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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1997 Commission File No. 1-4698
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Nevada Power Company
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(Exact name of registrant as specified in its charter)
Nevada 88-0045330
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6226 West Sahara Avenue, Las Vegas, Nevada 89102
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(Address of principal executive offices) (Zip Code)
(702) 367-5000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report.)
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 .
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Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
Common Stock outstanding July 31, 1997, 49,745,040 shares.
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PART I. FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
FOR THE FOR THE
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
1997 1996 1997 1996
-------- -------- -------- --------
ELECTRIC REVENUES ..................... $199,970 $199,468 $355,324 $346,596
OPERATING EXPENSES AND TAXES:
Fuel ............................. 34,435 25,439 55,561 44,138
Purchased and interchanged power . 75,251 65,727 128,521 116,824
Deferred energy cost
adjustments, net ................ (19,953) 2,401 (21,601) 6,391
-------- -------- -------- --------
Net energy costs ................ 89,733 93,567 162,481 167,353
Other production operations ...... 5,241 3,735 8,986 7,599
Other operations ................. 24,189 24,333 48,251 47,910
Maintenance and repairs .......... 17,620 13,005 27,603 22,816
Provision for depreciation ....... 16,011 15,254 32,186 30,233
General taxes .................... 5,401 5,092 10,458 9,929
Federal income taxes ............. 9,478 11,243 13,621 12,839
-------- -------- -------- --------
167,673 166,229 303,586 298,679
-------- -------- -------- --------
OPERATING INCOME ...................... 32,297 33,239 51,738 47,917
-------- -------- -------- --------
OTHER INCOME (EXPENSES):
Allowance for other funds used
during construction ............. 2,102 1,934 4,154 3,451
Miscellaneous, net ............... (726) (1,439) (1,696) (2,208)
-------- -------- -------- --------
1,376 495 2,458 1,243
-------- -------- -------- --------
INCOME BEFORE INTEREST DEDUCTIONS ..... 33,673 33,734 54,196 49,160
-------- -------- -------- --------
INTEREST DEDUCTIONS:
Interest on long-term debt ....... 12,655 12,037 24,964 23,678
Other interest ................... 311 1,050 747 1,457
Allowance for borrowed funds used
during construction ............. (546) (535) (1,339) (675)
-------- -------- -------- --------
12,420 12,552 24,372 24,460
-------- -------- -------- --------
INCOME BEFORE DISTRIBUTION REQUIREMENTS
ON PREFERRED SECURITIES .............. 21,253 21,182 29,824 24,700
-------- -------- -------- --------
Distribution requirements
on company-obligated mandatorily
redeemable preferred securities
of subsidiary trust ............. 2,383 - 2,383 -
-------- -------- -------- --------
NET INCOME ............................ 18,870 21,182 27,441 24,700
-------- -------- -------- --------
DIVIDEND REQUIREMENTS ON PREFERRED
STOCK ................................ 47 990 1,034 1,979
-------- -------- -------- --------
EARNINGS AVAILABLE FOR COMMON STOCK ... $ 18,823 $ 20,192 $ 26,407 $ 22,721
======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING .......................... 49,526 47,760 49,294 47,529
======== ======== ======== ========
EARNINGS PER AVERAGE COMMON SHARE ..... $ 0.38 $ 0.42 $ 0.54 $ 0.48
======== ======== ======== ========
DIVIDENDS PER COMMON SHARE ............ $ 0.40 $ 0.40 $ 0.80 $ 0.80
======== ======== ======== ========
See Notes to Consolidated Financial Statements.
