notes to Financial Statements.
Along with the rate filing, the Company filed offers of settlement that
were the result of extensive negotiations between Maine Yankee and the
intervenors. The parties, except for one municipal utility, have agreed to
a settlement reflecting, among other things, the following:
(1) an agreement to extend the ROE of 10.65% to April 1, 1997, or
later, except for certain reopener provisions;
(2) an agreement to establish the decommissioning collection rate
described above based on the new decommissioning cost estimate of
$316.6 million;
(3) an agreement to establish a moratorium on Maine Yankee's ROE and
decommissioning collection rate until April 1, 1997, except in
certain limited circumstances.
The settlement offer does not address the treatment of postretirement
benefits other than pensions.
Although the Company has reached agreement with all of the principal
parties on the major rate issues, the Company cannot predict with certainty
what action the FERC will take on its rate filing.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
</Page> - 10 -
<PAGE> PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCK-
HOLDER MATTERS
The Company's Common Stock, owned by the Company's ten utility Sponsors, is
not publicly traded. Transfer of the Common Stock is restricted by the
Company's bylaws. The Company has paid cash dividends on its Common Stock
to its utility Sponsors in each year of operation, 1973 through 1993. The
following table shows cash dividends paid for years 1993 and 1992:
<TABLE>
Shares 1993 1992
Outstanding Per Share Per Share
<S> <C> <C> <C>
January 500,000 $ 4.20 $ 4.10
April 500,000 4.20 4.30
July 500,000 3.95 4.15
October 500,000 3.20 4.20
----- -----
$15.55 $16.75
===== =====
</TABLE>
The payment of dividends on the Company's Common Stock is subject to the
following restrictions:
(1) The Company's First Mortgage Indenture (the "Indenture") provides that
the Company shall not declare or pay any dividend on any class of its
stock, except out of earned surplus, and shall not declare or pay any such
dividend or directly or indirectly make any payment on account of the
purchase, redemption, acquisition or other retirement of any shares of its
stock, unless, after giving effect to such declaration or payment, the
Company's Equity shall be at least 35% of Plant Construction Financing, and
the Company's Common Equity shall be at least 30% of Plant Construction
Financing. Under the provisions of its two revolving credit arrangements
with banks, the Company may not permit its Equity (as defined in the
Indenture) to be less than 33% of Plant Construction Financing (as so
defined) and its Common Equity (as so defined) to be less than 28% thereof.
The Company was in compliance with those restrictions through December 31,
1993.
(2) The Company's Articles of Incorporation provide that so long as any
shares of the Company's Cumulative Preferred Stock are outstanding, the
payment of dividends on Common Stock (other than dividends in Common Stock)
and the making of distributions thereon are limited to 50% of Net Income
Available for Dividends on Common Stock for the preceding twelve months if
the Common Stock Equity (after such action) is less than 20% of Total
Capitalization, and to 75% of such Net Income if such Common Stock Equity
(after such action) is 20% or more but less than 25% of Total Capitaliza-
tion. The Company was in compliance with that restriction through
December 31, 1993.
</Page> - 11 -
<PAGE> Maine Yankee Atomic Power Company
Form 10-K - 1993
ITEM 6 - SELECTED FINANCIAL DATA
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Selected Income
Statement Data:
Electric Operating
Revenues $193,102 $187,259 $166,471 $178,524 $158,412
Net Income 8,980 9,173 8,863 9,059 9,021
Earnings Per Share
of Common Stock 14.75 16.79 16.74 17.04 16.92
Dividends Declared Per
Share of Common Stock 14.45 16.85 16.70 17.05 17.05
Selected Balance Sheet Data:
Total Assets $534,817 $521,193 $486,881 $449,219 $419,196
First Mortgage Bonds 103,333 89,390 98,634 52,877 58,514
Nuclear Fuel
Financing Notes 12,000 21,000 26,000 64,000 40,000
Long-Term Fuel
Disposal Liability 103,506 100,364 96,771 91,191 84,371
Trust Fund to Satisfy
Long-Term Fuel
Disposal Liability 86,684 80,655 71,110 59,509 48,122
Redeemable Preferred
Stock 19,800 20,400 6,000 6,600 7,200
</TABLE>
</Page> - 12 -
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For a period commencing January 1, 1973, extending for thirty years
thereafter in accordance with the Power Contracts, as amended, subsequently
extended by the Additional Power Contracts from 2003 to the end of the
useful life of the Plant and completion of all licensing and financial
obligations, and subject to certain limitations, each Sponsor receives its
entitlement percentage of Plant output and is obligated to pay its
entitlement percentage of the Company's total costs, including a return on
invested capital, regardless of the level of operation of the Plant. The
Plant's operating license expires in 2008.
The following is management's analysis of certain significant factors which
have affected the Company's operating results and financial condition for
the period 1991 through 1993.
Operating Results
Plant Operations
The Plant has operated safely and reliably and has been a high production,
low cost supplier of electricity since 1972. The Company has continued to
upgrade its equipment and facilities. The reliability of the Plant is
reflected in its 72% lifetime average capacity factor rating, which
compares very favorably with a lifetime industry average capacity factor of
approximately 67%. Through December 31, 1993, the Company had sold over
106.8 billion KWH of electricity at an average lifetime total cost per KWH
of 2.3 cents.
The Plant is operated on a planned eighteen-month operating cycle and must
be taken off line at the end of a cycle for approximately eight to ten
weeks for scheduled refueling, maintenance and planned construction
activities.
During 1993 the Plant operated at an average 76% capacity factor (using MDC
net rating of 860 MWe) and generated and sold 5.7 billion KWH, the highest
annual electrical production in its history during a refueling year.
Generation
The following table sets forth the Company's average cost of power and
generation for the years 1993, 1992 and 1991. Comparability of amounts
below is primarily impacted by the duration of plant outages. There was no
refueling outage in 1991.
<TABLE> 1993 1992 1991
<S> <C> <C> <C>
Average Cost of Power:
Cents per KWH 3.4 3.5 2.7
Generation:
Net KWH sold (in billions) 5.7 5.3 6.2
</TABLE>
</Page> - 13 -
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Fuel Expenses
Fuel Amortization expense is based on the cost of (1) nuclear fuel in the
reactor core that is allocated to the accounting period based on the level
of energy production and (2) amortization over the remaining useful life of
the Plant for the last core of unburned nuclear fuel.
Fuel amortization decreased by $6.1 million in 1992 over 1991, primarily as
a result of lower generation and a reduction in the amortization rate due
to lower-cost fuel being inserted into the core during the 1992 scheduled
refueling, maintenance and construction outage ("refueling outage").
Fuel Disposal Cost results from (1) a disposal fee of $1.00 per megawatt-
hour of net generation which is assessed by the DOE and is paid quarterly,
and (2) a DOE annual assessment for decontaminating and decommissioning
DOE's enrichment facilities. The 1992 and 1991 disposal costs include
adjustments, lowering expense, for anticipated refunds from the DOE of
$272,000 and $277,000, respectively.
The final DOE rule on the refund process for disposal costs became
effective on January 30, 1992. Over the following four years, the DOE is
implementing the refund process for overpayments through credits against
quarterly payments. The refund process is being completed in two phases.
In the initial phase, principal overpayments and accrued interest through
March 31, 1992, were calculated and made available for credit during the
1992-1994 period. In the second phase, additional accrued interest for
the period April 1, 1992, through September 30, 1994, will be calculated
and made available for credit during 1995. Total credits available for
Maine Yankee are $4,312,246 (plus interest accrued from March 31, 1992,
through December 31, 1993) of which $2,588,296 has been applied through
1993.
Title XI of the Energy Policy Act of 1992 (the "Policy Act") provides for
decontaminating and decommissioning DOE's enrichment facilities to be
partially funded by a special assessment against domestic utilities. Under
the Policy Act the total amount collected for the fiscal year will not
exceed $150,000,000 escalated by the Consumer Price Index ("CPI") annually,
and the collection of the amounts will cease after the earlier of (1) 15
years after the date of the enactment or (2) the collection of
$2,250,000,000 (to be escalated by the CPI annually). Each utility's share
of the assessment is to be based on its cumulative consumption of DOE
enrichment services.
The Company's estimated obligation is $23,985,000 based on information from
the DOE. In September 1993 the Company paid the first assessment of
$1,599,000, of which $1,070,000 was expensed in 1993.
Operation Expense
Operation expense increased by $12.9 million for 1992 over 1991, a non-
outage year, primarily from the effect of the refueling outage in 1992.
</Page> - 14 -
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Maintenance Expense
The increase in maintenance expense by $6.8 million for 1993 over 1992 is
due primarily to a maintenance project involving the Plant's thermal
shield, along with general overall inflation associated with routine
maintenance services, equipment and parts.
The increase in maintenance expense by $14.3 million for 1992 over 1991, a
nonoutage year, is due primarily to expenses incurred for the 1992
refueling outage and general overall inflation associated with routine
maintenance services, equipment and parts.
Income Taxes
The net increase in federal and state income taxes of $.5 million for 1993
over 1992 resulted primarily from a reduction in the flowback of excess
deferred taxes associated with liberalized depreciation created from higher
corporate tax rates in prior periods.
The net increase in federal and state income taxes of $1.7 million for 1992
over 1991 resulted primarily from four items: (1) a reduction in flowback
of investment tax credits associated with the nuclear fuel assemblies as a
result of the 1986 change in federal tax law which eliminated investment
tax credits, (2) a reduction in flowback of excess deferred income taxes
associated with liberalized depreciation, (3) the current state taxation of
the growth in spent fuel trust earnings, offset by (4) the net tax benefits
associated with the increased tax-exempt earnings of the spent fuel and
decommissioning trust funds.
Other Income, Net
The increase in Other Income for 1992 over 1991 reflects primarily the
increased earnings associated with the Company's prior spent fuel disposal
trust fund.
Fuel Disposal Interest
The Company is accruing interest on its obligation to the DOE for fuel
burned prior to April 7, 1983. This interest expense is compounded
quarterly on the DOE obligation at the 13-week Treasury Bill rate. The
interest expense associated with this liability is reflected as Interest
Charges - Fuel Disposal Liability. The decrease in expense for 1993 and
1992 reflects the effect of lower interest rates.
Fuel Financing and Other Bank Note Interest
The average level of borrowings on fuel financing notes and bank notes was
lower in 1993 than in 1992 primarily due to the repayment of short-term
borrowings with the net proceeds of: (1) the $40,000,000 principal amount
of Series E 8.13% Bonds issued on January 22, 1993, which was first applied
to the redemption of the outstanding $27,500,000 principal amount of Series
A 9.10% Bonds; and (2) the $25,000,000 principal amount of Series F 6.89%
Bonds issued on June 4, 1993, which was first applied to the redemption of
the outstanding $16,741,000 principal amount of Series B 8 1/2% Bonds and
the outstanding $4,419,000 principal amount of Series C 7 5/8% Bonds.
</Page> - 15 -
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Allowance for Funds Used
Fluctuations in the amount of allowance for funds (equity and borrowed)
occur as the result of changes in the level of investment in plant
construction and nuclear fuel in process, and/or the rates used for
capitalization of these funds.
Earnings Applicable To Common Stock
The decrease in earnings applicable to common stock of $1.0 million for
1993 over 1992 resulted primarily from a decrease in the Company's ROE from
12.9%, established in the Company's 1988 FERC rate case, to 10.65%
effective June 15, 1993, approved by the FERC on December 30, 1993. See
Note 3 of Notes to Financial Statements, "Most Recent Rate Case", for a
discussion of the rate case filing.
Liquidity and Capital Resources
Capital Resources
Cash flow needs for 1993 were provided from operating activities in the
amount of $54.7 million and decommissioning trust earnings of $7.1 million
restricted to decommissioning trust investments.
The primary uses of cash were for various corporate purposes such as: (1)
nuclear fuel acquisitions of $11.2 million, (2) construction of operating
property, which utilized $14.4 million, (3) trust fund investments of
$22.2 million to meet future plant decommissioning costs and prior spent
fuel permanent disposal, (4) dividend payments of $9.4 million, and (5) the
net redemption of overall debt of $2.7 million.
The Company's current 1994 budget for construction of electric property is
$8.7 million, inclusive of Allowance for Funds Used During Construction
("AFC"), and $23.4 million for procurement of nuclear fuel, inclusive of
Allowance for Funds Used for Nuclear Fuel ("AFN"). See Note 12 of Notes to
Financial Statements, "Commitments and Contingencies", for additional
information concerning the Company's 1994 construction program and the
projected acquisition of nuclear fuel requirements for 1994 through 1998.
At December 31, 1993, the Company had capital resources available from
secured and unsecured lines of credit totaling $106 million, of which
$12.0 million was utilized.
On September 22, 1992, the Company issued $15.0 million of Cumulative
Preferred Stock, 8.00% Series (Sinking Fund), through a private placement
to institutional investors. The net proceeds received by the Company from
the sale of the Preferred Stock were applied to the repayment of bank
borrowings incurred to finance the Company's construction program.
</Page> - 16 -
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Capital Resources (continued)
On January 22, 1993, the Company issued $40.0 million of First Mortgage
Bonds, Series E (Sinking Fund) 8.13% due 2008, through a private placement
to institutional investors. The net proceeds received by the Company from
the bonds were applied to the redemption of the outstanding $27.5 million
principal amount of Series A 9.10% Bonds, with the balance being applied to
the repayment of bank borrowings incurred to finance the Company's
construction and fuel procurement programs.
On June 4, 1993, the Company issued $25.0 million of First Mortgage Bonds,
Series F (Sinking Fund) 6.89% due 2008, through a private placement to an
institutional investor. The net proceeds received by the Company from the
bonds were applied to the redemption of the outstanding $16.7 million
principal amount of Series B 8 1/2% Bonds and $4.4 million principal amount
of Series C 7 5/8% Bonds, with the balance being applied to the repayment
of bank borrowings incurred to finance the Company's construction and fuel
procurement programs.
Each of the Maine Yankee Sponsors has agreed under a Capital Funds
Agreement with the Company to provide a percentage equal to its respective
ownership percentage of the Company's capital requirements not obtained
from other sources, subject to obtaining necessary authorizations of
regulatory bodies in each instance. All such obligations are subject to
the continuing jurisdiction of various federal and state regulatory bodies.
In December 1993 Standard & Poor's Corp. ("S&P") announced that it was
lowering its rating on Maine Yankee's preferred stock to "BBB-" from "BBB"
and its implied senior secured debt rating to "BBB+" from "A-". S&P said
the downgrade reflected a decline in the "aggregate credit quality of the
utility sponsors in light of the recent downgrade of Central Maine Power
Co., which holds a 38% ownership interest in the Maine Yankee plant."
After a series of downgradings of Central Maine Power Company's securities
by three rating agencies, S&P in January 1994 further downgraded Central
Maine's senior secured debt to "BB+" with correspondingly lower ratings for
its unsecured debt and preferred stock.
The Company, as well as the nuclear electric industry in general, has been
challenged by common problems in recent years including those of increasing
operating costs and expenditures for plant modifications attributable to
more stringent regulatory requirements and uncertainties caused by
political involvement in nuclear utility regulation. It is not possible at
this time to predict what impact these uncertainties will have on the
future financial operation of the Company.
Liquidity
The Company bills its customers under a formula rate based on its cost of
service. Unlike traditional utility ratemaking, where rates are based on
a test-year rate base and total revenue requirements, the Company's rates
consist of its actual costs of providing service each month, regardless of
the production level of the Plant, plus the costs, as determined by the
FERC in periodic rate cases, of the following items: (1) return on common
equity; (2) property depreciation; (3) decommissioning expense; (4)
amortization of the materials and supplies inventory that will remain at
the end of the Plant's operating life; and (5) amortization of the fuel
remaining in the core at the end of the Plant's operating life.
</Page> - 17 -
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Liquidity (continued)
The Company therefore recovers all of its actual or estimated costs
monthly from its customers. See Note 3 of Notes to Financial Statements,
"Most Recent Rate Case", for a more detailed discussion of the Company's
rate formula.
In addition to funding its short-term needs, the Company must also fund the
payment of its long-term prior spent fuel disposal liability of $50.4
million and accrual of interest from April 7, 1983, to the time of payment,
which through 1993 amounted to an additional $53.1 million. Maine Yankee
is funding an external trust to provide for payment of this liability.
Payment from the trust to the DOE is scheduled for not earlier than January
1998. The trust is funded at least semiannually by the Company through
deposits, which began in December 1985, with current projected semiannual
deposits of approximately $0.26 million through December 1997. Deposits
are expected to total approximately $62.8 million. The estimated
liability, including interest due at the time of disposal, is projected to
be approximately $115.9 million at January 31, 1998. The Company estimates
that trust fund deposits plus estimated earnings will meet this total
liability if funding continues without material changes.
The Company must also provide for the eventual decommissioning of the Plant
at the end of its operating life. The Company's 1987 external engineering
study estimated the cost of decommissioning to be $142.5 million, plus a
contingency of $35.6 million, for a total of $178.1 million (in mid-1987
dollars). The Company is currently allowed to collect $9.1 million
annually in rates, based on the FERC-approved rate case settlement amount
of $167.0 million (in mid-1987 dollars). The amounts collected in cost of
service are being deposited into an external trust. These amounts,
together with the trust earnings, will be used to meet the Company's
decommissioning obligation. The Company recognizes the relative uncer-
tainties associated with decommissioning, including its changing technology
and the possibility of new requirements of law, and therefore recognizes
the need to monitor and adjust decommissioning collections through
supplemental rate filings with the FERC. In anticipation of such a rate
filing, the Company initiated a new decommissioning cost study by an
external engineering consultant in early 1993. The new study estimates
decommissioning costs to be $273.1 million plus a contingency of $43.5
million for a total of $316.6 million (in mid-1993 dollars). See Note 3 of
Notes to Financial Statements, "Most Recent Rate Case", for a discussion of
the current rate case filing.
Maine Yankee has been notified by the Maine Department of Environmental
Protection ("DEP") that it is one of approximately 100 potentially
responsible parties under the Maine Uncontrolled Hazardous Substance Sites
law for having arranged for the transport of hazardous substances to sites
that have been designated uncontrolled hazardous substance sites by the
DEP. Under the Maine law, each responsible party is jointly and severally
liable for costs associated with the abatement, clean-up or mitigation of
the hazards at such a site. Since the investigations by the DEP and the
Company are in their early stages and a large number of potentially
responsible parties are involved, the Company cannot now predict the amount
of costs it will ultimately be required to assume, but believes the amount
could be material.