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CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
June 30, December 31,
1997 1996
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(In Thousands)
ELECTRIC PLANT:
Original cost ..................................... $2,249,997 $2,194,947
Less accumulated depreciation ..................... 619,203 592,571
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Net plant in service ............................ 1,630,794 1,602,376
Construction work in progress ..................... 172,423 140,420
Other plant, net .................................. 74,418 76,134
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1,877,635 1,818,930
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INVESTMENTS ......................................... 12,514 10,734
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CURRENT ASSETS:
Cash and temporary cash investments ............... 663 2,544
Customer receivables .............................. 97,359 66,682
Other receivables ................................. 5,210 6,472
Fuel stock and materials and supplies ............. 44,357 36,605
Deferred taxes on deferred energy liability........ 2,606 10,139
Prepayments ....................................... 6,283 8,203
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156,478 130,645
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DEFERRED CHARGES .................................... 204,640 202,515
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$2,251,267 $2,162,824
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CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common shareholders' equity:
Common stock, 49,681,478 and 48,785,846
shares issued and outstanding, respectively .... $ 52,886 $ 51,990
Premium and unamortized expense on capital stock 649,160 630,804
Retained earnings ............................... 101,266 117,360
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803,312 800,154
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Cumulative preferred stock ........................ 3,584 41,663
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Company-obligated mandatorily redeemable preferred
securities of the Company's subsidiary trust, NVP
Capital I, holding solely $122.6 million principal
amount of 8.2% junior subordinated debentures of
the Company, due 2037 ............................ 118,872 -
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Long-term debt .................................... 823,492 840,964
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1,749,260 1,682,781
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CURRENT LIABILITIES:
Notes payable ..................................... 18,000 -
Current maturities and sinking fund requirements .. 20,359 5,714
Accounts payable .................................. 65,118 58,289
Accrued taxes ..................................... 7,688 6,372
Accrued interest .................................. 6,041 6,039
Deferred energy liability ......................... 7,446 28,725
Customers' service deposits and other ............. 33,439 36,151
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158,091 141,290
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DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred investment tax credits ................... 30,273 31,004
Deferred taxes on income .......................... 239,107 234,209
Customers' advances for construction and other .... 74,536 73,540
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343,916 338,753
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$2,251,267 $2,162,824
========== ==========
See Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
1997 1996
-------- --------
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................... $ 27,441 $ 24,700
Adjustments to reconcile net income to net cash
provided-
Depreciation and amortization ...................... 36,213 33,962
Deferred income taxes and investment tax credits ... 8,135 3,354
Allowance for other funds used during construction . (4,154) (3,451)
Changes in-
Receivables ........................................ (29,838) (30,696)
Fuel stock and materials and supplies .............. (1,119) (2,250)
Accounts payable and other current liabilities ..... 4,574 13,739
Deferred energy costs .............................. (20,224) 7,479
Accrued taxes and interest ......................... 1,318 (7,440)
Other assets and liabilities ........................ 1,701 2,493
-------- --------
Net cash provided by operating activities ......... 24,047 41,890
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures and gross additions ....... (97,320) (102,136)
Investment in subsidiaries and other ................ (403) 822
-------- --------
Net cash used in investing activities ............. (97,723) (101,314)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of capital stock ........................... 17,908 19,441
Issuance of company-obligated mandatorily
redeemable preferred securities ................... 118,872 -
Deposit of funds held in trust ...................... (1,063) (1,517)
Retirement of long-term debt ........................ (2,546) (2,620)
Retirement of preferred stock ....................... (38,080) (80)
Change in short-term borrowing ...................... 18,000 55,000
Cash dividends ...................................... (41,257) (39,817)
Other financing activities .......................... (39) 5,116
-------- --------
Net cash provided by financing activities ......... 71,795 35,523
-------- --------
CASH AND TEMPORARY CASH INVESTMENTS:
Net decrease during the period ...................... (1,881) (23,901)
Beginning of period ................................. 2,544 25,507
-------- --------
End of period ....................................... $ 663 $ 1,606
======== ========
CASH PAID DURING THE PERIOD FOR:
Interest, net of amounts capitalized ................ $ 31,328 $ 29,381
======== ========
Income taxes ........................................ $ 3,010 $ 16,120
======== ========
See Notes to Consolidated Financial Statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein have been
prepared by the registrant, pursuant to the rules and regulations of the
Securities and Exchange Commission, and reflect all adjustments which, in the
opinion of management are necessary for a fair presentation and are of a
normally recurring nature. Certain information and footnote disclosures have
been condensed in accordance with generally accepted accounting principles and
pursuant to such rules and regulations. The registrant believes that the
disclosures are adequate to make the information presented not misleading. It
is suggested that these condensed consolidated financial statements and notes
thereto be read in conjunction with the financial statements and the notes
thereto included in the registrant's latest annual report. Certain prior period
amounts have been reclassified, with no effect on income or common shareholders'
equity, to conform with the current period presentation.