</Page> - 18 -
<PAGE>
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX OF FINANCIAL INFORMATION
The information required to be furnished in response to this Item is
submitted on the following pages:
<TABLE> Page
<S> <C>
Report of Independent Public Accountants 20
Financial Statements:
Statement of Income for each of the three years
ended December 31, 1993 21
Balance Sheet at December 31, 1993 and 1992 22
Statement of Capitalization at December 31,
1993 and 1992 24
Statement of Changes in Common Stock
Investment for each of the three years ended
December 31, 1993 25
Statement of Cash Flows for each of the three years
ended December 31, 1993 26
Notes to Financial Statements 28
</TABLE>
</Page> - 19 -
<PAGE> REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF
MAINE YANKEE ATOMIC POWER COMPANY:
We have audited the accompanying balance sheet and statement of
capitalization of MAINE YANKEE ATOMIC POWER COMPANY (a Maine corporation)
as of December 31, 1993 and 1992, and the related statements of income,
changes in common stock investment and cash flows for each of the three
years in the period ended December 31, 1993. These financial statements
and the schedules listed in the index of financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedules 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 referred to above present fairly,
in all material respects, the financial position of MAINE YANKEE ATOMIC
POWER COMPANY as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
As discussed in Notes 2 and 11 of the Notes to Financial Statements,
effective January 1, 1993, the Company changed its method of accounting for
income taxes and other postretirement benefits.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index
of financial statement schedules 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.
ARTHUR ANDERSEN & CO.
Boston, Massachusetts,
January 28, 1994
</Page> - 20 -
<PAGE> Maine Yankee Atomic Power Company
STATEMENT OF INCOME
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
Year Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES $193,102 $187,259 $166,471
------- ------- -------
OPERATING EXPENSES
Fuel
Amortization (Note 1) 16,476 17,000 23,092
Disposal Cost (Note 1) 6,451 5,192 5,915
Operation 77,301 80,414 67,527
Maintenance 38,019 31,209 16,868
Depreciation (Note 1) 16,384 15,388 14,655
Decommissioning (Note 1) 9,074 9,074 9,074
Taxes
Federal and State Income (Note 2) 1,087 629 (1,036)
Local Property 11,730 11,289 10,317
------- ------- -------
Total Operating Expenses 176,522 170,195 146,412
------- ------- -------
OPERATING INCOME 16,580 17,064 20,059
OTHER INCOME (EXPENSE)
Allowance for Equity Funds Used
During Construction (Note 1) 129 57 103
For Nuclear Fuel (Note 1) - - -
Other, Net 5,075 5,365 4,222
------- ------- -------
INCOME BEFORE INTEREST CHARGES 21,784 22,486 24,384
------- ------- -------
INTEREST CHARGES
Long-Term Debt (Note 5) 9,294 8,790 8,411
Fuel Disposal Liability (Note 1) 3,142 3,593 5,553
Fuel Financing Notes (Notes 6 and 7) 254 1,041 1,739
Other Interest Charges (Note 4) 466 169 361
Allowance for Borrowed Funds Used
During Construction (Note 1) (128) (64) (129)
For Nuclear Fuel (Note 1) (224) (216) (414)
------- ------- -------
Total Interest Charges 12,804 13,313 15,521
------- ------- -------
NET INCOME 8,980 9,173 8,863
Dividends on Preferred Stock 1,604 779 494
------- ------- -------
EARNINGS APPLICABLE TO COMMON STOCK $ 7,376 $ 8,394 $ 8,369
======= ======= =======
SHARES OF COMMON STOCK OUTSTANDING 500,000 500,000 500,000
======= ======= =======
EARNINGS PER SHARE OF COMMON STOCK $ 14.75 $ 16.79 $ 16.74
DIVIDENDS DECLARED PER SHARE OF ======= ======= =======
COMMON STOCK $ 14.45 $ 16.85 $ 16.70
======= ======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
</Page> - 21 -
<PAGE> Maine Yankee Atomic Power Company
BALANCE SHEET
(Dollars in Thousands)
ASSETS
<TABLE> December 31,
1993 1992
<S> <C> <C>
ELECTRIC PROPERTY, at Original Cost
(Note 5) (Sch. V) $396,133 $384,664
Less: Accumulated Depreciation and Amortization
(Note 1) (Sch. VI) 175,996 163,887
------- -------
220,137 220,777
Construction Work in Progress 2,660 3,705
------- -------
Net Electric Property 222,797 224,482
------- -------
NUCLEAR FUEL, at Original Cost
(Note 1) (Sch. V)
Nuclear Fuel in Reactor 82,794 84,061
Nuclear Fuel - Spent 363,985 331,801
Nuclear Fuel - Stock 9,376 12,222
------- -------
456,155 428,084
Less: Accumulated Amortization (Note 1)
(Sch. VI) 417,588 401,112
------- -------
38,567 26,972
Nuclear Fuel in Process 310 21,741
------- -------
Net Nuclear Fuel 38,877 48,713
------- -------
Net Electric Property and Nuclear Fuel 261,674 273,195
------- -------
CURRENT ASSETS
Cash and Cash Equivalents 1,937 28
Restricted Cash 561 -
Accounts Receivable 15,941 25,869
Materials and Supplies, at Average Cost (Note 1) 12,220 13,133
Prepayments 5,359 5,119
------- -------
Total Current Assets 36,018 44,149
------- -------
DEFERRED CHARGES AND OTHER ASSETS
Trust Funds (Note 1)
Fuel Disposal 86,684 80,655
Plant Decommissioning 93,847 77,686
Accumulated Deferred Income Tax Assets (Note 2) 26,823 11,533
Regulatory Asset - DOE Decontamination
and Decommissioning Fee 22,475 25,960
Other Deferred Charges and Other Assets 7,296 8,015
------- -------
Total Deferred Charges and Other Assets 237,125 203,849
------- -------
$534,817 $521,193
======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
</Page> - 22 -
<PAGE> Maine Yankee Atomic Power Company
BALANCE SHEET
(Dollars in Thousands)
STOCKHOLDERS' INVESTMENT AND LIABILITIES
<TABLE>
December 31,
1993 1992
<S> <C> <C>
CAPITALIZATION (See Separate Statement)
Common Stock Investment $ 67,654 $ 67,503
Redeemable Preferred Stock 19,800 20,400
Long-Term Debt 103,333 89,390
------- -------
Total Capitalization 190,787 177,293
------- -------
LONG-TERM FUEL DISPOSAL LIABILITY (Note 1) 103,506 100,364
------- -------
NUCLEAR FUEL FINANCING NOTES (Notes 6 and 7) 12,000 21,000
------- -------
CURRENT LIABILITIES
Notes Payable to Banks (Note 4) (Sch. IX) - 4,465
Current Sinking Fund Requirements
(Notes 5 and 8) 7,267 9,841
Accounts Payable 12,778 16,314
Fuel Disposal Cost Payable (Note 1) - 1,489
Dividends Payable 1,951 2,512
Accrued Interest and Taxes 2,260 3,473
Other Current Liabilities 3,631 1,933
------- -------
Total Current Liabilities 27,887 40,027
------- -------
COMMITMENTS AND CONTINGENCIES (Note 12)
RESERVES AND DEFERRED CREDITS
Plant Decommissioning Reserve (Note 1)
(Sch. VIII) 94,665 78,486
Deferred Credits
Accumulated Deferred Income Tax Liabilities
(Note 2) 60,921 61,809
DOE Decontamination and Decommissioning Fee 19,188 24,801
Regulatory Liability - Income Taxes (Note 2) 12,628 -
Unamortized Investment Tax Credits (Note 2) 7,227 7,714
Unamortized Gains on Reacquired Debt (Note 1) 3,468 5,336
Other Deferred Credits 2,540 4,363
------- -------
Total Reserves and Deferred Credits 200,637 182,509
------- -------
$534,817 $521,193
======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
</Page> - 23 -
<PAGE> Maine Yankee Atomic Power Company
STATEMENT OF CAPITALIZATION
(Dollars in Thousands)
<TABLE>
December 31,
1993 1992
<S> <C> <C>
COMMON STOCK INVESTMENT
Common Stock, $100 Par Value, 500,000 Shares
Authorized and Outstanding $ 50,000 $ 50,000
Other Paid-in Capital 16,676 16,712
Capital Stock Expense (472) (511)
Gain on Redemption of Preferred Stock 1,106 1,100
Premiums on Preferred Stock 79 88
Retained Earnings (Note 9) 265 114
------- -------
67,654 67,503
------- -------
REDEEMABLE PREFERRED STOCK
7.48% Series, $100 Par Value
Authorized 60,000 Shares
Outstanding 54,000 in 1993 and 60,000
in 1992 (Note 8) 5,400 6,000
8.00% Series, $100 Par Value
Authorized 200,000 Shares
Outstanding 150,000 (Note 8) 15,000 15,000
------- -------
20,400 21,000
Less: Current Sinking Fund Requirements 600 600
------- -------
19,800 20,400
------- -------
LONG-TERM DEBT (Note 5)
First Mortgage Bonds
Series A - 9.10 % due May 1, 2002 - 27,500
Series B - 8 1/2% due May 1, 2002 - 16,741
Series C - 7 5/8% due May 1, 2002 - 4,419
Series D - 8.79 % due May 1, 2002 45,000 50,000
Series E - 8.13 % due May 1, 2008 40,000 -
Series F - 6.89 % due May 1, 2008 25,000 -
------- -------
110,000 98,660
Less: Current Sinking Fund Requirements 6,667 9,241
Unamortized Debt Discount, Net of
Premium - 29
------- -------
103,333 89,390
------- -------
Total Capitalization $190,787 $177,293
======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
</Page> - 24 -
<PAGE> Maine Yankee Atomic Power Company
STATEMENT OF CHANGES IN COMMON STOCK INVESTMENT
for the Three Years Ended December 31, 1993
(Dollars in Thousands)
<TABLE>
Amount at Retained
Shares Par Value Other,Net Earnings Total
<S> <C> <C> <C> <C> <C>
Balance-December 31, 1990 500,000 $50,000 $17,831 $ 126 $67,957
Add (Deduct):
Net Income - - - 8,863 8,863
Cash Dividends
Declared on -
Common Stock - - - (8,350) (8,350)
Preferred Stock - - - (494) (494)
Redemption of
Preferred Stock - - 4 - 4
Other - - (66) - (66)
------- ------ ------ ----- ------
Balance-December 31, 1991 500,000 50,000 17,769 145 67,914
Add (Deduct):
Net Income - - - 9,173 9,173
Cash Dividends
Declared on -
Common Stock - - - (8,425) (8,425)
Preferred Stock - - - (779) (779)
Redemption of
Preferred Stock - - 5 - 5
Other - - (385) - (385)
------- ------ ------ ------ ------
Balance-December 31, 1992 500,000 50,000 17,389 114 67,503
Add (Deduct):
Net Income - - - 8,980 8,980
Cash Dividends
Declared on -
Common Stock - - - (7,225) (7,225)
Preferred Stock - - - (1,604) (1,604)
Redemption of
Preferred Stock - - 6 - 6
Other - - (6) - (6)
------- ------ ------ ------ ------
Balance-December 31, 1993 500,000 $50,000 $17,389 $ 265 $67,654
======= ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
</Page> - 25 -
<PAGE> Maine Yankee Atomic Power Company
STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<TABLE> Year Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Operating Activities
Net Income $ 8,980 $ 9,173 $ 8,863
Items Not Requiring (Providing) Cash
Fuel Amortization 16,476 17,000 23,092
Depreciation and Decommissioning 25,458 24,462 23,729
Deferred Income Taxes and Investment
Tax Credits, Net (4,037) (5,472) (8,784)
Allowance for Equity Funds Used for
Nuclear Fuel and During Construction (129) (57) (103)
Long-Term Fuel Disposal Interest, Net of AFN 2,927 3,432 5,242
Other, Net (4,553) 9,630 (7,638)
Changes in Certain Assets and Liabilities
Accounts Receivable 9,928 (5,711) (1,727)
Other Current Assets 112 (191) (1,276)
Accounts Payable 766 (5,004) 2,432
Accrued Interest and Taxes (1,213) (242) 1,701
------ ------ ------
Net Cash Provided by Operating Activities 54,715 47,020 45,531
------ ------ ------
Investing Activities
Acquisition of Nuclear Fuel (6,640) (17,815) (17,563)
Construction of Electric Property (14,312) (6,659) (22,681)
Changes in Accounts Payable - Investing Activities
Nuclear Fuel (4,527) 4,422 282
Construction of Electric Property (127) (1,770) 8,421
Investment Income in Decommissioning Trust 7,105 4,542 3,587
Trust Fund Investments
Fuel Disposal (6,029) (9,545) (11,601)
Plant Decommissioning (16,161) (13,592) (12,665)
------ ------ ------
Net Cash Used by Investing Activities (40,691) (40,417) (52,220)
</TABLE> ------ ------ ------
</Page> - 26 -
<PAGE> Maine Yankee Atomic Power Company
STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<TABLE> Year Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Financing Activities
Issuances (Redemptions)
Bank Notes, Net $ (4,465) $ 2,025 $ 2,385
Fuel Financing Notes, Net (9,000) (5,000) (38,000)
Long-Term Debt
Issuances 65,000 - 60,000
Redemptions (53,660) (9,258) (8,036)
Preferred Stock
Issuances - 15,000 -
Redemptions (600) (600) (598)
Dividend Payments
Common Stock (7,775) (8,375) (8,475)
Preferred Stock (1,615) (490) (505)
Net Cash Provided (Used) by ------ ------ ------
Financing Activities (12,115) (6,698) 6,771
------ ------ ------
Net Increase (Decrease) in
Cash and Cash Equivalents 1,909 (95) 82
Cash and Cash Equivalents at
Beginning of Year 28 123 41
------ ------ ------
Cash and Cash Equivalents at End of Year $ 1,937 $ 28 $ 123
======= ====== ======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest (net of amounts capitalized) $ 9,998 $ 10,388 $ 9,791
Income taxes $ 6,356 $ 6,038 $ 6,634
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Company considers all highly
liquid instruments
purchased having a maturity of three months or less to be cash equivalents.
The accompanying notes are an integral part of these financial statements.
</TABLE>
</Page> - 27 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company: The Company owns and operates a pressurized-water
nuclear-powered electric generating plant with a current rated net
capacity of approximately 860 megawatts (the "Plant"). The Plant
commenced commercial operation on January 1, 1973. The following New
England electric utilities own all of the Company's common stock:
<TABLE>
Ownership
Sponsor/Participant Interest
<S> <C>
Central Maine Power Company 38%
New England Power Company 20
The Connecticut Light and Power Company 12
Bangor Hydro-Electric Company 7
Maine Public Service Company 5
Public Service Company of New Hampshire 5
Cambridge Electric Light Company 4
Montaup Electric Company 4
Western Massachusetts Electric Company 3
Central Vermont Public Service Corporation 2
---
100%
</TABLE> ===
For a period commencing January 1, 1973, extending for thirty years
thereafter in accordance with the Power Contracts, as amended,
subsequently extended by the Additional Power Contracts from 2003 to
the end of the useful life of the Plant and completion of all licensing
and financial obligations, and subject to certain limitations, each
Sponsor receives its entitlement percentage of Plant output and is
obligated to pay its entitlement percentage of the Company's total
costs, including a return on invested capital, regardless of the level
of operation of the Plant. The Plant's operating license expires in
2008.
Regulation: The Company is subject to the regulatory authority of the
Federal Energy Regulatory Commission ("FERC"), the Nuclear Regulatory
Commission ("NRC") and the Maine Public Utilities Commission ("MPUC")
and other federal and state agencies as to rates, accounting,
operations and other matters.
Depreciation: Depreciation is provided using a composite remaining
life method designed to fully depreciate the original cost of electric
plant over the Plant operating life. Under the composite method, at
the time depreciable property is retired, the original cost, plus cost
of removal, less salvage, of such property is charged to accumulated
depreciation.
</Page> - 28 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Decommissioning: A study conducted for the Company in 1987 by an
external engineering consultant estimated decommissioning costs, which
include the costs of removal of the Plant and reclamation of the Plant
site, to be $142.5 million, plus a contingency of $35.6 million, for a
total of $178.1 million (in mid-1987 dollars). The Company is
currently allowed to collect $9.1 million annually in rates, based on
the FERC-approved rate case settlement amount of $167.0 million (in
mid-1987 dollars). Through 1993 the Company had collected $69.1
million for decommissioning, which funds are held by an independent
trustee. The total decommissioning fund balance as of December 31,
1993, was $93.8 million (including interest earned) and is included in
Deferred Charges and Other Assets on the accompanying balance sheet.
The amounts collected, together with the trust earnings, will be used
to meet the Company's decommissioning obligation.
The Company's most recent study, conducted by the same consultant in
1993, estimated decommissioning costs to be $273.1 million, plus a
contingency of $43.5 million, for a total of $316.6 million (in mid-
1993 dollars). See Note 3 of Notes to Financial Statements, "Most
Recent Rate Case." The Company recognizes the relative uncertainties
associated with decommissioning, including its changing technology and
the possibility of new requirements of law, and therefore recognizes
the need to monitor and adjust decommissioning collections through
supplemental rate filings with the FERC.
Amortization of Nuclear Fuel: The cost of nuclear fuel in the reactor
is amortized to Fuel Expense based on the ratio of energy produced
during the period to the estimated total core capability.
The Company amortizes to expense the estimated costs of the unburned
nuclear fuel which is expected to be in the reactor core at the
expiration of the Plant's NRC operating license life in 2008. These
costs are being amortized over the period ending October 2008.
Accumulated amortization for last core fuel for 1993 and 1992 was
$8,221,000 and $7,248,000, respectively.
Federal Department of Energy ("DOE") Decontamination and
Decommissioning Assessment: Title XI of the Energy Policy Act of 1992
(the "Policy Act") provides for decontaminating and decommissioning
DOE's enrichment facilities to be partially funded by a special
assessment against domestic utilities. Under the Policy Act the total
amount collected for a fiscal year will not exceed $150,000,000
escalated by the Consumer Price Index ("CPI") annually, and the
collection of the amounts will cease after the earlier of (1) 15 years
after the date of the enactment or (2) the collection of $2,250,000,000
(to be escalated by the CPI annually). Each utility's share of the
assessment is to be based on its cumulative consumption of DOE
enrichment services.
</Page> - 29 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Maine Yankee's preliminary estimate of its annual assessment was
$1,760,000 (1.17% of the $150,000,000). As of year-end 1992, the
Company had accrued to Deferred Credits its estimated obligation of
$26,400,000 related to prior years' usage, with an equal amount charged
to Nuclear Fuel - Spent, to be paid over the 15-year period beginning
October 1, 1992.
In August 1993 the Company changed the estimated annual assessment to
$1,599,000 (1.066% of the $150,000,000) and decreased the estimated
obligation of $26,400,000 to $23,985,000, based on information provided
by the DOE.
In September 1993 the Company paid the first assessment of $1,599,000.
In accordance with the September 24, 1993, accounting ruling of the
FERC the cost previously recorded in Nuclear Fuel - Spent was
reclassified to Other Regulatory Assets. At December 31, 1993 and
1992, the unamortized balance of the Regulatory Asset was $22,475,000
and $25,960,000, respectively.
Fuel Disposal Cost: In 1983 the Company entered into a contract with
the DOE for disposal of its spent nuclear fuel, as required by the
Nuclear Waste Policy Act of 1982, pursuant to which a fee of $1.00 per
megawatt-hour is assessed against current generation and is paid to the
DOE quarterly. The Company also has an obligation of $50.4 million
with respect to generation prior to April 7, 1983 (the date current DOE
assessments began), all of which the Company has already collected from
its customers, but for which a reserve was not funded. The Company has
elected under the terms of this contract to make a single payment of
this obligation prior to the first delivery of spent fuel to DOE,
scheduled to begin no earlier than 1998 (See Note 12). Interest on the
obligation accrues at the 13-week Treasury Bill rate compounded on a
quarterly basis from April 7, 1983, through the date of the actual
payment and is billed under the terms of the Power Contract. Interest
accrued and billed through December 31,1993, amounted to $53.1 million.
The Company has formed a trust to provide for payment of this long-term
fuel obligation. The total spent fuel fund balance, held by an
independent trustee, as of December 31, 1993, was $86.7 million
(including interest earned) and is included in Deferred Charges and
Other Assets on the accompanying balance sheet. Funding of the trust
is being made through deposits by the Company at least semiannually,
which began in December 1985, with current projected semiannual
deposits of approximately $0.26 million through December 1997. Deposits
are expected to total approximately $62.8 million. The trust fund
deposits plus estimated earnings are projected to meet the total
estimated future liability of $115.9 million at January 31, 1998.
</Page> - 30 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Amortization of Materials and Supplies: The Company began reserving
for materials and supplies inventory that is expected to be
unrecoverable at the end of the Plant's life. This amortization
expense is based on the current inventory balance less the accumulated
amortization. This cost is being amortized over the period ending
October 2008 on a monthly basis using the prior month's ending
balances. Accumulated amortization for 1993 and 1992 was $3,480,000
and $2,650,000, respectively.
Allowance for Funds Used During Construction ("AFC") and Allowance for
Funds Used for Nuclear Fuel ("AFN"): In accordance with prior rate-
making treatment, the Company earns a current return on up to 50% of
Construction Work in Progress ("CWIP") and 50% of Nuclear Fuel in
Process ("NFIP"), subject to certain limitations. The Company
capitalizes the net cost of borrowed funds and the allowed rate of
return on equity funds used to finance its remaining construction and
nuclear fuel acquisition costs as AFC and AFN. The amount of the
allowance recorded is determined by multiplying the applicable average
monthly balance of CWIP and NFIP by the weighted average cost of
capital used to finance the respective additions.
The following table contains the rates used for the most recent three
annual periods:
AFC AFN
on CWIP on NFIP
1993 9.50% 5.93%
1992 9.94 5.97
1991 10.18 9.86
Unamortized Gain or Loss on Reacquired Debt: Gains and losses on bonds
reacquired to satisfy sinking fund requirements of First Mortgage Bonds
are deferred and amortized to income over the remaining original terms
of the applicable series as prescribed by the Uniform System of
Accounts of the FERC.
</Page> - 31 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
2. INCOME TAX EXPENSE
The components of federal and state income taxes reflected in the
Statement of Income are as follows:
<TABLE>
Year Ended December 31,
1993 1992 1991
(Dollars in Thousands)
<S> <C> <C> <C>
Federal
Current $ 4,301 $ 4,590 $ 6,493
Deferred (3,673) (4,582) (5,918)
Investment tax credits, net (487) (538) (2,535)
----- ----- -----
141 (530) (1,960)
State ----- ----- -----
Current 823 1,511 1,256
Deferred 123 (352) (332)
----- ----- -----
946 1,159 924
Total federal and state ----- ----- -----
income taxes $ 1,087 $ 629 $(1,036)
</TABLE> ===== ===== =====
Deferred income taxes are provided to recognize the income tax effect
of reporting certain transactions in different years for income tax and
financial reporting purposes in accordance with the ratemaking policies
of the FERC. Provisions for deferred income taxes reflect the tax
effect of all timing differences.
In February 1992, the FASB issued SFAS No. 109 on accounting for income
taxes effective for fiscal years beginning after December 15, 1992.
The Company adopted the newly revised standard effective January 1,
1993, and will not restate prior periods. The standard requires the
use of the liability method under which existing deferred taxes will be
adjusted currently to reflect the effect of tax rates applicable to the
years in which these taxes would become payable. Under this method,
deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect in the year in which the
differences are expected to reverse. The new standard had no impact on
total income tax expense for financial reporting purposes. The net
regulatory liability related to income taxes is $12,628,000 as of
December 31, 1993. This liability is being amortized consistent with
the Company's ratemaking.
</Page> - 32 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
2. INCOME TAX EXPENSE (continued)
Accumulated deferred income taxes consisted of the following as of
December 31, 1993.
<TABLE> Amount
(Dollars in Thousands)
<S> <C>
Liabilities
Property $58,158
Other 2,763
------
60,921
Assets ------
Decommissioning 8,877
Regulatory Tax Liability 5,285
Investment Tax Credit 4,797
Last Core Fuel and Material and Supplies Inventory 4,053
Other 3,811
------
26,823
Accumulated Deferred Income Taxes, ------
Net at December 31, 1993 $34,098
</TABLE> ======
A valuation allowance has not been recorded at December 31, 1993, as
the Company expects that all deferred income tax assets will be
realized in the future.
The principal components of deferred federal and state income taxes
required to be disclosed pursuant to the accounting standards for
income taxes in effect prior to the adoption of SFAS No. 109 are as
follows:
<TABLE> Year Ended December 31
(Dollars in thousands) 1992 1991
Federal State Federal State
<S> <C> <C> <C> <C>
Depreciation $ (349) $(101) $(2,292) $(734)
Decommissioning (1,219) - (1,219) -
Amortization - last
core fuel and
materials and supplies (453) (145) (528) (169)
Alternative minimum tax 17 - (876) -
Fuel contract
termination fees (286) (92) 932 299
Flowback of excess
deferrals (1,085) - (1,477) -
Other, net (1,207) (14) (458) 272
----- --- ----- ---
Total deferred taxes $(4,582) $(352) $(5,918) $(332)
</TABLE> ===== === ===== ===
</Page> - 33 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
2. INCOME TAX EXPENSE (continued)
Excess deferrals were created as a result of the reduction in the
federal income tax rate to 34 percent. The excess deferral related to
accelerated tax depreciation will be flowed back as a cost of service
reduction over the period that the depreciation timing difference
reverses (i.e., the period that straight-line depreciation exceeds
accelerated depreciation). The excess deferred tax reserve related to
other book/tax timing differences is being flowed back on a
straight-line basis over the remaining book life of the plant
facilities.
Investment tax credits utilized to reduce federal income taxes
currently payable are deferred and amortized over the lives of the
related assets.
The following table reconciles the statutory federal income tax rate to
the effective tax rate for financial reporting purposes.
<TABLE>
1993 1992 1991
(Dollars in Thousands)
Amount % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C>
Statutory federal income
tax rate $ 3,101 34.0 $ 2,939 34.0 $ 2,347 34.0
Increase (reduction) in
taxes resulting from:
Investment tax
credits (487) (5.3) (406) (4.7) (1,216) (17.6)
Flowback of excess
deferred income taxes (596) (6.5) (1,085) (12.6) (1,477) (21.4)
Nontaxable interest
income:
Spent Fuel Trust (1,807) (19.8) (1,811) (21.0) (1,516) (22.0)
Nonqualified Decom-
missioning Trust (441) (4.8) (440) (5.1) (386) (5.6)
Other 371 3.9 273 3.2 288 4.2
----- ---- ----- ---- ----- ----
Calculated rate $ 141 1.5 $ (530) (6.2) $(1,960) (28.4)
</TABLE> ===== ==== ===== ==== ===== ====
3. MOST RECENT RATE CASE
On April 7, 1993, the FERC initiated an investigation pursuant to
Section 206 of the Federal Power Act into the justness and
reasonableness of Maine Yankee's rate of return on common equity
("ROE") established in the Company's 1988 FERC rate case. The FERC
indicated that its concurrent investigations of the rates of return on
common equity of Maine Yankee and other nuclear generating companies
were based on an independent analysis that suggested such rates might
be excessive under current market conditions. After extensive
negotiations, on September 20, 1993, the FERC staff, intervenors and
Maine Yankee submitted for filing an offer of partial settlement, which
was approved by the Commission on December 30, 1993. The settlement
agreement provided, among other things, for the following:
</Page> - 34 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
3. MOST RECENT RATE CASE (continued)
(1) a reduction in Maine Yankee's ROE effective June 15, 1993, to
10.65% from 12.9%;
(2) an agreement by the parties to enter into good-faith negotiations
regarding Maine Yankee's estimated cost of decommissioning and the
corresponding collection rate;
(3) an agreement that if the parties reached a settlement on Maine
Yankee's decommissioning and collection rate, Maine Yankee would
submit a rate filing requesting approval of the agreed-upon
decommissioning and collection rate and a continuation of the
10.65% ROE, with the support of the FERC staff and intervenors;
(4) an agreement that if the parties were unable to reach agreement on
the decommissioning issues, the Company would submit a rate filing
that would encompass all appropriate rate issues.
On January 18, 1994, Maine Yankee, after reaching agreement on the
major issues, filed its rate case with the FERC. In the filing, the
Company sought approval to continue the ROE of 10.65% as earlier
approved by the FERC. Maine Yankee also sought to increase the annual
amount collected to fund decommissioning costs for the Plant from $9.1
million to the agreed amounts of $14.9 million commencing April 1,
1994. This amount reflects the first step increase in the estimated
cost to fully decommission the Plant from the $167.0 million (in mid-
1987 dollars) allowed by the FERC in the Company's 1988 rate case to
$316.6 million (in mid-1993 dollars) based on the Company's 1993
decommissioning cost study. The Company plans to continue to evaluate
the cost of decommissioning periodically and seek additional step
increases as necessary. With this filing, Maine Yankee is also
requesting the FERC's approval for current and past expenses to fund
postretirement benefits other than pensions, pursuant to a new
accounting standard. See Note 11 of Notes to Financial Statements.
Along with the rate filing, the Company filed offers of settlement that
were the result of extensive negotiations between Maine Yankee and the
intervenors. The parties, except for one municipal utility, have
agreed to a settlement reflecting, among other things, the following:
(1) an agreement to extend the ROE of 10.65% to April 1, 1997, or
later, except for certain reopener provisions;
(2) an agreement to establish the decommissioning collection rate
described above based on the new decommissioning cost estimate of
$316.6 million;
(3) an agreement to establish a moratorium on Maine Yankee's ROE and
decommissioning collection rate until April 1, 1997, except in
certain limited circumstances.
</Page> - 35 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
3. MOST RECENT RATE CASE (continued)
The settlement offer does not address the treatment of postretirement
benefits other than pensions.
Although the Company has reached agreement with all of the principal
parties on the major rate issues, the Company cannot predict with
certainty what action the FERC will take on its rate filing.
4. NOTES PAYABLE TO BANKS
The Company had bank lines of credit totaling $21.0 million as of
December 31, 1993 and 1992, all of which require an annual fee of 1/4%.
The outstanding bank notes under the lines of credit as of December 31,
1993 and 1992 were $0.0 and $4.5 million respectively.
5. FIRST MORTGAGE BONDS
On March 14, 1991, the Company issued $60.0 million of First Mortgage
Bonds, Series D (Sinking Fund) 8.79% due 2002, through a private
placement to institutional investors. The net proceeds received by the
Company from the sale of Series D Bonds were applied to the repayment
of bank borrowings incurred to finance the Company's construction
program.
On January 22, 1993, the Company issued $40.0 million of First Mortgage
Bonds, Series E (Sinking Fund) 8.13% due 2008, through a private
placement to institutional investors. The net proceeds received by the
Company from the bonds were applied to the redemption of the
outstanding $27.5 million principal amount of Series A 9.10% Bonds,
with the balance being applied to the repayment of bank borrowings
incurred to finance the Company's construction and fuel procurement
programs.
On June 4, 1993, the Company issued $25.0 million of First Mortgage
Bonds, Series F (Sinking Fund) 6.89% due 2008, through a private
placement to an institutional investor. The net proceeds received by
the Company from the bonds were applied to the redemption of the out-
standing $16.7 million principal amount of Series B 8 1/2% Bonds and
$4.4 million principal amount of Series C 7 5/8% Bonds, with the
balance being applied to the repayment of bank borrowings incurred to
finance the Company's construction and fuel procurement programs.
The annual sinking fund requirements of outstanding Series D, E, and F
First Mortgage Bonds and bonds repurchased in advance for each of the
five years ending December 31, 1997, are as follows:
<TABLE> Bonds Repurchased
Sinking in Advance
Fund at December 31, 1993
<S> <C> <C>
1993 $6,667,000 -
1994 6,667,000 -
1995 6,667,000 -
1996 6,667,000 -
1997 6,667,000 -
</TABLE>
</Page> - 36 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
5. FIRST MORTGAGE BONDS (continued)
Under the terms of the Indenture securing the First Mortgage Bonds,
substantially all electric plant of the Company is subject to a first
mortgage lien.
6. SECURED CREDIT AGREEMENT
In 1989 the Company entered into a secured credit agreement with a
group of banks including the Bank of New York ("BNY"), which is also
acting as the agent bank, under which the Company may borrow amounts up
to $50.0 million to finance corporate expenditures. Borrowings are
secured by the Company's nuclear fuel inventory as defined and certain
rights under the Power Contracts and Capital Funds Agreements. Under
the credit agreement as amended in 1992, the Company has four rate
options for financing its interim requirements: (1) a rate based on
the higher of BNY's prime rate or a rate based on overnight federal
funds transactions plus 1/4%; (2) the LIBOR rate plus 1/2%; (3) an
adjusted certificate of deposit rate plus 5/8%; and (4) a rate
established by bid. A quarterly commitment fee of .35% per annum is
required on the unused portion of the facility. The credit agreement
has a three-year term, which may be extended for an additional year on
each anniversary by agreement of the Company and the banks. The
agreement was extended for an additional year in 1993 with a current
maturity date of August 1996. Certain other information relating to
this loan arrangement is as follows:
<TABLE> Year Ended December 31,
1993 1992 1991
(Dollars in Thousands)
<S> <C> <C> <C>
Promissory notes outstanding
at end of period $12,000 $21,000 $26,000
Average daily outstanding borrowings $ 6,595 $22,527 $20,441
Highest level of borrowing $25,000 $36,000 $50,000
Annual interest rate at end of period 3.71% 4.21% 5.57%
Effective average annual interest rate 3.85% 4.62% 6.82%
</TABLE>
7. EURODOLLAR REVOLVING CREDIT AGREEMENT
In January 1990 the Company entered into a Eurodollar Revolving Credit
Agreement with a group of major international banks including Union
Bank of Switzerland, which is also acting as agent bank, under which
the Company may borrow up to $35.0 million. Under the facility each
loan is due one year after the date of the loan, unless an earlier
termination date applies under the agreement, and bears interest at a
LIBOR-based rate plus 5/8%. A commitment fee of .35% on the unused
line is payable quarterly. The loans are secured by a second lien on
the Company's nuclear fuel inventory (excluding fuel in the reactor)
and on certain rights under its Power Contracts and Capital Funds
Agreements requiring payments or financing of fuel-related costs.
</Page> - 37 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
7. EURODOLLAR REVOLVING CREDIT AGREEMENT (continued)
Certain other information relating to the Eurodollar Revolving Credit
Agreement is as follows:
<TABLE> Year Ended December 31,
1993 1992 1991
(Dollars in Thousands)
<S> <C> <C> <C>
Promissory notes outstanding
at end of period $ - $ - $ -
Average daily outstanding borrowings $ - $ - $ 4,285
Highest level of borrowings $ - $ - $30,000
Annual interest rate at end of periods - % - % - %
Effective average annual interest rate - % - % 8.03%
</TABLE>
8. REDEEMABLE PREFERRED STOCK
7.48% Series. The Company must redeem and cancel 6,000 shares annually
of the 7.48% Series Preferred Stock at par value plus accrued
dividends. At the election of the Company, up to an additional 6,000
shares may be redeemed and cancelled at par plus accrued dividends on
each redemption date. The optional provision is not cumulative. The
annual sinking fund requirement through December 31, 1998, is $600,000.
The Company may also redeem, in whole or in part, any additional shares
of the 7.48% Series Preferred Stock upon not less than thirty nor more
than fifty days' notice at $101.50 per share on or before December 31,
1997, and at $100.00 per share thereafter, in each case plus accrued
dividends.
There was no Preferred Stock repurchased for the sinking fund in
advance and not cancelled at December 31, 1993, 1992, and 1991.
8.00% Series. On September 22, 1992, the Company issued $15.0 million
of Cumulative Preferred Stock, 8.00% Series (Sinking Fund), through a
private placement to institutional investors. The net proceeds
received by the Company from the sale of the Preferred Stock were
applied to the repayment of bank borrowings incurred to finance the
Company's construction program.
At the option of the Company, any time on and after October 1, 1997,
shares of the Cumulative Preferred Stock, 8.00% Series are redeemable
at redemption prices decreasing from $105.33 per share on or after
October 1, 1997, to $100.00 per share as of October 1, 2007. No shares
of Cumulative Preferred Stock 8.00% Series may be redeemed, directly or
indirectly, prior to October 1, 1997. Mandatory sinking fund
redemptions of the 8.00% Series shares begin October 1, 2002, and each
October 1 thereafter with a noncumulative optional provision to redeem
additional shares at a price of $100.00 per share plus dividends
accrued.
</Page> - 38 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
9. RETAINED EARNINGS
Under terms of the most restrictive test in the Company's First
Mortgage Indenture and the Company's Articles of Incorporation, no
dividend may be paid on any class of its stock unless the Company is in
compliance with specific equity ratio requirements. Through
December 31, 1993, the Company was in compliance with these
requirements.
10. DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS
The methods and assumptions used to estimate the fair value of each
class of financial instruments for which it is practicable are
discussed below. The carrying amounts of cash and temporary
investments approximate fair value because of the short maturity of
these investments. The fair value of redeemable preferred stock, other
notes and long-term obligations is based on quoted market prices for
the same or similar issues.
The estimated fair value of the Company's financial instruments as of
December 31, 1993, is as follows:
<TABLE>
(Dollars in Thousands) Carrying Fair
Amount Value
<S> <C> <C>
Cash $ 1,937 $ 1,937
Spent Fuel Trust 86,684 94,541
Decommissioning Trust 93,847 99,862
Redeemable Preferred Stock 20,400 22,116
Mortgage Bonds 110,000 115,319
Notes Payable 12,000 12,000
</TABLE>
Anticipated regulatory treatment of any differences between fair value
and carrying value of the Company's financial instruments is expected
to be considered in the future rates charged by the Company.