(1) CONSOLIDATION POLICY
The consolidated financial statements include the accounts of Nevada Power
Company (Company) and its wholly-owned subsidiary, NVP Capital I. All
significant intercompany transactions and balances have been eliminated in
consolidation.
(2) RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 128 (FASB 128), Earnings Per Share, which is
effective for fiscal years beginning after December 15, 1997. FASB 128
establishes standards for computing and presenting earnings per share to make
them comparable to international earnings per share standards and requires dual
presentation of basic and diluted earnings per share for entities with complex
capital structures. After adoption, the Company expects there will be no
material effect on the presentation or computation of its earnings per share.
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 130 (FASB 130), Reporting Comprehensive
Income, which is effective for fiscal years beginning after December 15, 1997.
FASB 130 establishes standards for reporting and display of comprehensive income
and its components in a full set of general-purpose financial statements. The
Company has not yet determined the effect adoption of FASB 130 will have on
disclosures in its consolidated financial statements.
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 131 (FASB 131), Disclosures about Segments of
an Enterprise and Related Information, which is effective for financial
statements for periods beginning after December 15, 1997. FASB 131 establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The Company has not yet determined the effect adoption of FASB 131
will have on disclosures in its consolidated financial statements.
(3) FEDERAL INCOME TAXES:
For interim financial reporting purposes, the Company reflects in the
computation of the federal income tax provision liberalized depreciation based
upon the expected annual percentage relationship of book and tax depreciation
and reflects the allowance for funds used during construction on an actual
basis. The total federal income tax expense as set forth in the accompanying
consolidated statements of income results in an effective federal income tax
rate different than the statutory federal income tax rate. The table below
shows the effects of those transactions which created this difference.
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THREE MONTHS SIXMONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------- ----------------
1997 1996 1997 1996
----------------- ------- -------
(In Thousands)
Federal income tax at statutory rate ... $10,197 $11,442 $14,848 $13,373
Investment tax credit amortization ..... (365) (365) (730) (730)
Other .................................. 433 433 866 866
------- ------- ------- -------
Recorded federal income taxes .......... $10,265 $11,510 $14,984 $13,509
======= ======= ======= =======
Federal income taxes included in-
Operating expenses ................... $ 9,478 $11,243 $13,621 $12,839
Other income, net .................... 787 267 1,363 670
------- ------- ------- -------
Recorded federal income taxes .......... $10,265 $11,510 $14,984 $13,509
======= ======= ======= =======
(4) COMMITMENTS AND CONTINGENCIES:
On February 6, 1997, the Public Service Commission of Nevada (PSC) issued
its opinion and order in the last phase of the 1995 deferred energy case
concerning the prudency of the Company's fuel and purchased power expenditures
during the period June 1993 to May 1995, a buyout of a coal supply agreement and
a credit to customers related to the use of coal reserves in an unregulated
subsidiary company. The PSC order resulted in a fourth quarter 1996 charge of
$5.5 million, net of tax, for amounts disallowed by the PSC.
On May 7, 1997, the Company filed a Petition for Judicial Review in the
First District Court in Carson City, Nevada challenging the PSC's findings which
resulted in disallowances.
The Federal Clean Air Act Amendments of 1990 (Amendments) include
provisions for reduction of emissions of oxides of nitrogen by establishing new
emission limits for coal-fired generating units. This will require the
installation of additional pollution-control technology at some of the Reid
Gardner Station generating units before 2000 at an estimated cost to the Company
of no more than $6 million total, $3 million has been spent to date.