11. EMPLOYEE AND POSTRETIREMENT BENEFITS
The Company has two separate noncontributory defined-benefit pension
plans which cover substantially all of its union and nonunion
employees. The Company's funding policy is to contribute amounts to
the separate plans which are sufficient to meet the funding
requirements set forth in the Employee Retirement Income Security Act
("ERISA"), plus such additional amounts as the Company may determine to
be appropriate. Total pension expense related to these plans amounted
to $1,524,000 in 1993, $1,434,000 in 1992 and $991,000 in 1991.
Plan benefits under the union retirement plan are based on average
career earnings and length of employee service. Plan benefits under
the nonunion retirement plan are based on average final earnings, as
defined within the plan, and length of employee service.
A summary of the components of net periodic pension cost for the union
and nonunion defined benefit plans in 1993, l992 and 1991 and the total
contributions charged to pension expense is as follows:
</Page> - 39 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
11. EMPLOYEE AND POSTRETIREMENT BENEFITS (continued)
<TABLE>
Union Nonunion
l993 l992 1991 l993 1992 1991
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Service Cost - Benefits Earned
During the Period $ 299 $ 247 $ 185 $ 993 $ 895 $ 628
Interest Cost on Projected
Benefit Obligation 213 182 152 874 731 583
Return on Plan Assets (413) (188) (356) (1,009) (512) (1,024)
Net Amortization and Deferral 158 5 206 409 74 617
--- --- --- ----- ----- -----
Net Periodic Pension Cost $ 257 $ 246 $ 187 $ 1,267 $1,188 $ 804
</TABLE> === === === ===== ===== =====
The following table sets forth the actuarial present value of pension
benefit obligations, the funded status of the plans and the liabilities
recognized on the Company's balance sheet at December 31, 1993 and l992:
<TABLE> Union Nonunion
1993 1992 1993 1992
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Actuarial Present Value of
Benefit Obligations
Vested Benefit Obligation $1,867 $1,163 $ 6,074 $3,202
===== ===== ====== =====
Accumulated Benefit Obligation $2,333 $1,510 $ 7,993 $4,053
===== ===== ====== =====
Projected Benefit Obligation $3,268 $2,328 $15,282 $9,277
Plan Assets at Market Value
(Primarily, Stocks and Bonds) 3,544 2,797 9,451 6,955
Funded Status - Projected ----- ----- ------ -----
Benefit Obligation in Excess
of (Less Than) Plan Assets (276) (469) 5,831 2,322
Unrecognized Prior Service
Cost 15 17 (3,091) (26)
Unrecognized Net (Loss) Gain (138) 173 (1,575) (757)
Unrecognized Net Asset 331 353 442 473
Net Pension Liability (Asset) ----- ----- ----- -----
Recognized in the Balance
Sheet $ (68) $ 74 $ 1,607 $2,012
</TABLE> ===== ===== ====== =====
Assumptions used in determining the actuarial present value of the pension
benefit obligation for the union and nonunion plans at December 31 plans at
December 31 were as follows:
<TABLE> 1993 1992
<S> <C> <C>
Weighted Average Discount Rate 7.25% 8.50%
Rate of Increase in Future Compensation Levels 5.50% 7.00%
Expected Long-Term Return on Assets 8.50% 8.50%
</TABLE></Page> - 40 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
11. EMPLOYEE AND POSTRETIREMENT BENEFITS (continued)
In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for substantially all of its
qualifying employees. These benefits are provided through insurance
companies acting either as an insurer or plan administrator, and premiums
are based on the benefits paid during the year. The Company recognizes
the cost of providing these benefits through charging expense in the
current period. The cost of health care and life insurance benefits,
substantially all of which relates to active employees, aggregated
approximately $2,422,000 in 1993, $2,159,000 in 1992 and $1,833,000 in
1991.
In addition, in 1989 the Company established an employee welfare benefit
plan for nonunion employees, to provide a systematic means of providing
certain life, health and other postretirement benefits to eligible
retired employees and their dependents. In 1990 the Company began
funding the employee welfare benefit plan for union employees. The
benefits of the plan will be provided through a trust fund established
for the exclusive purpose of funding such benefits. The trust fund will
be funded by contributions by participants in the plan, if and to the
extent such contributions are required under the plan, and contributions
by the Company. Contributions made by the Company related to these plans
amounted to $786,000 in 1993, $331,000 in 1992 and $606,000 in 1991.
The benefits provided under the employee welfare benefit plans will be
limited to benefits for participants, dependents and beneficiaries
which qualify as welfare benefits under Section 3(1) of ERISA or as
life, sickness, accident or other benefits permitted to be provided
through (1) a "Voluntary Employees' Beneficiary Association" exempt
from taxation to the extent permitted under Sections 501(c)(9) and 512
of the Internal Revenue Code ("IRC") and the regulations thereunder,
and (2) a 401(h) subaccount, for nonunion employees, established in
accordance with Section 401(h) of the IRC in 1992 and maintained within
the Company's Retirement Income Plan for Nonunion Employees.
In December 1990, the FASB issued a new standard on Employers'
Accounting for Postretirement Benefits Other Than Pensions, such as
health care and life insurance. The Company adopted the new standard
effective January 1, 1993, and did not restate prior periods. The new
standard requires the accrual of the expected cost of such benefits
during the employees' years of service and provides transition rules
allowing the impact of the adoption to be included in annual expense
over a period not greater than 20 years.
The following table sets forth the plan's funded status:
</Page> - 41 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
11. EMPLOYEE AND POSTRETIREMENT BENEFITS (continued)
<TABLE> 1993
<S> <C>
Fair Value of Plan Assets $3,946,538
---------
Accumulated Postretirement Benefit Obligation:
Current Retirees and Beneficiaries 608,451
Active Employees Fully Eligible for Benefits 320,981
Other Active Employees 7,759,440
---------
Total Accumulated Benefit Obligations 8,688,872
---------
Accumulated Benefit Obligation in
Excess of Plan Assets (4,742,334)
Unrecognized Amounts:
Transition Obligation 3,237,765
Prior Service Cost (414,074)
Net Loss 1,622,781
---------
Accrued Postretirement Benefit Cost $ (295,862)
=========
The net periodic postretirement benefit cost expensed for 1993 included
the following components:
Service Cost $ 509,818
Interest Cost 574,018
Actual Return on Assets (44,730)
Deferral of Asset Loss During the Year (173,557)
Amortization of Transition Obligation 215,851
---------
Net Periodic Postretirement Benefit Cost $1,081,400
</TABLE> =========
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation is 7.25%. The expected pre-tax long-
term rate of return on the plan assets is 7.50%. A 14% annual rate of
increase in the per capita cost of covered health care benefits is
assumed for 1993. The health care cost trend rate is assumed to
decrease annually through the year 1999 to an ultimate rate of 5.5%.
Increasing the assumed health care cost trend rates by 1% would
increase the accumulated postretirement benefit obligation as of
December 31, 1993, by $2.0 million.
12. COMMITMENTS AND CONTINGENCIES
Construction: The Company anticipates construction expenditures to
amount to $8.7 million (inclusive of AFC) in 1994.
Nuclear Fuel: The Company anticipates nuclear fuel expenditures of
$23.4 million (inclusive of AFN) for 1994 and $61.4 million (inclusive
of AFN) for the period 1995 through 1998.
</Page> - 42 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES (continued)
Nuclear Fuel Storage: Federal legislation enacted in 1987 directed the
DOE to proceed with the studies necessary to develop and operate a
permanent high-level waste (spent fuel) disposal site at Yucca
Mountain, Nevada. The legislation also provides for the possible
development of a Monitored Retrievable Storage ("MRS") facility and
abandons plans to identify and select a second permanent disposal site.
An MRS facility would provide temporary storage for high-level waste
prior to eventual permanent disposal. In late 1989 the DOE announced
that the permanent disposal site was not expected to open before 2010,
although originally scheduled to open in 1998. Additional delays due
to political and technical problems are probable.
Under the terms of a license amendment approved by the NRC in 1984, the
present storage capacity of the spent fuel pool at the Plant will be
reached in 1999 and after 1996 the available capacity of the pool will
not accommodate a full-core removal. After consideration of available
technologies, the Company elected to provide additional capacity by
replacing the fuel racks in the spent fuel pool at the Plant and, on
January 25, 1993, filed with the NRC seeking authorization to implement
the plan. On March 15, 1994, the NRC granted the authorization. Maine
Yankee believes that the replacement of the fuel racks will provide
adequate storage capacity through the Plant's licensed operating life,
but cannot predict with certainty whether or to what extent the new
level of storage capacity at the Plant will affect the operation of the
Plant or the future cost of disposal.
Nuclear Insurance: In accordance with the Price-Anderson Act, the limit
of liability for a nuclear-related accident is approximately $9.317
billion, effective March 20, 1994. The primary layer of insurance for
the liability is $200 million of coverage provided by the commercial
insurance market. The secondary coverage is approximately $9.117
billion, based on 115 licensed reactors. The secondary layer is
based on a retrospective premium assessment of $75.5 million per
nuclear accident per licensed reactor, payable at a rate not exceeding
$10 million per year per accident. In addition, the retrospective
premium is subject to inflation-based indexing at five-year intervals
and, if the sum of all public liability claims and legal costs arising
from any nuclear accident exceeds the maximum amount of financial
protection, each licensee can be assessed an additional 5% ($3.775
million) of the maximum retrospective assessment.
In addition to the insurance required by the Price-Anderson Act, the
Company carries all-risk nuclear property damage insurance in the
amount of $500 million plus additional excess nuclear property
insurance in the amount of $2.25 billion, effective January 1, 1994.
Of this additional excess insurance, $1.4 billion is provided by a
nuclear electric utility industry insurance company through a
</Page> - 43 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES (continued)
combination of current premiums and retrospective premium assessments.
If the insurance company experiences losses in excess of its capacity
to pay them, each participating utility may be assessed a retrospective
premium of up to 7.5 times its premium with respect to industry losses
in any policy year, which could range up to approximately $12.8 million
for the Company. The remaining excess nuclear property coverage of
$850 million is obtained from the commercial insurance market and is
not subject to retrospective premium assessments. These excess
coverage amounts are the maximum offered by both the industry mutual
company and the commercial market.
Low-Level Waste Disposal: The federal Low-Level Radioactive Waste
Policy Amendments Act (the "Waste Act"), enacted in 1986, required
operating disposal facilities to accept low-level nuclear waste from
other states until December 31, 1992. The Waste Act also set limits on
the volume of waste each disposal facility must accept from each state,
established milestones for the nonsited states to establish facilities
within their states or regions (pursuant to regional compacts) and
authorized increasing surcharges on waste disposal until 1992. After
1992 the states in which there are operating disposal sites are
permitted to refuse to accept waste generated outside their states or
compact regions. In 1987 the Maine Legislature created the Maine Low-
Level Radioactive Waste Authority (the "Maine Authority") to provide
for such a facility if Maine is unable to secure access to out-of-state
facilities after 1992, and the Maine Authority has been engaged in a
search for a qualified disposal site in Maine. The Company volunteered
its site at the Plant for that purpose, but progress toward establish-
ing a definitive site in Maine, as in other states, was difficult
because of the complex technical nature of the search process and the
political sensitivities associated with it. As a result, Maine did not
satisfy its milestone obligation under the Waste Act requiring
submission of a site license application by the end of 1991, and is
therefore subject to surcharges on its waste and has not had access to
regulated disposal facilities since the end of 1992. Thus, Maine
Yankee now stores all waste generated at an on-site storage facility.
At the same time, the State of Maine was pursuing discussions with the
State of Texas concerning participation in a compact with that state
and Vermont. In May 1993, the Texas Legislature approved a compact
with the states of Maine and Vermont. The Maine Legislature in June
1993 ratified the compact and submitted it to ratification by Maine
voters in a referendum held on November 2, 1993, in which the compact
was ratified by a margin of approximately 73% to 27%. It must now be
presented to the United States Congress for final ratification.
</Page> - 44 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES (continued)
The compact provides for Texas to take Maine's low-level waste over a
30-year period for disposal at a planned facility in west Texas. In
return Maine would be required to pay $25 million, assessed to the
Company by the State of Maine, payable in two equal installments, the
first after ratification by Congress and the second upon commencement
of operation of the Texas facility. In addition, the Company would be
assessed a total of $2.5 million for the benefit of the Texas county in
which the facility would be located and would also be responsible for
its pro-rata share of the Texas governing commission's operating
expenses. Pending the ratification votes, the Maine Authority has
suspended its search for a suitable disposal site in Maine.
In the event the required ratification by Congress is not obtained,
subject to continued NRC approval, the Company can continue to utilize
its capacity to store approximately ten to twelve years' production of
low-level waste at its facility at the Plant site, which it started in
January 1993. Subject to obtaining necessary regulatory approval, the
Company could also build a second facility on the Plant site. The
Company believes it is probable that it will have adequate storage
capacity for such low-level waste available on-site, if needed, through
the licensed operating life of the Plant. On January 26, 1993, the NRC
published for public comment a proposed rulemaking that, if adopted,
would require a licensee such as Maine Yankee, as a condition of its
license, to document that it had exhausted other reasonable waste
management options in order to be permitted to store low-level waste
on-site beyond January 1, 1996. Such options include taking all
reasonable steps to contract, either directly or through the state, for
disposal of the low-level waste. On February 9, 1994, the NRC, after
affirming its preference for disposal of waste over storage, announced
its decision to withdraw the proposed rulemaking. Maine Yankee expects
the NRC to issue its formal notice of withdrawal in the spring of 1994.
The Company cannot predict whether the final required ratification of
the Texas compact or other regulatory approvals required for on-site
storage will be obtained, but the Company intends to utilize its on-
site storage facility in the interim and continue to cooperate with the
State of Maine in pursuing all appropriate options.
Maine Yankee has been notified by the Maine Department of Environmental
Protection ("DEP") that it is one of approximately 100 potentially
responsible parties under the Maine Uncontrolled Hazardous Substance
Sites law for having arranged for the transport of hazardous substances
to sites that have been designated uncontrolled hazardous substance
sites by the DEP. Under the Maine law, each responsible party is
jointly and severally liable for costs associated with the abatement,
clean-up or mitigation of the hazards at such a site. Since the
investigations by the DEP and the Company are in their early stages and
a large number of potentially responsible parties are involved, the
Company cannot now predict the amount of costs it will ultimately be
required to assume, but believes the amount could be material.
</Page> - 45 -
<PAGE> Maine Yankee Atomic Power Company
NOTES TO FINANCIAL STATEMENTS
13. UNAUDITED QUARTERLY FINANCIAL DATA
Unaudited quarterly financial data are shown below. Results of
operations vary between quarters, primarily because of scheduled and
unscheduled plant outages.
<TABLE>
Quarter Ended
March 31 June 30 September 30 December 31
(Dollars in Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
1993
Electric Operating
Revenues $41,817 $42,053 $62,756 $46,476
Operating Income 4,241 4,453 4,444 3,442
Net Income 2,506 2,457 2,522 1,495
Earnings Per Share
of Common Stock 4.21 4.11 4.24 2.19
1992
Electric Operating
Revenues $57,357 $44,457 $40,261 $45,184
Operating Income 4,195 4,436 4,266 4,167
Net Income 2,199 2,231 2,269 2,474
Earnings Per Share
of Common Stock 4.17 4.24 4.25 4.13
</TABLE>
14. TRANSACTIONS WITH ASSOCIATED COMPANIES
During 1993, 1992 and 1991, the Company paid $12,654,440, $12,214,635
and $11,099,994, respectively, to Yankee Atomic Electric Company, an
associate of several of the Sponsors, for services at cost for its
engineering and nuclear services department. Central Maine Power
Company has furnished the Company certain engineering, administrative
and legal services, and furnished certain facilities at cost, and
electric service at its filed rates. During 1993, 1992 and 1991,
Central Maine Power Company was reimbursed in the amount of $3,454,611,
$4,010,974 and $3,485,433, respectively, for such services. It is
expected that Yankee Atomic Electric Company and Central Maine Power
Company will continue to perform similar services for the Company in
the future, for which they will be reimbursed by the Company.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
</Page> - 46 -
<PAGE> PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A. Directors
The directors of the Company and their principal occupations and all
positions and offices with the Company are as follows:
<TABLE>
Name, Age and Year
First Elected Director Principal Occupation
<S> <C>
David T. Flanagan, 46, 1988, President and Chief Executive
Chairman of the Board of Officer, Central Maine Power
Directors Company
Robert S. Briggs, 50, 1991, President and Chief Executive
Director Officer, Bangor Hydro-Electric
Company
Ted C. Feigenbaum, 43, 1994, Senior Vice President and Chief
Director (effective Nuclear Officer, North Atlantic
March 18, 1994)North Atlantic Energy Service Corporation
Charles D. Frizzle, 51, President and Chief Executive
1991, President and Chief Officer of the Company
Executive Officer, and
Director
Frederic E. Greenman, 57, 1984, Senior Vice President, Secretary
Director and General Counsel, New England
Power Company
R. Edward Hanson, 56, 1994, Retired Vice President of
Director (effective Production, Central Maine Power
March 21, 1994) Company
G. Melvin Hovey, 64, 1984, Chairman and President,
Director Maine Public Service Company
John B. Keane, 47, 1992, Vice President and Treasurer,
Director Northeast Utilities
Donald F. Kelly, 62, 1992, Retired Senior Vice President,
Director Production, Engineering and Power
Supply, Central Maine Power
Company
Carroll R. Lee, 44, 1979, Vice President - Operations, Bangor
Director Hydro-Electric Company
John W. Newsham, 61, 1993 Vice President, New England
Director Electric System
</TABLE>
</Page> - 47 -
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
A. Directors (continued)
<TABLE>
Name, Age and Year
First Elected Director Principal Occupation
<S> <C>
John F. Opeka, 53, 1986, Executive Vice President -
Director Engineering and Operations,
Northeast Utilities Service
Company
Donald G. Pardus, 53, 1989, Chairman and Chief Executive
Director Officer, EAstern Utilities
Associates
Gerald C. Poulin, 52, 1989, Vice President, Production and
Director Support, Central Maine Power
Company
John W. Rowe, 48, 1991, * President and Chief Executive
Director Officer, New England Electric
System
Robert de R. Stein, 44, 1993, Senior Vice President, Engineering
Director and Energy Resources, Central
Vermont Public Service Corporation
Douglas Stevenson, 45, 1993, Treasurer, Central Maine Power
Director Company
Russell D. Wright, 47, 1989 President and Chief Operating
Director Officer, Commonwealth Electric
Company
</TABLE>
* Mr. Rowe also served as a director of the Company from 1984 to 1989
while President and Chief Executive Officer of Central Maine Power
Company.
Each of the directors has been for the past five years, and each of the
directors is now, an officer or employee of the Company, one of the
Sponsors or an associated company thereof.