Related to visibility, the United States Congress authorized the
Environmental Protection Agency (EPA) to study the potential impact the Mohave
Generating Station may have on visibility in the Grand Canyon area. Results of
this study are expected in 1997 or 1998. The cost of any improvements that may
be required cannot be determined at this time.
In 1991, the EPA published an order requiring the Navajo Generating Station
(Navajo) to install scrubbers to remove 90 percent of sulfur dioxide emissions
beginning in 1997. As an 11.3 percent owner of Navajo, the Company will be
required to fund an estimated $53.1 million for installation of the scrubbers.
The first of three scrubber units is expected to be on line in November 1997.
At that point, the project will be approximately 50 percent complete. The first
of the other two units is expected to be on line in 1998 and the last unit in
1999. The Company has spent $37.5 million through June 1997 on the scrubbers'
construction. In 1992, the Company received resource planning approval from the
PSC for its share of the cost of the scrubbers.
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(5) PREFERRED SECURITIES:
On April 1, 1997, the Company redeemed all 1.9 million shares of its $20
par value, 9.9 percent redeemable cumulative preferred stock at $21 per share
for a total of $39.9 million.
On March 26, 1997, NVP Capital I (Trust), a wholly-owned subsidiary of the
Company, sold 4,754,860 8.20% Cumulative Quarterly Income Preferred Securities,
Series A (QUIPS) at $25 per security. The proceeds of $118.9 million were
received at closing on April 2, 1997. The Company owns all the Series A common
securities, 147,058 shares totaling $3.7 million issued by the Trust. The QUIPS
and the common securities represent undivided beneficial ownership interests in
the assets of the Trust, a statutory business trust formed under the laws of the
state of Delaware. The existence of the Trust is for the sole purpose of
issuing the QUIPS and the common securities and using the proceeds thereof to
purchase from the Company its 8.20% Junior Subordinated Deferrable Interest
Debentures (QUIDS) due March 31, 2037, extendible to March 31, 2046 under
certain conditions, in a principal amount of $122.6 million. The sole asset of
the Trust is the QUIDS. The Company's obligations under the guarantee agreement
entered into in connection with the QUIPS when taken together with the Company's
obligation to make interest and other payments on the QUIDS issued to the Trust,
and the Company's obligations under the Indenture pursuant to which the QUIDS
are issued and its obligations under the Declaration, including its liabilities
to pay costs, expenses, debts and liabilities of the Trust, provides a full and
unconditional guarantee by the Company of the Trust's obligations under the
QUIPS. Financial statements of the Trust are consolidated with the Company's.
Separate financial statements are not filed because the Trust is wholly-owned by
the Company and essentially has no independent operations, and the Company's
guarantee of the Trust's obligations is full and unconditional. The $118.9
million in net proceeds to the Company was used for general corporate utility
purposes and the repayment of short-term debt incurred to redeem the Company's
$38 million, 9.9 percent Redeemable Cumulative Preferred Stock on April 1, 1997.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INDUSTRY RESTRUCTURING
On July 16, 1997 the Governor of the state of Nevada signed into law
Assembly Bill 366 (AB 366). The following summarizes the key points and aspects
of AB 366. The PSC will be reduced from five members to three and reorganized
October 1, 1997 as the Public Utilities Commission (PUC) and will authorize
customers to obtain competitive and potentially competitive services from
alternative sellers starting no later than December 31, 1999 unless the PUC
determines that another date better serves the public interest. It is expected
that the generation, aggregation (buying and reselling electricity to customers)
and marketing of electricity will be deemed competitive or potentially
competitive while transmission, distribution, billing and meter reading will be
deemed noncompetitive and will continue to be regulated. The Company is
required to submit a plan to the PUC, pursuant to a schedule yet to be
established by the PUC, to unbundle rates to be charged for noncompetitive and
potentially competitive services. A provider of a noncompetitive service will
be prohibited from providing a potentially competitive service except through an
affiliate which the PUC has determined after a hearing has an arm's length
relationship with the provider of the noncompetitive service. Each provider of
a noncompetitive service that is necessary to the provision of a potentially
competitive service is required to make its facilities or services available to
all alternative sellers on equal and nondiscriminatory terms and conditions.
Alternative sellers of electricity must be licensed under rules yet to be
determined by the PUC. AB 366 allows the PUC to authorize full recovery of
costs which they determine to be stranded but does not guarantee full recovery
of those costs. The Company believes it will remain obligated to serve
customers who do not choose a new service provider. No pilot program
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is mandated by AB 366 before the effective date for competition but the PUC may
authorize the right to buy from alternative sellers in gradual phases. The rate
charged for residential service for customers who are unable to obtain electric
service from an alternative seller or who fail to select an alternative seller
must not exceed the rate charged for that service on July 1, 1997, however, the
PUC may approve an increase in residential rates in an amount necessary to
ensure recovery by the Company of its just and reasonable costs. The
residential rate restriction will remain in place until 2003. Two-tenths of one
percent of all electric energy sold must come from a renewable resource produced
in Nevada by January 1, 2001. Fifty percent of this energy must be derived from
solar power. Every two years the standard increases by two-tenths of one
percent until a total of one percent of all electricity consumed comes from
renewable resources.
CONTINUING APPLICABILITY OF FASB 71
The Company's rates are currently subject to approval by the PSC and are
designed to recover the Company's costs of providing services to its customers.
A primary difference between a rate regulated entity and an unregulated entity
is the timing of recognizing certain assets and expenses for financial reporting
purposes. The Statement of Financial Accounting Standards No. 71, "Accounting
for the Effects of Certain Types of Regulation" (FASB 71), prescribes the method
to be used to record the financial transactions of a regulated entity. The
criteria for applying FASB 71 include the following: (i) rates are set by an
independent third party regulator, (ii) approved rates are intended to recover
the specific costs of the regulated products or services, (iii) rates set at
levels that will recover costs, can be charged to and collected from customers.
If the Company determines as a result of competitive changes in Nevada, PSC
orders or otherwise that its business, or a portion of its business, fails to
meet any of these three criteria of FASB 71, it may have to eliminate from its
financial statements the related transactions prescribed by the regulators that
would not have been recognized if it had been a non-regulated company, which
could result in an impairment of or write-off of utility assets. The Company
believes, however, that it continues to meet the criteria for operating as a
rate regulated entity, as prescribed by FASB 71.
LIQUIDITY AND CAPITAL RESOURCES
Overall net cash flows increased during the first six months of 1997, as
compared to 1996, primarily due to more cash being provided by financing
activities offset partially by less cash being provided by operating activities.
Increased costs for natural gas and purchased power and operations and
maintenance partially offset by timing differences in federal income tax
payments contributed to the decrease in cash being provided by operating
activities. The increase in net cash provided by financing activities is due to
the issuance of the QUIPS. (See Note 5 to Consolidated Financial Statements
included in this quarterly report.)
On July 15, 1997, the Company filed a request with the PSC for
authorization to increase energy rates by approximately $54 million under the
state's deferred energy accounting procedures. Commercial customers' rates
would increase by approximately $40 million and residential customers' rates
would increase by approximately $14 million under the proposal. The Company is
requesting the increase to cover higher costs for natural gas and purchased
power. The proposed increase will be effective on September 1, 1997 if the
expedited treatment the Company has requested is approved.
The Company's customer growth rate during 1996 and 1995 was 7.2 and 6.0
percent, respectively. The increase in customers for the first six months of
1997 was at an annualized rate of 6.2 percent. At June 30, 1997, the Company
provided electric service to 502,070 customers.
Pursuant to Nevada law, every three years the Company is required to file
with the PSC a forecast of electricity demands for the next 20 years and the
Company's plans
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to meet those demands. The Company filed its 1997 Resource Plan on June 3,
1997. Among the major items in the Company's preferred plan are the following:
(1) the Company proposes to continue to pursue a strategy of relying on bulk
power purchases to meet near-term incremental increases in load;
(2) the Company proposes to build a 500 kV transmission project known as the
Crystal Transmission Project (CTP), with an in-service date of June 1,
1999;
(3) the Company proposes a joint 230 kV transmission project with the
Colorado River Commission;
(4) the Company proposes to build two 144 megawatt (MW) combustion turbines
in 2002 and 2003 which would be converted to a 410 MW combined cycle
plant in 2004.