Each of the Sponsors is represented on the Company's Board of
Directors, but there is no formal arrangement with respect to such
representation. The directors are elected at the annual meeting of
stockholders and hold office until their successors are elected and
qualified. They are not compensated by Maine Yankee for serving as
directors.
</Page> - 48 -
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
B. Executive Officers
The following are the executive officers of the Company with all
positions and offices held:
<TABLE>
Name Age Office and Year First Elected Officer
<S> <C> <C>
Charles D. Frizzle 51 President - 1989
President and Chief Executive Officer -
1992
Patrick S. Lydon 51 Vice President, Finance and Admin-
istration, and Treasurer - 1985
Vice President, Finance and Admin-
istration - 1993
Andrew C. Kadak 48 Vice President, Nuclear Services -
1987
G. Douglas Whittier 47 Vice President, Licensing and
Engineering - 1990
Graham M. Leitch 59 Vice President, Operations, effective
January 1,1993
James D. Firth 40 Vice President, Public and
Governmental Affairs - 1989
(Resigned effective April 1, 1993)
Mary Ann Lynch 38 General Counsel - 1990
Michael E. Thomas 34 Treasurer, effective January 1, 1993
William M. Finn 57 Secretary and Clerk - 1984
</TABLE>
Each of the executive officers except Mr. Leitch and Ms. Lynch has been
for the past five years and is now an officer or employee of the
Company or one of the Sponsors or an associated company thereof.
Mr. Leitch had been retired from Philadelphia Electric Company since
July 1992 after serving since 1987 as Vice President and Plant Manager
of the Limerick nuclear power plant.
</Page> - 49 -
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
B. Executive Officers (continued)
Ms. Lynch was associated with the law firm of Verrill & Dana, Portland,
Maine, from 1984 until her employment with the Company.
The executive officers are elected annually by the Board of Directors
and hold office until their successors are elected and qualified. All
are employees of the Company except Mr. Kadak, who is employed by
Yankee Atomic Electric Company, and Mr. Finn, who is employed by
Central Maine Power Company.
There are no family relationships between any directors or executive
officers nor any formal arrangements or understandings pursuant to
which any were selected as officers or directors.
C. Other Directorships
The following directors of the registrant hold other directorships as
follows:
<TABLE>
Director Other Directorships Held
<S> <C>
Robert S. Briggs Bangor Hydro-Electric Company
East Branch Improvement Company
Maine Distributors
Eastern Maine Medical Center
Penobscot Hydro Co., Inc.
Bangor Var Co., Inc.
Ted C. Feigenbaum Greater Seacoast United Way
Portsmouth Academy for the Performing
Arts/Seacoast Repertory Theater
North Atlantic Energy Corporation
North Atlantic Energy Service Corporation
David T. Flanagan Central Securities Corporation
Cumberland Securities Corporation
Maine Electric Power Company, Inc.
The Union Water-Power Company
University of Maine System
American University of Bulgaria
</TABLE>
</Page> - 50 -
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C. Other Directorships (continued)
<TABLE>
Director Other Directorships Held
<S> <C>
Charles D. Frizzle Maine Leadership Consortium
Mid Coast Health Services
Mid Coast Medical Group
Nuclear Management and Resources Council
Maine Chamber of Commerce and Industry
Frederic E. Greenman American Corporate Counsel Association,
Northeast Chapter
Narragansett Energy Resources Company
New England Electric Resources, Inc.
New England Electric Transmission
Corporation
New England Energy Incorporated
New England Hydro Finance Company, Inc.
New England Hydro-Transmission Corp.
New England Hydro-Transmission Electric Co.,
Inc.
New England Legal Foundation
New England Power Company
New England Power Service Company
Connecticut Yankee Atomic Power Company
Vermont Yankee Nuclear Power Corporation
Yankee Atomic Electric Company
R. Edward Hanson Kennebec Hydro Resources, Inc.
G. Melvin Hovey Maine & New Brunswick Electrical Power
Company, Limited
Maine Public Service Company
First Citizens Bank
Maine Chamber of Commerce and Industry
</TABLE>
</Page> - 51 -
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C. Other Directorships (continued)
<TABLE>
Director Other Directorships Held
<S> <C>
John B. Keane Connecticut Yankee Atomic Power Company
Charter Oak Energy, Inc.
Charter Oak (Paris), Inc.
The Connecticut Light and Power Company
Northeast Nuclear Energy Company
Northeast Utilities Service Company
The Rocky River Realty Company
Research Park, Inc.
The City and Suburban Electric and Gas
Company
The Connecticut Steam Company
The Connecticut Transmission Corporation
Electric Power, Incorporated
The Nutmeg Power Company
HEC, Inc.
Holyoke Power and Electric Company
Holyoke Water Power Company
The Quinnehtuk Company
Western Massachusetts Electric Company
North Atlantic Energy Corporation
North Atlantic Energy Service Corporation
Vermont Yankee Nuclear Power Corporation
Yankee Atomic Power Company
Greater Hartford Arts Council
Greater Hartford Architecture Conservancy
Donald F. Kelly Central Securities Corporation
Cumberland Securities Corporation
Maine Electric Power Company, Inc.
NORVARCO
Carroll R. Lee Maine Electric Power Company, Inc.
East Branch Improvement Company
Penobscot Hydro Co., Inc.
Bangor Var Co., Inc.
Bangor Hydro-Electric Company
</TABLE>
</Page> - 52 -
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C. Other Directorships (continued)
<TABLE>
Director Other Directorships Held
<S> <C>
John W. Newsham New England Power Service Company
New England Power Company
New England Energy Resources, Inc.
Narragansett Energy Resources Company
Connecticut Yankee Atomic Power Company
Yankee Atomic Electric Company
John F. Opeka Connecticut Yankee Atomic Power Company
Yankee Atomic Electric Company
Northeast Utilities Service Company
The Connecticut Light and Power Company
Western Massachusetts Electric Company
The Quinnehtuk Company
Holyoke Water Power Company
Holyoke Power & Electric Company
The Rocky River Realty Company
Research Park, Inc.
Northeast Nuclear Energy Company
Opportunities Industrialization Center
of New London County
Charter Oak Energy, Inc.
North Atlantic Energy Corporation
North Atlantic Energy Services Corporation
Donald G. Pardus Eastern Utilities Associates (Trustee)
Montaup Electric Company
Eastern Edison Company
Blackstone Valley Electric Company
EUA Service Corporation
Newport Electric Corporation
EUA Cogenex Corporation
EUA Ocean State Corporation
EUA Energy Investment Corporation
Yankee Atomic Electric Company
Connecticut Yankee Atomic Power Company
Vermont Yankee Nuclear Power Corporation
Electric Council of New England
Gerald C. Poulin NORVARCO
Kennebec Water Power Company
The Union Water-Power Company
Androscoggin Reservoir Company
Maine Electric Power Company, Inc.
KV Federal Credit Union
Calumet Education Foundation
</TABLE>
</Page> - 53 -
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
C. Other Directorships (continued)
<TABLE>
Director Other Directorships Held
<S> <C>
John W. Rowe New England Electric System
New England Energy Incorporated
New England Power Service Company
Massachusetts Electric Company
New England Hydro-Transmission Electric
Company, Inc.
New England Hydro-Transmission Corp.
Narragansett Energy Resources Company
New England Electric Transmission Corp.
New England Electric Resources, Inc.
New England Hydro Finance Company, Inc.
The Narragansett Electric Company
New England Power Company
New England Wholesale Electric Company
Bank of Boston
First National Bank of Boston
UNUM Corporation
Electric Power Research Institute
Robert de R. Stein Yankee Atomic Electric Company
Connecticut Yankee Atomic Power Company
Smart Energy Services, Inc.
Douglas Stevenson Kennebec Hydro Resources, Inc.
Integrated Resource Management Services
American Red Cross Blood Services -
Northeast Region
Kennebec Valley Medical Center
Russell D. Wright Cambridge Electric Light Company
Canal Electric Company
Commonwealth Electric Company
COM/Energy Services Company
COM/Energy Steam Company
Connecticut Yankee Atomic Power Company
Yankee Atomic Electric Company
Vermont Yankee Nuclear Power Corporation
Reed and Barton
</TABLE>
</Page> - 54 -
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
Prior to April l, l988, except for participation by some officers in incentive
compensation and benefit plans, the Company's officers and directors were
compensated by the Sponsors or other associated companies by which they were
principally employed. Commencing April l, l988, however, certain Company
officers became employees of, and started being compensated by, the Company,
and were no longer employees of Central Maine Power Company. In addition,
certain other employees compensated by Maine Yankee have been promoted to
officer positions. In complying with regulatory requirements, the Company has
also reimbursed Central Maine Power Company for services rendered by its
employees including Maine Yankee officers and directors. See Item l3, CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.
SUMMARY COMPENSATION TABLE
The Summary Compensation Table set forth below includes compensation
information as to the President and Chief Executive Officer of the Company and
the Company's most highly compensated executive officers whose total annual
salary and bonus in 1993 exceeded $100,000.
<TABLE>
Annual
Compensation All Other
Name and Principal Occupation Year Salary Bonus(1) Compensation(2)
<S> <C> <C> <C> <C>
Charles D. Frizzle, President 1993 $189,868 $40,896 $ 4,497
and Chief Executive Officer 1992(3) 166,233 28,647 4,364
1991 148,317 32,016 -
Graham M. Leitch, Vice 1993(4) 136,658 29,181 26,461
President,Operations
Patrick S. Lydon, Vice 1993 106,733 22,802 3,649
President, Finance and 1992 102,192 16,771 2,670
Administration 1991 97,982 21,024 -
G. Douglas Whittier, Vice 1993 98,347 20,981 2,941
President, Licensing and 1992 91,058 15,060 2,725
Engineering 1991 83,643 18,142 -
</TABLE>
(1)The compensation shown in this column reflects Officer and Manager
Incentive Plan payments, which are based on the proportion by which the
Company exceeds each year's performance goals.
(2)In accordance with the transitional provisions of the applicable
Securities and Exchange Commission rules, the Company has not provided any
information in this column for any fiscal year that ended prior to
December 15, 1992. The compensation shown in this column reflects Company
contributions to the Savings and Investment Plan that is available to all
nonunion employees except for the amount reported for Graham M. Leitch,
which reflects payment for moving expenses in 1993.
(3)Mr. Frizzle became Chief Executive Officer in June 1992.
(4)Mr. Leitch became Vice President, Operations in January 1993.
</Page> - 55 -
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION (continued)
PENSION PLAN TABLE
The following table shows the estimated annual retirement benefit payable
to participating employees, including executive officers, in the earnings
and years of service classifications indicated.
<TABLE>
Final Average Years of Service
Compensation 10 20 30 40
<S> <C> <C> <C> <C>
$120,000. . . . . . . $18,343 $36,686 $ 55,029 $ 60,000
160,000. . . . . . . 25,143 50,286 75,429 82,400
200,000. . . . . . . 31,943 63,886 95,829 104,800
240,000. . . . . . . 38,743 77,486 115,641 115,641
</TABLE>
Covered compensation consists of the salaries of the eligible executive
officers. The computation of the estimated retirement benefits in the
above table is based on a straight life annuity. Messrs. Frizzle,
Leitch, Lydon and Whittier have, respectively, 22, 1, 22 and 10 years of
credited service under the Company's retirement program.
</Page> - 56 -
<PAGE>
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the ownership of the Company's 500,000 shares of
$100 par value Common Stock, all of which is issued and outstanding and all of
which is held of record and beneficially. None is held by management.
<TABLE>
Amount Percentage
Name Owned of Class
<S> <C> <C>
Central Maine Power Company 190,000 shares 38%
Edison Drive
Augusta, Maine 04336
New England Power Company 100,000 20
25 Research Drive
Westborough, Massachusetts 01582
The Connecticut Light and Power Company 60,000 12
P.O. Box 270
Hartford, Connecticut 06141
Bangor Hydro-Electric Company 35,000 7
33 State Street
Bangor, Maine 04401
Maine Public Service Company 25,000 5
209 State Street
Presque Isle, Maine 04769
Public Service Company of New Hampshire 25,000 5
1000 Elm Street
Manchester, New Hampshire 03105
Cambridge Electric Light Company 20,000 4
One Main Street
Cambridge, Massachusetts 02142-9150
Montaup Electric Company 20,000 4
P.O. Box 2333
Boston, Massachusetts 02107
Western Massachusetts Electric Company 15,000 3
P.O. Box 270
Hartford, Connecticut 06141
Central Vermont Public Service Corporation 10,000 2
77 Grove Street
Rutland, Vermont 05701 ------- ---
500,000 shares 100%
</TABLE> ======= ===
</Page> - 57 -
<PAGE>
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the Plant construction period, no return was paid to Sponsors on the
money paid by them for Common Stock, but a return (at the rate of 7% per annum
through November 30, 1970, and at the rate of 10% per annum thereafter) was
charged to plant as an allowance for equity funds used during construction.
The amounts so charged were recorded as paid-in capital. This practice
terminated as of December 31, 1972, the last day of the last month of the
construction period. These amounts are to be paid to the Sponsors on the
redemption of Common Stock. The Company's First Mortgage Indenture and the
provisions of its Articles of Incorporation relating to its capital stock
contain various limitations on redemption.
During 1993 and 1992, the Company paid $12,654,440 and $12,214,635,
respectively, to Yankee Atomic Electric Company, an associate of several of
the Sponsors, for services at cost for its engineering and nuclear services
department. Central Maine Power Company has furnished the Company certain
engineering, administrative and legal services, and furnished certain
facilities at cost, and electric service at its filed rates. During 1993 and
1992, Central Maine Power Company was reimbursed in the amount of $3,454,611
and $4,010,974, respectively, for such services. It is expected that Yankee
Atomic Electric Company and Central Maine Power Company will continue to
perform similar services for the Company in the future, for which they will be
reimbursed by the Company.
</Page> - 58 -
<PAGE> PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The following financial statements are filed as a part of this
report:
<TABLE>
INDEX OF FINANCIAL INFORMATION
Page
<S> <C>
Report of Independent Public Accountants 20
Financial Statements:
Statement of Income for each of the three years
ended December 31, 1993 21
Balance Sheet at December 31, 1993 and 1992 22
Statement of Capitalization at December 31, 1993
and 1992 24
Statement of Changes in Common Stock Investment
for each of the three years ended December 31,
1993 25
Statement of Cash Flows for each of the three years
ended December 31, 1993 26
Notes to Financial Statements 28
</TABLE>
2. The following financial statement schedules of the Company are
filed herewith and included in response to Item 14(d):
INDEX OF FINANCIAL STATEMENT SCHEDULES
<TABLE>
Page
<S> <C> <C>
Schedule V - Electric Property and Nuclear Fuel F-1
Schedule VI - Accumulated Provision for Depreciation
of Electric Plant and Amortization of
Nuclear Fuel F-4
Schedule VIII - Reserves Exclusive of Reserves for
Depreciation F-5
Schedule IX - Short-Term Borrowings F-6
</TABLE>
All other schedules are omitted as the required information is not
applicable or the information is presented in the Financial Statements or
related notes.
(b) Reports on Form 8-K. The Company filed no reports on Form 8-K during
the last quarter of 1993 and thereafter to date.
(c) The exhibits which are filed with this Form 10-K or are incorporated
herein by reference are set forth in the Exhibit Index, which
immediately precedes the exhibits to this report.
(d) The financial statement schedules required to be filed under this
paragraph are listed under paragraph (a) 2. of this Item.
</Page> - 59 -
<PAGE> SIGNATURES
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.
MAINE YANKEE ATOMIC POWER COMPANY
By Patrick S. Lydon s/s
Patrick S. Lydon, Vice President,
Finance and Administration
March 30, 1994
<TABLE>
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.
<S> <C>
By Charles D. Frizzle s/s By
Charles D. Frizzle, President and Donald F. Kelly, Director
Chief Executive Officer March , 1994
(Principal Executive Officer)
and Director By Carroll R. Lee s/s
March 30, 1994 Carroll R. Lee, Director
March 30, 1994
By Patrick S. Lydon s/s
Patrick S. Lydon, Vice President, By John W. Newsham s/s
Finance and Administration John W. Newsham, Director
(Principal Financial Officer and March 30, 1994
Principal Accounting Officer)
March 30, 1994 By John F. Opeka s/s
John F. Opeka, Director
By David T. Flanagan s/s March 30, 1994
David T. Flanagan, Chairman of
the Board of Directors By Donald G. Pardus s/s
March 30, 1994 Donald G. Pardus, Director
March 30, 1994
By Robert S. Briggs s/s
Robert S. Briggs, Director By Gerald C. Poulin s/s
March 30, 1994 Gerald C. Poulin
March 30, 1994
By By John W. Rowe s/s
Ted C. Feigenbaum, Director John W. Rowe
March , 1994 March 30, 1994
By Frederic E. Greenman s/s By
Frederic E. Greenman, Director Robert de R. Stein
March 30, 1994 March , 1994
By By Douglas Stevenson s/s
R. Edward Hanson, Director Douglas Stevenson
March , 1994 March 30, 1994
By G. Melvin Hovey s/s By Russell D. Wright s/s
G. Melvin Hovey, Director Russell D. Wright
March 30, 1994 March 30, 1994
By John B. Keane s/s
John B. Keane, Director
March 30, 1994
</TABLE>
</Page> - 60 -
<PAGE> Schedule V (1993)
Maine Yankee Atomic Power Company
ELECTRIC PROPERTY AND NUCLEAR FUEL
For The Year Ended December 31, 1993
(Dollars in Thousands)
Balance at Retire- Balance
Beginning Additions ments Transfers & at End
<TABLE> of Period at Cost or Sales Other Changes of Period
<S> <C> <C> <C> <C> <C>
Electric Property
Organization $ 7 $ - $ - $ - $ 7
Miscellaneous
Intangible Plant 3,748 - - 423 4,171
Land and Land Rights 469 - - (6) 463
Structures and
Improvements 42,092 - 1 190 42,283
Reactor Plant
Equipment 185,689 - (2,544) 5,594 188,739
Turbogenerator
Units 108,200 - (145) 1,654 109,709
Accessory Electric
Equipment 21,360 - (123) 6,495 27,732
Miscellaneous
Power Plant Equip. 18,239 - (102) 1,137 19,274
Substation Equip. 4,786 - (1,105) - 3,681
Miscellaneous
Electric Property 74 - - - 74
Unfinished
Construction 3,705 14,442 - (15,487) 2,660
------- ------ ----- ------ -------
Total Electric
Property $388,369 $14,442 $(4,018) $ - $398,793
======= ====== ===== ====== =======
Nuclear Fuel
Nuclear Fuel in
Reactor $ 84,061 $ - $ - $ (1,267) $ 82,794
Nuclear Fuel in
Process 21,741 6,640 - (28,071) 310
Nuclear Fuel -
Spent 331,801 - - 32,184 363,985
Nuclear Fuel -
Stock 12,222 - - (2,846) 9,376
------- ------ ----- ------ -------
Total Nuclear Fuel $449,825 $ 6,640 $ - $ - $456,465
</TABLE> ======= ====== ===== ====== =======
F-1
</Page>
<PAGE> Schedule V (1993)
Maine Yankee Atomic Power Company
ELECTRIC PROPERTY AND NUCLEAR FUEL
For The Year Ended December 31, 1992
(Dollars in Thousands)
Balance at Retire- Balance
Beginning Additions ments Transfers & at End
<TABLE> of Period at Cost or Sales Other Changes of Period
<S> <C> <C> <C> <C> <C>
Electric Property
Organization $ 7 $ - $ - $ - $ 7
Miscellaneous
Intangible Plant 3,649 - - 99 3,748
Land and Land Rights 474 - - (5) 469
Structures and
Improvements 41,443 - (29) 678 42,092
Reactor Plant
Equipment 181,579 - (556) 4,666 185,689
Turbogenerator
Units 100,241 - (26) 7,985 108,200
Accessory Electric
Equipment 19,847 - (175) 1,688 21,360
Miscellaneous
Power Plant Equip. 16,852 - (123) 1,510 18,239
Substation Equip. 4,786 - - - 4,786
Miscellaneous
Electric Property 74 - - - 74
Unfinished
Construction 21,203 6,716 - (24,214) 3,705
------- ------ --- ------ -------
Total Electric
Property $390,155 $ 6,716 $(909) $ (7,593) $388,369
======= ====== === ====== =======
Nuclear Fuel
Nuclear Fuel in
Reactor $104,368 $ - $ - $(20,307) $ 84,061
Nuclear Fuel in
Process 3,922 17,815 - 4 21,741
Nuclear Fuel -
Spent 294,159 - - 37,642 331,801
Nuclear Fuel -
Stock 29,561 - - (17,339) 12,222
------- ------ --- ------ -------
Total Nuclear Fuel $432,010 $17,815 $ - $ - $449,825
======= ====== === ====== =======
</TABLE>
F-2
</Page>
<PAGE> Schedule V (1993)
Maine Yankee Atomic Power Company
ELECTRIC PROPERTY AND NUCLEAR FUEL
For The Year Ended December 31, 1991
(Dollars in Thousands)
Balance at Retire- Balance
Beginning Additions ments Transfers & at End
<TABLE> of Period at Cost or Sales Other Changes of Period
<S> <C> <C> <C> <C> <C>
Electric Property
Organization $ 7 $ - $ - $ - $ 7
Miscellaneous
Intangible Plant 2,543 - (7) 1,113 3,649
Land and Land Rights 474 - - - 474
Structures and
Improvements 42,031 - (1,537) 949 41,443
Reactor Plant
Equipment 179,716 - (57) 1,920 181,579
Turbogenerator
Units 99,570 - - 671 100,241
Accessory Electric
Equipment 19,751 - (46) 142 19,847
Miscellaneous
Power Plant Equip. 15,313 - (290) 1,829 16,852
Substation Equip. 4,786 - - - 4,786
Miscellaneous
Electric Property 74 - - - 74
Unfinished
Construction 5,043 22,784 - (6,624) 21,203
------- ------ ----- ------ -------
Total Electric
Property $369,308 $22,784 $(1,937) $ - $390,155
======= ====== ===== ====== =======
Nuclear Fuel
Nuclear Fuel in
Reactor $104,368 $ - $ - $ - $104,368
Nuclear Fuel in
Process 8,503 17,563 - (22,144) 3,922
Nuclear Fuel -
Spent 294,159 - - - 294,159
Nuclear Fuel -
Stock 7,417 - - 22,144 29,561
------- ------ ----- ------ -------
Total Nuclear Fuel $414,447 $17,563 $ - $ - $432,010
</TABLE> ======= ====== ===== ====== =======
F-3
</Page>
<PAGE> Schedule VI
Maine Yankee Atomic Power Company
ACCUMULATED PROVISION FOR DEPRECIATION
OF ELECTRIC PLANT AND AMORTIZATION OF NUCLEAR FUEL
For The Years Ended December 31,
(Dollars in Thousands)
Balance at Balance
Beginning Charged Other at End
<TABLE> of Period to Income* Retirements Changes of Period
<S> <C> <C> <C> <C> <C>
1993
Electric Property $163,887 $16,251 $(4,017) $(125) $175,996
======= ====== ===== === =======
Nuclear Fuel $401,112 $16,476 $ - $ - $417,588
======= ====== ===== === =======
1992
Electric Property $149,625 $15,311 $ (909) $(140) $163,887
======= ====== ===== === =======
Nuclear Fuel $384,112 $17,000 $ - $ - $401,112
======= ====== ===== === =======
1991
Electric Property $136,922 $14,655 $(1,937) $ (15) $149,625
======= ====== ===== === =======
Nuclear Fuel $361,020 $23,092 $ - $ - $384,112
======= ====== ===== === =======
</TABLE>
* Excludes amounts collected for Decommissioning and Permanent Disposal Cost.
See Note 1 of Notes to Financial Statements for the Company's depreciation
and fuel amortization policies.
F-4
</Page>
<PAGE> Schedule VIII
Maine Yankee Atomic Power Company
RESERVES EXCLUSIVE OF RESERVES FOR DEPRECIATION
For the Years Ended December 31,
(Dollars in Thousands)
Balance at Charged Charged Deductions Balance
Beginning to to Other From at End
<TABLE> of Period Income Accounts Reserves of Period
<S> <C> <C> <C> <C> <C>
1993
Decommissioning Reserve $78,486 $9,074 $7,105 $ - $94,665
====== ===== ===== ====== ======
1992
Decommissioning Reserve $64,870 $9,074 $4,542 $ - $78,486
====== ===== ===== ====== ======
1991
Decommissioning Reserve $52,209 $9,074 $3,587 $ - $64,870
====== ===== ===== ====== ======
</TABLE>
F-5
</Page>
<PAGE> Maine Yankee Atomic Power Company
Form 10-K - 1993
Schedule IX
SHORT-TERM BORROWINGS
(Dollars in Thousands)
<TABLE> Year Ended December 31,
1993 1992 1991
<S> <S> <C> <C>
Category of Short-Term Borrowings Banks (1) Banks (1) Banks (1)
Balance at End of Year $ - $ 4,465 $ 2,440
Weighted Average Interest Rate
at End of Period 3.54% 3.78% 5.43%
Maximum Amount Outstanding
During the Year $11,575 $10,385 $17,900
Average Amount Outstanding
During the Year $ 3,616 $ 3,878 $ 4,231
Weighted Daily Average Interest
Rate During the Year 3.62% 4.29% 6.67%
</TABLE>
(1) See Note 4 of Notes to Financial Statements.
</Page> F-6
<PAGE> EXHIBIT INDEX
The following designated exhibits, as indicated below, are either filed
herewith or have heretofore been filed with the Securities and Exchange
Commission under the Securities Act of 1933, the Securities Exchange Act of
1934 or the Public Utility Holding Company Act of 1935 and are incorporated
herein by reference to such filings. Reference is made to Item 8 of this
Form 10-K for a listing of certain financial information and statements
incorporated by reference herein.
Filed
Prior SEC Herewith
Exhibit Number And Description Of Document Exhibit No. Docket at Page
(2) Plan of acquisition, reorganization,
arrangement, liquidation or succession
Not applicable
<TABLE>
(3) Articles of Incorporation and Bylaws
Incorporated herein by reference:
<S> <C> <C> <C> <C>
3-1 Articles of Incorporation, 3.1 1-6554
including amendments of (Form 10-K
April 17, 1992, May 29, 1992, for 1992)
and September 18, 1992.
3-2 Bylaws, as amended 3.5 1-6554
(Form 10-K
for 1988)
</TABLE>
(4) Instruments defining the rights of
security holders
<TABLE>
Incorporated herein by reference:
<S> <C> <C> <C>
4-1 First Mortgage Indenture from 3.2 1-6554
the Company to Old Colony Trust
Company, Trustee, dated as of
November 1, 1970
4-2 First Supplemental Indenture 4 70-4976
from the Company to The First
National Bank of Boston, Trustee,
dated as of March 1, 1971
</TABLE>
</Page> E-1
<PAGE> Filed
Prior SEC Herewith
Exhibit Number And Description Of Document Exhibit No. Docket at Page
(4) Instruments defining the rights of
security holders (continued)
<TABLE>
<S> <C> <C> <C>
4-3 Second Supplemental Indenture 4.3 2-46226
from the Company to The First
National Bank of Boston, Trustee,
dated as of December 1, 1972
4-4 Third Supplemental Indenture 4.4 1-6554
from the Company to The First
National Bank of Boston, Trustee,
dated as of February 15, 1984
4-5 Fourth Supplemental Indenture 4.5 1-6554
from the Company to The First (Form 10-K
National Bank of Boston, Trustee, for 1988)
dated as of April 1, 1986
4-6 Secured Credit Agreement among 4.1 1-6554
the Company and a group of banks, (Form 10-Q
with The Bank of New York as for quarter
Agent Bank, dated as of ended Sept. 30,
August 15, 1989 1989)
4-6.1 Amendment No. 1 to Exhibit 4-6, - -
dated as of June 19, 1992
4-6(a) Security Agreement dated 4.2 1-6554
as of August 15, 1989, (Form 10-Q
relating to Exhibit 4-6 for quarter
ended Sept. 30,
1989)
4-7 Eurodollar Revolving Credit 4.7 1-6554
Agreement among the Company (Form 10-K
and a group of international for 1989)
banks, with Union Bank of
Switzerland as Agent Bank,
dated as of January 15, 1990
4-7.1 Amendment No. 1 to Exhibit 4-7, - -
dated as of July 1, 1992
4-7(a) Security Agreement dated 4.7(a) 1-6554
as of January 30, 1990, (Form 10-K
relating to Exhibit 4-7 for 1989)
4-8 Fifth Supplemental Indenture 4.8 1-6554
from the Company to The First (Form 10-K
National Bank of Boston, Trustee, for 1990)
dated as of March 1, 1991
</TABLE>
</Page> E-2
<PAGE> Filed
Prior SEC Herewith
Exhibit Number And Description Of Document Exhibit No. Docket at Page
(4) Instruments defining the rights of
security holders (continued)
<TABLE>
<S> <C> <C> <C> <C>
4.9 Sixth Supplemental Indenture 4.9 1-6554
from the Company to The First (Form 10-K
National Bank of Boston, Trustee, for 1992)
dated as of January 15, 1993
Filed herewith:
4.10 Seventh Supplemental Indenture
from the Company to The First
National Bank of Boston, Trustee,
dated as of May 15, 1993
</TABLE>
(9) Voting Trust Agreement
Not applicable
(10) Material Contracts
<TABLE>
Incorporated herein by reference:
<S> <C> <C> <C>
10-1 Composite copy of Power Con-
tract between the Company and
Sponsors dated as of May 20, (Included in pro-
1968 spectus in 2-46226)
10-2 Composite copy of Capital
Funds Agreement between the
Company and Sponsors, dated (Included in pro-
as of May 20, 1968 spectus in 2-46226)
10-3 Stockholders Agreement dated
as of May 20, 1968, among the (Included in pro-
Sponsors spectus in 2-46226)
10-4 Loan Agreement between the
Company and MYA Fuel Company, B-1 70-5805
dated as of August 26, 1976, B-1 70-6765
as amended B-1 70-7117
10-5 Eurodollar Revolving Credit
Agreement between the Company
and a group of international
banks, with Union Bank of
Switzerland as Agent Bank,
dated as of September 30, 1985 B-1 70-7165
10-1.1 Amendment No. 1 to Exhibit 10-1,
dated as of March 1, 1984 10-1.1 1-6554
10-1.2 Amendment No. 2 to Exhibit 10-1,
dated as of January 1, 1984 10-1.2 1-6554
10-1.3 Amendment No. 3 to Exhibit 10-1,
dated as of October 1, 1984 10-1.3 1-6554
</TABLE></Page> E-3
<PAGE> Filed
Prior SEC Herewith
Exhibit Number And Description Of Document Exhibit No. Docket at Page
<TABLE>
(10) Material Contracts (continued)
<S> <C> <C> <C> <C>
10-1.4 Additional Power Contract be-
tween the Company and Sponsors,
dated as of February 1, 1984 10-1.4 1-6554
10-2.1 Amendment No. 1 to Exhibit 10-2,
dated as of August 1, 1985 10-2.1 1-6554
10-6 Indenture of Trust dated as of
March 14, 1988, between the
Company and Maine National Bank 10-6 1-6554
relating to decommissioning (Form 10-K
trust fund for 1987)
10-6.1 Maine Yankee Decommissioning 10-6.1 1-6554
Trust Amended and Restated (Form 10-K
Indenture of Trust with The for 1992)
Bank of New York, Trustee,
relating to decommissioning
trust fund
10-7 Indenture of Trust dated as of 10-7 1-6554
October 16, 1985, between the (Form 10-K
Company and Norstar Bank of for 1985)
Maine relating to the spent
fuel disposal trust fund
10-8 Bond Purchase Agreement dated 10-8 1-6554
as of March 1, 1991, between (Form 10-K
the Company and purchasers of for 1990)
Series D Bonds
10-9 Preferred Stock Purchase 10-9 1-6554
Agreement dated as of (Form 10-K
September 22, 1992, relating for 1992)
to 150,000 shares of Cumulative
Preferred Stock, 8.00% Series
(Sinking Fund) with purchasers
thereof
10-10 Bond Purchase Agreement dated 10-10 1-6554
as of January 15, 1993, between (Form 10-K
the Company and purchasers of for 1992)
Series E Bonds
</TABLE>
(11) Statement re computation of per share earnings
Not applicable
(12) Statements re computation of ratios
Not applicable
</Page> E-4
<PAGE> Filed
Prior SEC Herewith
Exhibit Number And Description Of Document Exhibit No. Docket at Page
<TABLE>
<S> <C>
(13) Annual report to security holders, Form 10-Q or quarterly report to
security holders
Not applicable
(16) Letter re change in certifying accountant
Not applicable
(18) Letter re change in accounting principles
Not applicable
(21) Subsidiaries of the registrant
None
(22) Published report regarding matters
submitted to vote of security holders
Not applicable
(23) Consents of experts and counsel
Not applicable
(24) Power of attorney
Not applicable
(27) Financial Data Schedule
Not applicable
(28) Information from reports furnished to state insurance regulatory
authorities
Not applicable
(99) Additional exhibits
None
</TABLE>
E-5
</Page>
=======================================================
MAINE YANKEE ATOMIC POWER COMPANY
TO
THE FIRST NATIONAL BANK OF BOSTON,
Trustee
---------------------
SEVENTH SUPPLEMENTAL INDENTURE
Dated as of May 15, 1993
---------------------
RELATING TO FIRST MORTGAGE BONDS
--------------------
Additional Issue: $25,000,000 of First Mortgage Bonds, Series F
(Sinking Fund) 6.89% Due 2008.
=======================================================
<PAGE>
THIS SEVENTH SUPPLEMENTAL INDENTURE, dated as of
May 15, 1993, between MAINE YANKEE ATOMIC POWER COMPANY, a Maine
corporation, with its principal office in Augusta, Maine
(hereinafter generally referred to as the Company), and THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, with its
principal office at 100 Federal Street, Boston, Massachusetts
02110, as trustee under the First Mortgage Indenture, as
supplemented, referred to in the first recital hereof (the
Trustee from time to time under said First Mortgage Indenture, as
supplemented, being hereinafter generally referred to as the
Trustee).