In the event the in-service date of the above CTP is delayed, the Company's
Resource Plan includes a back-up plan which calls for the construction of three
72 MW combustion turbines in 1999 followed by the CTP in 2000. Hearings have
been scheduled to begin in September 1997.
To meet capital expenditure requirements through 1998, the Company plans to
utilize internally generated cash, the proceeds from industrial development
revenue bonds (IDBs), first mortgage bonds (FMBs), unsecured borrowings,
preferred securities and common stock issues through public offerings and the
Stock Purchase and Dividend Reinvestment Plan (SPP).
In June 1997, the Company filed an application with the PSC seeking
approval to issue and sell up to $300 million of preferred stock, tax advantaged
preferred stock and/or common stock through public or private offerings, the
Company's SPP, the Company's 401(k) plan or any other method deemed appropriate.
The application also requests approval to issue and sell $625 million of tax-
exempt, taxable, tax advantaged and/or any other type of debt the Company
determines to be appropriate at the time. The Company also requested the option
to secure any of the debt through the issuance and pledge of first mortgage
bonds. The financing request above covers three years of projected financing
needs plus a contingency for unanticipated needs. The authorization would
expire on December 31, 2000. Approval was also sought to issue up to $225
million of unsecured promissory notes through December 31, 2002.
The Company has the option of issuing new shares or using open market
purchases of its common stock to meet the requirements of the SPP. Under the
SPP the Company issued 1,659,764 and 841,886 shares, respectively, of its
common stock in 1996 and the first six months of 1997.
On October 12, 1995, Clark County, Nevada issued $76.75 million Series
1995A IDBs (Nevada Power Company Project) due 2030. Net proceeds from the sale
of the IDBs were placed on deposit with a trustee and are being used to finance
the construction of certain facilities which qualify for tax-exempt financing.
At June 30, 1997, $53.8 million remained on deposit with the trustee.
On March 26, 1997, the Company sold 4,754,860 8.20% Cumulative Quarterly
Income Preferred Securities, Series A (QUIPS) at $25 per security. The proceeds
of $118.9 million were received at closing on April 2, 1997. The QUIPS were
issued through NVP Capital I, a statutory business trust of the Company. The
proceeds were used for general corporate utility purposes and to repay short-
term debt incurred to redeem the Company's 9.9 percent Redeemable Cumulative
Preferred Stock on April 1, 1997. (See Note 5 to Consolidated Financial
Statements included in this quarterly report.)
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OPERATING RESULTS OF FIRST SIX MONTHS OF 1997
COMPARED TO FIRST SIX MONTHS OF 1996
Earnings per average common share were 54 cents for the first six months of
1997, compared to 48 cents for the same period in 1996. The increase in
earnings was due primarily to increased revenues. Revenues increased due
primarily to customer growth, the sale of sulfur dioxide emission allowances
($2.3 million, before tax) and warmer weather partially offset by an energy rate
decrease effective February 1, 1997. In addition, effective February 1, 1997,
capacity costs associated with purchased power were included in general rates
rather than the deferred energy cost accounting mechanism. The average number
of customers increased 6.9 percent and kilowatthour sales, excluding sales for
resale, were up 7.3 percent, as compared to the first six months of 1996.
Fuel expense increased $11.4 million due to increased generation and higher
average fuel rates. Purchased power increased $11.7 million due to increased
power purchases and higher average purchased power costs. Maintenance and
repairs increased $4.8 million due to increased maintenance expense at Reid
Gardner Generating Station. Depreciation expense increased $2.0 million because
of a growing asset base. Distribution requirements on company-obligated
preferred securities of subsidiary trust increased by $2.4 million due to the
issuance of QUIPS (see Note 5 to Consolidated Financial Statements included in
this quarterly report.)