WHEREAS, the Company heretofore duly executed and
delivered to Old Colony Trust Company, as Trustee, its First
Mortgage Indenture dated as of November 1, 1970 (hereinafter
generally referred to as the Original Indenture, and sometimes
referred to, with each and every other instrument, including this
Supplemental Indenture, which the Company, pursuant to the
provisions thereof, may execute with the Trustee and which is
therein stated to be supplemental to the Original Indenture, as
the Indenture), recorded in the Office of the Secretary of State
of Maine, File No. 146534, Lincoln County Registry of Deeds, Book
678, Page 1, and Sagadahoc County Registry of Deeds, Book 373,
Page 777, to which this instrument is supplemental, and the
Company heretofore duly executed and delivered to The First
National Bank of Boston, as successor Trustee, an indenture,
dated as of March 1, 1971, supplemental to and in confirmation of
the Original Indenture, recorded in the Office of the Secretary
of State of Maine, File No. 152116, Lincoln County Registry of
Deeds, Book 686, Page 48, and Sagadahoc County Registry of Deeds,
Book 374, Page 1003, a second indenture, dated as of January 1,
1973, supplemental to and in confirmation of the Original
Indenture, as theretofore supplemented, recorded in the Office of
the Secretary of State of Maine, File No. 207526, Lincoln County
Registry of Deeds, Book 757, Page 247, and Sagadahoc County
Registry of Deeds, Book 388, Page 380, a third indenture, dated
as of February 15, 1984, supplemental to and in confirmation of
the Original Indenture, as theretofore supplemented, recorded in
the Office of the Secretary of State of Maine, File No. 588974,
Lincoln County Registry of Deeds, Book 1179, Page 207, and
Sagadahoc County Registry of Deeds, Book 658, Page 33, a fourth
indenture, dated as of April 1, 1986, supplemental to and in
confirmation of the Original Indenture, as theretofore
supplemented, recorded in the Office of the Secretary of State of
Maine, File No. 679327, Lincoln County Registry of Deeds, Book
1300, Page 273, and Sagadahoc County Registry of Deeds, Book 748,
Page 92, a fifth indenture, dated as of March 1, 1991,
supplemental to and in confirmation of the Original Indenture, as
theretofore supplemented, recorded in the office of the Secretary
of State of Maine, File No. 927150, Lincoln County Registry of
Deeds, Book 1678, Page 101, and Sagadahoc County Registry of
Deeds, Book 1052, Page 127 and a sixth indenture, dated as of
January 15, 1993, supplemental to and in confirmation of the
Original Indenture, as theretofore supplemented, recorded in the
office of the Secretary of State of Maine, File No. 1015944,
Lincoln County Registry of Deeds, Book 1848, Page 201, and
Sagadahoc County Registry of Deeds, Book 1180, Page 103, whereby
all the properties of the Company whether then owned or
thereafter acquired, with certain reservations, exceptions and
exclusions fully set forth in the Original Indenture, as
heretofore supplemented, were given, granted, bargained, sold,
transferred, assigned, pledged, mortgaged, warranted, conveyed
and confirmed to the Trustee, its successors and assigns, in
trust upon the terms and conditions set forth therein to secure
bonds of the Company issued and to be issued thereunder, and for
other purposes more particularly specified therein; and
WHEREAS, Section 16.01 of the Original Indenture
provides that the Company, when authorized by a resolution of the
Board of Directors of the Company (or of any committee of said
Board, however designated, authorized to exercise the powers of
said Board in the premises), and the Trustee may from time to
time enter into an indenture or indentures supplemental to the
Original Indenture for the following purposes, among others:
assigning, conveying, mortgaging, pledging, transferring and
setting over additional property unto the Trustee (Section
16.01(a)); and providing the terms and conditions of any series
of bonds other than the bonds of Series A (Section 16.01(c)); and
WHEREAS, the Board of Directors of the Company (through
the duly authorized Finance Committee of said Board) has
authorized the execution of this Supplemental Indenture and the
delivery hereof to the Trustee; and
WHEREAS, in all other respects the terms, conditions
and provisions of subsections (a) and (c) of Section 16.01 have
been complied with; and
WHEREAS, for its lawful corporate purposes, the Company
has duly authorized the creation of a new series of its bonds to
be issued under the Indenture, to be known as First Mortgage
Bonds, Series F (Sinking Fund) 6.89% Due 2008 (hereinafter
sometimes called the bonds of Series F or the Series F Bonds),
and has duly authorized the execution and delivery of this
Supplemental Indenture; and
WHEREAS, the form of the Series F Bonds, which are to
be issued only in fully registered form without coupons, and the
form of the Trustee's certificate of authentication to be
executed on the Series F Bonds, are to be substantially in the
following forms, respectively:
<PAGE>
(FORM OF SERIES F BOND)
(1933 Act Legend)
No. FR ___________ $_________
MAINE YANKEE ATOMIC POWER COMPANY
First Mortgage Bond, Series F (Sinking Fund) 6.89% Due 2008
Maine Yankee Atomic Power Company, a Maine corporation
(hereinafter called the Company), for value received, hereby
promises to pay to ____________________________________ or
registered assigns, the principal sum of ___________________
Dollars ($_________) at the principal office of The First
National Bank of Boston (hereinafter called the Trustee, which
term shall include its successors in the trusts hereinafter
referred to) in the City of Boston, Commonwealth of Massachusetts
(or at the principal office of its then successor Trustee) or, at
the option of the registered owner hereof, at the principal
office of any designated paying agent in the Borough of
Manhattan, City and State of New York, on May 1, 2008 and to pay
interest thereon from the May 1 or November 1, as the case may
be, next preceding the date hereof (or from the date hereof if
such date be either of said dates) to which interest has been
paid on this bond, or, in the case of interest payable on
November 1, 1993, from the date on which any bonds of Series F
were first issued, at the rate per annum specified in the title
of this bond, on May 1 and November 1 in each year, at the
principal office of the Trustee or, at the option of the
registered owner hereof, at the principal office of any such
paying agent, until the principal hereof shall have been paid in
full; such interest payable on any May 1 or November 1 shall
(subject to certain exceptions provided in the Indenture
mentioned below) be paid to the person in whose name this bond,
or the bond in exchange or substitution for which this bond shall
have been issued, shall have been registered at the close of
business on the April 15 or October 15, as the case may be, next
preceding such May 1 or November 1. Interest shall be payable on
any overdue payment of principal (including any overdue
redemption), premium and (to the extent legally enforceable)
interest, at a rate per annum from time to time equal to the
greater of (i) 7.89% or (ii) the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York from time
to time in New York City as its Prime Rate (but only to the
extent allowable under the Order entered on May 3, 1993 by the
Maine Public Utilities Commission in Docket No. 93-081), accruing
at such rate from the date on which such payment was due and
unpaid. Both principal and premium, if any, and interest shall
be paid in coin or currency of the United States of America
which, at the time of payment, is legal tender for public and
private debts. Notwithstanding any provision to the contrary in
this bond or in the Indenture mentioned below, Section 5.1 of the
Bond Purchase Agreement dated as of June 1, 1993 pursuant to
which the bonds of Series F were initially issued (hereinafter
called the Bond Purchase Agreement) shall govern payments with
respect to the bonds of Series F to the bondholders referred to
in said Section 5.1, and Section 6.3 of said Bond Purchase
Agreement shall govern the replacement of bonds of Series F to
the extent set forth in said Section 6.3. A copy of said Bond
Purchase Agreement is on file at the principal office of the
Trustee.
This bond is one of a duly authorized issue of First
Mortgage Bonds of the Company, the aggregate principal amount of
which is not limited except by law, to be issued in series with
distinctive designations, the series of which this bond is one,
designated as Series F, being the sixth series and limited to an
aggregate principal amount of Twenty-Five Million Dollars
($25,000,000), all bonds of all series, including the bonds of
Series F, to be issued under and secured by a certain First
Mortgage Indenture dated as of November 1, 1970 by and between
the Company and the Trustee, as supplemented (said First Mortgage
Indenture, together with all other indentures supplemental
thereto to which the Trustee shall be a party, being hereinafter
referred to as the Indenture), to which reference is hereby made
for a description of the mortgaged and pledged property, the
nature and extent of the security and benefit thereof, the terms
and conditions under which bonds may be issued and secured, the
rights and remedies under the Indenture of the bondholders and
the rights and obligations under the Indenture of the Company and
the Trustee. Executed counterparts of the Indenture are on file
at the principal office of the Trustee.
The Indenture may, with the consent of the holders of
not less than sixty-six and two-thirds per cent (66-2/3%) in
principal amount of the bonds of all series then issued and
outstanding, and as stated therein, be modified in certain
respects upon the conditions and in the manner provided therein,
but, among other restrictions, no such modification shall affect
or impair the obligation of the Company in respect of the
principal of and premium, if any, and interest on this bond.
In the event of certain defaults, the principal of this
bond may be declared or may become due and payable prior to
maturity upon the conditions and in the manner provided in the
Indenture.
This bond is transferable on the bond register, upon
surrender hereof at the principal office of the Trustee, in the
City of Boston, Massachusetts, or at the office or agency to be
maintained by the Company in the Borough of Manhattan, City and
State of New York, and upon compliance with the conditions
prescribed in the Indenture and accompanied by a written
instrument of assignment in proper form, duly executed by the
registered owner in person or by duly authorized attorney, and
thereupon a new bond or bonds of the same series and for a like
aggregate principal amount of authorized denominations will be
issued in the name of the transferee.
The Company, the Trustee, any authenticating agent, any
paying agent and any registrar may deem and treat the registered
holder hereof as the absolute owner of this bond (whether or not
this bond shall be overdue and notwithstanding any notice of
ownership or writing hereon made by anyone other than the Company
or any registrar), for the purpose of receiving payment hereof or
on account hereof or interest hereon (subject to the provisions
of the first paragraph hereof) and for all other purposes, and
neither the Company, the Trustee, any authenticating agent, any
paying agent nor any registrar shall be affected by any notice to
the contrary.
The bonds of Series F consist of fully registered bonds
without coupons in the denominations of one thousand dollars
($1,000) and multiples thereof. This bond, singly or with other
bonds of the same series and registered in the same name, may be
exchanged for one or more bonds of the same series and for a like
aggregate principal amount in authorized denominations. All
bonds to be so exchanged shall be surrendered for that purpose at
the principal office of the Trustee, or at the office or agency
to be maintained by the Company in the Borough of Manhattan, City
and State of New York, and, if required by the Trustee,
accompanied by written instruments of assignment in proper form,
duly executed by the registered owner in person or by duly
authorized attorney.
The bonds of Series F are subject to redemption (a) at
any time in whole or from time to time in part (in multiples of
$1,000), by the Company at its option, or (b) in whole or in part
by operation of various provisions of the Indenture (including,
without limitation, provisions establishing the sinking fund for
the bonds of Series F) at the time or times specified in such
provisions, in each instance by the payment of the applicable
redemption price specified below and accrued interest to the date
fixed for redemption on the principal amount of the bonds being
redeemed. The applicable redemption price shall be:
(i) 100% of the principal amount of the bonds being
redeemed (constituting the "Special Redemption Price"), if
the bonds are redeemed by the use of sinking fund and
certain insurance, release or other moneys held by the
Trustee, as more fully set forth in the Indenture, and
(ii) otherwise, 100% of the Called Principal (as
defined below) plus the Yield-Maintenance Amount applicable
thereto (calculated as set forth below).
"Yield-Maintenance Amount" shall mean, with respect to
any bond of Series F, a premium equal to the excess, if any, of
the Discounted Value of the Called Principal of such bond over
the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of the Settlement Date (including interest due on such
date) with respect to such Called Principal (provided, that the
Yield-Maintenance Amount shall in no event be less than zero).
"Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed.
"Called Principal" shall mean, with respect to any bond
of Series F, the principal of such bond that is to be redeemed.
"Discounted Value" shall mean, with respect to the
Called Principal of any bond of Series F, the amount obtained by
discounting all Remaining Scheduled Payments with respect to such
Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to the sum of
(i) the Reinvestment Yield with respect to such Called Principal,
plus (ii) fifty (50) basis points.
"Reinvestment Yield" shall mean, with respect to the
Called Principal of any bond of Series F, the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New York
City time) on the third Business Day next preceding the
Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such
other display as may replace Page 678 on the Telerate Service)
for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as
of such Settlement Date, or if such yields shall not be reported
as of such time or the yields reported as of such time shall not
be ascertainable, (ii) the Treasury Constant Maturity Series
yields reported, for the latest day for which such yields shall
have been so reported as of the third Business Day next preceding
the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date.
Such implied yield shall be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and
(b) interpolating linearly between yields reported for various
maturities.
"Remaining Average Life" shall mean, with respect to
the Called Principal of any bond of Series F, the number of years
(calculated to the nearest one-twelfth year) obtained by dividing
(i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) each Remaining Scheduled Payment of
such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year)
which will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect
to the Called Principal of any bond of Series F, all payments of
such Called Principal and interest thereon that would be due on
or after the Settlement Date with respect to such Called
Principal if no payments of such Called Principal were made prior
to their scheduled due dates.
"Settlement Date" shall mean, with respect to the
Called Principal of any bond of Series F, the date on which such
Called Principal is to be redeemed.
Notice of redemption shall be given by mail, first
class postage prepaid, to the holders of the bonds of Series F to
be redeemed not less than thirty (30) days prior to the date
fixed for redemption, at their last addresses as they shall
appear on the register, or otherwise as provided in the
Indenture. In the case of any redemption of bonds of Series F
for which the applicable redemption price has as a component a
Yield-Maintenance Amount, which will be determined prior to the
date fixed for redemption but subsequent to the date of the
giving of such notice, the notice of such redemption shall
sufficiently specify the applicable redemption price if it shall
state that such redemption price is equal to 100% of the
principal of such bond specified in such notice to be redeemed,
plus a Yield-Maintenance Amount calculated as set forth in the
bonds of Series F. The Company, on or prior to the date fixed
for redemption, will deliver or cause to be delivered to each
holder of a bond of Series F called for redemption a written
statement showing the calculation of the Yield-Maintenance Amount
and the redemption price determined on the basis thereof, which
statement shall be accompanied by a certification verifying the
accuracy of the calculations from The Prudential Insurance
Company of America (or any corporate affiliate thereof) as long
as The Prudential Insurance Company of America (or any corporate
affiliate thereof) holds any bond of Series F. Otherwise, said
certification verifying the accuracy of the calculations shall be
prepared by Kidder, Peabody & Co. Incorporated or such other
investment banking firm of national reputation as shall be
designated by the Company and approved in writing by holders of
at least 25% in principal amount of the bonds of Series F then
outstanding.
In case of the call for redemption of less than the
whole principal amount of this bond, upon payment of the
redemption price to the registered owner hereof and surrender of
this bond, there shall be issued to such registered owner another
bond of Series F in principal amount equal to the unredeemed
balance hereof.
Section 9.7 of the Bond Purchase Agreement is a
bondholders' redemption agreement (within the meaning of Section
8.02 of the Indenture) among the holders of the bonds of Series
F, satisfactory to and a copy of which is on file with the
Trustee, that provides for the method that shall be followed by
the Trustee in selecting bonds or parts of bonds for redemption
in the event such redemption is a redemption of a part only of
the bonds of Series F. By acceptance hereof, the holder hereof
is deemed to have executed, and is bound by the terms of, the
Bond Purchase Agreement.
No recourse upon any obligation contained in this bond
or in the Indenture or otherwise shall be had against any
incorporator or any officer, director or stockholder, past,
present or future, of the Company or any successor corporation,
such personal liability of every kind being expressly waived.
This bond shall not be valid or obligatory for any
purpose or entitled to any security or benefit under the
Indenture until the certificate of authentication hereon shall
have been signed by or on behalf of the Trustee.
IN WITNESS WHEREOF, Maine Yankee Atomic Power Company
has caused this bond to be executed in its name by its President
or one of its Vice Presidents by his signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by the signature
or facsimile signature of its Secretary or one of its Assistant
Secretaries.
Dated ____________________
MAINE YANKEE ATOMIC POWER COMPANY
By ________________________________
[CORPORATE SEAL]
Attest:
_____________________________
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
This bond is one of the bonds of Series F referred to
in the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF BOSTON,
Trustee
By ____________________________________
Authorized Signatory
or
_____________________________________
as Authenticating Agent
for the Trustee
By _____________________________________
Authorized Officer
(FORM OF ASSIGNMENT)
For value received the undersigned hereby sell(s),
assign(s) and transfer(s) unto
________________________________________________
Please Insert Social Security or Other
Identifying Number of Assignee
the within bond of Maine Yankee Atomic Power Company and all
rights thereunder, hereby irrevocably constituting and appointing
attorney to transfer said
bond on the register of the Company, with full power of
substitution in the premises.
Dated:
Notice: The signature to this assignment must correspond with
the name as written upon the face of the within bond in every
particular, without alteration or enlargement or any change
whatever.
AND, WHEREAS, all acts and things necessary to make the
Series F Bonds, when authenticated by the Trustee and issued as
in this Supplemental Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute the Original
Indenture, as heretofore supplemented and as supplemented by this
Supplemental Indenture, a valid first mortgage and deed of trust
to secure the payment of the principal of, premium, if any, and
interest on all bonds issued thereunder, have been done and
performed.
NOW, THEREFORE, in consideration of the premises, and
of the acceptance and purchase of the bonds by the holders
thereof, and of the sum of One Dollar duly paid by the Trustee to
the Company, and of other good and valuable consideration, the
receipt whereof is hereby acknowledged, and in confirmation of
and supplementing the Original Indenture, as heretofore
supplemented, and for the purpose of securing the due and
punctual payment of the principal of and premium, if any, and
interest on the bonds issued and to be issued under the
Indenture, and for the purpose of securing the faithful
performance and observance of all covenants and conditions
hereinafter and in the Original Indenture, as heretofore
supplemented, set forth, the Company has executed and delivered
this Supplemental Indenture and by these presents does give,
grant, bargain, sell, transfer, assign, pledge, mortgage,
warrant, convey and confirm unto The First National Bank of
Boston, as Trustee, as herein provided, and its successor or
successors in the trust created by the Indenture, and to its or
their assigns, forever, all and singular the plants, rights,
permits, franchises, easements and property, real, personal and
mixed, now owned or hereafter acquired by the Company, together
with the rents, issues and profits thereof, in all cases not
specifically reserved and excepted, and whether now owned or
hereafter acquired by the Company; including, without limiting
the generality of the foregoing, all property, except such as may
have been released by the Trustee or sold or disposed of as
permitted by the provisions of the Original Indenture, as
heretofore supplemented, specifically described or referred to in
Schedule A to the Original Indenture, as heretofore supplemented,
and in Schedule A to the Sixth Supplemental Indenture, dated as
of January 15, 1993 (the "Sixth Supplemental Indenture").
AND TOGETHER WITH all and singular the now-existing and
hereafter-acquired rights, privileges, tenements, hereditaments
and appurtenances belonging to or in any wise appertaining in and
to the aforesaid property or any part thereof, with all reversion
and reversions, remainder and remainders and, subject to the
provisions of Article IX of the Original Indenture, as heretofore
supplemented, all rents, revenues, earnings, interest, dividends,
royalties, issues, income and profits thereof, and all the
estate, right, title, interest and claims whatsoever, at law as
well as in equity, which the Company now has or may hereafter
acquire, in and to all and every part of the foregoing, it being
the intention to include in the Indenture and to subject to the
lien of the Indenture all land, interests in land, real estate,
physical assets, other property and interests in property and
franchises, whether now owned by the Company or which it may
hereafter acquire, and wherever situated, as if the same were now
owned by the Company and were specifically described and conveyed
by the Indenture, except as hereinafter specified.
SUBJECT, HOWEVER, (1) to Permitted Liens as that term
is defined in Article I of the Original Indenture, as heretofore
supplemented; (2) as to the property specifically described or
referred to in Schedule A to the Original Indenture, as
heretofore supplemented, to the liens, charges, encumbrances,
reservations, exceptions, exclusions, restrictions, conditions,
limitations, covenants and interests, if any, set forth or
referred to in said Schedule A; and (3) as to the property
specifically described in Schedule A to the Sixth Supplemental
Indenture, to the reservations, exceptions and exclusions set
forth in said Schedule A.
AND SUBJECT FURTHER, as to all hereafter-acquired
property, to all defects and limitations of title and to all
liens, charges, encumbrances, reservations, restrictions,
conditions, limitations, covenants, interests and exceptions
existing at the time of such acquisition.
BUT SPECIFICALLY RESERVING, EXCEPTING AND EXCLUDING (as
the same were reserved, excepted and excluded from the lien of
the Original Indenture, as heretofore supplemented) from the
Indenture, and from the grant, conveyance, mortgage, transfer,
pledge and assignment herein contained, (i) all right, title and
interest of the Company, now owned or hereafter acquired, in and
to the properties and rights specified in subclauses (a) to (j),
both inclusive, of the granting clauses, on pages 9 and 10 of the
Original Indenture, and (ii) the rights and interests reserved in
the three paragraphs of the granting clauses, on pages 10 and 11
of the Original Indenture, next succeeding the paragraph
containing the above-mentioned subclauses.
TO HAVE AND TO HOLD all said plants, rights, permits,
franchises, easements and property hereby conveyed, assigned,
pledged or mortgaged, or intended so to be, unto the Trustee, its
successor or successors in trust, and to its and their assigns
forever.
BUT IN TRUST, NEVERTHELESS, for the equal pro rata
benefit, security and protection of the holders from time to time
of all bonds (and their appurtenant coupons, if any) outstanding
under the Indenture, without any priority of any one bond or
coupon over any other (except as provided in Section 6.02 of the
Original Indenture, as heretofore supplemented, and except as any
sinking or other fund, established in accordance with the
Indenture, may afford additional special security for the bonds
of any particular series), and upon the trusts and subject to the
conditions herein set forth.