Average common shares increased because of the sale of additional common
shares through the SPP to partially provide funds for the construction of
facilities necessary to meet increased customer demand for electricity.
OPERATING RESULTS OF SECOND QUARTER OF 1997
COMPARED TO SECOND QUARTER OF 1996
Earnings per average common share were 38 cents for the second quarter of
1997, compared to 42 cents for the same period in 1996. The decrease in earnings
was due primarily to increased operating and maintenance expenses and
distributions on the QUIPS. Revenues increased due to customer growth largely
offset by an energy rate decrease effective February 1, 1997. In addition,
effective February 1, 1997, capacity costs associated with purchased power were
included in general rates rather than the deferred energy cost accounting
mechanism. The average number of customers increased 6.9 percent and
kilowatthour sales, excluding sales for resale, were up 7.4 percent, as compared
to the first six months of 1996.
Fuel expense increased by $9.0 million due to increased generation and
higher average fuel rates. Purchased power increased $9.5 million due to
increased power purchases and higher average purchased power costs. Maintenance
and repairs increased $4.6 million due to increased maintenance expense at Reid
Gardner Generating Station. Distribution requirements on company-obligated
preferred securities of subsidiary trust increased by $2.4 million due to the
issuance of QUIPS (see Note 5 to Consolidated financial Statements included in
this quarterly report.)
Average common shares increased because of the sale of additional common
shares through the SPP to partially provide funds for the construction of
facilities necessary to meet increased customer demand for electricity.
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PART II. OTHER INFORMATION
Items 1 through 5. None.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
Exhibits Filed Description
-------------- -----------
27 Financial Data Schedule
b. Reports on Form 8-K.
None.
Signatures
----------
Pursuant to the requirements 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.
Nevada Power Company
--------------------
(Registrant)
STEVEN W. RIGAZIO
--------------------------------------
(Signature)
Date: August 5, 1997 Steven W. Rigazio
--------------
Vice President, Finance and Planning,
Treasurer, Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF NEVADA POWER COMPANY AS OF JUNE 30, 1997 AND THE
RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE SIX MONTHS
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $1,877,635
<OTHER-PROPERTY-AND-INVEST> 12,514
<TOTAL-CURRENT-ASSETS> 156,478
<TOTAL-DEFERRED-CHARGES> 204,640
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,251,267
<COMMON> 52,886
<CAPITAL-SURPLUS-PAID-IN> 649,160
<RETAINED-EARNINGS> 101,266
<TOTAL-COMMON-STOCKHOLDERS-EQ> 803,312
118,872
3,584
<LONG-TERM-DEBT-NET> 732,489
<SHORT-TERM-NOTES> 18,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 15,300
200
<CAPITAL-LEASE-OBLIGATIONS> 91,003
<LEASES-CURRENT> 4,859
<OTHER-ITEMS-CAPITAL-AND-LIAB> 463,648
<TOT-CAPITALIZATION-AND-LIAB> 2,251,267
<GROSS-OPERATING-REVENUE> 199,970
<INCOME-TAX-EXPENSE> 9,478
<OTHER-OPERATING-EXPENSES> 158,195
<TOTAL-OPERATING-EXPENSES> 167,673
<OPERATING-INCOME-LOSS> 32,297
<OTHER-INCOME-NET> 1,376
<INCOME-BEFORE-INTEREST-EXPEN> 33,673
<TOTAL-INTEREST-EXPENSE> 14,803
<NET-INCOME> 18,870
47
<EARNINGS-AVAILABLE-FOR-COMM> 18,823
<COMMON-STOCK-DIVIDENDS> 39,259
<TOTAL-INTEREST-ON-BONDS> 0<F1>
<CASH-FLOW-OPERATIONS> 24,047
<EPS-PRIMARY> .38
<EPS-DILUTED> 0<F1>
<FN>
<F1>INAPPLICABLE
</FN>
</TABLE>