PROVIDED, HOWEVER, and these presents are upon the
condition, that if the Company shall pay or cause to be paid or
make appropriate provisions for the payment unto the holders of
the bonds and any appurtenant coupons of the principal, premium,
if any, and interest to become due thereon at the times and in
the manner stipulated therein, and shall pay or cause to be paid
all other sums payable under the Indenture by the Company, then
the Indenture and the estate and rights hereby granted shall,
pursuant to the provisions of Article XII of the Original
Indenture, as heretofore supplemented, cease, determine and be
void, but otherwise shall be and remain in full force and effect.
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED, upon
the trusts and for the purposes aforesaid, as set forth in the
following covenants, agreements, conditions and provisions, viz:
SECTION 1. Title and Terms of Series F Bonds. There
shall be a series of bonds designated "First Mortgage Bonds,
Series F (Sinking Fund) 6.89% Due 2008". The Series F Bonds
shall be limited in aggregate principal amount to $25,000,000,
shall be issuable only as fully registered bonds without coupons
and shall be issued substantially in the form hereinbefore set
forth. The Series F Bonds shall mature on May 1, 2008, and may
be issued in denominations of $1,000 and any multiple thereof.
The Series F Bonds shall bear interest, until payment
of the principal thereof has been made or duly provided for, at
the rate per annum specified in the title of the Series F Bonds,
payable semi-annually on May 1 and November 1 in each year,
commencing on November 1, 1993. Interest shall be payable on any
overdue payment of principal (including any overdue redemption),
premium and (to the extent legally enforceable) interest, at a
rate per annum from time to time equal to the greater of (i)
7.89% or (ii) the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York
City as its Prime Rate (but only to the extent allowable under
the Order entered on May 3, 1993 by the Maine Public Utilities
Commission in Docket No. 93-081), accruing at such rate from the
date on which such payment was due and unpaid.
Each bond of Series F shall be dated the date of its
authentication and interest shall be payable on the principal
represented thereby from the interest payment date next preceding
the date thereof to which interest has been paid, unless the date
thereof is an interest payment date to which interest has been
paid, in which case such interest shall be payable from such
date, or unless the date thereof is prior to the first interest
payment date, in which case such interest shall be payable from
the date on which any bonds of Series F were first issued;
provided, however, that interest shall be payable on each bond of
Series F authenticated between an interest payment date and the
record date therefor as set forth in this Section, and provided,
further, that if the Company shall default in the payment of the
interest due on such interest payment date, any bond of Series F
so authenticated shall bear interest from the May 1 or
November 1, as the case may be, next preceding the date of such
bond to which interest has been paid (or, in case no interest has
been paid on such bond of Series F, from the date on which any
bonds of Series F were first issued).
Interest on any Series F Bond shall be paid to the
person in whose name such bond (or notwithstanding the
cancellation thereof, the bond in exchange or substitution for
which such bond shall have been issued) is registered at the
close of business on the applicable record date; provided,
however, that if the Company shall default in the payment of the
interest due on any interest payment date on the principal
represented by any Series F Bond, such defaulted interest shall
be paid to the person in whose name such bond (or any bond issued
upon registration of transfer or exchange thereof) is registered
on a subsequent record date established by notice given by mail
by or on behalf of the Company to the holders of Series F Bonds
not less than ten days preceding such subsequent record date.
The term "record date" shall mean, with respect to any semi-
annual interest payment date for the Series F Bonds, the close of
business on the 15th day of April or the 15th day of October, as
the case may be, next preceding such interest payment date, or
with respect to any payment of defaulted interest, the close of
business on any subsequent record date established as provided
above which shall be at least five business days prior to the
payment date for such defaulted interest.
The principal of and the premium, if any, and interest
on the Series F Bonds shall be payable in any coin or currency of
the United States of America which at the time of payment is
legal tender for the payment of public and private debts, at the
principal office of the Trustee in the City of Boston,
Massachusetts, or at the principal office of its successor as
Trustee, or, at the option of the holder, (i) at the principal
office of the Company's paying agent in the Borough of Manhattan,
City of New York, New York, or (ii) at any other office or agency
designated by the Company for the purpose.
Notwithstanding any provision to the contrary in the
bonds of Series F or in the Indenture, Section 5.1 of the Bond
Purchase Agreement dated as of June 1, 1993 pursuant to which the
bonds of Series F were initially issued (hereinafter generally
referred to as the Bond Purchase Agreement) shall govern payments
with respect to the bonds of Series F to the bondholders referred
to in said Section. The Trustee hereby consents to the method of
payment described in the aforesaid Section 5.1. The Trustee also
consents to the provisions of Section 6.3 of said Bond Purchase
Agreement and agrees that if any lost, destroyed, stolen or
mutilated bond of Series F was held by the original holder or an
Institutional Investor, as defined in the Bond Purchase Agreement
("Institutional Investor"), of financial responsibility
reasonably satisfactory to the Company, or any nominee for any
such original holder or such Institutional Investor, (a) an
agreement of indemnity reasonably satisfactory to the Company
from such original holder or such Institutional Investor shall
constitute indemnity satisfactory to the Trustee for purposes of
Section 2.10 of the Indenture and (b) the Trustee will look only
to the Company for reimbursement of its expenses incurred in
connection with such replacement.
The bonds of Series F shall be exchangeable for a like
aggregate principal amount of bonds of such series of other
authorized denominations at the option of the holders and without
charge, except that the Company, at its option, may require the
payment of a sum sufficient to reimburse it for any stamp or
other tax or governmental charge incident thereto. The Trustee
and the Trustee's authenticating agent are hereby appointed
registrars of the bonds of Series F for the purpose of
registering transfers and exchanges of bonds of Series F as
herein provided.
SECTION 2. Original Issue of the Series F Bonds. At
any time after the execution and delivery of this Supplemental
Indenture, upon the application of the Company, the Trustee shall
authenticate and deliver $25,000,000 in aggregate principal
amount of bonds of Series F, upon delivery of the instruments
referred to in Sections 5.01, 5.03 and 5.05 of the Original
Indenture, as heretofore and hereby supplemented, and receipt by
the Trustee of the bonds to be authenticated, duly executed by
the Company.
SECTION 3. Redemption of Series F Bonds. The Series F
Bonds shall be redeemable in whole or in part (in multiples of
$1,000) by the operation of the sinking fund provided therefor in
Section 4 of this Supplemental Indenture, or by operation of
various provisions of the Original Indenture, as heretofore
supplemented, at the time or times specified therein, or, at the
option of the Company, at any time and from time to time prior to
maturity, in each instance at the applicable redemption price and
accrued interest to the date fixed for redemption on the
principal amount of the bonds being redeemed. The applicable
redemption price shall be:
(a) 100% of the principal amount of the bonds
being redeemed (constituting the "Special Redemption
Price"), if the bonds are redeemed through the operation of
the sinking fund, or by the use of Trust Moneys, or pursuant
to Section 9.13 of the Original Indenture, as heretofore
supplemented, and
(b) otherwise, 100% of the Called Principal plus
the Yield-Maintenance Amount, as those terms are defined in
the form of Series F Bonds hereinbefore set forth.
On any redemption of bonds of Series F, the Trustee, in
the name and on behalf of the Company, shall mail, by first class
mail, postage prepaid, a notice of redemption to each registered
holder of a bond to be redeemed (in whole or in part) at the last
address of such holder appearing on the bond register; provided,
however, that, in the case of any redemption of bonds of Series F
for which the applicable redemption price has as a component a
Yield-Maintenance Amount (as defined in the bonds of Series F),
the Company, and not the Trustee, shall mail the notice of
redemption as aforesaid, and the Trustee shall have no
responsibility or liability in connection with any acts or
omissions by the Company related to the notice of any such
redemption. Such notice shall be mailed not less than 30 days
prior to the date fixed for redemption.
The Company shall notify the Trustee at least 15 days
(or such fewer number of days as may be satisfactory to the
Trustee) before the date on which any notice of redemption of
bonds of Series F (otherwise than through the operation of the
sinking fund) is required to be given by the Trustee. The
Company shall be responsible for delivering statements
calculating Yield-Maintenance Amounts and resulting redemption
prices to bondholders as required by the form of bond of Series F
hereinbefore set forth and shall cause a similar statement to be
delivered to the Trustee no later than the second business day
(or such later date as may be satisfactory to the Trustee) before
the applicable date fixed for redemption.
Section 9.7 of the Bond Purchase Agreement is a
bondholders' redemption agreement (within the meaning of
Section 8.02 of the Indenture) among the holders of the bonds of
Series F, satisfactory to and a copy of which is on file with the
Trustee, that provides for the method that shall be followed by
the Trustee in selecting bonds or parts of bonds for redemption
in the event such redemption is a redemption of a part only of
the bonds of Series F. The bonds of Series F provide that, by
the acceptance thereof, the holders thereof are deemed to have
executed, and are bound by the terms of, the Bond Purchase
Agreement. Section 9.7 thereof provides that the principal
amount of any partial redemption of the bonds of Series F shall
be allocated, in units of $1,000 or integral multiples thereof,
among the holders of the bonds of Series F at the time
outstanding, in proportion, as nearly as practicable, to the
respective unpaid principal amount of the bonds of Series F held
thereby, with adjustments, to the extent practicable, to equalize
for any prior redemption not made in exactly such proportion.
SECTION 4. Sinking Fund for Series F Bonds. The
Company covenants that, as a sinking fund for the bonds of
Series F, and so long as any of such bonds are outstanding, it
will, subject to the provisions of the Bond Purchase Agreement,
deposit with the Trustee cash in the amount of $1,667,000 at
least one business day before May 1, 1994, and at least one
business day before each May 1 thereafter through May 1, 2007
(each such May 1 being hereinafter referred to as a "Sinking Fund
Date"), such cash to be held subject to the provisions hereof.
The Trustee shall apply the amount of the cash so
deposited with it by the Company hereunder to the redemption, in
accordance with Article VIII of the Original Indenture, as
heretofore supplemented, on the Sinking Fund Date before which
such deposit is required to be made, of Series F Bonds in an
aggregate principal amount equal to the amount of cash so
deposited. Each deposit of cash with the Trustee pursuant hereto
shall, subject to the provisions of the Bond Purchase Agreement,
be accompanied by a further deposit in an amount sufficient to
pay the accrued interest on the Series F Bonds to be redeemed,
and such further deposit shall be applied by the Trustee to the
payment of such interest.
SECTION 5. Yield-Maintenance Amount for Series F
Bonds. The Company further covenants that, so long as any of
Series F Bonds are outstanding, upon any declaration pursuant to
Section 10.01 of the Original Indenture that the principal and
interest accrued on all the bonds then outstanding are due and
payable immediately, the amounts then immediately due and payable
with respect to the outstanding Series F Bonds shall consist of
(i) the principal amount thereof, (ii) all interest accrued and
unpaid thereon, and (iii) the Yield-Maintenance Amount (as
hereinafter defined), if any, with respect to each such Series F
Bond; provided, however, that such Yield-Maintenance Amount shall
be due and payable upon such declaration only if the following
conditions are satisfied:
(a) Such declaration is based upon an event of default
under any clause of said Section 10.01 other than clauses (f) and
(g) thereof; and
(b) The Trustee or the holders of at least 25% in
principal amount of the bonds then outstanding under the
Indenture, as the case may be, shall have given to the Company,
at least ten (10) business days before such declaration, written
notice stating its or their intention so to declare the bonds to
be immediately due and payable and identifying one or more such
events of default the occurrence of which, on or before the date
of such notice, permits such declaration, and one or more of the
events of default so identified shall be continuing at the time
of such declaration; provided that if, on the date of said notice
or prior to the date of the declaration made pursuant thereto,
the Trustee or any other holders of at least 25% in principal
amount of bonds then outstanding under the Indenture shall have
declared the principal of and interest accrued on all the bonds
then outstanding to be immediately due and payable, then,
anything herein to the contrary notwithstanding, the Yield-
Maintenance Amount, if any, on the bonds of Series F shall be
immediately due and payable on the date of such declaration by
the Trustee or such other holders.
For the purposes of this Section 5, the term "Yield-
Maintenance Amount" and all related terms shall have the meanings
ascribed thereto in the form of Series F Bond hereinbefore set
forth, provided that the definitions therein of the related terms
"Called Principal" and "Settlement Date" shall be revised to read
as follows:
"Called Principal" shall mean, with respect to any
bond of Series F, the principal of such bond that is to be
redeemed or is declared immediately due and payable pursuant
to Section 10.01 of the Indenture, as the context requires.
"Settlement Date" shall mean, with respect to the
Called Principal of any bond of Series F, the date on which
such Called Principal is to be redeemed or is declared to be
immediately due and payable pursuant to Section 10.01 of the
Indenture, as the context requires.
SECTION 6. Retirement of Series F Bonds. The Company
shall not, and shall not permit any of its subsidiaries or
affiliates to, redeem or otherwise retire in whole or in part
prior to their stated final maturity (other than pursuant to
Section 3 or 4 hereof or upon acceleration of such final maturity
pursuant to Section 10.01 of the Original Indenture, as
heretofore supplemented), or purchase or otherwise acquire,
directly or indirectly, Series F Bonds held by any holder, unless
the Company or such subsidiary or affiliate shall have offered to
redeem or otherwise retire or purchase or otherwise acquire, as
the case may be, the same proportion of the aggregate principal
amount of the Series F Bonds held by each other holder of a
Series F Bond at the time outstanding upon the same terms and
conditions. Any Series F Bonds so redeemed or otherwise retired
or purchased or otherwise acquired by the Company or any of its
subsidiaries or affiliates shall not be deemed to be outstanding
for any purpose under the Indenture, as heretofore and hereby
supplemented, subject to the terms of sub-clause (4) of the
definition of the term "outstanding" in Section 1.01(ee) of the
Original Indenture.
SECTION 7. Pledged Contracts. So long as any of the
Series F Bonds are outstanding, the Company will comply with the
provisions of subsections (a) and (b) of Section 6.13 of the
Original Indenture, as heretofore supplemented, and, except with
the consent of holders of 66-2/3% in principal amount of the
Series F Bonds outstanding, will observe the prohibitions and
limitations of subsection (c) of said Section 6.13.
SECTION 8. The Trustee. The Trustee shall be entitled
to, may exercise and shall be protected by, where and to the full
extent that the same are applicable, all the rights, powers,
privileges, immunities and exemptions and shall be subject to the
duties and liabilities of the Trustee, provided in the Original
Indenture, as heretofore supplemented and confirmed and as herein
supplemented and confirmed. The remedies and provisions of the
Original Indenture, as heretofore supplemented and confirmed and
as herein supplemented and confirmed, applicable in case of any
default by the Company thereunder, are hereby adopted and made
applicable in case of any such default with respect to the
properties included herein. Without limitation of the generality
of the foregoing, there are hereby conferred upon the Trustee the
same powers of sale and other powers over the properties
described herein as are by the Original Indenture, as heretofore
supplemented, expressed to be conferred.
SECTION 9. No Liability for Recitals. The recitals
contained herein and in the bonds (except the Trustee's
authentication certificate) shall be taken as the statements of
the Company and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as
to the value of the mortgaged and pledged property or any part
thereof, or as to the title of the Company thereto; or as to the
validity or adequacy of the security afforded thereby and by the
Indenture, or as to the validity of the Indenture or of the bonds
or coupons issued thereunder. The Trustee shall not be
responsible for the effect, authorization, execution, delivery or
recording of this Supplemental Indenture, except as expressly set
forth in the Original Indenture, as heretofore supplemented. The
Trustee shall not be taken impliedly to waive by this
Supplemental Indenture any right it would otherwise have.
SECTION 10. The Original Indenture. This Supplemental
Indenture is expressly made supplemental to, and shall form a
part of, the Original Indenture, as heretofore supplemented, and
the conveyances hereby made are subject to all of the conditions,
covenants and warranties in the Original Indenture, as heretofore
supplemented, contained, and the use of terms and expressions
herein is in accordance with the definitions and constructions
contained in the Original Indenture, as heretofore supplemented.
This Supplemental Indenture shall become void when the Original
Indenture, as heretofore supplemented, shall be void.
SECTION 11. Trust Indenture Act to Control. If any
provision of this Supplemental Indenture limits, qualifies or
conflicts with the duties imposed by any of Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990, through operation of Section
318(c), such imposed duties shall control.
SECTION 12. Effect of Headings. The headings of the
different Sections of this Supplemental Indenture are inserted
for convenience of reference, and are not to be taken to be any
part of those provisions, or to control or affect the meaning,
construction or effect of the same.
SECTION 13. Counterparts. This Supplemental Indenture
is being simultaneously executed in several counterparts, all of
which are identical, and all said counterparts are to be deemed
to constitute but one and the same instrument.
IN WITNESS WHEREOF, Maine Yankee Atomic Power Company
has caused this Supplemental Indenture to be executed on its
behalf by its President or one of its Vice Presidents or its
Treasurer and its corporate seal to be hereunto affixed and
attested by its Secretary or an Assistant Secretary; and The
First National Bank of Boston, as Trustee, has caused this
Supplemental Indenture to be executed on its behalf and its
corporate seal to be hereunto affixed by one of its Authorized
Officers or Authorized Signatories; all as of the day and year
first above written but actually on the date or dates set forth
in the Acknowledgments hereto.
MAINE YANKEE ATOMIC POWER COMPANY
By s/Michael E. Thomas
Treasurer
[Corporate Seal]
Attest:
s/William M. Finn
Secretary
Signed, sealed and delivered on
behalf of Maine Yankee Atomic
Power Company in the presence
of:
s/Judith Sargent
THE FIRST NATIONAL BANK OF BOSTON,
Trustee
By s/J. E. Mogavero
[Corporate Seal]
Signed, sealed and delivered on
behalf of The First National
Bank of Boston in the presence
of:
s/E. J. Donaghey
<PAGE>
STATE OF MAINE )
) ss.:
COUNTY OF KENNEBEC )
On this 2nd day of June, 1993, before me appeared
Michael E. Thomas, the Treasurer of Maine Yankee Atomic Power
Company, to me personally known, who executed the foregoing
instrument on behalf of said corporation and acknowledged the
same to be his free act and deed in said capacity and the free
act and deed of Maine Yankee Atomic Power Company.
WITNESS my hand and official seal the day and year
first above written.
s/Geraldine Downer Scott
Notary Public
Geraldine Downer Scott
Notary Public, Maine
My Commission Expires May 1, 1995
(Notarial Seal)
COMMONWEALTH OF MASSACHUSETTS )
) ss.:
COUNTY OF SUFFOLK )
On this 1st day of June, 1993, before me appeared
J. E. Mogavero , an Authorized Officer of The First
National Bank of Boston, to me personally known, who executed the
foregoing instrument on behalf of said corporation and
acknowledged the same to be such person's free act and deed in
said capacity and the free act and deed of The First National
Bank of Boston.
WITNESS my hand and official seal the day and year
first above written.
s/Shawn Patrick George
Notary Public
Shawn Patrick George
Notary Public
My Commission Expires
September 2, 1999
(Notarial Seal)
